<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
October 4, 1995
GIANT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or jurisdiction of incorporation)
1-10398 86-0642718
(Commission File Number) (IRS Employer Identification No.)
23733 North Scottsdale Road
Scottsdale, Arizona 85255
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(602) 585-8888
<PAGE>
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 4, 1995, Giant Industries Arizona, Inc. and
San Juan Refining Company (collectively "the Company"), each a
direct or indirect wholly-owned subsidiary of Giant
Industries, Inc. ("Giant"), completed the purchase of the
18,000 barrel per day ("bpd") Bloomfield Refinery ("the
Refinery") located in Bloomfield, New Mexico, along with
related pipeline and transportation assets. The Refinery and
related assets were purchased from Gary-Williams Energy Co.
and its wholly-owned subsidiary Bloomfield Refining Company
("BRC"), a privately-held company not affiliated with the
Company or Giant, for a price of $55 million, determined as a
result of arms'-length negotiations, plus approximately $7.5
million for crude oil and refined products inventories
associated with the refinery operations. The purchase
agreement also provides for potential contingent payments to
be made to BRC over approximately the next six years should
certain criteria be met.
The Refinery includes the following major processing
units:
- 18,000 bpd Crude Distillation Unit
- 6,200 bpd Catalytic Cracking Unit
- 4,000 bpd Catalytic Reforming Unit
- 4,000 bpd Naphtha Hydrotreating Unit
- 3,000 bpd Distillate Hydrotreating Unit
- 2,000 bpd Catalytic Polymerization Unit
Also included in the purchase is approximately 25 miles
of pipeline connecting the Refinery to the Texas-New Mexico
and Four Corners common carrier pipeline systems and various
automobiles and small trucks.
The Refinery has been and will continue to be used to
process primarily locally acquired crude oil into refined
products which are distributed principally in Southern Utah,
Southern Colorado, Northwestern New Mexico and Northeastern
Arizona.
The purchase was funded with approximately $32.5 million
of cash on hand and $30.0 million provided under a three-year
unsecured revolving term facility evidenced by a Credit
Agreement (the "Agreement") with Bank of America Illinois and
Bank of America National Trust and Savings Association, as
Agent. In addition, the Agreement contains a three-year
unsecured working capital facility to provide working capital
and letters of credit in the ordinary course of business. The
availability of funds under this working capital facility will
be the lesser of (i) $40.0 million, or (ii) the amount under a
borrowing base as defined in the Agreement. Both credit
facilities have floating interest rates that are tied to
various short-term indices. The Agreement contains certain
covenants and restrictions which require Giant to, among other
things, maintain a minimum consolidated net worth; minimum
fixed charge coverage ratio; minimum funded debt to total
capitalization percentage; and places limits on investments,
prepayment of senior subordinated debt, guarantees, liens and
restricted payments.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
CONDENSED BALANCE SHEET
JUNE 30, 1995
<CAPTION>
ASSETS
JUNE 30,
1995
-----------
(UNAUDITED)
<S> <C>
CURRENT ASSETS
Cash and temporary investments $ 5,004,313
Accounts receivable - affiliates 8,119,859
Accounts receivable 452,296
Inventories 8,955,818
Prepaid crude oil - affiliate 6,017,091
Prepaid expenses and other 990,457
-----------
Total current assets 29,539,834
-----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 23,296,346
Gas plants, property and equipment 5,124,801
Less: Accumulated depreciation (7,410,590)
-----------
21,010,557
Construction in progress 277,979
-----------
Total property, plant and equipment 21,288,536
-----------
Other 281,783
-----------
TOTAL ASSETS $51,110,153
===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable - affiliates $12,200,562
Accounts payable 296,331
Accrued liabilities 2,144,797
Income taxes payable - affiliate 863,000
-----------
Total current liabilities 15,504,690
-----------
NON-CURRENT LIABILITIES
Deferred income taxes, net 1,216,700
Accrued turnaround costs 2,525,447
Other 115,941
-----------
Total non-current liabilities 3,858,088
-----------
Commitments and contingencies (Note 3)
SHAREHOLDER'S EQUITY
Common stock, .01 par value: 1,000 voting shares
authorized, issued and outstanding 10
Contributed capital 3,200,090
Retained earnings 28,547,275
-----------
Total shareholder's equity 31,747,375
-----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $51,110,153
===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Operating revenues $69,613,751 $65,637,591
Operating expenses 58,315,363 52,494,058
----------- -----------
Gross margin 11,298,388 13,143,533
General and administrative expenses 3,552,587 3,465,778
----------- -----------
Operating income 7,745,801 9,677,755
----------- -----------
OTHER INCOME (EXPENSE)
Interest income 142,617 153,994
Interest expense (134,757) (138,756)
Other 96,829 56,947
----------- -----------
104,689 72,185
----------- -----------
Income before income taxes 7,850,490 9,749,940
INCOME TAX EXPENSE
Current (3,020,000) (3,722,000)
Deferred (32,200) (107,900)
----------- -----------
(3,052,200) (3,829,900)
----------- -----------
NET INCOME $ 4,798,290 $ 5,920,040
=========== ===========
NET INCOME PER COMMON SHARE $ 4,798.29 $ 5,920.04
=========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 1,000 1,000
=========== ===========
STATEMENTS OF RETAINED EARNINGS
Balance at January 1 $27,138,322 $23,854,523
Net income 4,798,290 5,920,040
Dividends ($3,389.34 per share in 1995
and $1,200.00 per share in 1994) (3,389,337) (1,200,000)
----------- -----------
Balance at June 30 $28,547,275 $28,574,563
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
<CAPTION> 1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Reconciliation of net income to net cash provided by
operating activities:
Net income $ 4,798,290 $ 5,920,040
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 859,671 851,908
Accrued turnaround costs 571,776 571,776
Changes in assets and liabilities (5,795,054) (5,301,705)
----------- -----------
Net cash provided by operating activities $ 434,683 $ 2,042,019
=========== ===========
Cash flows used in investing activities:
Capital expenditures - refinery (151,487) (946,759)
Capital expenditures - gas plants (269,147) (30,929)
----------- -----------
Net cash used in investing activities (420,634) (977,688)
----------- -----------
Cash flows used in financing activities:
Principal payments on debt (2,875,000)
Dividends distributed (3,389,337) (1,200,000)
----------- -----------
Net cash used in financing activities (3,389,337) (4,075,000)
----------- -----------
Net decrease in cash and temporary investments (3,375,288) (3,010,669)
Cash and temporary investments at beginning of period 8,379,601 9,501,500
----------- -----------
Cash and temporary investments at end of period $ 5,004,313 $ 6,490,831
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
BLOOMFIELD REFINING COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information.
Accordingly, they do not include all of the information and notes
required by generally accepted accounting principles for complete
financial statements. In the opinion of the Management of Bloomfield
Refining Company, all adjustments and reclassifications considered
necessary for a fair and comparable presentation have been included
and are of a normal recurring nature. Operating results for the
six months ended June 30, 1995 are not necessarily indicative of
the results that may be expected for the year ending December 31,
1995. The enclosed financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's December 31, 1994 annual financial
statements.
(2) INVENTORIES
-----------
Inventories are valued at the lower of first-in, first-out
cost or market. Inventories at June 30, 1995 are as follows:
<TABLE>
<CAPTION>
June 30,
1995
----------
<S> <C>
Refined, unrefined and intermediate products $5,314,051
Crude oil 2,792,252
Materials and supplies 849,515
----------
$8,955,818
==========
</TABLE>
(3) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company is subject to certain environmental and other
regulations primarily administered by the United States Environmental
Protection Agency (E.P.A.) and various state agencies. Management of
the Company believes it has complied with all material aspects
associated with these regulations. The Company entered into an
administrative order with the E.P.A. to perform a study to assess the
nature of any environmental cleanup requirements at the refinery which
was substantially completed in 1994. Management is currently
evaluating the E.P.A.'s response and is uncertain as to what, if any,
additional costs may be required.
The Company and its parent are members of a consolidated tax group
which files a consolidated income tax return. The Internal Revenue
Service concluded a field audit of the consolidated tax group's income
tax return for the fiscal year 1990 resulting in a "Notice of
Deficiency" for that fiscal year. Proposed adjustments to income and
tax credits resulted in a proposed tax deficiency of approximately
$4,800,000 plus penalties. The Company's parent filed a petition with
the United States Tax Court contesting the notice and believes that it
has meritorious legal defenses to the proposed tax deficiency, but the
ultimate outcome of the Tax Court case is uncertain.
The Company is subject to various claims and business disputes in
the ordinary course of business. Management does not anticipate that
the ultimate outcome of these issues will have a material impact on the
Company's financial position or results of operations.
An affiliate of the Company entered into a ten year lease
agreement for office space in November 1989. The Company has
guaranteed the performance of the affiliate's obligations. Terms of
the lease provided for annual rent of $553,000 in 1994 and escalating
to $796,000 in years six through ten. In addition to the rent, the
Company has guaranteed the annual payment of $328,000 in occupancy
costs with provisions for escalation based on actual expenses.
Currently, the affiliate of the Company is subleasing certain office
space to a third party and a related party.
(4) SUBSEQUENT EVENT
----------------
Effective October 4, 1995, the Company sold to a third party
substantially all of its refining assets for $55,000,000 and
potential contingent payments to be made over approximately the
next six years should certain criteria be met. In addition,
related refinery inventories were sold for approximately
$7,500,000.
<PAGE>
<PAGE>
ARTHUR ANDERSEN LLP
BLOOMFIELD REFINING COMPANY
FINANCIAL STATEMENTS
TOGETHER WITH REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
AS OF DECEMBER 31, 1994, 1993 AND 1992<PAGE>
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Bloomfield Refining Company:
We have audited the accompanying balance sheets of Bloomfield
Refining Company (a Delaware corporation) as of December 31,
1994 and 1993, and the related statements of operations,
retained earnings and cash flows for each of the three years
in the period ended December 31, 1994. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Bloomfield Refining Company as of December 31,
1994 and 1993, and the results of its operations and its cash
flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted
accounting principles.
/s/ ARTHUR ANDERSEN LLP
Denver, Colorado,
October 13, 1995.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<CAPTION>
ASSETS
1994 1993
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and temporary investments $ 8,379,601 $10,800,111
Accounts receivable - affiliates 6,008,872 5,646,661
Accounts receivable 257,820 35,783
Inventories 7,887,826 6,046,026
Prepaid crude oil - affiliate 2,312,338 819,868
Prepaid expenses and other 584,495 879,839
Deferred tax asset --- 291,500
----------- -----------
Total current assets 25,430,952 24,519,788
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 23,165,353 22,177,094
Gas plants, property and equipment 4,855,654 4,652,324
Less: Accumulated depreciation (6,550,919) (4,854,519)
----------- -----------
21,470,088 21,974,899
Construction in progress 147,712 409,970
----------- -----------
Total property, plant and equipment 21,617,800 22,384,869
----------- -----------
Other 289,005 240,720
----------- -----------
TOTAL ASSETS $47,337,757 $47,145,377
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable - affiliates $10,853,802 $ 8,513,020
Accounts payable 649,983 935,698
Current portion of long-term debt --- 2,875,000
Accrued liabilities 2,227,067 2,558,658
Income taxes payable - affiliate --- 2,496,600
----------- -----------
Total current liabilities 13,730,852 17,378,976
----------- -----------
NON-CURRENT LIABILITIES
Deferred income taxes, net 1,184,500 1,750,300
Accrued turnaround costs 1,953,671 810,119
Other 130,312 151,359
----------- -----------
Total non-current liabilities 3,268,483 2,711,778
----------- -----------
Commitments and contingencies (Note 9)
SHAREHOLDER'S EQUITY
Common stock, .01 par value; 1,000
voting shares authorized, issued and
outstanding 10 10
Contributed capital 3,200,090 3,200,090
Retained earnings 27,138,322 23,854,523
----------- -----------
Total shareholder's equity 30,338,422 27,054,623
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $47,337,757 $47,145,377
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION> 1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Operating revenues $141,701,590 $148,822,139 $143,974,427
Operating expenses 114,999,480 118,026,762 124,573,250
------------ ------------ ------------
Gross margin 26,702,110 30,795,377 19,401,177
General and administrative expenses 7,529,972 8,470,542 8,542,979
------------ ------------ ------------
Operating income 19,172,138 22,324,835 10,858,198
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Gain (loss) on sale of assets 8,568 (8,503) 1,495,553
Interest income 375,022 259,062 272,471
Interest expense (265,862) (357,446) (753,046)
Other 268,858 15,839 89,671
------------ ------------ ------------
386,586 (91,048) 1,104,649
------------ ------------ ------------
Income before income taxes 19,558,724 22,233,787 11,962,847
INCOME TAX EXPENSE (NOTE 4)
Current (7,396,500) (7,635,100) (4,993,000)
Deferred (248,800) (1,220,800) ---
------------ ------------ ------------
(7,645,300) (8,855,900) (4,993,000)
------------ ------------ ------------
NET INCOME $ 11,913,424 $ 13,377,887 $ 6,969,847
============ ============ ============
NET INCOME PER COMMON SHARE $ 11,913.42 $ 13,377.88 $ 6,969.85
============ ============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 1,000 1,000 1,000
============ ============ ============
STATEMENTS OF RETAINED EARNINGS
Balance at January 1 $ 23,854,523 $ 16,077,577 $ 11,367,632
Net income 11,913,424 13,377,887 6,969,847
Dividends ($8,629.63, $5,600.94 and
$2,230.57 per share in 1994, 1993
and 1992, respectively) (8,629,625) (5,600,941) (2,230,572)
Excess of additional pension liability
over unrecognized prior service cost --- --- (29,330)
------------ ------------ ------------
Balance at December 31 $ 27,138,322 $ 23,854,523 $ 16,077,577
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION> 1994 1993
1992
------------- -------------
- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 141,129,762 $ 148,745,079 $
143,704,941
Cash paid to suppliers and employees (120,708,328) (120,947,666)
(130,035,607)
Cash outlay for turnaround --- (3,202,273)
(3,522)
Interest received 382,751 263,429
264,519
Interest paid (266,117) (359,739)
(806,318)
Income taxes (10,416,200) (6,260,500)
(5,062,500)
Other 266,933 7,703
135,602
------------- -------------
- -------------
Net cash provided by operating activities 10,388,801 18,246,033
8,197,115
------------- -------------
- -------------
Cash flows from investing activities:
Capital expenditures - refinery (1,276,862) (8,744,591)
(743,730)
Acquisition of gas plants interests (Note 1) --- ---
(2,544,653)
Capital expenditures - gas plants (29,574) (528,826)
(88,426)
Proceeds from sale of assets 1,750 29,657
3,308,618
------------- -------------
- -------------
Net cash used in investing activities (1,304,686) (9,243,760)
(68,191)
------------- -------------
- -------------
Cash flows from financing activities:
Borrowings under revolving credit agreement --- 3,000,000
---
Principal payments on debt (2,875,000) (2,892,496)
(5,376,267)
Dividends distributed (8,629,625) (5,600,941)
(2,230,572)
------------- -------------
- -------------
Net cash used in financing activities (11,504,625) (5,493,437)
(7,606,839)
------------- -------------
- -------------
Net (decrease) increase in cash and temporary investments (2,420,510) 3,508,836
522,085
Cash and temporary investments at beginning of year 10,800,111 7,291,275
6,769,190
------------- -------------
- -------------
Cash and temporary investments at end of year $ 8,379,601 $ 10,800,111 $
7,291,275
============= =============
=============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION> 1994 1993
1992
----------- -----------
- -----------
<S> <C> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net income $11,913,424 $13,377,887 $
6,969,847
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,739,979 1,370,415
1,288,601
Accrued turnaround costs 1,143,552 1,014,887
883,716
(Gain) loss on sale of assets (8,568) 8,503
(1,495,553)
Changes in assets and liabilities:
Increase in accounts receivable (584,248) (150,662)
(873,550)
(Increase) decrease in inventories (1,841,800) 1,815,826
37,323
(Increase) decrease in prepaid expenses and other (1,370,882) 462,695
461,337
Decrease (increase) in deferred tax asset 291,500 (291,500)
- ---
(Increase) decrease in other assets (48,285) ---
387,561
Increase (decrease) in accounts payable 2,569,167 (787,383)
(13,964)
(Decrease) increase in accrued liabilities (331,591) 1,356,798
242,090
(Decrease) increase in income taxes payable - affiliate (2,496,600) 1,374,600
(69,500)
(Decrease) increase in accrued turnaround costs --- (2,809,000)
301,775
(Decrease) increase in other liabilities (21,047) (9,333)
77,432
(Decrease) increase in deferred income taxes (565,800) 1,512,300
- ---
----------- -----------
- -----------
Net cash provided by operating activities $10,388,801 $18,246,033 $
8,197,115
=========== ===========
===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
BLOOMFIELD REFINING COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND AND ORGANIZATION
---------------------------
Organization
- ------------
On August 31, 1994, Bloomfield Refining Company, a Delaware
corporation (the Company), was incorporated. The Company's primary
activities are the refining of petroleum products and gas plant
operations. The Company is a wholly-owned subsidiary of
Gary-Williams Energy Corporation (GWEC). The Company operates a
refinery in Bloomfield, New Mexico with a throughput capacity of
17,000 barrels per day and has ownership interests in two gas
plants located in Utah.
During 1992, the Company acquired additional interests in
a gas plant located in Utah for approximately $2,500,000. Also
during 1992, the Company sold all rights, title and interest in
a gas plant gathering system, an extraction plant, and certain
related equipment and appurtenances located in Colorado to
third parties, resulting in a gain on sale of gas plant assets
of $1,495,553.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Cash and Temporary Investments
- ------------------------------
For purposes of these statements, the Company considers
investments purchased with an original maturity of three months or
less to be cash or temporary investments. Temporary investments
consist primarily of certificates of deposit and commercial paper.
These securities are classified as held to maturity investments as
defined by Statement of Financial Accounting Standards No. 115. At
December 31, 1994 and 1993, these securities are recorded at a
market value of $7,663,000 and $8,520,000, respectively. Realized
gains and losses from sales of these securities are included in
interest income in the accompanying statements of operations. The
net unrealized gain or loss on these securities was not material as
of December 31, 1994 and 1993.
Inventories
- -----------
Inventories are valued at the lower of first-in, first-out
cost or market. Inventories at December 31, 1994 and 1993, are as
follows:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
----------- -----------
<S> <C> <C>
Refined, unrefined and intermediate products $4,181,728 $3,692,757
Crude oil 2,811,004 1,432,350
Materials and supplies 895,094 920,919
---------- ----------
$7,887,826 $6,046,026
========== ==========
</TABLE>
Property, Plant and Equipment
- -----------------------------
The initial purchase and additions to property, plant and
equipment are recorded at cost. Depreciation is provided using the
straight-line method based on estimated useful lives ranging from 2
to 35 years, with an average initial life of approximately 19
years.
Ownership interests in gas plants are recorded at cost and
proportionately consolidated for financial statement purposes.
Depreciation is provided using the straight-line method with
estimated useful lives ranging from 5 to 10 years, with an average
initial life of approximately 7 years.
General and Administrative Expenses
- -----------------------------------
The Company reimbursed GWEC $5,146,145, $4,999,212 and
$5,395,703 for general and administrative services relating to
the supply and marketing of raw materials and refined products
and gas plant operations in 1994, 1993 and 1992, respectively.
Accrued Turnaround Costs
- ------------------------
Major repair and maintenance expenses (turnaround costs) are
accrued and charged to current operations in anticipation of the
work to be performed in future periods to renew the related
refinery assets. Accrued turnaround costs are classified as either
current or non-current liabilities based upon the scheduling of
major expenditures.
Capitalized Interest
- --------------------
The Company capitalizes interest on debt associated with the
financing of capital construction projects. During 1993 interest
of $109,480 was capitalized to property, plant and equipment. No
such interest was capitalized during 1994 or 1992.
Reclassifications
- -----------------
Certain prior year amounts have been reclassified for
consistency with the current year presentation.
(3) LONG-TERM DEBT
--------------
The Company has a revolving credit facility, as amended, with
a group of banks under which it may borrow up to $8,000,000 in cash
and/or issue letters of credit which in the aggregate cannot exceed
the lesser of $35,000,000 or the borrowing base. The borrowing
base, which consists principally of accounts receivable, inventory,
exchange balances and unused outstanding letters of credit was
approximately $21,000,000 and $18,000,000 as of December 31, 1994
and 1993. The Company had no amounts outstanding under the
revolving credit facility, however, letters of credit totaling
approximately $20,000,000 and $14,000,000 had been issued as of
December 31, 1994 and 1993. Borrowings under the revolving credit
facility bear interest at a rate based on the bank's prime rate.
The credit facility is secured by substantially all of the
assets of the Company and, among other things, requires the
maintenance of certain financial covenants and ratios. The
revolving credit facility matures June 1, 1996; however, the credit
agreement provides for extensions of the maturity date.
The Company borrowed $3,000,000 in 1993 for capital projects
at the Bloomfield refinery pursuant to an amendment to the credit
agreement. Interest was based on the bank's prime rate or
alternatively, interest rates could be fixed for 30, 60 or 90 day
periods on portions of the term loan at a floating Eurocurrency
rate. At December 31, 1993, the weighted average interest rate
being paid was approximately 6.2%. The entire balance was paid
during 1994.
(4) INCOME TAXES
------------
The Company and GWEC are members of a consolidated tax group
which files a consolidated federal income tax return. An agreement
was entered into between the Company and GWEC whereby the Company
determines, on a stand alone basis, the tax liability or benefit as
if it were not a member of the tax group. The Company then
reimburses GWEC for its current income tax liability on a quarterly
basis. Deferred income taxes are paid to GWEC periodically. The
Company is entitled to be reimbursed by GWEC for its income tax
benefit when the Company could otherwise have utilized such benefit
on a stand alone basis.
Effective January 1, 1993, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", (SFAS 109). SFAS 109 requires that deferred
income taxes be recognized for the differences between the tax and
financial reporting bases of assets and liabilities at each year-
end based on enacted tax laws and statutory tax rates. Valuation
allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. The adoption of SFAS
109 had no material impact on the Company's financial position or
results of operations for the year ended December 31, 1993.
The net deferred tax liability consists of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Gross deferred tax assets:
Turnaround expenses $ 760,000 $ 315,100
Inventory costs capitalized for tax and other 182,100 150,700
Other 148,600 140,800
----------- -----------
1,090,700 606,600
Gross deferred tax liabilities:
Accelerated tax depreciation (2,798,300) (2,065,400)
----------- -----------
(1,707,600) (1,458,800)
Payments to affiliate 523,100
Valuation allowance
----------- -----------
Net deferred tax liability $(1,184,500) $(1,458,800)
=========== ===========
</TABLE>
The difference between the statutory federal income tax rate
and the Company's effective income tax rate is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Federal income tax rate 34% 34% 34%
State income taxes 5% 6% 6%
Other 2%
---- ---- ----
39% 40% 42%
==== ==== ====
</TABLE>
In management's opinion, it is more likely than not that the
gross deferred tax assets will be realized based on past earnings
history.
Tax Deficiency
- --------------
The Internal Revenue Service concluded a field audit of the
consolidated tax group's income tax return for the fiscal year 1990
resulting in a "Notice of Deficiency" for that fiscal year.
Proposed adjustments to income and tax credits resulted in a
proposed tax deficiency of approximately $4,800,000 plus penalties.
The Company filed a petition with the United States Tax Court
contesting the notice and believes that it has meritorious legal
defenses to the proposed tax deficiency, but the ultimate outcome
of the Tax Court case is uncertain.
(5) OPERATING REVENUES AND EXPENSES BY SEGMENTS
--------------------------------------------
The following segment information reflects operating revenues,
operating expenses and gross margins for the years ended December
31, 1994 and 1993.
<TABLE>
<CAPTION>
Refining Gas Plants Total
------------ ---------- ------------
December 31, 1994
------------------------------------------
<S> <C> <C> <C>
Operating Revenues $139,073,511 $2,628,079 $141,701,590
Operating Expenses 112,824,818 2,174,662 114,999,480
------------ ---------- ------------
Gross Margin $ 26,248,693 $ 453,417 $ 26,702,110
============ ========== ============
December 31, 1993
------------------------------------------
Operating Revenues $145,878,017 $2,944,122 $148,822,139
Operating Expenses 115,829,494 2,197,268 118,026,762
------------ ---------- ------------
Gross Margin $ 30,048,523 $ 746,854 $ 30,795,377
============ ========== ============
December 31, 1992
------------------------------------------
Operating Revenues $140,088,307 $3,886,120 $143,974,427
Operating Expenses 122,005,814 2,567,436 124,573,250
------------ ---------- ------------
Gross Margin $ 18,082,493 $1,318,684 $ 19,401,177
============ ========== ============
</TABLE>
(6) RELATED PARTY TRANSACTIONS
--------------------------
A supply and marketing service agreement was entered into
between the Company and GWEC, whereby GWEC purchases crude oil and
other raw materials for resale to the Company, at cost, for
processing at the refinery. The intercompany purchases of raw
materials include all amounts accrued and owing by GWEC to third
parties, including prepayments and offsite inventory and represent
substantially all raw material purchases made by the Company. Also,
the Company sells substantially all of its refined petroleum
products to GWEC, at market, for resale by GWEC.
The Company has guaranteed the payment by GWEC of an aggregate
maximum at any one time of $2,000,000 of present and/or future
indebtedness owed to a third party crude oil supplier.
(7) EMPLOYEE BENEFIT PLANS
----------------------
The Company has a profit sharing plan (defined contribution
plan) covering certain non-union employees who meet eligibility
requirements as to age and length of service. Contributions to the
plan are determined annually by the Company. Contributions of
$187,357, $173,139 and $169,002 were accrued for the years ended
December 31, 1994, 1993 and 1992, respectively.
The Company also has a defined benefit pension plan for union
employees. The Company's funding policy is to contribute annually
an amount to fund normal cost and amortize unfunded actuarial
liabilities over 19 years. Plan assets at December 31, 1994 and
1993 consist primarily of private and public debt and equity
investments.
In 1993 and 1992, benefits were based on a percentage of the
employee's earnings, as defined, as of June 1, 1990, and years of
credited service up to a maximum of 30 years. In 1994, the plan
was amended to base benefits on a percentage of the employee's
earnings as of June 1, 1993.
The following table sets forth the funded status and amounts
recognized in the Company's statements of financial position and
operations at December 31, 1994, 1993 and 1992, for the defined
benefit pension plan:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $417,559, $406,405 and $364,702
at December 31, 1994, 1993 and 1992, respectively $(433,264) $(424,162)
$(377,359)
========= ========= =========
Projected benefit obligation for service rendered to date $(433,264) $(424,162)
$(377,359)
Plan assets at fair value 302,952 272,803 216,667
--------- --------- ---------
Projected benefit obligation in excess of plan assets (130,312) (151,359)
(160,692)
Unrecognized net obligation existing at January 1, 1989
being recognized over 19 years 8,926 9,590 10,255
Prior service cost not yet recognized 77,483 14,091 14,951
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions 70,391 160,797 176,517
Adjustment to recognize minimum liability (156,800) (184,478)
(201,723)
--------- --------- ---------
Accrued pension liability included in other liabilities $(130,312) $(151,359)
$(160,692)
========= ========= =========
Net pension cost includes the following components:
Service cost $ 55,079 $ 49,580 $ 35,988
Interest cost 29,266 23,202 18,060
Actual return on plan assets 6,557 (31,641)
(18,597)
Net amortization and deferral of other components (19,922) 20,237 6,712
--------- --------- ---------
Net periodic pension cost $ 70,980 $ 61,378 $ 42,163
========= ========= =========
</TABLE>
The discount rate used in determining the actuarial present value
of the projected benefit obligation was 7.0% for 1994, 6.0% for 1993,
and 5.75% for 1992. The expected long-term rate of return on pension
plan assets was 8.0% in 1994 and 1993 and 9% in 1992.
(8) MAJOR CUSTOMER
---------------
During the years ended December 31, 1994, 1993 and 1992, the
Company sold 100% of the refined products to GWEC. Also, during that
period, the Company purchased 100% of the crude oil and raw materials
from GWEC.
(9) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company is subject to certain environmental and other
regulations primarily administered by the United States Environmental
Protection Agency (E.P.A.) and various state agencies. Management of
the Company believes it has complied with all material aspects
associated with these regulations. The Company entered into an
administrative order with the E.P.A. to perform a study to assess the
nature of any environmental cleanup requirements at the refinery which
was substantially completed in 1994. Management is currently
evaluating the E.P.A.'s response and is uncertain as to what, if any,
additional costs may be required.
The Company is subject to various claims and business disputes in
the ordinary course of business. Management does not anticipate that
the ultimate outcome of these issues will have a material impact on the
Company's financial position or results of operations.
An affiliate of the Company entered into a ten year lease
agreement for office space in November 1989. The Company has
guaranteed the performance of the affiliate's obligations. Terms of
the lease provided for annual rent of $553,000 in 1994 and escalating
to $796,000 in years six through ten. In addition to the rent, the
Company has guaranteed the annual payment of $318,000 in occupancy
costs with provisions for escalation based on actual expenses.
Currently, the affiliate of the Company is subleasing certain office
space to a third party and a related party.
(10) SUBSEQUENT EVENT
----------------
Effective October 4, 1995, the Company sold to a third party
substantially all of its refining assets for $55,000,000 and
potential contingent payments to be made over approximately the
next six years should certain criteria be met. In addition,
related refinery inventories were sold for approximately
$7,500,000.<PAGE>
<PAGE>
(b) Pro Forma Financial Information
On October 4, 1995, Giant Industries Arizona, Inc. and
San Juan Refining Company (collectively "the Company"), each a
direct or indirect wholly-owned subsidiary of Giant Industries,
Inc. ("Giant"), completed the purchase of the Bloomfield
Refinery ("the Refinery") along with related pipeline and
transportation assets from Gary-Williams Energy Co. and its
wholly-owned subsidiary Bloomfield Refining Company ("BRC").
The historical financial statements of BRC include the
assets and results of operations of two gas plants not
included in the purchase and exclude the assets of the
Refinery pipeline and transportation operations which were
acquired. The pre-tax operating results of the pipeline and
transportation operations are included in BRC's historical
cost of products sold line item in the Unaudited Pro Forma
Combined Condensed Statements of Earnings.
For purposes of presenting the Unaudited Pro Forma Combined
Condensed Balance Sheet, only the historical Balance Sheet of Giant
is presented since only property, plant
and equipment and inventories of BRC were purchased.
The fiscal year for both companies ends on December 31. For
purposes of presenting the Unaudited Pro Forma Combined Condensed
Statements of Earnings, the results of the full year ended December
31, 1994, and for the six months ended June 30, 1995 for both
companies are included in the respective Pro Forma statements.
The Unaudited Pro Forma Combined Condensed Balance Sheet assumes
the Purchase was consummated on June 30, 1995, and the Unaudited Pro
Forma Combined Condensed Statements of Earnings assume the Purchase
was consummated January 1, 1994.
The unaudited pro forma combined financial information does not
purport to represent the results of operations that actually would
have resulted had the purchase occurred on January 1, 1994, nor
should it be taken as indicative of the future results of operations.
The unaudited pro forma combined financial information should be read
in conjunction with the Notes to Unaudited Pro Forma Combined
Financial Information and the separate financial statements and notes
thereto of Giant and BRC.
On October 2, 1995, Giant announced the temporary closure
of its ethanol processing plant. The plant is expected to be
closed until grain prices return to more favorable levels. Included
in Giant's historical numbers are ethanol plant third party revenues
of $12.7 million and operating losses of $1.4 million for the
year ended December 31, 1994, and third party revenues of $5.3 million
and operating earnings of $450,000 for the six months ended
June 30, 1995.<PAGE>
<PAGE>
<TABLE>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
JUNE 30, 1995
(DOLLARS IN THOUSANDS)
<CAPTION>
HISTORICAL
---------- PRO FORMA PRO FORMA
GIANT ADJUSTMENTS COMBINED
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 11,518 $ (7,101)<F1> $ 4,417
Marketable securities 26,039 (26,039)<F1>
Accounts receivable, net 17,804 17,804
Income tax refunds receivable 259 259
Inventories 34,089 7,500 <F1> 41,589
Prepaid expenses and other 2,344 2,344
Deferred income taxes 2,419 2,419
--------- -------- ---------
Total current assets 94,472 (25,640) 68,832
--------- -------- ---------
Property, plant and equipment 319,903 55,000 <F1> 374,903
Less accumulated depreciation,
depletion and amortization (151,113) (151,113)
--------- -------- ---------
168,790 55,000 223,790
--------- -------- ---------
Other assets 13,382 640 <F1> 14,022
--------- -------- ---------
$ 276,644 $ 30,000 $ 306,644
========= ======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 4,133 $ $ 4,133
Accounts payable 19,745 19,745
Accrued expenses 16,791 16,791
--------- -------- ---------
Total current liabilities 40,669 40,669
--------- -------- ---------
Long-term debt, net of current portion 113,523 30,000 <F1> 143,523
Deferred income taxes 13,851 13,851
Other liabilities 3,462 3,462
Common stockholders' equity 105,139 105,139
--------- -------- ---------
$ 276,644 $ 30,000 $ 306,644
========= ======== =========
</TABLE>
See accompanying notes to pro forma combined condensed financial
statements.
<PAGE>
<PAGE>
<TABLE>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(IN THOUSANDS EXCEPT SHARES AND PER SHARE DATA)
<CAPTION>
HISTORICAL
----------------------- PRO FORMA PRO
FORMA
GIANT BRC ADJUSTMENTS
COMBINED
---------- ---------- --------------
- ----------
<S> <C> <C> <C> <C>
Net revenues $ 151,558 $ 69,614 $ (1,189)<F4> $
220,557
574 <F8>
Cost of products sold 104,627 58,316 (1,065)<F4>
154,798
(69)<F5>
(7,314)<F7>
303 <F8>
---------- ---------- --------
- ----------
Gross margin 46,931 11,298 7,530
65,759
---------- ---------- --------
- ----------
Operating expenses 25,476 6,756 <F7>
32,232
Depreciation, depletion and amortization 7,694 1,375 <F3>
9,069
(587)<F3>
587 <F7>
Selling, general and administrative expenses 6,207 3,552 (41)<F4>
7,518
(2,437)<F5>
250 <F6>
16 <F8>
(29)<F7>
---------- ---------- --------
- ----------
Operating income 7,554 7,746 1,640
16,940
Interest expense, net and other 4,173 (104) 1,200 <F1>
6,147
111 <F1>
663 <F2>
104 <F5>
---------- ---------- --------
- ----------
Earnings before income taxes 3,381 7,850 (438)
10,793
Provision for income taxes 1,082 3,052 (171)<F9>
3,963
---------- ---------- --------
- ----------
Net earnings $ 2,299 $ 4,798 $ (267) $
6,830
========== ========== ========
==========
Earnings per common share $ 0.20 $ 4,798.29 $
0.59
========== ==========
==========
Weighted average number of shares outstanding 11,662,510 1,000
11,662,510
========== ==========
==========
</TABLE>
See accompanying notes to pro forma combined financial statements.
<PAGE>
<PAGE>
<TABLE>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS EXCEPT SHARES AND PER SHARE DATA)
<CAPTION>
HISTORICAL
----------------------- PRO FORMA PRO
FORMA
GIANT BRC ADJUSTMENTS
COMBINED
---------- ---------- --------------
- ----------
<S> <C> <C> <C> <C>
Net revenues $ 293,458 $ 141,702 $ (2,628)<F4> $
433,924
1,392 <F8>
Cost of products sold 193,359 115,000 (2,177)<F4>
292,834
(190)<F5>
(14,042)<F7>
884 <F8>
---------- ---------- --------
- ----------
Gross margin 100,099 26,702 14,289
141,090
---------- ---------- --------
- ----------
Operating expenses 53,884 12,932 <F7>
66,816
Depreciation, depletion and amortization 15,040 2,750 <F3>
17,790
(1,110)<F3>
1,110 <F7>
Selling, general and administrative expenses 11,930 7,530 (93)<F4>
14,495
(5,393)<F5>
500 <F6>
21 <F8>
Reduction of carrying value of crude oil and
natural gas properties 3,395
3,395
---------- ---------- --------
- ----------
Operating income 15,850 19,172 3,572
38,594
Interest expense, net and other 10,072 (387) 2,400 <F1>
14,021
223 <F1>
1,326 <F2>
387 <F5>
---------- ---------- --------
- ----------
Earnings before income taxes 5,778 19,559 (764)
24,573
Provision for income taxes 1,257 7,645 (298)<F9>
8,604
---------- ---------- --------
- ----------
Net earnings $ 4,521 $ 11,914 $ (466) $
15,969
========== ========== ========
==========
Earnings per common share $ 0.37 $11,913.42 $
1.32
========== ==========
==========
Weighted average number of shares outstanding 12,127,481 1,000
12,127,481
========== ==========
==========
</TABLE>
See accompanying notes to pro forma combined financial statements.<PAGE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
BALANCE SHEET AND STATEMENTS OF EARNINGS
The Unaudited Pro Forma Combined Condensed Balance Sheet was
prepared as if the purchase took place on June 30, 1995.
The Unaudited Pro Forma Combined Condensed Statements of Earnings
were prepared as if the purchase took place on January 1, 1994.
The following is a summary of reclassifications and adjustments
reflected in the Unaudited Pro Forma Combined Condensed Balance Sheet
and Statements of Earnings:
<F1> Represents the purchase of the Refinery, pipeline and
transportation assets along with the associated inventories
for cash and the issuance of long-term debt to partially
finance the purchase. The Statements of Earnings reflect the
increase in interest expense based on the issuance of
long-term debt at an assumed interest rate of 8%. Debt
issuance costs of approximately $640,000 are amortized to
interest expense over three years, the term of the Loan.
It is assumed that all debt was issued on January 1, 1994
and was outstanding through June 30, 1995.
<F2> Represents the reduction in interest income due to a decrease
in cash available for investment.
<F3> Represents Giant's depreciation expense due to the purchase
and reverses BRC depreciation expense included in the
historical amounts.
<F4> Represents the elimination of the Gas Plant operations not
purchased, but included in the historical amounts.
<F5> Represents the elimination of certain GWEC general and
administrative expenses allocated to BRC and other income
(expense), included in the historical amounts, which will not
be duplicated subsequent to the purchase.
<F6> Represents the estimated increase in Giant's general and
administrative costs due to the purchase.
<F7> Represents the reclassification of BRC operating expenses
to conform to Giant's presentation.
<F8> Represents the reclassification of pipeline and
transportation pre-tax operating results, after the
elimination of intercompany transactions.
<F9> Represents the tax effect of the Statements of Earnings
adjustments based upon the statutory rate in effect for the
periods shown.
<PAGE>
<PAGE>
(c) Exhibits
2.1 Purchase and Sale Agreement, dated August 8, 1995,
among Bloomfield Refining Company and Gary-Williams
Energy Corporation, as Sellers, and Giant Industries
Arizona, Inc., as Buyer.
2.2 First Amendment, dated September 29, 1995, to Purchase
and Sale Agreement, dated August 8, 1995, among
Bloomfield Refining Company and Gary-Williams Energy
Corporation, as Sellers, and Giant Industries Arizona,
Inc. as Buyer.
2.3 Second Amendment, dated October 2, 1995, to Purchase
and Sale Agreement, dated August 8, 1995, among
Bloomfield Refining Company and Gary-Williams Energy
Corporation, as Sellers, and Giant Industries Arizona,
Inc. as Buyer.
4.1 Credit Agreement, dated October 4, 1995, among
Giant Industries, Inc., as Borrower, Giant Industries
Arizona, Inc., Ciniza Production Company, San Juan
Refining Company, Giant Exploration & Production
Company and Giant Four Corners, Inc., as Guarantors
and Bank of America National Trust and Savings
Association, as Agent, Bank of America Illinois, as a
Bank and as Letter of Credit Issuing Bank and the
Other Financial Institutions Parties hereto.
23.1 Consent of Arthur Andersen LLP to incorporate reports
in previously filed Registration Statement.<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
GIANT INDUSTRIES, INC.
/s/ A. WAYNE DAVENPORT
-----------------------------
A. Wayne Davenport
Vice President and Chief
Financial Officer
(Principal Accounting Officer)
Date: October 18, 1995
PURCHASE AND SALE AGREEMENT
Bloomfield Refining Company
and
Gary-Williams Energy Corporation,
as Sellers
and
Giant Industries Arizona, Inc.,
as Buyer
Dated as of August 8, 1995<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Definitions and References . . . . . . . . . . . 1
1.01 General Definitions. . . . . . . . . . . . . . . 1
1.02 Exhibits and Schedules . . . . . . . . . . . . .15
1.03 References and Titles. . . . . . . . . . . . . .15
ARTICLE II Purchase and Sale . . . . . . . . . . . . .16
2.01 Purchase and Sale. . . . . . . . . . . . . . . .16
2.02 Effective. . . . . . . . . . . . . . . . . . . .16
2.03 Purchase Price . . . . . . . . . . . . . . . . .16
2.04 Allocation of Purchase Price . . . . . . . . . .16
2.05 Adjustments to Base Purchase Price . . . . . . .16
ARTICLE III Representations and Warranties. . . . . . .17
3.01 Representations and Warranties of Seller . . . .17
3.02 Representations and Warranties of Buyer. . . . .22
ARTICLE IV Covenants . . . . . . . . . . . . . . . . .24
4.01 Covenants of Sellers . . . . . . . . . . . . . .24
4.02 Covenants of Buyer . . . . . . . . . . . . . . .28
ARTICLE V Certain Procedures . . . . . . . . . . . . . . .29
5.01 Environmental Matters. . . . . . . . . . . . . .29
5.02 Personnel, Employment Arrangements and
Employee Benefits . . . . . . . . . . . . . .37
5.03 Casualty Loss. . . . . . . . . . . . . . . . . .40
5.04 Taxes Due with Respect to Transfer of Assets . .41
5.05 Property Tax Proration Amount. . . . . . . . . .41
5.06 Like-Kind Exchange . . . . . . . . . . . . . . .41
5.07 Due Diligence. . . . . . . . . . . . . . . . . .42
ARTICLE VI Conditions to Closing . . . . . . . . . . .42
6.01 Conditions to Obligations of Seller. . . . . . .42
6.02 Conditions to Obligations of Buyer . . . . . . .43
6.03 Conditions to Obligations of Both Parties. . . .52
ARTICLE VII Closing . . . . . . . . . . . . . . . . . .54
7.01 Date of Closing. . . . . . . . . . . . . . . . .54
7.02 Place of Closing . . . . . . . . . . . . . . . .54
7.03 Closing Obligations. . . . . . . . . . . . . . .54
ARTICLE VIII Obligations After Closing . . . . . . . . .58
8.01 Post-Closing Settlement. . . . . . . . . . . . .58
8.02 Recording Fees . . . . . . . . . . . . . . . . .60
8.03 Indemnification. . . . . . . . . . . . . . . . .60
8.04 Assumption of Obligations. . . . . . . . . . . .62
8.05 Identifications, Signs, Trademarks and
Tradenames . . . . . . . . . . . . . . . . . . .63
8.06 Access to Records - Books and Records. . . . . .63
8.07 Waiver of Compliance with Bulk Sales Laws. . . .64
8.08 Covenant Against Competition . . . . . . . . . .64
8.09 Independent Evaluation . . . . . . . . . . . . .64
8.10 Further Assurances . . . . . . . . . . . . . . .65
ARTICLE IX Termination of Agreement. . . . . . . . . .66
9.01 Termination. . . . . . . . . . . . . . . . . . .66
9.02 Return of Information. . . . . . . . . . . . . .67
9 .03 Effect of Termination. . . . . . . . . . . . . .67
ARTICLE X Miscellaneous. . . . . . . . . . . . . . . . . .68
10.01 Expenses . . . . . . . . . . . . . . . . . . . .68
10.02 Notices. . . . . . . . . . . . . . . . . . . . .68
10.03 Amendment. . . . . . . . . . . . . . . . . . . .70
10.04 Assignment . . . . . . . . . . . . . . . . . . .70
10.05 Announcements. . . . . . . . . . . . . . . . . .70
10.06 Counterparts . . . . . . . . . . . . . . . . . .71
10.07 Governing Law. . . . . . . . . . . . . . . . . .71
10.08 Entire Agreement . . . . . . . . . . . . . . . .71
10.09 Parties in Interest. . . . . . . . . . . . . . .72
<PAGE>
<PAGE>
SCHEDULE OF EXHIBITS AND SCHEDULES
EXHIBITS:
A -- Form of COMMON UNDERTAKING LETTER.
B -- Form of GENERAL DEED, ASSIGNMENT, BILL OF SALE AND
ASSUMPTION, covering all of the Assets.
C -- Form of BILL OF SALE, covering the Refinery
Equipment, the Refinery Facilities and the Refinery
Inventory.
D -- Form of ASSIGNMENT AND CONVEYANCE, covering the
Refinery Real Property (other than the Refinery
Site).
E -- Form of GENERAL WARRANTY DEED, covering the Refinery
Site.
F -- Form of BILL OF SALE, covering the Pipeline
Equipment, the Pipeline Facilities and the Pipeline
Inventory.
G -- Form of ASSIGNMENT AND CONVEYANCE, covering the
Pipeline Real Property.
H -- Form of GUARANTEE AND AGREEMENT.
I -- Form of SELLERS' CERTIFICATE.
J -- Form of BUYER'S CERTIFICATE.
K -- Form of NON-FOREIGN STATUS CERTIFICATE.
L -- Form of CRUDE OIL CONTRACT.
SCHEDULES:
1.01.1 -- Earnout
1.01.2 -- Excluded Contracts
1.01.3 -- Processing Units, Shipping Facilities and
Terminals
1.01.4 -- Refinery Site
1.01.5 -- Refinery Site Encumbrances
2.04 -- Allocation of Purchase Price
3.01(e) -- Contested Taxes
3.01(g) -- Litigation
3.01(j) -- Capital Projects
3.01(k) -- Collective Bargaining Agreements
3.01(l) -- Water and Water Rights
3.01(m) -- Financial Statements
3.01(n) -- Summary of Operations
3.02(g) -- Certain Permits, Licenses and Contracts
5.02(a) -- Retained Employees
6.02(i) -- BOR Draft Permit<PAGE>
<PAGE>
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement (this "Agreement"), dated as
of August 8, 1995, is among BLOOMFIELD REFINING COMPANY, a Delaware
corporation ("BRC"), with an address of 370 Seventeenth Street,
Suite 5300, Denver, Colorado 80203, GARY-WILLIAMS ENERGY
CORPORATION, a Delaware corporation ("GWEC"), with an address of
370 Seventeenth Street, Suite 5300, Denver, Colorado 80203, and
GIANT INDUSTRIES ARIZONA, INC., an Arizona corporation ("Buyer"),
with an address of 23733 North Scottsdale Road, Scottsdale, Arizona
85255. BRC and GWEC shall be referred to collectively as
"Sellers," and individually as a "Seller." In consideration of the
mutual promises contained herein, the benefits to be derived by
each party hereunder and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer and
Sellers agree as follows:
ARTICLE I
DEFINITIONS AND REFERENCES
1.01 GENERAL DEFINITIONS. As used herein, the terms
"Agreement," "BRC," "GWEC," "Buyer," "Sellers" and "Seller" shall
have the meaning ascribed thereto above, and the following terms
shall have the following meanings:
"ACCOUNTS PAYABLE" shall mean all accounts and other
obligations of the Businesses for the payment of money which are
reflected in accordance with generally acceptable accounting
principles as accounts payable on the books and records of Sellers.
"ACCOUNTS RECEIVABLE" shall mean accounts and other rights of
the Businesses to receive the payment of money which are reflected
in accordance with generally accepted accounting principles as
accounts receivable on the books and records of Sellers.
"ADMINISTRATION" shall have the meaning ascribed to such term
in Subsection 6.02(t).
"AFFILIATE" shall mean with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under
common control with such Person. The term "control" as used in the
preceding sentence means, with respect to any specified Person the
power to direct the management and policies of such Person directly
or indirectly, whether through the ownership of voting stock or
interests, by contract or otherwise; and the terms "controlling"
and "controlled" shall have meanings correlative to the foregoing.
"ANTI-DUMPING REQUIREMENTS" shall have the meaning ascribed to
such term in Subsection 6.02(u).
"ASSETS" shall mean the Refinery Assets and the Pipeline
Assets, but excluding the Excluded Assets.
"BASE PURCHASE PRICE" shall mean $55,000,000 in U.S. currency.
"BEST EFFORTS" shall mean the taking by a party of such action
as would be in accordance with reasonable commercial practices as
applied to the particular matter in question; provided, however,
that such action shall not include the incurrence of unreasonable
expenses.
"BUSINESSES" shall mean the Refinery Business and the Pipeline
Business.
"BUSINESS DAY" shall mean any day other than a Saturday, a
Sunday or a United States federal or New Mexico state banking
holiday.
"BUYER'S EMPLOYEES" shall have the meaning ascribed to such
term in Subsection 5.02(a).
"CAPITAL PROJECTS" shall have the meaning ascribed to such
term in Subsection 3.01(j).
"CAPITAL PROJECTS COSTS" shall mean those costs and expenses
relating to the Capital Projects and paid in the ordinary course by
Sellers after the date of this Agreement.
"CLEANUP" shall have the meaning ascribed to such term in
Subsection 5.01(e).
"CLOSING" shall have the meaning ascribed to such term in
Section 7.01.
"CLOSING DATE" shall have the meaning ascribed to such term in
Section 7.01.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, together with all Treasury Regulations promulgated
thereunder.
"COMMON UNDERTAKING LETTER" shall have the meaning ascribed to
such term in Subsection 5.01(c).
"CONFIDENTIALITY AGREEMENT" shall mean that certain
Confidentiality Agreement, dated as of June 22, 1995, between Buyer
and GII, as Recipient, and Sellers, as Provider.
"CONTRACTS" shall mean all transferable agreements, contracts,
leases of personal property, preferential rights of purchase, calls
on production, agreements for the purchase of non-Four Corners area
crude oil which is delivered or sold to an exchange partner in
consideration for receipts or purchases of Four Corners area crude
oil and other legally binding contractual commitments to which a
Seller or any Affiliate of a Seller is a party (including without
limitation, those which name a Seller as a party) and which are
materially associated with, relate to, or are used in connection
with the Assets or the Businesses, excluding the Excluded
Contracts.
"EARNOUT" shall mean the contingent payment by Buyer to BRC of
up to a net present value of $25,000,000 in accordance with the
terms and provisions of Schedule 1.01.1.
"EFFECTIVE TIME" shall mean 7:00 A.M. on the Closing Date, as
such time is customarily observed in Bloomfield, New Mexico.
"ENVIRONMENTAL INVESTIGATION" shall have the meaning ascribed
to such term in Subsection 5.01(b).
"ENVIRONMENTAL LAWS" shall mean: (i) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended
by the Superfund Amendment and Reauthorization Act and otherwise,
the Resource Conservation and Recovery Act, the Clean Air Act, the
Toxic Substances Control Act, the Safe Drinking Water Act, the
Federal Water Pollution Control Act, the Oil Pollution Act and
other federal laws relating to the use, storage, emission,
discharge, cleanup, removal, remediation, release or threatened
release of Hazardous Substances in any work place or on or into the
air, land, surface waters, ground water or other medium, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, disposal, transportation or handling of Hazardous
Substances; (ii) regulations relating to such federal laws; or
(iii) similar state, local and tribal laws, ordinances and
regulations. Environmental Laws do not include laws concerning man
made material fibers (which term shall not be deemed to include
asbestos or other mineral fibers) or employee health and safety.
"ENVIRONMENTAL LIABILITIES" shall mean any liabilities,
claims, expenses, penalties, fines or other obligations, including
reasonable fees of attorneys, consultants, engineers, accountants
and other advisers, for environmental conditions, situations,
circumstances, events or incidents on, at or concerning,
originating at or relating to the Assets arising under common law
actions or Environmental Laws as in effect on the Effective Time
directly or indirectly from: (i) the use, storage, emission,
discharge, release or threatened release of Hazardous Substances in
any work place or on or into the air, land, surface waters,
groundwater or other medium (on or off site); (ii) the manufacture,
processing, distribution, use, treatment, disposal, transportation
or handling of Hazardous Substances; or (iii) the investigation,
study, correction, cleanup, removal, remediation, or monitoring of
Hazardous Substances. The foregoing notwithstanding, in the case
of: (i) any remediation or other Cleanup of Hazardous Substances
for which Sellers are responsible and liable pursuant to Section
5.01(g) (including, but not limited to, the investigation, study,
correction, cleanup, removal and monitoring of such Hazardous
Substances), such remediation or Cleanup shall be conducted and
performed in accordance with remediation standards in effect up to
the time the remediation or Cleanup is completed; and (ii) any
claims or demands that are within the scope of Section 5.01(g)(iv),
Sellers shall be responsible and liable for such claims and demands
in accordance with, and as required by, all applicable
Environmental Laws without limitation to those Environmental Laws
in effect on the Effective Time.
"ENVIRONMENTAL NOTICE" shall have the meaning ascribed to such
term in Subsection 5.01(d).
"EPA" shall mean the United States Environmental Protection
Agency.
"EQUIPMENT" shall mean all equipment, tools, instruments,
machines, parts, materials, substances, systems, supplies, rolling
stock, furniture, catalysts and chemicals, communications systems
and licenses, vehicles, electronic systems and computers.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EXCLUDED ASSETS" shall mean the Accounts Receivable, the
Excluded Contracts and all assets of Sellers or Affiliates of
Sellers not associated with, related to or used in connection with
the Businesses, including without limitation (i) the Bluebell and
Altonah gas plants and related gathering systems located in Uintah
and Duchesne Counties, Utah, (ii) Sellers' airplane and hanger, and
(iii) the stock of Gary-Williams Acquisition Company, Gary-Williams
Retail Company and Gary-Williams Production Company. The term
"EXCLUDED ASSETS" shall also include (i) the computers, software
(other than the Refinery linear program in connection with which
Buyer agrees to pay the $5,000 assumption fee), trademarks, office
equipment and supplies and other fixed assets located in the
ordinary course of business in Sellers' office in Denver, Colorado,
(ii) all fixed assets located in the ordinary course of business in
Denver or Arapahoe Counties, Colorado, (iii) all sulfur credits
earned prior to the Effective Time, and (iv) the stock of BRC.
"EXCLUDED CONTRACTS" shall mean those contracts and agreements
listed in Schedule 1.01.2 which are excluded from the terms of this
Agreement and are being retained by Sellers.
"EXISTING ENVIRONMENTAL LIABILITIES" shall mean those
Environmental Liabilities disclosed in a writing of even date
herewith and executed by Buyer and Sellers.
"FACILITIES" shall mean all facilities, units, buildings,
structures, fixtures, terminals, pipelines, tanks and other storage
facilities and similar property used in the refining, processing,
treating, transporting or storage of crude oil and refined
products.
"FEEDSTOCK" shall mean crude oil, natural gas liquids and
other hydrocarbons processed by the Refinery.
"FINAL SETTLEMENT STATEMENT" shall have the meaning ascribed
to such term in Subsection 8.01(a).
"GII" shall mean Giant Industries, Inc., a Delaware
corporation, the direct parent of Buyer.
"HAZARDOUS SUBSTANCES" shall mean any hazardous substance,
extremely hazardous substance, hazardous material, hazardous waste,
toxic substance, pollutant, contaminant, hazardous waste
constituent, radioactive material, petroleum (including without
limitation crude oil or any fraction thereof), any variation of the
foregoing, or any other environmental contaminant.
"H-S-R ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
of the Federal Trade Commission under such act.
"INDEMNIFIED PARTY" shall have the meaning ascribed to such
term in Subsection 8.03(c).
"INDEMNIFYING PARTY" shall have the meaning ascribed to such
term in Subsection 8.03(c).
"INDEMNITY OBLIGATION" shall have the meaning ascribed to such
term in Subsection 8.03(c).
"INTANGIBLE PROPERTY" means patents, copyrights, proprietary
know-how and proprietary technology (but not Licenses thereof),
associated with, related to, or used in connection with the Assets
or the Businesses.
"INTERMEDIATE PRODUCTS" shall mean products that have been
purchased, partially processed or refined and placed in storage
pending blending or further processing in amounts and qualities
that have been historically stored and used in connection with the
Businesses.
"INVENTORY" shall mean readily marketable and saleable or
useable Feedstock, Refined Products and Intermediate Products,
including line fills, salable tank bottoms and work in process.
"LAWS" shall mean all laws, rules, regulations, ordinances and
orders of all federal, state, local and tribal governmental bodies,
authorities and agencies having jurisdiction over the Assets or the
Businesses, other than Environmental Laws.
"LICENSES" shall mean all licenses and other rights to use
proprietary materials, technology, processes and rights in
connection with the Assets and the Businesses.
"LOSS" shall mean any loss, cost, claim, damage, deficiency
and all expenses, including without limitation, attorneys' and
accountants' fees and disbursements.
"MATERIAL EFFECT" shall mean an adverse effect which, in the
reasonable judgment of a comparable industry third party purchasing
assets and businesses comparable to the Assets and Businesses,
would, alone or in the aggregate, cause such a third party not to
purchase the Assets for reasons other than changes or conditions in
the industry and in markets.
"NONTRANSFERABLE PERMITS AND LICENSES" shall mean those
Permits and Licenses which by their terms are not transferable, or,
if by their terms require consent or approval for transfer, such
consents or approvals are not obtained prior to Closing.
"OSHA REQUIREMENTS" shall have the meaning ascribed to such
term in Subsection 6.02(t).
"PERMITS" shall mean any and all permits, authorizations,
certificates, approvals, registrations, premanufacture
notifications or other approvals and licenses granted or required
by any federal, state, local or tribal governmental bodies,
authorities and agencies in connection with the Businesses or the
Assets.
"PERMITTED EXCEPTIONS" shall mean: (a) liens for taxes or
assessments not yet delinquent or, if delinquent, that are being
contested in good faith in the normal course of business; (b)
mechanic's, materialmen's, repairmen's, employees, contractor's,
operator's and similar liens or charges arising in the ordinary
course of business securing amounts not yet due and payable; (c)
easements, rights-of-way, servitudes, permits, surface leases and
other rights with respect to surface operations; pipelines,
grazing, canals, ditches, reservoirs or the like; conditions,
restrictive and protective covenants, common area maintenance
assessments or other similar restrictions and charges; mineral and
royalty reservations and conveyances; and easements for streets,
alleys, highways, pipelines, telephone lines, power lines, railways
and other easements and rights-of-way, on, over or in respect of
any of the Assets; provided in each case that such matters do not
and will not interfere materially with the ownership, operation or
use of the Assets or the Businesses as they are now operated or
used and as they have been operated or used on an historical basis,
nor result in a Material Effect; (d) other minor defects and
irregularities of title affecting the Assets that do not and will
not interfere materially with the ownership, operation or use of
the Assets or the Businesses as they are now owned, operated or
used or as they have been owned, operated or used on an historical
basis, nor result in a Material Effect; and (e) ordinary and
customary rights reserved to or vested in any federal, state, local
or tribal governmental authority to control or regulate the
Businesses or any of the Assets.
"PERSON" shall mean an individual, partnership, corporation,
governmental body, limited liability company, joint venture, trust
or an unincorporated organization or association or other legal
entity.
"PIPELINE" shall mean the crude oil pipeline commonly referred
to as the San Juan Pipeline and located in San Juan County, New
Mexico, and currently owned in part by Buyer and in part by GWEC;
the LPG pipeline connecting the Refinery to the MAPCO pipeline; and
any other pipelines in which Sellers or any Affiliate have an
interest and which are associated with, related to or used in
connection with the San Juan Pipeline, the LPG pipeline and the
Refinery.
"PIPELINE ASSETS" shall mean all of Sellers' and any
Affiliate's property, interests and rights in and to the real
property, personal property and other assets associated with,
related to, or used in connection with the Pipeline and the
Pipeline Business, including without limitation, all of Sellers'
and any Affiliate's property, interests and rights in and to the
Pipeline Real Property, the Pipeline Personal Property, the
Pipeline Inventory and the Pipeline Contracts.
"PIPELINE BUSINESS" shall mean Sellers' and any Affiliate's
business relating to the transportation of crude oil and LPGs
through the Pipeline.
"PIPELINE CONTRACTS" shall mean all Contracts associated with,
related to or used in connection with the Pipeline or the Pipeline
Business.
"PIPELINE EQUIPMENT" shall mean all Equipment associated with,
related to or used in connection with the Pipeline and the Pipeline
Business.
"PIPELINE FACILITIES" shall mean all Facilities associated
with, related to or used in connection with the Pipeline and the
Pipeline Business, including without limitation, all pipes,
pipelines, tanks and storage facilities, terminals, pumps and
pumping stations.
"PIPELINE INVENTORY" shall mean all Inventory owned by Sellers
or any Affiliate located at or stored on or in the Pipeline
Facilities as of the Effective Time.
"PIPELINE PERSONAL PROPERTY" shall mean the Pipeline Equipment
and all other tangible personal property (including any Pipeline
Facilities and fixtures that are personal property under state law,
but excluding Pipeline Inventory) associated with, related to or
used in connection with the Pipeline or the Pipeline Business.
"PIPELINE REAL PROPERTY" shall mean the real property
(including any Pipeline Facilities and fixtures that are real
property under state law) associated with, related to or used in
connection with the Pipeline, or the Pipeline Business, including
without limitation, all leases, easements, servitudes,
rights-of-way, mineral rights, water rights, appurtenant rights,
permits, licenses, franchises, grants, certificates and rights to
use the surface.
"PRELIMINARY AMOUNT" shall have the meaning ascribed to such
term in Subsection 6.03(d).
"PRELIMINARY SETTLEMENT STATEMENT" shall have the meaning
ascribed to such term in Subsection 6.03(d).
"PREPAID ITEMS" shall mean necessary goods and services to be
delivered to the Refinery in the ordinary course of business on or
after the Closing Date for which Seller has prepaid as reflected in
accordance with generally accepted accounting principles on the
books and records of Sellers and for which Buyer will receive the
proportionate benefit which at the date of this Agreement are
estimated by Sellers to be approximately $25,000.
"PROPERTY TAX PRORATION AMOUNT" shall have the meaning
ascribed to such term in Section 5.05.
"RCRA" shall mean the federal Resource Conservation and
Recovery Act.
"RECORDS" shall mean and include all originals and copies, in
whatever form, of agreements, documents, tapes, maps, manuals,
books, financial information, reports, engineering designs,
surveys, plans and specifications, title reports, test results,
files and other records in the possession or control of Sellers and
reasonably necessary or desirable for analyzing, owning, operating
and maintaining the Assets and the Businesses, excluding personnel
and other records that are subject to an obligation of
confidentiality or are not transferable under applicable agreements
with third parties or any applicable laws, rules, regulations or
orders.
"REFINED PRODUCTS" shall mean gasoline, diesel fuel, aviation
fuel, fuel oil and other refined products produced by the Refinery.
"REFINERY" shall mean the refinery known as the Bloomfield
Refinery.
"REFINERY ASSETS" shall mean all of Sellers' and any
Affiliate's property, interests and rights in and to the real
property, personal property, and other assets associated with,
related to or used in connection with the Refinery or the Refinery
Business, including without limitation, all of Sellers' and any
Affiliate's property, interests and rights in and to the Refinery
Real Property, the Refinery Personal Property, the Intangible
Property, the Refinery Inventory and the Refinery Contracts.
"REFINERY BUSINESS" shall mean Sellers' and any Affiliate's
business relating to the purchase, transportation, refinement,
processing and sale of Feedstock and Refined Products in the
Refinery's historical area of operation.
"REFINERY CONTRACTS" shall mean all Contracts associated with,
related to or used in connection with the Refinery or the Refinery
Business.
"REFINERY EQUIPMENT" shall mean all Equipment associated with,
related to or used in connection with the Refinery or the Refinery
Business.
"REFINERY FACILITIES" shall mean all Facilities associated
with, related to or used in connection with the Refinery or the
Refinery Business, including without limitation, the processing
units, shipping facilities and terminals described on Schedule
1.01.3.
"REFINERY INVENTORY" shall mean all Inventory owned by Sellers
or any Affiliate located at or stored on or in the Refinery
Facilities as of the Effective Time.
"REFINERY PERSONAL PROPERTY" shall mean the Refinery Equipment
and all other tangible personal property (including any Refinery
Facilities and fixtures that are personal property under state law,
but excluding Refinery Inventory) associated with, related to, or
used in connection with the Refinery or the Refinery Business.
"REFINERY REAL PROPERTY" shall mean the Refinery Site and the
other real property (including any Refinery Facilities and fixtures
that are real property under state law) associated with, related
to, or used in connection with the Refinery or the Refinery
Business, including without limitation, all leases, easements,
servitudes, rights-of-way, mineral rights, water rights,
appurtenant rights, permits, licenses, franchises, grants,
certificates and other rights to use the surface.
"REFINERY SITE" shall mean the real property on which the
Refinery is located as more specifically described on Schedule
1.01.4.
"REFINERY SITE ENCUMBRANCES" shall mean the liens, charges,
encumbrances, contracts, agreements, instruments, obligations,
defects and irregularities affecting the Refinery Site as listed on
Schedule 1.01.5.
"TRANSFERABLE PERMITS AND LICENSES" shall mean those Permits
and Licenses which by their terms are transferable, or, if by their
terms require consent or approval for transfer, such consent or
approval is obtained prior to Closing.
"TRANSFER DOCUMENTS" shall have the meaning ascribed to such
term in Subsection 7.03(a).
"TRANSFER TAXES" shall have the meaning ascribed to such term
in Section 5.04.
1.02 EXHIBITS AND SCHEDULES. All Exhibits and Schedules
referred to in this Agreement have been separately bound and
initialed by the duly authorized officers of Buyer and Sellers.
All of such Exhibits and Schedules are hereby incorporated in this
Agreement by reference and constitute a part of this Agreement.
Each party to this Agreement and its counsel has received a
complete set of the Exhibits and Schedules prior to and as of the
execution of this Agreement.
1.03 REFERENCES AND TITLES. All references in this Agreement
to Exhibits, Schedules, Articles, Sections, Subsections, and other
subdivisions refer to the Exhibits, Schedules, Articles, Sections,
Subsections and other subdivisions of this Agreement unless
expressly provided otherwise. Titles and headings appearing at the
beginning of any subdivision are for convenience only and do not
constitute a part of any such subdivision and shall be disregarded
in construing the language contained in this Agreement. The words
"this Agreement," "herein," "hereof," "hereby," "hereunder" and
words of similar import refer to this Agreement as a whole and not
to any particular subdivision unless expressly so limited. The
phrases "this Article," "this Section" and "this Subsection" and
similar phrases refer only to the Articles, Sections or Subsections
hereof in which the phrase occurs. The word "or" is not exclusive.
Pronouns in masculine, feminine and neuter gender shall be
construed to include any other gender. Words in the singular form
shall be construed to include the plural and words in the plural
form shall be construed to include the singular, unless the context
otherwise requires. The words "operated as they have been operated
on an historical basis" and words of similar import shall include
physical operation, financial results of operation and all other
aspects of operation, but shall not include changes or conditions
affecting the industry or markets.
ARTICLE II
PURCHASE AND SALE
2.01 PURCHASE AND SALE. Sellers agree to sell and transfer
to Buyer, and Buyer agrees to purchase and accept delivery of, the
Assets, subject to the terms and conditions of this Agreement.
2.02 EFFECTIVE. The purchase and sale of the Assets shall be
effective for all purposes as of the Effective Time.
2.03 PURCHASE PRICE. The consideration to be paid by Buyer
to Sellers for the Assets shall be: (i) the Base Purchase Price as
adjusted pursuant to Section 2.05; plus (ii) the Earnout if and
when earned.
2.04 ALLOCATION OF PURCHASE PRICE. The purchase price shall
be allocated among the Assets and among Sellers as set forth in
Schedule 2.04. Buyer and Sellers shall not take any position on
their respective income tax returns or financial statements that is
inconsistent with the allocation of the purchase price as set forth
in Schedule 2.04, and Buyer and Sellers shall duly prepare and
timely file such reports and information returns as may be required
under Section 1060 of the Code to report the allocation of the
purchase price among the Assets in a manner consistent with
Schedule 2.04.
2.05 ADJUSTMENTS TO BASE PURCHASE PRICE. The Base Purchase
Price shall be adjusted upward by the value of the Refinery
Inventory and the Pipeline Inventory as of the Effective Time, and
the cost of any Prepaid Items (apportioned as of the Effective
Time). The value of Inventory shall be determined: (a) for
Feedstock, using weighted average laid-in prices as of the
Effective Time; (b) for Refined Products, using Bloomfield O.P.I.S.
average product prices as of the Effective Time less a discount
equal to the difference between the prior calendar month O.P.I.S.
average product prices and the realized netbacks for those products
for the prior calendar month (Refined Products prices not reported
in O.P.I.S. shall be the fair market value thereof); (c) for
Intermediate Products (other than blend stocks) using the prices
for Refined Products for the refined components to be produced from
the Intermediate Products less $.03 per gallon; and (d) for blend
stocks, using the weighted average laid-in price as of the
Effective Time. Work in process (estimated to be no more than
1,000 barrels) shall be transferred without additional
consideration as part of the Base Purchase Price. The cost of
Prepaid Items shall be the amount Sellers actually paid in good
faith in arm's length transactions for such Prepaid Items. The
Base Purchase Price shall also be adjusted upward by the Capital
Projects Costs, and downward by the Property Tax Proration Amount.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF SELLER. Sellers
represent and warrant to Buyer as follows:
(a) ORGANIZATION. Sellers are corporations duly
organized, validly existing and in good standing under the laws of
the State of Delaware, and Sellers are duly qualified to carry on
their business in the State of New Mexico.
(b) POWER AND AUTHORITY. Sellers have all requisite
power and authority to carry on their business as presently
conducted, to enter into this Agreement, to sell the Assets on the
terms described in this Agreement, and to perform their obligations
under this Agreement. The consummation of the transactions
provided for in this Agreement will not violate, nor be in conflict
with, any provision of either Seller's charter, bylaws or governing
documents, or any agreement or instrument to which either Seller is
a party or is bound, or any judgment, decree, order, statute, rule
or regulation applicable to either Seller.
(c) AUTHORIZATION. The execution, delivery and
performance of this Agreement and the transactions provided for
herein have been duly and validly authorized by all requisite
action on the part of Sellers and, if necessary, Sellers'
shareholders.
(d) BINDING OBLIGATIONS. This Agreement has been duly
executed and delivered on behalf of Sellers, and at the Closing all
documents and instruments required hereunder to be executed and
delivered by Sellers shall have been duly executed and delivered.
This Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of Sellers,
enforceable against Sellers in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws relating to
or affecting the enforcement of creditors' rights generally and to
general principles of equity.
(e) TAXES. All taxes, including without limitation all
ad valorem, property, excise, sales, use, assessments, special
assessments, pipeline, windfall profit, severance, payroll,
employment, unemployment compensation and other governmental
charges and assessments (together with any and all interest and
penalties) that would result in a lien on the Assets or otherwise
affect title thereto or that Buyer (as the owner of the Assets and
Businesses after the Effective Time) would be responsible for after
the Effective Time that have become due and payable have been
properly and timely withheld, collected, deposited, and paid prior
to becoming delinquent, or are being contested in good faith in the
normal course of business. All such taxes which are being so
contested are described on Schedule 3.01(e), and Sellers shall
continue to be responsible therefor.
(f) BROKER'S AND FINDER'S FEES. Sellers have incurred
no liability, contingent or otherwise, for brokers' or finders'
fees relating to the transactions provided for in this Agreement
for which Buyer shall have any responsibility whatsoever.
(g) LITIGATION. Except for pending or threatened
litigation expressly described as Existing Environmental
Liabilities and those matters listed on Schedule 3.01(g), no suit,
action, investigation, material dispute or other proceeding is
pending or, to the best of Sellers' knowledge, threatened before
any court, arbitrator, or governmental agency that, if determined
adversely would result in any of the following: (i) a Material
Effect, (ii) impairment or loss of title to any portion of the
Assets or the value thereof or of the Businesses in any material
respect, or (iii) any prohibition, restriction, limitation, or
other matter that would affect the use, operation or enjoyment of
the Assets and the Businesses in any material respect.
(h) COMPLIANCE WITH LAWS. Except as disclosed in a
writing of even date herewith and executed by Buyer and Sellers,
all Laws relating to the Assets, the Businesses or the ownership
and operation thereof as they are now operated and as they have
been operated on an historical basis have been complied with in all
material respects.
(i) NON-FOREIGN PERSON. Neither Seller is a
non-resident alien, foreign corporation, foreign partnership,
foreign trust or foreign estate (as those terms are defined in the
Code).
(j) CAPITAL PROJECTS. Schedule 3.01(j) contains a
listing of all material capital projects (the "CAPITAL PROJECTS")
being conducted or proposed (i.e., budgeted or approved) to be
conducted in relation to the Assets or the Businesses (other than
scheduled turnarounds), together with the estimated costs thereof
and the estimated cost remaining to be paid for completion.
(k) COLLECTIVE BARGAINING AGREEMENTS. Schedule 3.01(k)
sets forth all collective bargaining agreements to which Sellers
are parties or are bound and relating to the Businesses, and all
long term employment contracts relating to employees who may become
Buyer's Employees. During the past year Sellers have not been
advised of any threatened strikes, slow downs, work stoppages,
representation questions, material grievances or similar labor
activities relating to the Businesses. The consummation of the
transactions provided for in this Agreement does not violate any
collective bargaining agreement with or for the benefit of any
employee of Sellers, and shall not result in a material violation
of any Laws relating to employment obligations of Sellers.
(l) WATER RIGHTS. Schedule 3.01(l) sets forth a
description of the water and water rights used by Sellers in
connection with the Assets and the Businesses.
(m) FINANCIAL STATEMENTS. Schedule 3.01(m) sets forth
(i) audited financial statements as of the close of BRC's fiscal
years ended December 31, 1990, 1991, 1992, 1993 and 1994, (ii)
unaudited financial statements for 1995 as of March 31, and (iii)
profit and loss statements for April and May of 1995. These
financial statements, together with the notes thereto, and the
profit and loss statements are complete and correct in all material
respects and present fairly the financial position and the results
of operations of BRC as of the dates and for the periods indicated.
The financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis. Since March 31, 1995, there has not been any change in
operations, assets or business which would have a Material Effect.
(n) SUMMARY OF OPERATIONS. Schedule 3.01(n) sets forth
a financial summary of operations of the Businesses for the periods
indicated prepared from the books and records of the Sellers. Such
financial summary (taking into consideration all notes and
explanations contained therein and exclusions for transportation
and marketing personnel that overlap with Buyer's transportation
and marketing personnel) fairly represents the results of
operations for the periods indicated in all material respects.
Since the last period indicated in such financial summary, there
has not been any change in the Assets or the Businesses or the
operations thereof which would have a Material Effect.
(o) CLAIMS AGAINST TITLE. To the best knowledge of
Sellers, subject to Permitted Exceptions and the Refinery Site
Encumbrances, no claim or demand has been made or asserted
challenging Sellers' title, ownership use or operation of the
Refinery Assets or the Pipeline Assets.
(p) NECESSARY ASSETS. Except for the Excluded Assets
and water rights, the Refinery Assets and the Pipeline Assets
include all tangible property necessary for owning and operating
the Refinery, Sellers' interest in the Pipeline, and the Businesses
as they are currently being operated and as they have been operated
on an historical basis.
3.02 REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer
represents and warrants to Sellers as follows:
(a) ORGANIZATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Arizona, and Buyer is duly qualified to carry on its
business in the State of New Mexico.
(b) POWER AND AUTHORITY. Buyer has all requisite power
and authority to carry on its business as presently conducted, to
enter into this Agreement, to purchase the Assets on the terms
described in this Agreement and to perform its other obligations
under this Agreement. The consummation of the transactions
provided for in this Agreement will not violate, nor be in conflict
with, any provision of Buyer's charter, bylaws or governing
documents, or any agreement or instrument to which Buyer is a party
or is bound, or any judgment, decree, order, statute, rule or
regulation applicable to Buyer.
(c) DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement and the transactions provided for
herein have been duly and validly authorized by all requisite
action on the part of Buyer.
(d) BINDING OBLIGATIONS. This Agreement has been duly
executed and delivered on behalf of Buyer, and at the Closing all
documents and instruments required hereunder to be executed and
delivered by Buyer shall have been duly executed and delivered.
This Agreement does, and such documents and instruments shall,
constitute legal, valid and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms, subject
to applicable bankruptcy, insolvency and similar laws relating to
or affecting the enforcement of creditors' rights generally and to
general principles of equity.
(e) QUALIFIED. Buyer is duly qualified to own, hold
and operate assets customary in the industry for the Businesses,
including without limitation all industry typical leases,
easements, rights-of-way and other agreements covering, affecting
or otherwise relating to federal, state and tribal lands.
(f) BROKER'S AND FINDER'S FEES. Buyer has incurred no
liability, contingent or otherwise, for brokers' or finders' fees
relating to the transactions provided for in this Agreement for
which Sellers shall have any responsibility whatsoever.
(g) ACCEPTANCE OF CERTAIN PERMITS, LICENSES AND
CONTRACTS. Notwithstanding anything contained herein to the
contrary, Buyer has received copies of the Permits, Licenses,
Contracts and other documents listed on Schedule 3.02(g), and
copies of the Refinery Site Encumbrances; and Buyer acknowledges
that such items do not result in a Material Effect and are
otherwise acceptable to Buyer, and Buyer shall not assert a failure
of a condition to Closing as a result of the terms and provisions
of such items. Provided the foregoing shall not prohibit Buyer
from raising the condition in Subsection 6.02(p), except for fees,
costs and expenses specifically enumerated in such items.
ARTICLE IV
COVENANTS
4.01 COVENANTS OF SELLERS. From the date hereof through the
Closing Date, Sellers covenant and agree with Buyer as follows:
(a) ACCESS TO INFORMATION. In order to assist Buyer in
Buyer's due diligence review as provided in Section 5.07 and
Buyer's review of the accuracy of Sellers' representations and
warranties, Sellers shall permit Buyer and its authorized
employees, agents, consultants, accountants, and legal counsel
access, at Buyer's sole expense, risk and cost, during normal
business hours, to the Records and the Assets and will furnish
Buyer with such additional financial and operating data and other
information pertaining to the Businesses as Buyer may reasonably
request to the extent that such access and disclosure would not
violate the terms of any agreement to which Sellers are bound or
any applicable law, rule, regulation or order; provided, however,
that the confidentiality of any data or information to which Buyer
is given access shall be maintained by Buyer and its
representatives (including employees, agents, consultants,
accountants and legal counsel) in accordance with the
Confidentiality Agreement, and Buyer shall be liable for any
disclosure or use in violation thereof. Sellers shall promptly
provide Buyer with a listing of any such matters withheld pursuant
to the provisions of this Section.
(b) CERTAIN CHANGES. Except as contemplated in this
Agreement, Sellers will not, without first obtaining the consent of
Buyer (which consent will not be unreasonably withheld): (i) make
any change in the nature of the Businesses or carry on the
Businesses other than in the ordinary course; (ii) enter into or
amend in any material respect any Contract other than in the
ordinary course of business; (iii) refrain from using its Best
Efforts to maintain all qualifications of Sellers which are
required for them to carry on the Businesses; (iv) sell or
otherwise transfer or encumber (other than liens and security
interests to be released at Closing) title to any of the Assets,
other than Inventory in the ordinary course of business and
personal property that is replaced by equivalent property or
consumed in the normal operation of the Refinery or the Pipeline;
(v) except to the extent otherwise required by applicable legal
requirements, fail to maintain their books and records in the
usual, regular and ordinary manner and consistent with past
practices; or (vi) commit itself to do any of the foregoing.
(c) MAINTENANCE OF ASSETS. Sellers shall cause the
Assets to be maintained and operated in a good and workmanlike
manner consistent with past practices and industry standards, shall
maintain insurance now in force with respect to the Assets and
shall pay or cause to be paid all costs and expenses incurred in
connection therewith.
(d) OPERATION OF BUSINESSES AND MAINTENANCE OF
INVENTORY. Sellers shall carry on the Businesses in substantially
the same manner as Sellers have heretofore and shall not introduce
any new method of management, operation or accounting with respect
to the Businesses. Sellers shall use reasonable efforts to
maintain the customers, good will and reputation of the Businesses,
and shall maintain Inventory, supplies and spare parts in the
ordinary course of business consistent with past practice in
amounts reasonably sufficient to allow Buyer to continue operations
of the Assets in the ordinary course immediately after the Closing.
(e) COMPLIANCE WITH LAWS. All Laws relating to the
Assets and the Businesses shall be complied with in all material
respects.
(f) BEST EFFORTS. Subject to Sellers' rights
hereunder, Sellers shall use their Best Efforts to take or cause to
be taken all such actions as may be necessary or advisable to
consummate and make effective the sale of the Assets and the
transactions provided for in this Agreement and to assure that as
of the Closing Date they will not be under any material corporate,
legal or contractual restriction that would prohibit or delay the
timely consummation of such transactions; and Sellers will use
their Best Efforts to obtain the satisfaction of the conditions to
Closing set forth in Section 6.02 hereof.
(g) H-S-R ACT FILING. As soon as practicable after the
date hereof, but in no event later than five Business Days after
the date hereof, Sellers shall submit all necessary filings for
Sellers in connection with the transactions provided for in this
Agreement under the H-S-R Act.
(h) TRANSFER OF PERMITS AND LICENSES AND CONTRACTS.
Sellers shall use their Best Efforts to have all Transferable
Permits and Licenses transferred to Buyer at the Closing, and shall
assist Buyer in obtaining replacement or substitute Permits and
Licenses for the Nontransferable Permits and Licenses. Sellers
shall use their Best Efforts to have the Contracts transferred to
Buyer at the Closing; and shall assist Buyer in obtaining
replacement or substitute contracts and agreements for the
contracts and agreements (other than those included within the
Excluded Contracts) which would be Contracts except that such
contracts and agreements are not transferrable.
(i) CONTRACTS. On or before ten days after the date of
this Agreement, Sellers shall provide Buyer with a list (and copies
of) of all material Contracts, all Contracts with Affiliates, and
any Contracts that do not expire within 180-days of the date hereof
or cannot be terminated or canceled on 180-days or less notice.
Such list shall also separately list all material contracts which
would be Contracts except that Sellers believe such contracts to be
not transferable.
(j) PERMITS AND LICENSES; INTANGIBLE PROPERTY. On or
before ten days after the date of this Agreement, Sellers shall
provide Buyer with a list (and copies of) all material Permits and
Licenses and all Intangible Property.
(k) NON-TRANSFERABLE RECORDS. As soon as practical
after the date of this Agreement, Sellers shall provide Buyer with
a list of the Records, if any, that are not transferrable under
applicable agreements with third parties or any applicable law,
rule, regulation or order.
(l) INFORMATION FOR SEC FILINGS. Sellers shall provide
all information in their possession or control reasonably required
for Buyer to make any securities filings in connection with the
transaction provided for in this Agreement, including but not
limited to audited financial statements and unaudited summarized
data as may be required by the rules and regulations of the
Securities and Exchange Commission; provided, however, all
reasonable costs and expenses incurred by Sellers in connection
therewith shall be borne and paid by Buyer. Notwithstanding the
foregoing, Sellers shall not be required to provide any such
information if in doing so it would require Sellers to incur
unreasonable costs and expenses unless Buyer agrees to reimburse
Sellers for such added costs and expenses.
(m) NOTICES. Sellers shall promptly notify Buyer in
writing of: (a) all events, circumstances, facts and occurrences
known to Sellers which would result in a breach of a representation
or warranty or covenant of the Sellers; (b) all other material
developments known to Sellers affecting the Assets and the
Businesses which would have a Material Effect; and (c) receipt of a
notice from a third party that would cause one of the conditions in
Section 6.02 not to be met.
4.02 COVENANTS OF BUYER. From the date hereof through the
Closing, Buyer covenants and agrees with Sellers as follows:
(a) BEST EFFORTS. Subject to Buyer's rights hereunder,
Buyer shall use its Best Efforts to take or cause to be taken all
such actions as may be necessary or advisable to consummate and
make effective the purchase of the Assets and the transactions
provided for in this Agreement and to assure that as of the Closing
Date it will not be under any material corporate, legal or
contractual restriction that would prohibit or delay the timely
consummation of such transactions; and Buyer will use its Best
Efforts to obtain the satisfaction of the conditions to Closing set
forth in Section 6.01.
(b) H-S-R ACT. As soon as practicable after the date
hereof, but in no event later than five Business Days after the
date hereof, Buyer shall submit all necessary filings for Buyer in
connection with the transactions provided for in this Agreement
under the H-S-R Act.
(c) FINANCIAL COMMITMENTS. Subject to Buyer's rights
hereunder, Buyer shall obtain all necessary bonds, insurance,
guaranties, letters of credit and similar financial commitments in
connection with (i) the transfer of the Transferrable Permits and
Licenses, (ii) obtaining replacement or substitute Permits and
Licenses for the Nontransferable Permits and Licenses, (iii) the
transfer of the Contracts, and (iv) obtaining replacement or
substitute contracts and agreements (other than those within the
Excluded Contracts) which would be Contracts except that such
contracts and agreements are not transferable.
(d) TRANSFER OF PERMITS AND LICENSES AND CONTRACTS.
Buyer shall use its Best Efforts to obtain replacement or
substitute Permits and Licenses for the Nontransferable Permits and
Licenses; and shall assist Sellers in having the Transferable
Permits and Licenses transferred to Buyer at the Closing. Buyer
shall use its best efforts to obtain replacement or substitute
contracts and agreements for the contracts and agreements (other
than those included within the Excluded Contracts) which would be
Contracts except that such contracts and agreements are not
transferrable; and shall assist Sellers in having the Contracts
transferred to Buyer at the Closing.
ARTICLE V
CERTAIN PROCEDURES
5.01 ENVIRONMENTAL MATTERS.
(a) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except for the
Existing Environmental Liabilities, to the best knowledge of
Sellers the Assets, the Businesses and the ownership and operation
thereof as they are currently being owned and operated and as they
have been owned and operated on an historical basis and all Refined
Products produced thereby are in compliance with all Environmental
Laws, the failure of which compliance could have a Material Effect.
(b) ACCESS FOR INSPECTION. From the date hereof until
the Effective Time, Buyer shall have the right to make an
environmental assessment of the Assets at Buyer's sole risk and
expense in compliance with the terms and conditions described in
this Section ("ENVIRONMENTAL INVESTIGATION"). Sellers agree to
cooperate with reasonable requests by Buyer and its agents in
connection with the Environmental Investigation.
(c) ENVIRONMENTAL INVESTIGATION. If Buyer exercises
its right pursuant to Subsection 5.01(b) to make an Environmental
Investigation of the Assets, Buyer and its agents shall have the
right, subject to compliance with the provisions of this Section,
to enter upon the Assets and all structures and improvements
thereon, inspect the same, conduct soil and water tests and
borings, and conduct such other tests, examinations, investigations
and studies as may be necessary or appropriate in Buyer's
reasonable judgment for the preparation of appropriate engineering
and other reports relating to the Assets, their condition, and the
presence thereon of any Hazardous Substances. Buyer shall give
Sellers at least two Business Days' notice prior to conducting any
such test, which notice shall set forth with specificity the
procedures to be used; and Sellers shall be entitled to be present
during any such tests and shall be entitled to conduct their own
tests, including tests using split samples. Buyer shall exercise
all due diligence in safeguarding and maintaining as confidential
all data or information acquired during its Environmental
Investigation, and all such data and information shall be subject
to the terms of the Confidentiality Agreement. If Buyer or its
agents prepares any report documenting any Environmental
Investigation, Buyer shall furnish copies thereof to Sellers, and
Sellers shall exercise all due diligence in safeguarding and
maintaining any such report as confidential. Buyer waives and
releases all claims and demands against Sellers, their respective
directors, officers, shareholders, employees and agents for injury
to or death of persons or damage to property arising in any way
from any Environmental Investigation, except to the extent such
claims are caused by the negligence or willful misconduct of
Sellers, or their directors, officers, shareholders, employees and
agents in connection with such Environmental Investigation. Buyer
and Sellers have executed a letter relating to any Environmental
Investigation in the form of Exhibit A (the "COMMON UNDERTAKING
LETTER"), the provisions of which shall survive the execution of
this Agreement.
(d) ENVIRONMENTAL NOTICE; LOSSES. If Buyer determines
reasonably and in good faith that any portion of the Assets or the
Businesses is adversely affected by Environmental Liabilities other
than (i) Existing Environmental Liabilities, (ii) Environmental
Liabilities attributable to the actions or omissions of Buyer in
conducting the Environmental Investigation and (iii) Environmental
Liabilities related to the Pipeline Assets of which Buyer had
knowledge prior to the date of this Agreement as a result of its
prior ownership interest in the Pipeline Assets, Buyer shall give
Sellers one or more notices (an "ENVIRONMENTAL NOTICE") thereof on
or before the Effective Time, if the Environmental Liabilities are
discovered prior to the Effective Time, or on or before one year
after the Effective Time if the Environmental Liabilities are
discovered after the Effective Time. Buyer shall provide Sellers
with a copy of any report or reports of the results of the
Environmental Investigation and shall disclose to Sellers the
discovery of any Hazardous Substance or other matter that could
result in Environmental Liabilities. Sellers shall exercise all
due diligence in safeguarding and maintaining as confidential any
such reports, the Environmental Notice, and any information
relating to the discovery of any Hazardous Substance or any other
matter that could result in Environmental Liabilities. The
Environmental Notice shall describe such matters and include copies
of reports, tests, photographs and other documentary evidence
supporting the position that an Environmental Liability exists.
With respect to Environmental Notices received on or before the
Closing, Sellers shall either: (i) terminate this Agreement if
allowed by Section 5.01(f); or (ii) give written notice to Buyer
that it will remain responsible and liable for the Environmental
Liabilities identified in the Environmental Notice.
(e) CLEANUP. From and after the Closing, Sellers and
their agents shall have the right, subject to compliance with the
provisions of this Section, to enter upon the Assets for the
purpose of conducting any remediation or restoration ("CLEANUP")
required to remedy any Environmental Liabilities for which Sellers
remain responsible and liable after the Closing pursuant to Section
5.01(g). Sellers shall give Buyer at least two Business Days'
notice prior to visits or for activities that will not affect the
normal operation of the Assets. Sellers shall give Buyer at least
ten Business Days' notice of activities that will affect normal
operation. Sellers shall not, to the extent reasonably possible,
interfere with Buyer's use or operation of the Assets, or the
conduct of the Businesses, in conducting any Cleanup. Sellers
agree to use their best efforts to complete any Cleanup in a timely
manner. For purposes of all applicable Laws, Sellers shall be
considered the "generator" of any Hazardous Substances generated
during any Cleanup conducted by Sellers, and Sellers shall own any
Hazardous Substances, including any water, soil and other media
contaminated with Hazardous Substances, that is treated, stored or
disposed of in connection with Sellers' Cleanup activities. If
Sellers or their agents prepare any reports in connection with a
Cleanup, Sellers shall furnish copies thereof to Buyer, and Buyer
shall exercise all due diligence in safeguarding and maintaining
any such report as confidential in accordance with the
Confidentiality Agreement. Sellers waive and release all claims
and demands against Buyer, its directors, officers, shareholders,
employees and agents for injury to or death of persons or damage to
property arising in any way from a Cleanup, except to the extent
such claims are caused by the negligence or willful misconduct of
Buyer, its directors, officers, employees and agents.
(f) TERMINATION OF AGREEMENT. If the Loss reasonably
expected to be incurred in connection with one or more of the
Environmental Liabilities identified in one or more Environmental
Notices received prior to Closing in the aggregate is greater than
five percent of the Base Purchase Price, Sellers or Buyer may
terminate this Agreement without liability to either party.
(g) ENVIRONMENTAL LIABILITIES RETAINED BY SELLER.
Sellers expressly retain responsibility and liability for and agree
to pay, perform, fulfill and discharge the following Environmental
Liabilities:
(i) all Environmental Liabilities existing with
regard to the Assets or the Businesses that are known to Sellers on
the date of this Agreement and that are not disclosed in a writing
of even date herewith executed by Buyer and Sellers;
(ii) all Environmental Liabilities that are
identified in one or more Environmental Notices delivered to
Sellers on or before Closing (if the Environmental Liabilities are
discovered prior to that date) or on or before one year after the
Closing (if the Environmental Liabilities are discovered after the
Closing but before one year after Closing);
(iii) all Environmental Liabilities arising from or
in connection with claims made by third parties (other than claims
made by governmental entities requiring or requesting that Sellers
or Buyer clean up, remove or otherwise remediate any Hazardous
Substance) at any time, whether before or after the Effective Time,
arising out of or in connection with operations or other activities
conducted by such third parties on or associated with the Assets,
or the presence of such third parties on the Assets, prior to the
Effective Time and during the period of Sellers' or an Affiliate's
ownership or operation of the Assets;
(iv) all Environmental Liabilities arising from or
in connection with any claims or demands made at any time, whether
before or after the Effective Time, arising out of or in connection
with any Hazardous Substances that were transported off of the
Assets prior to the Effective Time by Sellers, an Affiliate or
their agents for purposes of treatment, storage or disposal;
(v) all Environmental Liabilities arising from or
in connection with claims made by third parties ( including
governmental entities) within two years after the Effective Time
arising out of or in connection with any discharge or other release
of Hazardous Substances off of the Assets prior to the Effective
Time, or the migration off of the Assets of Hazardous Substances
that were discharged or otherwise released on the Assets prior to
the Effective Time;
(vi) all Environmental Liabilities arising from or
in connection with tort claims for injury to human health made by
third parties (other than claims made by governmental entities
requiring or requesting that Sellers or Buyer clean up, remove or
otherwise remediate any Hazardous Substance) at any time, whether
before or after the Effective Time, arising out of or in connection
with the presence in the air, in groundwater used for drinking
purposes, or in the San Juan River of Hazardous Substances
discharged or otherwise released off of the Assets prior to the
Effective Time, or Hazardous Substances that were discharged or
otherwise released on the Assets prior to the Effective Time and
have migrated off of the Assets; and
(vii) all fines, penalties and related assessments
for Environmental Liabilities assessed or imposed by governmental
entities relating to, arising out of or pertaining to the Assets,
the Businesses or the ownership or operation thereof, but only to
the extent such fines, penalties and assessments pertain to the
period of Sellers' or Affiliate's ownership or operation of the
Assets.
Environmental Liabilities retained by Sellers in this
Section 5.01(g) shall not include (w) any Environmental Liabilities
known to Buyer prior to the Effective Time that are not disclosed
to Sellers by an Environmental Notice given prior to Closing and
(x) any Environmental Liabilities for which Buyer has liability
prior to the Effective Time by virtue of its existing ownership
interest in the Pipeline Assets, but only to the extent of such
ownership interest. Environmental Liabilities retained by Sellers
in this Section 5.01(g) also shall not include Environmental
Liabilities that result either from (y) cleanup or other remedial
actions taken by Buyer voluntarily prior to demand therefor by a
third party including any governmental entity, or (z) notices given
by Buyer to any third party of facts or circumstances concerning
the Assets that could provide the basis for Environmental
Liabilities, except notices requested or required by a governmental
entity or required by any Law or Environmental Law.
(h) ENVIRONMENTAL LIABILITIES ASSUMED BY BUYER. Except
for the Environmental Liabilities retained by Sellers pursuant to
Section 5.01(g), upon Closing Buyer shall assume and agree to pay,
perform, fulfill and discharge all Environmental Liabilities
arising before, as of or after the Effective Time for which Sellers
would otherwise have responsibility (including those Environmental
Liabilities relating to the Assets and contractually assumed by
Sellers from predecessors in interest to the Assets, but not
including those Environmental Liabilities, if any, contractually
assumed from other third parties, unless such Environmental
Liabilities contractually assumed from other third parties are
described in the Existing Environmental Liabilities or the
documents incorporated by reference therein), including without
limitation the Existing Environmental Liabilities, Environmental
Liabilities for remediation or cleanup on the Assets required by
any governmental entity to remove sources of Hazardous Substances
giving rise to tort claims described in Section 5.01(g)(v) and
(vi), and all Environmental Liabilities not expressly retained by
Seller pursuant to Section 5.01(g) or referred to in the
parenthetical in this Subsection 5.01(h).
5.02 PERSONNEL, EMPLOYMENT ARRANGEMENTS AND EMPLOYEE
BENEFITS.
(a) OFFERS OF EMPLOYMENT. Except for those employees
of BRC listed on Schedule 5.02(a), Buyer shall offer employment to
all hourly or salaried active, full time employees of BRC employed
in connection with the Businesses. The employees who accept offers
of employment by Buyer shall be referred to as "BUYER'S EMPLOYEES."
As soon as practicable after the date hereof, Sellers shall provide
Buyer with information as to the titles and current salaries with
respect to such employees, and Buyer and Sellers shall cooperate in
all aspects in effecting their change of employment as of the
Closing Date in an orderly fashion.
(b) BENEFITS.
(i) SELLERS' UNION DEFINED BENEFITS AND 401(K)
SAVINGS PLANS. Buyer shall have no liability whatsoever to the
Buyer's Employees or to Sellers with respect to accrued pension
benefits or any other benefits payable to such Buyer's Employees
under the Bloomfield Refining Company Union Employee's Defined
Benefits and 401(k) Savings Plans, and Sellers warrant there are no
and have not been any multiemployer plans within the meaning of
Section 4001(a)(3) of ERISA.
(ii) SELLERS' NON-UNION RETIREMENT PLAN. Buyer
shall have no liability whatsoever to the Buyer's Employees or to
Sellers with respect to any benefits payable to such Buyer's
Employees under the non-union Gary Tax Advantaged Savings Program
and Profit Sharing Plan.
(iii) UNUSED VACATION. Sellers will pay out
directly to each Buyer's Employee any accrued unused vacation time
as of the Closing Date.
(iv) ONGOING BENEFITS. Except as provided in any
contract between Buyer and any labor organization in connection
with any Buyer's Employees, all Buyer's Employees shall receive
from Buyer substantially the same employee benefits as Buyer's
current employees are receiving, including health, disability and
other insurance, retirement accounts and vacation and sick leave,
with no waiting period for comparable benefits, and with credit for
years of service to Sellers for vesting purposes, in each case to
the extent permitted by Buyer's existing plans and programs.
(v) SELLERS' RESPONSIBILITY FOR EXISTING BENEFITS.
Buyer shall not be liable for any salaries, wages, commissions,
vacation and/or sick leave pay or other compensation or benefits
due Sellers' employees prior to the Effective Time, including, but
not limited to, any withdrawal liability imposed under ERISA as the
result of the cessation of any of Sellers' obligations to
contribute to any plan subject to ERISA. Sellers shall remain
liable for and pay all amounts due their employees under any
pension, vacation, 401(k) savings, profit sharing, retirement,
severance, bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, medical, dental, life insurance,
supplemental retirement or other benefit plans, programs, or
arrangements (including any such plans, programs or arrangements
contained in any employment or collective bargaining contract or
agreement). Sellers agree to remain solely responsible and liable
for any claims or demands made by their employees arising or
resulting from facts or circumstances occurring during their
employment by Sellers. Sellers hereby agree to indemnify, save and
hold harmless Buyer for, from and against any and all Loss
associated in any way with the matters set forth in this Section
5.02(b).
(c) COOPERATION OF THE PARTIES. Sellers and Buyer
agree to fully cooperate with respect to each of the calculations
necessary to effect the transactions contemplated by this Section.
(d) EMPLOYEE RIGHTS. Nothing herein expressed or
implied shall confer upon any employee of Sellers, any Buyer's
Employee or any other employee or legal representatives thereof any
rights or remedies, including any right to employment, or continued
employment for any specified period, of any nature or kind
whatsoever under or by reason of this Agreement.
(e) COBRA AND HEALTH CLAIM DATA. Sellers shall provide
all notices and fulfill all of their obligations, if any, under
Section 4980B(f)(6) of the Code with respect to the Buyer's
Employees. Prior to Closing, Sellers shall provide Buyer
information with respect to all accident, workers' compensation and
disability claims filed by each of Sellers' employees (including
information respecting the total number of claims filed, the total
amount of benefits claimed and the total amount of benefits paid)
during the eighteen-month period immediately preceding the delivery
of such information to Buyer.
(f) WAGE REPORTING. Wages paid by Sellers to Buyer's
Employees during 1995 shall be considered attributable to Buyer for
purposes of Section 3121(a)(1) of the Code and Section
31.3121(a)(1)-1(b) of the Treasury Regulations. Buyer shall
furnish each Buyer's Employee one statement of Income Tax Withheld
on Wages (IRS Form W-2) for wages paid by Sellers and Buyer. Buyer
shall file IRS Forms W-2 and W-3 covering Buyer's Employees with
the Social Security Administration for wages paid and withheld by
Sellers and Buyer during 1995. Both parties shall comply with the
provisions of Section 5 of Rev. Proc. 84-77. Sellers shall provide
Buyer computer information as soon as practicable relative to wages
paid to Buyer's Employees prior to the Closing Date to permit Buyer
to comply with this Subsection. Sellers and Buyer do not intend by
this Subsection 5.02(f) to relieve Sellers of the obligation to pay
and/or withhold any wages for any of Buyer's Employees up to the
Effective Time.
(g) UNEMPLOYMENT COMPENSATION. Prior to the Closing
Date, if requested by Buyer, Buyer and Sellers shall jointly make
application to the New Mexico Department of Labor to transfer
Sellers' New Mexico unemployment compensation experience rating as
of the Closing Date.
5.03 CASUALTY LOSS. If, prior to the Closing, all or any
portion of the Assets shall be destroyed by fire or other casualty,
or if any portion of the Assets shall be taken in condemnation or
under the right of eminent domain, or if proceedings for such
purposes shall be pending or threatened, the effect of which would
have a Material Effect, Buyer or Sellers may elect to terminate
this Agreement. If Buyer or Sellers shall so elect, neither party
shall have any further obligation to the other hereunder. If not
so terminated or if there is no Material Effect, this Agreement
shall remain in full force and effect notwithstanding any such
destruction or taking, and Sellers shall repair or replace that
portion of the Assets damaged or destroyed by fire or other
casualty prior to the Closing and, in the event of a taking under
condemnation or under the right of eminent domain, Sellers shall at
the Closing pay to Buyer all sums paid to Sellers by reason of such
taking, and Sellers shall assign, transfer and set over unto Buyer
all of the right, title and interest of Sellers in and to any
unpaid awards or other payments arising out of such taking.
5.04 TAXES DUE WITH RESPECT TO TRANSFER OF ASSETS. Buyer and
Sellers believe that there are no sales or other transfer taxes
("TRANSFER TAXES") applicable as a result of the transfer of the
Assets to Buyer pursuant to this Agreement. If there are any such
Transfer Taxes, Buyer shall be obligated to pay such taxes or
reimburse Sellers for Sellers' payment of such taxes.
5.05 PROPERTY TAX PRORATION AMOUNT. Unpaid state and local
ad valorem, property and similar taxes and assessments, common area
charges and assessments, utility charges, and rent under leases or
subleases applicable to the Assets shall be apportioned as of the
Effective Time. The "PROPERTY TAX PRORATION AMOUNT" shall be the
amount of the foregoing which have accrued for periods preceding
the Effective Time, but which have not been paid. The calculation
of the Property Tax Proration Amount shall be based on the best
information relating to the items covered thereby available
immediately prior to the Closing Date. The Property Tax Proration
Amount as so determined shall be final between the parties and the
Base Purchase Price shall be adjusted therefor as provided in
Section 2.05.
5.06 LIKE-KIND EXCHANGE. If requested by Sellers, Buyer will
cooperate with Sellers to accommodate a like-kind exchange under
Section 1031 of the Code with respect to the Assets or any portion
thereof. Such cooperation shall include, without limitation, the
execution of certain documents in connection with such like-kind
exchange, but Buyer shall not have to assume any additional
liabilities or obligations in connection therewith. Sellers shall
have the right, without the consent of Buyer, to assign all or any
portion of their interests in the Assets and their rights and
obligations under this Agreement to a third party designated by
Sellers for purposes of facilitating such like-kind exchange.
Sellers shall indemnify, save and hold harmless Buyer for, from and
against any and all costs, expenses, liabilities, fines, penalties,
and demands for damages associated in any way with the like-kind
exchange or the third-party's property to be exchanged and the
breach of all warranties, obligations and duties of "Sellers" under
this Agreement and the Transfer Documents.
5.07 DUE DILIGENCE. Immediately upon execution of this
Agreement, and subject to Section 5.01(b) and (c), Sellers shall
give to Buyer full access during normal business hours to all
information as provided in Section 4.01(a) in order to allow Buyer
to inspect, test, and examine the Assets and the Businesses prior
to the Closing and in order to assist Buyer in determining if any
matter or event may constitute a Material Effect.
ARTICLE VI
CONDITIONS TO CLOSING
6.01 CONDITIONS TO OBLIGATIONS OF SELLER. The obligations of
Sellers to consummate the transactions provided for in this
Agreement are subject, at the option of Sellers, to the
satisfaction or waiver of the following condition: All
representations and warranties of Buyer contained in this Agreement
shall be true in all respects at and as of the Closing as if such
representations and warranties were made at and as of the Closing,
and Buyer shall have performed and satisfied in all material
respects all covenants and agreements required by this Agreement to
be performed and satisfied by Buyer at or prior to the Closing.
6.02 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of
Buyer to consummate the transactions provided for in this Agreement
are subject, at the option of Buyer, to the satisfaction or waiver
of the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of Sellers contained in this
Agreement shall be true in all respects at and as of the Closing as
if such representations and warranties were made at and as of the
Closing, and Sellers shall have performed and satisfied in all
material respects all covenants and agreements required by this
Agreement to be performed and satisfied by Sellers at or prior to
the Closing.
(b) NO STATUTE OR REGULATION. No state or federal
statute or regulation shall have been proposed or adopted that
would result in a Material Effect or that would adversely affect
the Assets, the Businesses or Buyer's ability to own and operate
the Assets in substantially the same way as they are now operated
and as they have been operated on an historical basis.
(c) TITLE. Subject to Permitted Exceptions, and the
Refinery Site Encumbrances, Sellers' title to the Refinery Assets
shall be good and marketable. Subject to Permitted Exceptions,
Sellers' title to the Pipeline Assets shall be such as to allow
Buyer to enjoy the use and operation thereof as they are now
operated by Sellers and as they have been operated on an historical
basis, free of any claims of third parties.
(d) PERMITS AND LICENSES. All material Permits and
Licenses necessary for Buyer to own and operate the Assets and the
Businesses in accordance with Laws and Environmental Laws and as
they are now owned and operated by Sellers and as they have been
owned and operated on a historical basis, shall have been
transferred to Buyer without modifications, amendments, or
additional costs, financial obligations or other requirements that
would have a Material Effect, or Buyer shall have received
replacement or substitute Permits and Licenses or other
arrangements have been made to give Buyer substantially the same
benefits, without modifications, amendments or additional costs,
financial obligations or other requirements that would have a
Material Effect.
(e) CONTRACTS. Except for the Excluded Contracts, all
material contracts, agreements, leases of personal property and
leases of real property, and any consents required from any Person
in connection with the assignment thereof, necessary for Buyer to
own and operate the Assets and the Businesses as they are now owned
and operated by Sellers and as they have been owned and operated on
an historical basis, shall have been transferred to Buyer without
modifications, amendments, or additional costs, financial
obligations or other requirements that would have a Material
Effect, or Buyer shall have received replacement or substitute
contracts, agreements, leases of personal property and leases of
real property for such material contracts, agreements, leases of
personal property and leases of real property, respectively, or
other arrangements have been made to give Buyer substantially the
same benefits, without modifications, amendments or additional
costs, financial obligations or other requirements that would have
a Material Effect.
(f) CONDITION AND REPAIR OF REFINERY FACILITIES AND
REFINERY PERSONAL PROPERTY. The Refinery shall be operating in
the ordinary course and shall be capable of operating at its rated
capacity. The Refinery Facilities and Refinery Personal Property
shall be in good condition and repair and shall have been
maintained in as good and effective operating condition as they
would be kept and maintained by a prudent operator; and the
Refinery Facilities and Refinery Personal Property shall be in
compliance with all Laws, the failure of which compliance would
have a Material Effect.
(g) CONDITION AND REPAIR OF PIPELINE FACILITIES AND
PIPELINE PERSONAL PROPERTY. Subject to those matters known to
Buyer as a result of Buyer's ownership interest in the Pipeline and
taking into consideration the age and use of the Pipeline, the
Pipeline Facilities and Pipeline Personal Property shall be in good
condition and repair and shall have been maintained in as good and
effective operating condition as they would be kept and maintained
by a prudent operator; and the Pipeline Facilities and Pipeline
Personal Property shall be in compliance with all Laws, the failure
of which compliance would have a Material Effect.
(h) RESULTS OF DUE DILIGENCE. Buyer's inspection,
testing and examination of the Assets and the Businesses conducted
pursuant to Section 5.07 shall not have revealed any matter which,
in the reasonable judgment of a comparable industry third party
purchasing assets and businesses comparable to the Assets and
Businesses, would, alone or in the aggregate, cause such a third
party not to purchase the Assets for reasons other than changes or
conditions in the industry and in markets.
(i) WATER RIGHTS. Buyer shall have received an
assignment, and all required consents thereto, of a fully executed,
valid and effective contract between Sellers and the United States
Bureau of Reclamation in the form set forth in Schedule 6.02(i),
and, in addition, a comparable industry third party purchasing
assets and businesses comparable to the Assets and Businesses would
in its reasonable judgment determine, following due diligence
review as provided in Section 5.07, that an assured water supply,
at a cost not materially exceeding historical costs, will be
available in the immediate future through a valid and enforceable
contract with a term of not less than 10 years with a local
municipality for delivery of water through the Refinery's existing
delivery point(s) in an amount sufficient to operate the Refinery
as it is now operated by Sellers and has been operated by Sellers
on an historical basis. If such an assured water supply is not
immediately available, Sellers and Buyer shall together in good
faith attempt to determine if other mutually satisfactory
assurances of adequate long-term supply are available. The water
rights described on Schedule 3.01(l) shall have, in the past,
provided the Refinery with an adequate water supply to operate in
the ordinary course of business without interruption or shut down
and without objections, litigation, threatened litigation or
similar claims, except as set forth on such Schedule. The water
rights granted by the contract with the United States Bureau of
Reclamation described above, together with the "Owned Rights"
described on Schedule 3.01(l), shall be sufficient to allow Buyer
to operate the Refinery as it is currently being operated and as it
has been operated on a historical basis; and except as set forth in
such Schedule, there shall be no objections, threatened objections,
complaints, litigation, threatened litigation or other matters with
respect to, limiting or affecting the continued use of such water
by Buyer.
(j) COLLECTIVE BARGAINING AGREEMENT. Buyer shall have
entered into an agreement(s) with those labor organizations, or
successors thereto, that are parties to the collective bargaining
agreements set forth in Exhibit 3.01(k) containing terms and
conditions no more onerous than those contained in said collective
bargaining agreements in any material respect.
(k) APPROVAL OF WATER USAGE. The New Mexico State
Engineer Office shall have approved the continued removal of
groundwater in connection with environmental remediation activities
at the Refinery and said approval shall not unreasonably restrict
the amount of groundwater that may be removed for such purpose
after the Effective Time, or Buyer shall have received from
Montgomery & Andrews, New Mexico legal counsel to Buyer, reasonable
assurances to the effect that lack of such approval will not have a
material adverse effect on such remediation activities.
(l) INTANGIBLE PROPERTY. Buyer shall have obtained all
material Intangible Property necessary to own and operate the
Assets and the Businesses as they are now operated and as they have
been operated on an historical basis. The continued operation of
the Refinery Business and the Pipeline Business and the use of such
Intangible Property and the Licenses shall not infringe any valid
patent, copyright, tradename or other right held by any third party
in any material respect. No claim by any third party contesting
the validity, enforceability, use or ownership of the Intangible
Property or Licenses shall have been threatened or outstanding.
(m) NO VIOLATION. No oral or written notice, citation,
order or judgment shall have been issued, no penalty shall have
been assessed, and no investigation or review shall be pending or
threatened by any Person with respect to any alleged material
violation of any Laws or Environmental Laws (other than as
disclosed as an Existing Environmental Liability), or with respect
to any alleged failure to have any material Licenses or Permits in
connection with the Assets or the Businesses.
(n) VALIDITY OF CONTRACTS. All material Contracts and
leases of real property (i) shall be in full force and effect, (ii)
shall be legal, valid, binding and enforceable in accordance with
their terms, and (iii) shall not be in default and no events have
occurred thereunder, which with the giving of notice or the passage
of time or both could cause any such Contract or leases of real
property to be in default. All monies due and performance required
under the terms of all material Contracts and leases of real
property through the Effective Date shall have been paid and
performed or Sellers will give adequate assurance that such will be
so paid and performed.
(o) CONDEMNATION. There shall be no material
condemnation, expropriation, eminent domain, or similar proceeding
pending or threatened affecting any of the Assets.
(p) COSTS RELATING TO ENVIRONMENTAL LIABILITIES. The
costs and expenses of Buyer to comply with Environmental Laws and
to pay, perform, fulfill and discharge Environmental Liabilities
would not, in the reasonable judgment of a comparable industry
third party purchasing assets and businesses comparable to the
Assets and Businesses, be materially increased over the historical
costs incurred by Sellers in connection therewith.
(q) REASSESSMENTS AND REEVALUATIONS. There shall have
been no proposed reassessments or reevaluations of any of the
Assets, any imposition of additional assessments or special
assessments, or any other proposals that would increase the amount
of any taxes relating to the Assets or the Businesses, that would
have a Material Effect.
(r) PROFIT AND LOSS STATEMENTS. Prior to Closing
Sellers shall have provided to Buyer profit and loss statements for
BRC for each month subsequent to May, 1995 as is normally
available.
(s) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except for the
Existing Environmental Liabilities, the Assets, the Businesses and
the ownership and operation thereof as they are currently being
owned and operated and as they have been owned and operated on an
historical basis and all Refined Products produced thereby shall be
in compliance with all Environmental Laws, the failure of which
compliance could have a Material Effect.
(t) CRUDE OIL CONTRACTS. All contracts for the
purchase or supply of crude oil identified by Sellers in Schedule
3.02(g) shall have been transferred to Buyer without any material
modifications, amendments, or additional costs, financial
obligations or other requirements or Buyer shall have received
replacement or substitute contracts or other arrangements have been
made to give Buyer substantially the same benefits, without
material modifications, amendments, or additional costs, financial
obligations or other requirements.
(u) OSHA MATTERS. Except as referred to in Section
3.01(h), all requirements of the Occupational Safety and Health Act
and the regulations promulgated thereunder, and all requirements of
any similar laws or regulations of any state, tribal or local
jurisdiction (the "OSHA REQUIREMENTS") relating to the Assets, the
Businesses or the ownership or operation thereof as they are now
owned and operated, and as they have been owned and operated on an
historical basis, shall have been complied with in all material
respects. Sellers shall have not received any citation or other
notice of alleged violation of OSHA Requirements from the
Occupational Safety and Health Administration or any comparable
administration of any state, tribal or local jurisdiction (an
"ADMINISTRATION") or any Administration inspector setting forth any
respect in which the Assets, the Businesses, or the ownership or
operation thereof is not in compliance with OSHA Requirements,
which noncompliance shall not have been corrected or remediated to
the satisfaction of such Administration or inspector.
(v) CONVENTIONAL GASOLINE/ANTI-DUMPING. Subject to
averaging in accordance with 40 C.F.R. Part 80, Subpart E, all
gasoline produced at the Refinery shall be in compliance with the
anti-dumping provisions, including conventional gasoline standards
and blendstock controls, of the Clean Air Act and the regulations
promulgated thereunder, including 40 C.F.R. Part 80, Subpart E (the
"ANTI-DUMPING REQUIREMENTS"), and the Refinery is capable of
producing gasoline which complies with the Anti-Dumping
Requirements, without any limitation on existing gasoline
production capacity, utilizing the Refinery's existing
configuration and existing Feedstock quality.
(v) MATERIAL STATEMENTS. No information provided by
Sellers shall have contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements contained therein not misleading. There shall have been
no material adverse fact known to Sellers and unknown to Buyer
relating to the Assets or the Businesses which has not been
disclosed to Buyer.
(w) PERMITS AND LICENSES. The Permits and Licenses
shall have been entered into by Sellers in the ordinary course of
business and shall contain terms and conditions customary in the
industry for similar types of instruments.
(x) CONTRACTS. The Contracts shall have been entered
into by Sellers or Affiliates in the ordinary course of business in
arm's length transactions and shall contain terms and conditions
customary in the industry for similar types of instruments.
(y) CONSENTS. All material final consents, approvals,
orders and authorizations of any Person required in connection with
the consummation of the transactions herein contemplated, the
transfer of the Assets to Buyer or the ownership, operation or use
of the Assets and the Businesses as they are now operated or used
and as they have been operated or used on an historical basis
(including but not limited to any preferential rights to purchase
or consents to assignments), shall have been obtained without
conditions which would result in a Material Effect, or, if such
consents are customarily obtained subsequent to such transfer, such
consents will be forthcoming in the ordinary course without
resulting in a Material Effect.
(z) BENEFIT PLANS. Each employee benefit plan
maintained by Sellers which is intended to meet the requirements
for tax-favored treatment under the Code or which is intended to be
qualified within the meaning of Section 401(a) of the Code, shall
have been administered in accordance with such requirements and
shall have received a favorable determination letter from the
Internal Revenue Service with respect thereto; and nothing shall
have occurred which would cause the loss of any such tax-favored
treatment or qualification. Each such plan shall have been amended
prior to the end of the Code's remedial amendment period to
incorporate all provisions required by the Tax Reform Act of 1986
and subsequent legislation.
(aa) UTILITIES. Buyer shall have access and the right
to use all gas, electricity and other utilities necessary or
historically used for the operation of the Assets and the
Businesses as they are currently being operated and as they have
been operated on a historical basis.
6.03 CONDITIONS TO OBLIGATIONS OF BOTH PARTIES. The
obligations of Sellers and Buyer to consummate the transactions
provided for in this Agreement are subject, at the option of each
party, to the satisfaction or waiver by both parties of the
following conditions:
(a) NO ACTION OR PROCEEDINGS. There shall not be
pending or instituted, threatened or proposed, any suit, action,
investigation, material dispute or other proceeding by or before
any court, arbitrator or governmental agency or any other Person
affecting, relating to, challenging or complaining of, or seeking
to collect damages or other relief in connection with, the
transactions provided for in this Agreement, the Assets or the
Businesses.
(b) H-S-R ACT. The waiting period applicable under the
H-S-R Act shall have been terminated or shall have expired, no
litigation shall be pending or threatened with respect to any
antitrust issue, and the Closing shall then be permitted to occur
without violation of the H-S-R Act.
(c) NO STATUTE, RULE, REGULATION OR ACTION. No state
or federal statute, rule, regulation or action shall exist or be
proposed, pending, or threatened, or shall have been adopted or
taken and no judicial or administrative decision shall have been
entered (whether on a preliminary or final basis), that would
prohibit, restrict or delay the consummation of the transactions
provided for in this Agreement or make illegal the payments due
hereunder.
(d) PRELIMINARY SETTLEMENT STATEMENT. Sellers and
Buyer shall have agreed upon a settlement statement (the
"PRELIMINARY SETTLEMENT STATEMENT") that shall set forth the
Preliminary Amount (as hereinafter defined) and each adjustment and
the calculation of such adjustments used to determine such amount.
The term "PRELIMINARY AMOUNT" shall mean the Base Purchase Price
adjusted as provided in Section 2.05 using for such adjustment the
best information then available.
ARTICLE VII
CLOSING
7.01 DATE OF CLOSING. Subject to the conditions stated in
this Agreement, the consummation of the transactions contemplated
by this Agreement (the "CLOSING") shall be held on August 31, 1995,
provided, however, if all conditions to Closing set forth in
Article VI have not been satisfied or waived by such date, the
Closing shall occur within three business days after such
conditions shall have been met or waived. The date Closing
actually occurs shall be referred to as the "CLOSING DATE."
7.02 PLACE OF CLOSING. The Closing shall be held at the
offices of Holme Roberts & Owen LLC, Suite 4100, 1700 Lincoln,
Denver, Colorado, or at such other place as Buyer and Sellers may
agree upon in writing.
7.03 CLOSING OBLIGATIONS. At the Closing the following
events shall occur, each being a condition precedent to the others
and each being deemed to have occurred simultaneously with the
others:
(a) TRANSFER DOCUMENTS. Sellers (and, if necessary,
Affiliates of Sellers) shall execute, acknowledge and deliver, and
Buyer shall execute, acknowledge and accept delivery of, the
following transfer documents (the "TRANSFER DOCUMENTS"):
(i) General Deed, Assignment, Bill of Sale and
Assumption, covering all of the Assets; guarantees and warranties
on equipment and fixtures; claims against UST funds for
Environmental Liabilities assumed by Buyer; and as to any matters
for which Buyer has assumed any liability or obligation, any
claims, defenses, warranties of title and rights to indemnity
which Sellers have or to which they are entitled from the parties
from whom Sellers acquired the Assets or Sellers' predecessors in
interest; substantially in the form of Exhibit B;
(ii) Bill of Sale, covering the Refinery Equipment,
Refinery Facilities, Refinery Inventory, and Pipeline Inventory
warranting to Buyer good title free and clear of all liens, claims,
liabilities, encumbrances or rights or interests of any third party
whatsoever, subject to Permitted Exceptions, substantially in the
form of Exhibit C;
(iii) Assignment and Conveyance covering the
Refinery Real Property (other than the Refinery Site and the
fixtures that are real property under applicable state law located
thereon), if any, containing a special warranty of title against
liens and security interests created by, through or under Seller,
subject to Permitted Exceptions, substantially in the form of
Exhibit D;
(iv) General Warranty Deed, covering the Refinery
Site and the fixtures that are real property under applicable state
law located thereon, containing a general warranty of title,
subject to Permitted Exceptions and the Refinery Site Encumbrances,
substantially in the form of Exhibit E (if deemed necessary by
Buyer, this Transfer Document will be recorded in the real property
records of San Juan County, New Mexico, concurrently with the
Closing);
(v) Bill of Sale, covering all of Sellers' right,
title and interest in the Pipeline Equipment and Pipeline
Facilities, containing a special warranty of title against liens
and security interests created by, through or under Sellers,
subject to Permitted Exceptions, substantially in the form of
Exhibit F; and
(vi) Assignment and Conveyance covering all of
Sellers' right, title and interest in the Pipeline Real Property,
containing a special warranty of title against liens and security
interests created by, through or under Seller, subject to Permitted
Exceptions, substantially in the form of Exhibit G.
As appropriate, Sellers and Buyer shall also execute, acknowledge
and deliver (i) separate transfer documents for individual Assets
as may be required given the nature of an individual Asset, and
(ii) separate transfer documents of the Assets on officially
approved forms in sufficient counterparts to satisfy applicable
statutory and regulatory requirements. All such separate transfer
documents shall be deemed to contain all of the exceptions,
reservations, warranties, right, titles, powers and privileges as
are contained in the Transfer Documents.
(b) POSSESSION. Buyer shall be given exclusive
possession of the Refinery Assets, possession of the Pipeline
Assets and possession of the Records maintained at the Refinery
(and Buyer shall be entitled to retain copies of all Records
maintained by Sellers in Denver).
(c) LIEN RELEASES. Sellers shall deliver to Buyer
releases of liens and security interests (including termination of
financing statements relating thereto) necessary to transfer title
as provided herein.
(d) INDIVIDUALS' NONCOMPETE. Sellers shall cause to be
delivered to Buyer a covenant against competition executed by Sam
Gary and Ron Williams in form and substance as Section 8.08.
(e) GUARANTEE AND AGREEMENT. Buyer shall cause to be
delivered to Sellers a Guarantee and Agreement executed by GII in
form and substance as set forth in Exhibit H.
(f) PRELIMINARY SETTLEMENT STATEMENT. Sellers and
Buyer shall execute and deliver the Preliminary Settlement
Statement.
(g) PRELIMINARY AMOUNT. Buyer shall deliver the
Preliminary Amount to Sellers or to Sellers' account (such account
to be designated by Sellers at least two Business Days prior to the
Closing Date) by direct bank or wire transfer.
(h) SELLERS' CERTIFICATE. Sellers shall execute,
acknowledge and deliver to Buyer a Sellers' Certificate dated as of
the Closing Date in form and substance as set forth in Exhibit I.
(i) BUYER'S CERTIFICATE. Buyer shall execute,
acknowledge and deliver to Seller a Buyer's Certificate dated as of
the Closing Date in form and substance as set forth in Exhibit J.
(j) NON-FOREIGN STATUS CERTIFICATE. Each Seller shall
execute, acknowledge and deliver to Buyer a Non-Foreign Status
Certificate dated as of the Closing Date in form and substance as
set forth in Exhibit K.
(k) CRUDE OIL CONTRACT. Sellers and Buyer shall
execute and deliver a crude oil contract in form and substance as
set forth in Exhibit L.
ARTICLE VIII
OBLIGATIONS AFTER CLOSING
8.01 POST-CLOSING SETTLEMENT.
(a) FINAL SETTLEMENT STATEMENT. Within 60 days
following the Closing Date Sellers and Buyer SHALL PREPARE A
STATEMENT (THE "Final Settlement Statement") setting forth the Base
Purchase Price and each adjustment thereto as provided in Section
2.05 which was not finally determined as of the Closing. Sellers
and Buyer shall make available to the other party all books,
records and other information in their possession or control, and
the assistance of personnel who are familiar with same, as may be
reasonably requested in connection with the preparation of the
Final Settlement Statement.
(b) INABILITY TO AGREE TO FINAL SETTLEMENT STATEMENT.
The parties shall undertake in good faith to agree on the Final
Settlement Statement no later than 90 days after the Closing Date;
provided, if Buyer and Sellers shall be unable to agree on the
Final Settlement Statement within such 90-day period, then Ernst &
Young LLP, or such other nationally recognized public accounting
firm mutually acceptable to Buyer and Sellers, shall be engaged to
make its determination of the amount in dispute (and only such
amount). Each party shall bear and pay one-half of the fees and
other costs charged by such accounting firm.
(c) ACCOUNTING FIRM PROCEDURES. If any accounting firm
is engaged as provided in Subsection 8.01 (b) above, Sellers and
Buyer agree to provide such accounting firm with all books, records
and other information relevant to the determination of the amount
in dispute. In determining the amount in dispute, such accounting
firm shall be instructed to use a materiality standard as such firm
may determine to be reasonable under the circumstances, in light of
the cost to be incurred and the amount in issue. Such accounting
firm shall be instructed to make such calculations as soon as
practicable. The final determination of any adjustment of the Base
Purchase Price, pursuant to this Subsection 8.01(c) shall be
binding on the parties hereto.
(d) PAYMENT OF DIFFERENCE. The amount of the
difference between the Preliminary Amount paid by Buyer to Sellers
at the Closing and the amount as determined in accordance with this
Section, shall be paid by the appropriate party to the party to
whom it is owed within five Business Days after its final
determination in immediately available funds.
8.02 RECORDING FEES. Buyer shall pay all documentary, filing
and recording fees required in connection with the filing and
recording of the Transfer Documents and any separate transfer
documents executed pursuant to Subsection 7.03(a).
8.03 INDEMNIFICATION.
(a) BUYER'S INDEMNIFICATION OF SELLERS. From and after
the Closing Date, Buyer shall defend, indemnify and save and hold
harmless Sellers and Sellers' respective directors, officers,
shareholders, employees and agents against all Losses which arise
from or in connection with (i) any of the matters assumed by Buyer
pursuant to Subsection 5.01(h) or set forth in Section 8.04(b);
(ii) any breach of any covenant, agreement, representation or
warranty of Buyer contained herein; and (iii) claims or demands
asserted against any Seller, its directors, officers, shareholders,
employees and agents for injury to or death of persons or damage to
property arising in any way from Buyer's due diligence or Buyer's
Environmental Investigation, and any common law or statutory liens
or other encumbrances for labor or materials furnished in
connection with an Environmental Investigation.
(b) SELLERS' INDEMNITY OF BUYER. From and after the
Closing Date, Sellers shall defend, indemnify and save and hold
harmless Buyer and Buyer's directors, officers, shareholders,
employees and agents against all Losses which arise from or in
connection with (i) any of the matters retained or assumed by
Sellers pursuant to Subsection 5.01 (g) or set forth in Section
8.04(a); (ii) any breach of any covenant, agreement, representation
or warranty of Sellers contained herein ; and (iii) any breach of
any covenant, agreement, representation of warranty of Sellers in
any Transfer Document.
(c) CLAIMS FOR INDEMNIFICATION. Sellers and Buyer
shall with reasonable promptness notify the other party of the
making of any demand, the assertion of any claim, or the
commencement of any suit, action or proceeding by any third party
for which indemnity may be sought under this Agreement (an
"INDEMNITY OBLIGATION"). The party from whom indemnification is
sought (the "INDEMNIFYING PARTY") shall have the right, but not the
obligation, to assume the defense or settlement of any Indemnity
Obligation of which the party seeking indemnification (the
"INDEMNIFIED PARTY") gives notice; provided, however, that if the
Indemnifying Party does not elect to assume such defense or
settlement, the Indemnified Party shall have the right, but not the
obligation, to assume such defense or settlement, and the
Indemnifying Party shall at all times have the right, at its option
and expense, to participate fully therein. Each party shall have
reasonable access to the books, records and personnel in the
possession or control of the other party which are pertinent to the
defense or settlement of any Indemnity Obligation. The parties
shall cooperate in the defense or settlement of any Indemnity
Obligation, but the party electing to assume such defense or
settlement shall have full authority to determine all action to be
taken with respect thereto. The Indemnified Party may join the
Indemnifying Party in any suit, action or proceeding to which any
such right of indemnity created by this Agreement would or might
apply, for the purpose of enforcing any such right.
(d) INDEMNIFICATION THRESHOLD. Notwithstanding
anything contained herein to the contrary, neither Sellers nor
Buyer shall be liable for Losses pursuant to the indemnification
obligations set forth in Section 8.03(a) and (b) unless the amount
of Losses for which Sellers or Buyer, as the case may be, would be
liable, but for the provisions of this Subsection 8.03(d), exceeds
$25,000 for any individual Loss or $125,000.00 on an aggregate
basis for all such Losses, but they shall retain full liability for
all other covenants and obligations. The limitation in the
foregoing sentence shall apply to Environmental Liabilities.
8.04 ASSUMPTION OF OBLIGATIONS.
(a) SELLERS' OBLIGATION. In addition to the
obligations retained or assumed by Sellers elsewhere in this
Agreement, and except as otherwise provided in Section 5.01,
Sellers shall remain liable and responsible for all claims, costs,
expenses, liabilities and obligations of any kind or nature,
whether known or unknown, arising from or in any manner relating to
the existence, ownership, operation or maintenance of the Assets,
the conduct of the Businesses, or any activity of the Sellers
(including without limitation obligations arising under the
Transferable Permits and Licenses, and the Contracts) attributable
to periods prior to the Effective Time.
(b) BUYER'S OBLIGATIONS. In addition to the
obligations assumed by Buyer elsewhere in this Agreement, and
except as otherwise provided in Section 5.01, Buyer shall be liable
and responsible for all claims, costs, expenses, liabilities and
obligations of any kind or nature, whether known or unknown,
arising from or in any manner relating to the ownership or the
operation of the Assets, the conduct of Buyer's business, or any
activity of Buyer (including without limitation obligations arising
under the Transferable Permits and Licenses, and the Contracts)
attributable to periods after the Effective Time.
8.05 IDENTIFICATIONS, SIGNS, TRADEMARKS AND TRADENAMES.
Within a reasonable time after Closing, but in no event later than
90 days after the Closing Date, Buyer at its sole cost, risk and
expense shall remove from the Assets any and all signs or other
items that display or exhibit the name of Sellers or their
Affiliates, or the trademarks or tradenames of Sellers or their
Affiliates. In the conduct of its business and otherwise, Buyer
shall not use any of the foregoing and shall not represent, state
or otherwise infer in any manner, directly or indirectly, to any
party that Buyer is acting on behalf of or as a representative or
agent of, or in any way associated with Sellers. Furthermore,
Purchaser shall not use the names "Bloomfield Refining Company,"
"Gary-Williams Energy Corporation," "Bloomfield" or "Gary-Williams"
or, with the exception of "Bloomfield Refinery," any combination
thereof or any abbreviation thereof in connection with the use and
operation of the Assets.
8.06 ACCESS TO RECORDS - BOOKS AND RECORDS. Sellers shall
have the right to make copies of any of the Records located at the
Refinery which they desire to retain prior to delivering such
Records to Buyer at the Closing, and Buyer shall be entitled to
make copies of any Records maintained by Sellers in Denver prior to
Closing. For a period of seven years after the Closing Date, Buyer
shall permit Sellers and their authorized representatives to have
reasonable access to any Records received from Sellers remaining
from time to time in Buyer's possession; and Sellers shall permit
Buyer and its authorized representatives to have reasonable access
to any Records retained by Sellers remaining from time to time in
Sellers' possession.
8.07 WAIVER OF COMPLIANCE WITH BULK SALES LAWS. Buyer hereby
waives compliance by Sellers with the provisions of any applicable
bulk sales act, and Sellers hereby agree to indemnify Buyer from
any Losses resulting therefrom.
8.08 COVENANT AGAINST COMPETITION. Sellers covenant and
agree that they shall not at any time within the five year period
immediately following the Closing Date engage in, finance, assist,
or have any ownership or interest of any kind, directly or
indirectly in any Person that engages in, anywhere within a 175
mile radius of Bloomfield, New Mexico, all or any part of the
Businesses or any business related thereto (other than retail
marketing of Refined Products, and exchanges and buying and selling
of Refined Products relating to the retail marketing of Refined
Products) including without limitation the purchasing or gathering
of crude oil, the refining of crude oil or the marketing of Refined
Products (other than retail marketing of Refined Products, and
exchanges and buying and selling of Refined Products relating to
the retail marketing of Refined Products); provided, however, that
Sellers may own, directly or indirectly, as an investment,
securities of any Person which are publicly traded if Sellers do
not, directly or indirectly, own five percent or more of any class
of securities of such Person. Except as provided in this Section,
neither Sellers nor Buyer agree to otherwise refrain from any other
competitive activities.
8.09 INDEPENDENT EVALUATION. Buyer is experienced and
knowledgeable in the refinery and pipeline businesses and is aware
of their risks. To the extent Buyer deems appropriate, Buyer will
examine all materials made available by Sellers with respect to the
Assets (the "BACKGROUND MATERIALS"). The Background Materials are
files, or copies thereof, that Sellers have used in its normal
course of business and other information about the Assets that
Sellers have compiled or generated; however, Buyer acknowledges and
agrees that, except as otherwise set forth herein, Sellers have
made no representations or warranties, express or implied, written
or oral, as to the accuracy or completeness of the Background
Materials or any other information relating to the Assets furnished
or to be furnished to Buyer or its representatives by or on behalf
of Sellers. Buyer expressly assumes the risk of (i) future changes
in the world price for crude oil, (ii) future changes in prices
that may be received for refined and other products, (iii) future
changes in the volumes of products refined at the Refinery, (iv)
future changes in the volumes of products being transported through
the Pipeline, and the rates received therefor, and (v) future
changes in levels of production from the oil and gas leases and
wells supplying the Refinery and the Pipeline (whether expected or
unexpected declines or complete cessation of production).
8.10 FURTHER ASSURANCES. Sellers and Buyer shall execute,
acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action as may be
reasonably necessary or advisable to carry out their obligations
under this Agreement and under any Exhibit, Schedule, document,
certificate or other instrument delivered pursuant hereto.
8.11 TITLE REPRESENTATIONS. Upon delivery of the Assignment
and Conveyance delivered pursuant to 7.03(a)(iii) and the General
Warranty Deed delivered pursuant to Section 7.03(a)(iv), GWEC
agrees to guarantee to Buyer the title warranties of BRC contained
therein.
ARTICLE IX
TERMINATION OF AGREEMENT
9.01 TERMINATION. This Agreement and the transactions
provided for herein may be terminated in the following instances:
(a) By either Buyer or Sellers if any condition set
forth in Section 6.03 above shall not be satisfied at the Closing.
(b) By Buyer if any condition set forth in Section 6.02
above shall not be satisfied on or before October 1, 1995.
(c) By Sellers if any condition set forth in Section
6.01 above shall not be satisfied on or before October 1, 1995, or,
if the Closing has not occurred, upon the later of 40 days after
the date of this Agreement or 10 days after the waiting period
applicable under the H-S-R Act has terminated or expired, but in no
event earlier than August 31, 1995.
(d) By either Buyer or Sellers if, in response to such
party's filing under the H-S-R Act, the Federal Trade Commission or
the Department of Justice makes a written request of such party for
additional information and the compliance with such request would
in such party's reasonable judgment cause an out-of-pocket
expenditure to such party in excess of $200,000 or would, in the
reasonable judgment of a comparable industry third party selling or
purchasing assets and businesses comparable to the Assets and
Businesses be otherwise unduly burdensome.
(e) By either Buyer or Sellers if as of 60 days
following the date of this Agreement, all federal and state
regulatory clearances or approvals in connection with the H-S-R Act
which are required to be granted prior to Closing have not been
received.
(f) By the mutual written agreement of Buyer and
Sellers.
This Agreement shall terminate without any further
action by Sellers or Buyer if the Closing has not occurred on or
before October 1, 1995.
9.02 RETURN OF INFORMATION. If this Agreement is terminated
pursuant to Section 9.01 above or terminated under any other
provision of this Agreement, Buyer shall return to Sellers all
written information and material delivered to Buyer by Sellers
pursuant to the terms of this Agreement, and such information shall
remain subject to the terms of the Confidentiality Agreement.
9.03 EFFECT OF TERMINATION. The following provisions shall
apply in the event of a termination of this Agreement:
(a) NON-WILLFUL FAILURE. If this Agreement is
terminated by Buyer or Sellers as permitted under Section 9.01
hereof and not as a result of the willful failure of any party to
perform any of its obligations hereunder, such termination shall be
without liability to any party to this Agreement or on the part of
any shareholder, director, officer, employee, agent or
representative of such party;
(b) WILLFUL FAILURE. If this Agreement is terminated
as a result of the willful failure of a party to perform any of its
obligations hereunder, such non-performing party shall be fully
liable for any and all damages, costs and expenses (including,
without limitation, reasonable attorney's fees) sustained or
incurred by such other party;
(c) REMEDY FOR THE NON-SATISFACTION OF BUYER'S
CONDITIONS. Notwithstanding anything contained herein to the
contrary, if the conditions to Buyer's obligations to purchase the
Assets as set forth in Section 6.02 are not satisfied other than as
a result of Sellers' willful failure to perform any of their
obligations hereunder, Buyers sole and only remedy is to terminate
this Agreement without liability to Sellers; and
(d) SURVIVAL. Sellers and Buyer hereby agree that the
provisions of this Section 9.03 shall survive any termination of
this Agreement.
ARTICLE X
MISCELLANEOUS
10.01 EXPENSES. Except as otherwise specifically provided in
this Agreement, all fees, costs and expenses incurred by Buyer or
Sellers in negotiating this Agreement or in consummating the
transactions contemplated by this Agreement shall be paid by the
party incurring the same, including without limitation, legal and
accounting fees, costs and expenses.
10.02 NOTICES. All notices and communications required or
permitted under this Agreement shall be in writing and shall be
delivered by established overnight delivery service, fax, by hand
or by registered or certified mail, postage prepaid, addressed as
follows:
If to Sellers:
Bloomfield Refining Company
Gary-Williams Energy Corporation
370 Seventeenth Street, Suite 5300
Denver, Colorado 80202
Attention: David J. Younggren, Senior Vice President
Fax No.: 303/628-3834
With copies to:
Bloomfield Refining Company
Gary-Williams Energy Corporation
370 Seventeenth Street, Suite 5300
Denver, Colorado 80202
Attention: James W. Greene, Esq.
Fax No.: 303/628-3833
and
Holme Roberts & Owen LLC
Suite 4100
1700 Lincoln
Denver, Colorado 80203
Attention: Lynn P. Hendrix, Esq.
Fax No.: 303/866-0200
If to Buyer:
Giant Industries Arizona, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Attention: Fredric L. Holliger
Fax No.: 602/585-8894
With copies to:
Giant Industries Arizona, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Attention: A. Wayne Davenport
Fax No.: 602/585-8894
Giant Industries Arizona, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Attention: Morgan Gust, Esq.
Fax No.: 602/585-8985
All notices and communications shall be effective upon the earlier
of actual receipt or, if delivered by mail, seven days after being
deposited in the mail, postage prepaid and addressed as required by
this Section. Either party may, by written notice so delivered to
the other, change the address to which delivery shall thereafter be
made.
10.03 AMENDMENT. This Agreement may not be altered or
amended, nor any rights hereunder be waived, except by an
instrument in writing executed by the party or parties to be
charged with such amendment or waiver. No waiver of any term,
provision or condition of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such term, provision or condition or as a
waiver of any other term, provision or condition of this Agreement.
10.04 ASSIGNMENT. Except as provided in Section 5.06,
neither Seller nor Buyer may assign any portion of its rights or
delegate any portion of its duties or obligations under this
Agreement without the prior written consent of the other party;
provided, however, that Buyer may, without the consent of Sellers,
assign all or any portion of its right to receive the Assets and
its rights and obligations under this Agreement to a wholly-owned
subsidiary but, in such event, Buyer shall remain liable for all
obligations and duties to Sellers under this Agreement.
10.05 ANNOUNCEMENTS. Sellers and Buyer shall consult with
each other with regard to all press releases and other
announcements concerning this Agreement or the transactions
provided for herein and, except as may be required by applicable
laws or the applicable rules and regulations of any governmental
agency or stock exchange, neither Buyer nor Sellers shall issue any
such press release or make any other announcement without the prior
written consent of the other party, which consent will not be
unreasonably withheld.
10.06 COUNTERPARTS. This Agreement may be executed by Buyer
and Sellers in any number of counterparts, each of which shall be
deemed an original instrument, but all of which together shall
constitute but one and the same instrument. This Agreement shall
become operative when each party has executed at least one
counterpart of this Agreement This Agreement may be delivered by
facsimile or similar transmission evidencing execution, and this
Agreement so delivered shall be effective as a valid and binding
agreement between the parties for all purposes.
10.07 GOVERNING LAW. This Agreement and the transactions
contemplated hereby shall be construed in accordance with, and
governed by, the laws of the State of New Mexico.
10.08 ENTIRE AGREEMENT. Except for the Confidentiality
Agreement (which shall remain in effect until the Closing occurs)
and the Common Undertaking Letter, this Agreement (including the
Exhibits and Schedules hereto) constitutes the entire understanding
between the parties with respect to the subject matter hereof and
supersedes all negotiations, prior discussions and prior agreements
and understandings relating to such subject matter. No
representation, warranty, covenant, agreement, promise, inducement
or statement, whether oral or written, has been made by Sellers or
Buyer that is not set forth in this Agreement or in the instruments
referred to herein, and neither Sellers nor Buyer shall be bound by
or liable for any alleged representation, warranty, covenant,
agreement, promise, inducement or statement not so set forth.
10.09 PARTIES IN INTEREST. This Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and,
except as otherwise prohibited, their respective successors and
assigns. Nothing contained in this Agreement, express or implied,
is intended to confer upon any other Person or entity any benefits,
rights or remedies.
Executed as of the date first above mentioned.
SELLERS:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By: /S/ DAVID J. YOUNGGREN
-----------------------------------
David J. Younggren, Senior Vice President
GARY-WILLIAMS ENERGY
CORPORATION, a Delaware corporation
By: /S/ DAVID J. YOUNGGREN
-----------------------------------
David J. Younggren, Senior Vice President
BUYER:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By: /S/ FREDRIC L. HOLLIGER
-----------------------------------
Fredric L. Holliger, Executive Vice President<PAGE>
<PAGE>
EXHIBITS AND SCHEDULES TO
PURCHASE AND SALE AGREEMENT
Bloomfield Refining Company and Gary-Williams Energy Corporation,
as Sellers
and
Giant Industries Arizona, Inc., as Buyer
Dated as of August 8, 1995
These Exhibits and Schedules, when initialed in the spaces provided
below, constitute a part of the Purchase and Sale Agreement, dated
as of August 8, 1995 (the "Agreement"), among Bloomfield Refining
Company, a Delaware corporation and Gary-Williams Energy
Corporation, a Delaware corporation, as Sellers, and Giant
Industries Arizona, Inc. an Arizona corporation, as Buyer. Certain
capitalized terms used in these Exhibits and Schedules without
definition have the meanings specified in the Agreement.
SELLERS: BUYER:
BLOOMFIELD REFINING COMPANY GIANT INDUSTRIES ARIZONA, INC.
and GARY-WILLIAMS ENERGY
CORPORATION
By: /S/ DAVID J. YOUNGGREN By: /S/ FREDRIC L. HOLLIGER
----------------------- ---------------------------
<PAGE>
<PAGE>
SCHEDULE OF EXHIBITS AND SCHEDULES
EXHIBITS:
A -- Form of COMMON UNDERTAKING LETTER.
B -- Form of GENERAL DEED, ASSIGNMENT, BILL OF SALE AND
ASSUMPTION, covering all of the Assets.
C -- Form of BILL OF SALE, covering the Refinery
Equipment, the Refinery Facilities and the Refinery
Inventory.
D -- Form of ASSIGNMENT AND CONVEYANCE, covering the
Refinery Real Property (other than the Refinery
Site).
E -- Form of GENERAL WARRANTY DEED, covering the Refinery
Site.
F -- Form of BILL OF SALE, covering the Pipeline
Equipment, the Pipeline Facilities and the Pipeline
Inventory.
G -- Form of ASSIGNMENT AND CONVEYANCE, covering the
Pipeline Real Property.
H -- Form of GUARANTEE AND AGREEMENT.
I -- Form of SELLERS' CERTIFICATE.
J -- Form of BUYER'S CERTIFICATE.
K -- Form of NON-FOREIGN STATUS CERTIFICATE.
L -- Form of CRUDE OIL CONTRACT.
SCHEDULES:
1.01.1 -- Earnout
1.01.2 -- Excluded Contracts
1.01.3 -- Processing Units, Shipping Facilities and
Terminals
1.01.4 -- Refinery Site
1.01.5 -- Refinery Site Encumbrances
2.04 -- Allocation of Purchase Price
3.01(e) -- Contested Taxes
3.01(g) -- Litigation
3.01(j) -- Capital Projects
3.01(k) -- Collective Bargaining Agreements
3.01(l) -- Water and Water Rights
3.01(m) -- Financial Statements
3.01(n) -- Summary of Operations
3.02(g) -- Certain Permits, Licenses and Contracts
5.02(a) -- Retained Employees
6.02(i) -- BOR Draft Permit<PAGE>
<PAGE>
EXHIBIT A
COMMON UNDERTAKING LETTER
Buyer's Counsel Letterhead
August 8, 1995
Bloomfield Refining Company
Gary-Williams Energy Corporation
370 Seventeenth Street
Suite 5300
Denver, Colorado 80202
Re: Common Undertaking Between Giant Industries Arizona,
Inc., Bloomfield Refining Company and Gary-Williams
Energy Corporation Regarding Due Diligence Assessment
of Bloomfield Refinery
Gentlemen:
On behalf of Giant Industries Arizona, Inc. ("Giant"), Giant's
legal department is in the process of conducting an environmental
due diligence assessment of the Bloomfield, New Mexico refinery
(the "Refinery") of Bloomfield Refining Company and Gary-Williams
Energy Corporation (collectively, "Sellers") in connection with the
sale of the Refinery to Giant. As part of that due diligence,
Giant and its consultants ("Consultants"), have obtained certain
documents from Sellers or their counsel regarding environmental
issues that may be privileged under the attorney-client or
work-product privilege. Consultants are also conducting on-site
inspections of the Refinery and related properties. Certain
information and documents obtained or prepared as a result of the
environmental due diligence assessment will be provided to Sellers
and their counsel in accordance with the Purchase and Sale
Agreement between Giant and Sellers.
Giant, Sellers and their respective counsels have a common
interest in evaluating the environmental status of the Refinery and
related properties to complete the transaction. Therefore, the
transmission of information or documents to Sellers shall not be
deemed as a waiver of any attorney-client or work product privilege
that may otherwise attach to the information or documents. To
maintain the privilege, Sellers and their counsel and any
consultants retained by Sellers for this matter agree not to
divulge or release the documents or information contained in the
documents to any third parties or persons who do not have a need to
know the information for purposes of the due diligence.<PAGE>
<PAGE>
Bloomfield Refining Company
August 8, 1995
Page 2
If the foregoing accurately reflects the common understanding
concerning the matters described in this letter, please so indicate
by signing in the space provided below. This common undertaking
may be executed in counterparts which together shall be deemed to
be the same instrument.
Very truly yours,
Giant Industries Arizona, Inc.
Legal Department
By:______________________________
Morgan Gust,
Vice President and General Counsel
AGREED AND ACCEPTED this ____
day of August, 1995:
BLOOMFIELD REFINING COMPANY
and GARY-WILLIAMS ENERGY CORPORATION
By:______________________________
Name:_________________________
Title:__________________________
Holme Roberts & Owen LLC, Counsel for
Bloomfield Refining Company and
Gary-Williams Energy Corporation
By:_______________________________
<PAGE>
<PAGE>
EXHIBIT B
FORM OF GENERAL DEED, ASSIGNMENT,
BILL OF SALE AND ASSUMPTION AGREEMENT
DO NOT RECORD
GENERAL DEED, ASSIGNMENT, BILL OF SALE AND ASSUMPTION AGREEMENT
This General Deed, Assignment, Bill of Sale and Assumption
Agreement (this "INSTRUMENT"), dated as of ___________, 1995 at
7:00 A.M. local time (the "EFFECTIVE TIME"), is from BLOOMFIELD
REFINING COMPANY, a Delaware corporation ("BRC"), and GARY-WILLIAMS
ENERGY CORPORATION, a Delaware corporation ("GWEC"), both with an
address of 370 Seventeenth Street, Suite 5300, Denver, Colorado
80203, to GIANT INDUSTRIES ARIZONA, INC., an Arizona corporation
("ASSIGNEE"), with an address of 23733 North Scottsdale Road,
Scottsdale, Arizona 85255. BRC and GWEC shall collectively be
referred to as "ASSIGNORS".
Assignors and Assignee are parties to that certain Purchase
and Sale Agreement (the "PURCHASE AGREEMENT"), dated as of August
8, 1995, wherein Assignors agreed to sell and transfer to Assignee
and Assignee agreed to purchase and accept delivery of, certain
property, interests and rights as more specifically described
therein. Capitalized terms used herein without definition shall
have the meaning ascribed thereto in the Purchase Agreement. This
Instrument is being delivered pursuant to the Purchase Agreement
and shall be construed and interpreted consistently therewith.
1. DEED, ASSIGNMENT AND BILL OF SALE. (a) For valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, and in consideration of Assignee accepting delivery
as described below, Assignors hereby grant, assign, transfer,
convey and deliver unto the Assignee, its successors and assigns
forever, the Refinery Assets and the Pipeline Assets, excluding the
Excluding Assets, including all of Assignors' property, assets and
rights, real, personal and mixed, tangible and intangible, choate
and inchoate, of whatever kind and wherever located relating
thereto. The property, assets and rights transferred by this
Agreement include, without limitation, to the extent transferable
(a) the nonexclusive right to enforce and assert the following:
(i) all guaranties, indemnities, warranties and covenants received
by the Assignors' or their predecessors with respect to any of the
Assets transferred hereby and all rights and claims thereunder;
(ii) all of Assignors' rights, claims, defenses and causes of
action against others, known and unknown, including any such
rights, claims, defenses and causes of action to which Assignors
are entitled from the parties from whom Assignors acquired the
Assets or Assignors' predecessors in interest; and (iii) all of
Assignors' rights under warranties of title and indemnities
relating to any matters for which Assignee has assumed any
liability or obligation under the Purchase Agreement; and (b) any
claims against state underground storage tank funds for
Environmental Liabilities relating to underground storage tanks to
the extent Assignor has assumed liability or responsibility for
such underground storage tanks.
(b) There is specifically excepted and reserved from the
terms of this Instrument, the Excluded Assets.
(c) Assignors make in this Instrument no representation,
warranty or covenant, express or implied, with respect to any of
the property, assets or rights transferred hereby; but nothing
herein shall in any way diminish or impair any representation,
warranty or covenant made by or on behalf of the Assignors or
Assignee in the Purchase Agreement or in any assignment,
certificate or other document or instrument executed by the
parties.
2. ACCEPTANCE OF DELIVERY. Assignee hereby accepts delivery
of the property, assets and rights transferred by this Instrument.
3. ASSUMPTION. (a) Except as otherwise provided in the
Purchase Agreement, including without limitation Section 5.01
thereof, Assignors shall remain liable and responsible for all
claims, costs, expenses, liabilities and obligations of any kind or
nature, whether known or unknown, arising from or in any manner
relating to the existence, ownership, operation or maintenance of
the Assets, the conduct of the Businesses, or any activity of
Assignors (including without limitation obligations arising under
the Transferable Permits and Licenses, and the Contracts)
attributable to periods prior to the Effective Time.
(b) Except as otherwise provided in the Purchase
Agreement, including without limitation Section 5.01 thereof,
Assignee shall be liable and responsible for all claims, costs,
expenses, liabilities and obligations of any kind or nature,
whether known or unknown, arising from or in any manner relating to
the ownership or the operation of the Assets, the conduct of
Assignee's business, or any activity of Assignee (including without
limitation obligations arising under the Transferable Permits and
Licenses, and the Contracts) attributable to periods after the
Effective Time.
4. FURTHER ASSURANCES. Assignees and Assignor shall
execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered such instruments and take such other
action as may be reasonably necessary or advisable to carry out
their obligations under this Instrument. The foregoing shall
include the execution, acknowledgment and delivery of (i) separate
transfer instruments for individual assets as may be required given
the nature of an individual asset, and (ii) separate transfer
instruments of the assets on officially approved forms in
sufficient counterparts to satisfy applicable statutory and
regulatory requirements.
Executed as of ___________, 1995, to be effective for all
purposes as of the Effective Time.
ASSIGNORS:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By:__________________________
__________________________
________________ President
GARY-WILLIAMS ENERGY CORPORATION,
a Delaware corporation
By:__________________________
__________________________
________________ President
ASSIGNEE:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By:__________________________
__________________________
Executive Vice President<PAGE>
<PAGE>
EXHIBIT C
FORM OF BILL OF SALE (REFINERY)
BILL OF SALE
(Refinery)
This Bill of Sale (this "INSTRUMENT"), dated as of
___________, 1995 at 7:00 A.M. local time (the "EFFECTIVE TIME"),
is from BLOOMFIELD REFINING COMPANY, a Delaware corporation
("BRC"), and GARY-WILLIAMS ENERGY CORPORATION, a Delaware
corporation ("GWEC"), both with an address of 370 Seventeenth
Street, Suite 5300, Denver, Colorado 80203, to GIANT INDUSTRIES
ARIZONA, INC., an Arizona corporation ("GRANTEE"), with an address
of 23733 North Scottsdale Road, Scottsdale, Arizona 85255. BRC and
GWEC shall collectively be referred to as ("GRANTORS").
Grantors and Grantee are parties to that certain Purchase and
Sale Agreement (the "PURCHASE AGREEMENT"), dated as of August __,
1995, wherein Grantors agreed to sell and transfer to Grantee, and
Grantee agreed to purchase and accept delivery of, certain
property, interests and rights as more specifically described
therein. Capitalized terms used herein without definition shall
have the meaning ascribed thereto in the Purchase Agreement. This
Instrument is being delivered pursuant to the Purchase Agreement
and shall be construed and interpreted consistently therewith.
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Grantors, Grantors
have sold and transferred, and do hereby sell and transfer, to
Grantee all of Grantors' right, title and interest in and to the
following (collectively, the "PROPERTY"):
1. All of Grantors' right, title and interest in and to
all equipment, tools, instruments, machines, parts,
materials, substances, systems, supplies, rolling
stock, furniture, catalysts and chemicals,
communication systems and licenses, vehicles,
electronic systems and computers associated with,
related to or used in connection with the Refinery
or the Refinery Business, including without
limitation, all equipment, tools, instruments,
machines, parts, materials, substances, systems,
supplies, rolling stock, furniture, catalysts and
chemicals, communications systems and licenses,
vehicles, electronic systems and computers located
on the Refinery Site as of the Effective Time.
2. All of Grantors' right, title and interest in and to
all facilities, units, buildings, structures,
fixtures, terminals, pipelines, tanks and other
storage facilities and similar property used in the
refining, processing, treating, transporting or
storage of crude oil and refined products that are
associated with, related to or used in connection
with the Refinery or the Refinery Business,
including without limitation, the processing units,
shipping facilities and terminals described in
Exhibit A attached hereto.
3. All of the following owned by Grantors or any of
Grantors' Affiliates and located at or stored on or
in the Refinery Facilities as of the Effective Time,
including, in each case, linefills, tank bottoms and
work in progress: (a) crude oil, natural gas
liquids and other hydrocarbons processed by the
Refinery; (b) gasoline, diesel fuel, aviation fuel,
fuel oil and other refined products produced by the
Refinery; and (c) products that have been purchased,
partially processed or refined and placed in storage
pending blending or further processing.
4. All crude oil, natural gas liquids and other
hydrocarbons owned by Grantors or any of Grantors'
Affiliates and located at or stored on or in the
Pipeline Facilities as of the Effective Time,
including linefills.
There is specifically excepted and reserved from the terms of this
Instrument, and the term "Property" shall not include (a) the
Accounts Receivable, the Excluded Contracts and all assets of
Grantors or Affiliates of Grantors not associated with, related to
or used in connection with the Businesses, including without
limitation, (i) the Bluebell and Altonah gas plants and related
gathering systems located in Uintah and Duchesne Counties, Utah,
(ii) Grantors' airplane and hangar, and (iii) the stock of
Gary-Williams Acquisition Company, Gary-Williams Retail Company and
Gary-Williams Production Company; and (b) (i) the computers,
software (excluding the Refinery linear program), trademarks,
office equipment and supplies and other fixed assets located in the
ordinary course of business in Grantors' offices in Denver,
Colorado, (ii) all fixed assets located in the ordinary course of
business in Denver or Arapahoe Counties, Colorado, (iii) all
sulphur credits earned prior to the Effective Time, and (iv) the
stock of BRC.
Subject to Permitted Exceptions (as defined in Schedule I
attached hereto), Grantors warrant to Grantee, and to Grantee's
successors and assigns, that Grantors have good title to the
Property free and clear of all liens, claims, liabilities,
encumbrances or rights or interests of any third party whatsoever.
Except as otherwise provided in the Purchase Agreement,
Grantee hereby accepts the transfer set forth in this Instrument
and assumes and agrees to pay, perform and discharge all duties,
liabilities and obligations appurtenant to the Property and arising
after the Effective Time, including the Permitted Exceptions.
Grantors also hereby transfer to Grantee, its successors and
assigns, to the extent so transferable, the benefit of and the
right to enforce the claims, defenses, indemnities, covenants and
warranties, if any, that Grantors are entitled to enforce with
respect to the Property against Grantors' predecessors.
The parties agree that to the extent required to be operative,
the disclaimers of certain warranties contained herein are
"conspicuous" disclaimers for the purposes of any applicable law,
rule or order. The Property is transferred without any implied
warranties or covenants; and fixtures and personal property, if
any, transferred by this Instrument are transferred "AS IS," "WHERE
IS" and "WITH ALL FAULTS." WITHOUT LIMITATION OF THE GENERALITY OF
THE IMMEDIATELY PRECEDING SENTENCE, WITH RESPECT TO ANY FIXTURES OR
PERSONAL PROPERTY TRANSFERRED BY THIS INSTRUMENT GRANTORS EXPRESSLY
DISCLAIM AND NEGATE: (A) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, AND (C) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS.
The references herein to Permitted Exceptions and to liens,
encumbrances, burdens, defects and other matters are for the
purpose of defining the nature and extent of Grantors' warranty of
title and shall not be deemed to ratify or create any rights in
third parties.
Executed as of ___________, 1995, to be effective for all
purposes as of the Effective Time.
GRANTORS:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By:_____________________________
_____________________________
________________ President
GARY-WILLIAMS ENERGY CORPORATION,
a Delaware corporation
By:_____________________________
_____________________________
________________ President
GRANTEE:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By:_____________________________
_____________________________
Executive Vice President
<PAGE>
<PAGE>
EXHIBIT D
FORM OF ASSIGNMENT AND CONVEYANCE
(REFINERY)
ASSIGNMENT AND CONVEYANCE
(Refinery)
This Assignment and Conveyance (this "INSTRUMENT"), dated as
of ___________, 1995 at 7:00 A.M. local time (the "EFFECTIVE
TIME"), is from BLOOMFIELD REFINING COMPANY, a Delaware corporation
("GRANTOR"), with an address of 370 Seventeenth Street, Suite 5300,
Denver, Colorado 80203, to GIANT INDUSTRIES ARIZONA, INC., an
Arizona corporation ("GRANTEE"), with an address of 23733 North
Scottsdale Road, Scottsdale, Arizona 85255.
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Grantor, Grantor
has granted and assigned, and does hereby grant and assign to
Grantee all of Grantor's right, title and interest in and to the
following:
1. The leases, easements, servitudes, rights-of-way,
mineral rights, water rights, appurtenant rights,
permits, licenses, franchises, grants, certificates
and rights to use the surface described on Exhibit A
hereto; together with all other real property,
leases, easements, servitudes, rights-of-way,
mineral rights, water rights, appurtenant rights,
permits, licenses, franchises, grants, certificates
and rights to use the surface associated with,
related to or used in connection with the Bloomfield
Refinery located on the land described on Exhibit A
attached hereto located in San Juan County, New
Mexico or Grantor's business relating to the
purchase, transportation, refinement, processing and
sale of hydrocarbons and hydrocarbon products in
connection with such Bloomfield Refinery; and
2. The water rights described on Exhibit B hereto;
together with all other water rights associated
with, related to or used in connection with such
Bloomfield Refinery or Grantor's business relating
to the purchase, transportation, refinement,
processing and sale of hydrocarbons and hydrocarbon
products in connection with such Bloomfield
Refinery;
together with all of the fixtures located thereon that are real
property under applicable law and all hereditaments and
appurtenances thereunto belonging (collectively, the "Property").
To have and to hold the Property unto Grantee, and its
successors and assigns.
This Instrument is executed without warranty of any kind,
either express or implied, except that, subject to Permitted
Exceptions (as defined in Schedule I attached hereto) and the
Refinery Site Encumbrances (as defined in Schedule II), Grantor
specially warrants and agrees to defend the title of Grantee, and
its successors and assigns, against liens and security interests
created by, through or under Grantor, but not otherwise.
Grantor also hereby transfers to Grantee, and its successors
and assigns, to the extent so transferable, the benefit of and the
right to enforce the claims, defenses, indemnities covenants and
warranties, if any, that Grantor is entitled to enforce with
respect to the Property against Grantor's predecessors.
The parties agree that to the extent required to be operative,
the disclaimers of certain warranties contained herein are
"conspicuous" disclaimers for the purposes of any applicable law,
rule or order. The Property is transferred without any implied
warranties or covenants; and fixtures and personal property, if
any, transferred by this Instrument are transferred "AS IS," "WHERE
IS" and "WITH ALL FAULTS." WITHOUT LIMITATION OF THE GENERALITY OF
THE IMMEDIATELY PRECEDING SENTENCE, WITH RESPECT TO ANY FIXTURES OR
PERSONAL PROPERTY TRANSFERRED BY THIS INSTRUMENT GRANTOR EXPRESSLY
DISCLAIMS AND NEGATES: (A) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, AND (C) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS.
Separate assignments of the Property may be executed on
officially approved forms by Grantor to Grantee, in sufficient
counterparts to satisfy applicable statutory and regulatory
requirements. Those assignments shall be deemed to contain all of
the exceptions, reservations, limitations, warranties, rights,
titles, powers and privileges set forth herein as fully as though
they were set forth in each such assignment. The interests
conveyed by such separate assignments are the same, and not in
addition to, the Property conveyed herein.
The references herein to Permitted Exceptions, Refinery Site
Encumbrances and to liens and security interests are for the
purpose of defining the nature and extent of Grantor's special
warranty of title and shall not be deemed to ratify or create any
rights in third parties.
Executed as of ___________, 1995, to be effective for all
purposes as of the Effective Time.
GRANTOR:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By:_______________________________
_______________________________
____________President
GRANTEE:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By:_______________________________
_______________________________
Executive Vice President
<PAGE>
<PAGE>
ACKNOWLEDGMENT CERTIFICATES
GRANTOR
STATE OF _____________ )
) ss.
_______ COUNTY OF ____________)
This instrument was acknowledged before me on _____________,
1995, by __________________ as ____ President of BLOOMFIELD
REFINING COMPANY, a Delaware corporation.
_______________________________
[NOTARIAL SEAL] Notary Public
My commission expires: _______________________
GRANTEE
STATE OF _____________ )
) ss.
_______ COUNTY OF ____________)
This instrument was acknowledged before me on _____________,
1995, by __________________ as Executive Vice President of GIANT
INDUSTRIES ARIZONA, INC., an Arizona corporation.
_______________________________
[NOTARIAL SEAL] Notary Public
My commission expires: _______________________
<PAGE>
<PAGE>
EXHIBIT E
FORM OF GENERAL WARRANTY DEED (REFINERY SITE)
GENERAL WARRANTY DEED
(Refinery Site)
This General Warranty Deed (this "INSTRUMENT"), dated as of
_____________, 1995 at 7:00 A.M. local time (the "EFFECTIVE TIME"),
is from BLOOMFIELD REFINING COMPANY, a Delaware corporation
("GRANTOR"), with an address of 370 Seventeenth Street, Suite 5300,
Denver, Colorado 80203, to GIANT INDUSTRIES ARIZONA, INC., an
Arizona corporation ("GRANTEE"), with an address of 23733 North
Scottsdale Road, Scottsdale, Arizona 85255.
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Grantor, Grantor
has granted and does hereby grant to Grantee the following
described land:
The South One-Half of the Northwest Quarter (S1/2 NW1/4); The
Northeast Quarter of the Southwest Quarter (NE1/4SW1/4); The
North One-Half of the Northwest Quarter of the Southwest
Quarter (N1/2NW1/4SW1/4) and the Southeast Quarter of the
Northwest Quarter of the Southwest Quarter (SE1/4NW1/4SW1/4)
of Section 26; AND
The Southeast Quarter of the Northeast Quarter
(SE1/4NE1/4) and the North One-Half of the Northeast Quarter
of the Southeast Quarter (N1/2NE1/4SE1/4) of Section 27;
AND
The West One-Half of the Northeast Quarter (W1/2NE1/4) of
Section 27;
EXCEPT the following part of said tract, to wit:
BEGINNING at the Northwest corner of said tract;
THENCE South 30 feet;
THENCE east parallel to the north line of said tract, 676.6
feet;
THENCE North 30 feet;
THENCE West along the North line of said tract 676.6 feet to
the place of beginning.
AND;
BEGINNING at a point which is 826.08 feet North 31
degrees 16' East from the West Quarter Corner of said Section
27;
THENCE North 7 degrees 55' East 135.0 feet along the East
Right of Way of State Highway #44;
THENCE South 82 degrees 05' East 161.3 feet;
THENCE South 7 degrees 55' West 135.0 feet;
THENCE North 82 degrees 05' West 161.3 feet to the point of
beginning.
AND;
A tract of land situated in the Southeast Quarter of the
Northwest Quarter (SE1/4NW1/4) of said Section 27, more
particularly described as follow:
BEGINNING at a point which is the center of said SECTION 27;
THENCE N 00 degrees 23' 49" E along the North-South Centerline
of Section 27, a Distance of 554.30 feet, more or less, to a
point on the Easterly Right of Way of the Hammond Canal as
described in the San Juan County records in Book 633,
Page 243B (Parcel No. HMC);
THENCE Southwesterly along a non-tangent curve to the left as
described in said description 90 feet, more or less;
THENCE South 04 degrees 21' 30" West along a line tangent to
said curve 487.17 feet, more or less, along the Easterly Right
of Way line of the Hammond Canal to a point on the East-West
Centerline of Section 27;
THENCE North 89 degrees 24' 29" East 79.81 feet along said
East-West Centerline to the point of beginning.
All in Township 29 North of Range 11 West, N.M.P.M., San Juan
County, New Mexico;
together with all of the fixtures that are real property under
applicable law located thereon and all hereditaments and
appurtenances thereunto belonging. Said land, fixtures,
hereditaments and appurtenances are collectively referred to as the
"PROPERTY."
To have and to hold the Property unto Grantee, and its
successors and assigns.
Subject to Permitted Exceptions (as described in Schedule I
attached hereto), and the Refinery Site Encumbrances (as described
in Schedule II attached hereto), the Property has been granted, and
is granted by Grantor to Grantee with warranty covenants.
Grantor also hereby transfers to Grantee, and its successors
and assigns, to the extent so transferable, the benefit of and the
right to enforce the claims, defenses, indemnities, covenants and
warranties, if any, that Grantor is entitled to enforce with
respect to the Property against Grantor's predecessors in title to
the Property.
The parties agree that to the extent required to be operative,
the disclaimers of certain warranties contained herein are
"conspicuous" disclaimers for the purposes of any applicable law,
rule or order. The Property is transferred without any implied
warranties or covenants; and fixtures and personal property, if
any, transferred by this Instrument are transferred "AS IS," "WHERE
IS" and "WITH ALL FAULTS." WITHOUT LIMITATION OF THE GENERALITY OF
THE IMMEDIATELY PRECEDING SENTENCE, WITH RESPECT TO ANY FIXTURES OR
PERSONAL PROPERTY TRANSFERRED BY THIS INSTRUMENT GRANTOR EXPRESSLY
DISCLAIMS AND NEGATES: (A) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, AND (C) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS.
The references herein to Permitted Exceptions and to Refinery
Site Encumbrances and other matters are for the purpose of defining
the nature and extent of Grantor's warranty and shall not be deemed
to ratify or create any right in third parties.
This Instrument shall bind and inure to the benefit of Grantor
and Grantee, and their respective successors and assigns.
Executed as of ___________, 1995, to be effective for all
purposes as of the Effective Time.
GRANTOR:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By:________________________________
________________________________
_____ President
GRANTEE:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By:_________________________________
_________________________________
Executive Vice President
<PAGE>
<PAGE>
ACKNOWLEDGMENT CERTIFICATES
GRANTOR
STATE OF _____________ )
) ss.
_______ COUNTY OF ____________)
This instrument was acknowledged before me on _____________,
1995, by __________________ as ____ President of BLOOMFIELD
REFINING COMPANY, a Delaware corporation.
_______________________________
[NOTARIAL SEAL] Notary Public
My commission expires: _______________________
GRANTEE
STATE OF _____________ )
) ss.
_______ COUNTY OF ____________)
This instrument was acknowledged before me on _____________,
1995, by __________________ as Executive Vice President of GIANT
INDUSTRIES ARIZONA, INC., an Arizona corporation.
_______________________________
[NOTARIAL SEAL] Notary Public
My commission expires: _______________________
<PAGE>
<PAGE>
EXHIBIT F
FORM OF BILL OF SALE (PIPELINE)
BILL OF SALE
(Pipeline)
This Bill of Sale (this "INSTRUMENT"), dated as of
___________, 1995 at 7:00 A.M. local time (the "EFFECTIVE TIME"),
is from BLOOMFIELD REFINING COMPANY, a Delaware corporation
("BRC"), and GARY-WILLIAMS ENERGY CORPORATION, a Delaware
corporation ("GWEC"), both with an address of 370 Seventeenth
Street, Suite 5300, Denver, Colorado 80203, to GIANT INDUSTRIES
ARIZONA, INC., an Arizona corporation ("GRANTEE"), with an address
of 23733 North Scottsdale Road, Scottsdale, Arizona 85255. BRC and
GWEC shall collectively be referred to as ("GRANTORS").
Grantors and Grantee are parties to that certain Purchase and
Sale Agreement (the "PURCHASE AGREEMENT"), dated as of August 8,
1995, wherein Grantors agreed to sell and transfer to Grantee and
Grantee agreed to purchase and accept delivery of, certain
property, interests and rights as more specifically described
therein. Capitalized terms used herein without definition shall
have the meaning ascribed thereto in the Purchase Agreement. This
Instrument is being delivered pursuant to the Purchase Agreement
and shall be construed and interpreted consistently therewith.
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Grantors, Grantors
have sold and transferred, and do hereby sell and transfer, to
Grantee all of Grantors' right, title and interest in and to the
following (collectively, the "Property"):
1. All equipment, tools, instruments, machines, parts,
materials, substances, systems, supplies, rolling
stock, furniture, catalysts and chemicals,
communications systems and licenses, vehicles,
electronic systems and computers associated with,
related to or used in connection with the Pipeline
and the Pipeline Business; and
2. All facilities, units, buildings, structures,
fixtures, terminals, pipelines, tanks and other
storage facilities and similar property used in the
refining, processing, treating, transporting or
storage of crude oil and refined products associated
with, related to or used in connection with the
Pipeline or the Pipeline Business, including,
without limitation, all pipes, pumps and pumping
stations.
There is specifically excepted and reserved from the terms of this
Instrument, and the term "Property" shall not include (a) the
Accounts Receivable, the Excluded Contracts and all assets of
Grantors and their Affiliates not associated with, related to or
used in connection with the Businesses, including without
limitation (i) the Bluebell and Altonah gas plants and related
gathering systems located in Uintah and Duchesne Counties, Utah,
(ii) Grantors' airplane and hangar, and (iii) the stock of
Gary-Williams Acquisition Company, Gary-Williams Retail Company and
Gary-Williams Production Company; and (b) (i) the computers,
software (excluding the Refinery linear program), trademarks,
office equipment and supplies and other fixed assets located in the
ordinary course of business in Grantors' offices in Denver,
Colorado, (ii) all fixed assets located in the ordinary course of
business in Denver or Arapahoe Counties, Colorado, (iii) all
sulphur credits earned prior to the Effective Time, and (iv) the
stock of BRC.
This Instrument is executed without warranty of any kind,
either express or implied, except that, subject to Permitted
Exceptions (as defined in Schedule I attached hereto), Grantors
specially warrant and agree to defend the title of Grantee, and its
successors or assigns, against liens and security interests created
by, through or under Grantors, but not otherwise.
Except as otherwise provided in the Purchase Agreement,
Grantee hereby accepts the transfer set forth in this Instrument
and assumes and agrees to pay, perform and discharge all duties,
liabilities and obligations appurtenant to the Property arising
after the Effective Time, including the Permitted Exceptions.
Grantors also hereby transfer to Grantee, and its successors
and assigns, to the extent so transferable, the benefit of and the
right to enforce the claims, defenses, indemnities covenants and
warranties, if any, that Grantors are entitled to enforce with
respect to the Property against Grantors' predecessors.
The parties agree that to the extent required to be operative,
the disclaimers of certain warranties contained herein are
"conspicuous" disclaimers for the purposes of any applicable law,
rule or order. The Property is transferred without any implied
warranties or covenants; and fixtures and personal property, if
any, transferred by this Instrument are transferred "AS IS," "WHERE
IS" and "WITH ALL FAULTS." WITHOUT LIMITATION OF THE GENERALITY OF
THE IMMEDIATELY PRECEDING SENTENCE, WITH RESPECT TO ANY FIXTURES OR
PERSONAL PROPERTY TRANSFERRED BY THIS INSTRUMENT GRANTORS EXPRESSLY
DISCLAIM AND NEGATE: (A) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, AND (C) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS.
The references herein to Permitted Exceptions and liens and
security interest are for the purpose of defining the nature and
extent of Grantors' special warranty of title and shall not be
deemed to ratify or create any rights in third parties.
Executed as of ___________, 1995, to be effective for all
purposes as of the Effective Time.
GRANTORS:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By:_____________________________
_____________________________
________________ President
GARY-WILLIAMS ENERGY CORPORATION,
a Delaware corporation
By:_____________________________
_____________________________
________________ President
GRANTEE:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By:_____________________________
_____________________________
Executive Vice President<PAGE>
<PAGE>
EXHIBIT G
FORM OF ASSIGNMENT AND CONVEYANCE (PIPELINE)
ASSIGNMENT AND CONVEYANCE
(Pipeline)
This Assignment and Conveyance (this "INSTRUMENT"), dated as
of ___________, 1995 at 7:00 A.M. local time (the "EFFECTIVE
TIME"), is from BLOOMFIELD REFINING COMPANY, a Delaware corporation
("BRC"), and GARY-WILLIAMS ENERGY CORPORATION, a Delaware
corporation ("GWEC"), both with an address of 370 Seventeenth
Street, Suite 5300, Denver, Colorado 80203, to GIANT INDUSTRIES
ARIZONA, INC., an Arizona corporation ("GRANTEE"), with an address
of 23733 North Scottsdale Road, Scottsdale, Arizona 85255. BRC and
GWEC shall collectively be referred to as ("Grantors").
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Grantors, Grantors
have granted and assigned, and do hereby grant and assign, to
Grantee all of Grantors' right, title and interest in and to the
leases, easements, servitudes, rights-of-way, mineral rights, water
rights, appurtenant rights, permits, licenses, franchises, grants,
certificates and rights to use the surface described on Exhibit A
hereto; together with all other real property, leases, easements,
servitudes, rights-of-way, mineral rights, water rights,
appurtenant rights, permits, licenses, franchises, grants,
certificates and rights to use the surface associated with, related
to or used in connection with the Pipeline as described on Exhibit
A attached hereto or Grantors' business relating to the
transportation of hydrocarbons and hydrocarbon products through the
Pipeline; together with all of the fixtures that are real property
under applicable law located thereon and all hereditaments and
appurtenances thereunto belonging (collectively, the "PROPERTY").
To have and to hold the Property unto Grantee, and its
successors and assigns.
This Instrument is executed without warranty of any kind,
either express or implied, except that, subject to Permitted
Exceptions (as defined in Schedule I attached hereto), Grantors
specially warrant and agree to defend the title of Grantee, and its
successors and assigns, against liens and security interests
created by, through or under Grantors, but not otherwise.
Grantors also hereby assign and convey to Grantee, and its
successors and assigns, to the extent so transferable, the benefit
of and the right to enforce the claims, defenses, indemnities
covenants and warranties, if any, that Grantors are entitled to
enforce with respect to the Property against Grantors'
predecessors.
The parties agree that to the extent required to be operative,
the disclaimers of certain warranties contained herein are
"conspicuous" disclaimers for the purposes of any applicable law,
rule or order. The Property is transferred without any implied
warranties or covenants; and fixtures and personal property, if
any, transferred by this Instrument are transferred "AS IS," "WHERE
IS" and "WITH ALL FAULTS." WITHOUT LIMITATION OF THE GENERALITY OF
THE IMMEDIATELY PRECEDING SENTENCE, WITH RESPECT TO ANY FIXTURES OR
PERSONAL PROPERTY TRANSFERRED BY THIS INSTRUMENT GRANTORS EXPRESSLY
DISCLAIM AND NEGATE: (A) ANY IMPLIED OR EXPRESS WARRANTY OF
MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE, AND (C) ANY IMPLIED OR EXPRESS WARRANTY OF
CONFORMITY TO MODELS OR SAMPLES OF MATERIALS.
Separate assignments of the Property may be executed on
officially approved forms by Grantors to Grantee, in sufficient
counterparts to satisfy applicable statutory and regulatory
requirements. Those assignments shall be deemed to contain all of
the exceptions, reservations, limitations, warranties, rights,
titles, powers and privileges set forth herein as fully as though
they were set forth in each such assignment. The interests
conveyed by such separate assignments are the same, and not in
addition to, the Property conveyed herein.
The references herein to Permitted Exceptions and to liens and
security interests are for the purpose of defining the nature and
extent of Grantors' special warranty of title and shall not be
deemed to ratify or create any rights in third parties.
Executed as of ___________, 1995, to be effective for all
purposes as of the Effective Time.
GRANTORS:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By:_____________________________
_____________________________
________________ President
GARY-WILLIAMS ENERGY CORPORATION,
a Delaware corporation
By:_____________________________
_____________________________
________________ President
GRANTEE:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By:_____________________________
_____________________________
Executive Vice President
<PAGE>
<PAGE>
ACKNOWLEDGMENT CERTIFICATES
GRANTORS
STATE OF _____________ )
) ss.
_______ COUNTY OF ____________)
This instrument was acknowledged before me on _____________,
1995, by __________________ as ____ President of BLOOMFIELD
REFINING COMPANY, a Delaware corporation.
___________________________
[NOTARIAL SEAL] Notary Public
My commission expires: _______________________
STATE OF _____________ )
) ss.
_______ COUNTY OF ____________)
This instrument was acknowledged before me on _____________,
1995, by __________________ as ____ President of GARY-WILLIAMS
ENERGY CORPORATION, a Delaware corporation.
___________________________
[NOTARIAL SEAL] Notary Public
My commission expires: _______________________
<PAGE>
<PAGE>
GRANTEE
STATE OF _____________ )
) ss.
_______ COUNTY OF ____________)
This instrument was acknowledged before me on _____________,
1995, by __________________ as Executive Vice President of GIANT
INDUSTRIES ARIZONA, INC., an Arizona corporation.
___________________________
[NOTARIAL SEAL] Notary Public
My commission expires: _______________________
<PAGE>
<PAGE>
EXHIBIT H
FORM OF GUARANTEE AND AGREEMENT
GUARANTEE AND AGREEMENT
This Guarantee and Agreement (this "AGREEMENT"), dated as of
___________, 1995, is from GIANT INDUSTRIES, INC., a Delaware
corporation, with an address of 23733 North Scottsdale Road,
Scottsdale, Arizona 85255 ("GUARANTOR"), and to and for the benefit
of BLOOMFIELD REFINING COMPANY, a Delaware corporation ("BRC"),
with an address of 370 Seventeenth Street, Suite 5300, Denver,
Colorado 80203, and its successors and assigns.
RECITALS
Gary-Williams Energy Corporation, a Delaware corporation
("GWEC"), BRC and Giant Industries Arizona, Inc., an Arizona
corporation ("GIANT ARIZONA") entered into that certain Purchase
and Sale Agreement (the "PURCHASE AGREEMENT"), dated as of August
8, 1995, wherein Sellers agreed to sell and transfer to Giant
Arizona, and Giant Arizona agreed to purchase and accept delivery
of, certain property, interests and rights as more specifically
described in the Purchase Agreement. As set forth in Section 2.02
of the Purchase Agreement the consideration to be paid by Giant
Arizona under the Purchase Agreement, included an "Earnout," if and
when earned, as more specifically described in Schedule 1.01.1 to
the Purchase Agreement (the "EARNOUT"). Capitalized terms used
herein without definition shall have the meaning ascribed thereto
in the Earnout.
Guarantor owns all of the outstanding shares of stock of Giant
Arizona, and Guarantor, and the other direct and indirect
subsidiaries of Guarantor are mutually dependent on each other in
the conduct of their respective businesses as an integrated
operation. It is a condition to the consummation of the
transactions provided for in the Purchase Agreement that Guarantor
shall have executed and delivered this Agreement.
AGREEMENT
In consideration of the foregoing, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged by Guarantor, and in order to induce Sellers to
proceed with the consummation of the transactions provided for in
the Purchase Agreement, Guarantor hereby agrees as follows:
1. RATIFICATION. Guarantor hereby ratifies and agrees to be
bound by the provisions contained in Subsection 3.01(c) and Section
3.02 of the Earnout.
2. GUARANTEE. Guarantor hereby guarantees the duties and
obligations of Giant Arizona under the Earnout (the "Obligations")
as follows:
(a) If and whenever Giant Arizona fails for any reason
whatsoever punctually to pay or perform any of the Obligations,
Guarantor shall cause each and every such Obligation to be paid or
performed on demand as if Guarantor instead of Giant Arizona were
expressed to be the primary obligor of such Obligations to the
intent that BRC shall receive the same amounts and benefits as
would have been receivable had such payments or performances had
been made by Giant Arizona.
(b) If any payment received by BRC shall, on the
subsequent bankruptcy, insolvency, corporate reorganization or
other similar event applying to Giant Arizona, be avoided or set
aside under any laws relating to bankruptcy, insolvency, corporate
reorganization or other such similar event, such payments shall not
be considered as discharging or diminishing the liability of
Guarantor, and the guarantee contained herein shall continue to
apply as if such payment had at all times remained owing by Giant
Arizona and Guarantor shall indemnify BRC with respect thereto.
(c) Guarantor hereby agrees that its obligations under
the guarantee contained herein shall be unconditional and
irrevocable and that Guarantor shall be fully liable irrespective
of the validity, regularity, legality or enforceability against
Giant Arizona of, or of any defense or counterclaim whatsoever
available to Giant Arizona in relation to, the Obligations, whether
or not any action has been taken to enforce the same or any
judgment obtained against Giant Arizona, whether or not any time or
indulgence has been granted to Giant Arizona by or on behalf of
BRC, whether or not there have been any dealings or transactions
between Giant Arizona and BRC, whether or not BRC has changed its
status, functions, control or ownership, whether or not the Earnout
has been amended, changed or otherwise modified, and whether or not
any other circumstances have occurred which might otherwise
constitute a legal or equitable discharge of or defense of a
guarantor. Accordingly, the validity of the guarantee contained
herein shall not be affected by reason of any invalidity,
irregularity, illegality or unenforceability of all or any of the
Obligations and this guarantee shall not be discharged nor shall
the liability of Guarantor under the guarantee contained herein be
affected by any act, thing or omission or means whatever whereby
its liability would not have been discharged if it had been the
principal obligor.
(d) In furtherance of the foregoing and not in
limitation thereof, no action or inaction by or on behalf of Giant
Arizona, Guarantor or BRC or any other person and no change of law
or circumstances shall affect, release or diminish Guarantor's
obligations, liabilities, agreements or duties hereunder.
Guarantor hereby expressly agrees that BRC may, from time to time,
without notice to or the consent of Guarantor (i) amend, change or
modify, in whole or in part, the Earnout, (ii) give or refuse to
give any waivers or other indulgences, or neglect, delay, fail or
refuse to take or prosecute any action in connection with the
Earnout, (iii) change, rearrange, extend or renew the time, terms,
or manner for payment or performance of any of Giant Arizona's
obligations or duties, and (iv) compromise or settle any duties or
obligations under the Earnout. Furthermore, the guarantee
contained herein is a continuing guarantee and shall apply to and
cover the Earnout and all renewals, extensions, amendments,
modifications, supplements or restatements thereof.
(e) BRC may invoke the benefits of the guarantee
contained herein before pursuing any remedies against Giant Arizona
or any other person. BRC may maintain an action against Guarantor
on the guarantee contained herein without joining Giant Arizona
therein and without bringing a separate action against Giant
Arizona.
(f) Guarantor hereby waives diligence, presentment,
demand of payment, filing or claims with a court in the event of
dissolution, liquidation, merger or bankruptcy of Giant Arizona,
any right to require a proceeding first against Giant Arizona,
protest or notice with respect to the Obligations and all demands
whatsoever and hereby covenants that the guarantee contained herein
shall be a continuing guarantee which will not be discharged except
by complete payment and performance of the Obligations.
(g) Notwithstanding anything contained in this Agreement
to the contrary, Guarantor shall have the same rights as Giant
Arizona has to assert any defense or claim under the Purchase
Agreement as a defense to this guarantee.
3. REPRESENTATIONS AND WARRANTIES. Guarantor hereby
represents and warrants to BRC as follows:
(a) ORGANIZATION. Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, and Guarantor is duly qualified to carry on
its business in the State of New Mexico.
(b) POWER AND AUTHORITY. Guarantor has all requisite
power and authority to carry on its business as presently
conducted, to enter into this Agreement, and to perform its other
obligations under this Agreement. This Agreement does not violate,
and is not in conflict with, any provision of Guarantor's charter,
bylaws or governing documents, or any agreement or instrument to
which Guarantor is a party or is bound, or any judgment, decree,
order, statute, rule or regulation applicable to Guarantor.
(c) DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement have been duly and validly authorized
by all requisite action on the part of Guarantor.
(d) BINDING OBLIGATIONS. This Agreement has been duly
executed and delivered on behalf of Guarantor, and constitutes the
legal, valid and binding obligations of Guarantor, enforceable
against Guarantor in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws relating to or
affecting the enforcement of creditors' rights generally and to
general principles of equity.
4. MISCELLANEOUS. This Agreement shall bind Guarantor and
inure to the benefit of BRC and its permitted successors and
assigns under the Earnout. This Agreement may not be altered or
amended, nor any rights hereunder be waived, except by an
instrument in writing executed by the party or parties to be
charged with such amendment or waiver. A waiver of any term,
provision or condition of this Agreement in any one or more
instances, shall not be deemed to be, or construed as, a further or
continuing waiver of any such term, provision or condition or as a
waiver of any other term, provision or condition of this Agreement.
Executed as of the date first set forth above.
GIANT INDUSTRIES, INC., a Delaware
corporation
By:_______________________________
Fredric L. Holliger, Executive
Vice President
ACKNOWLEDGMENT CERTIFICATE
STATE OF __________________ )
) ss.
_______ COUNTY OF _________ )
This instrument was acknowledged before me on
______________, 1995, by FREDRIC L. HOLLIGER as Executive Vice
President of GIANT INDUSTRIES, INC., a Delaware corporation.
Witness my hand and official seal.
________________________________
[NOTARIAL SEAL] Notary Public
My commission expires:<PAGE>
<PAGE>
EXHIBIT I
FORM OF SELLERS' CERTIFICATE
Bloomfield Refinery Company, a Delaware corporation, and
Gary-Williams Energy Corporation, a Delaware corporation
(collectively, "SELLERS"), hereby certify as follows with respect
to that certain Purchase and Sale Agreement, dated as of August 8,
1995 (the "AGREEMENT"), among Sellers and Giant Industries Arizona,
Inc., an Arizona corporation ("Buyer").
1. Those representations and warranties of Sellers contained
in Section 3.01 of the Agreement are true at and as of the date
hereof in all material respects.
2. Those covenants and agreements of Sellers contained in
Section 4.01 of the Agreement have been performed in all material
respects.
3. Those conditions to Sellers' obligations contained in
Sections 6.01 and 6.03 of the Agreement have been satisfied to the
satisfaction of Sellers or waived by Sellers.
Executed as of the _____ day of _______________, 1995.
BLOOMFIELD REFINING COMPANY
By:_____________________________
__________President
GARY-WILLIAMS ENERGY CORPORATION
By:_____________________________
__________President<PAGE>
<PAGE>
EXHIBIT J
FORM OF BUYER'S CERTIFICATE
Giant Industries Arizona, Inc., an Arizona corporation
("BUYER"), hereby certifies as follows with respect to that certain
Purchase and Sale Agreement, dated as of August 8, 1995 (the
"AGREEMENT"), among the Buyer and Bloomfield Refining Company, a
Delaware corporation, and Gary-Williams Energy Corporation, a
Delaware corporation (collectively, "Sellers").
1. Those representations and warranties of Buyer contained
in Section 3.02 of the Agreement are true at and as of the date
hereof in all material respects.
2. Those covenants and agreements of Buyer contained in
Section 4.02 of the Agreement have been performed in all material
respects.
3. Those conditions to Buyer's obligation contained in
Sections 6.02 and 6.03 of the Agreement have been satisfied to the
satisfaction of Buyer or waived by Buyer.
Executed as of the _____ day of _____________________, 1995.
GIANT INDUSTRIES ARIZONA, INC.
By:________________________________
_________ President<PAGE>
<PAGE>
EXHIBIT K
FORM OF NON-FOREIGN STATUS CERTIFICATE
___________________________, a _____________ corporation
("SELLER"), hereby certifies as follows with respect to that
certain Purchase and Sale Agreement, dated as of August 8, 1995
(the "AGREEMENT"), among Seller, _________________ a corporation,
as Sellers, and _____________________________________, a
_______________ corporation ("Buyer"), as Buyer, and pursuant the
Foreign Investment and Real Property Tax Act of 1980, as amended.
1. Seller is not a non-resident alien, foreign corporation,
foreign partnership, foreign trust, or foreign estate alien (as
those terms are defined in the Internal Revenue Code of 1986 as
amended (the "Code")) and the Treasury Regulations thereunder.
2. Seller's United States of America employer identification
number is ________________.
3. Seller's office address is ______________________________
__________________________________________________________.
Attest: ______________________________
By:___________________________
___________________________
___________________________ _______________ President
By:________________________
Secretary
(Seal)
ACKNOWLEDGMENT
State of __________________)
) ss.
_______ County of _________)
The foregoing instrument was acknowledged before me this _____
day of ____________, 19___, by ______________ as __________________
of the _____________________________.
Witness my hand and official seal.
My commission expires:
_______________________________<PAGE>
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED AND EXHIBIT FILED WITH THE SEC
UNDER SEPARATE COVER
EXHIBIT L
GIANT INDUSTRIES, INC.
23733 NORTH SCOTTSDALE ROAD
SCOTTSDALE, AZ 85255
P.O. BOX 12999, SCOTTSDALE, AZ 85255
(602) 585-8888
CRUDE OIL CONTRACT
TO: GARY-WILLIAMS ENERGY CORPORATION (GWEC) DATE:
370 17th Street, Suite 5300
Denver CO 80202
GIANT CONTRACT #:7765-MKG-S
- -----------------------------------------------------------------
This is to confirm conversations in which the following
transaction was agreed upon:
INTENT: It is the intent herein, of both Parties,
to share the financial savings of GWEC's
XXXXXXXXXXXXXXXXXXX Contracts (the
"Contracts"), listed herein, as now or
hereafter amended or extended or replaced.
Contracts are deemed to have been replaced
in a situation where GWEC sought a
cancellation of contracts shown, and
entered into a new contract with the
supplier including essentially the same
production under similar terms and
conditions. In such a replacement
contract, the shared financial savings
shall only apply to volumes, which were a
part of the original contract.
Parties Date Type
------- ---- ----
GWEC and XXXXXXXXXX 10/14/94 XXXXXXXXXX
GWEC and XXXXXXXXXX 03/02/95 XXXXXXXXXX
GWEC and XXXXXXXXXX 06/20/91 XXXXXXXXXX
GWEC and XXXXXXXXXX 06/29/90 XXXXXXXXXX
GWEC and XXXXXXXXXX 09/06/90 XXXXXXXXXX
GWEC and XXXXXXXXXX 12/09/94 XXXXXXXXXX
GWEC and XXXXXXXXXX 08/16/94 XXXXXXXXXX
MONTHLY PAYMENT TO
GIANT FROM GWEC:
Payment shall be made by GWEC on or before
the 25th day of the month following the
month of delivery as it relates to all
XXXXXXXXXX Contracts. A good faith
estimate payment shall be made by GWEC on
or before the last day of the month
following the month of delivery as it
relates to the XXXXXXXXXX Contract. The
good faith estimate payment shall be
adjusted to the then current actual volumes
and values on or before the 10th day of the
fourth month following the month of
delivery. Further payment adjustments
shall be made monthly as they occur. All
payments shall be made by bank wire
transfer in immediately available funds to
a bank into an account as designated by the
recipient of the payment. Each month GWEC
shall issue to Giant a complete statement
supporting all payments and adjustments.
GWEC's payment each month to Giant shall
equal a percent, as shown below, of the
difference between XXXXXXXXXXXXXXXXXX
figure as published by Platt's Oilgram
Price Report ("Platts"), for the month of
delivery, and GWEC's Purchase Price of
crude oil under the Contracts for the same
month, multiplied by GWEC's monthly
receipts from Contracts shown above.
Percentage
----------
Retained by Paid to
GWEC Giant
----------- -------
From (Date of Closing) to
Six Months After Closing XXX XXX
(Next Six Months) XXX XXX
(Thereafter to Termination) XXX XXX
TERM: A period of time equal in length to the
earlier of (i) the expiration or
cancellation of the Contracts, as now or
hereafter amended or extended or replaced;
or (ii) December 31, 2001; or, (iii)
termination of Giant's obligation to make
Earnout Payments pursuant to Schedule
1.01.1 of the Purchase and Sale Agreement
among Bloomfield Refining Company, GWEC,
and Giant Industries Arizona, Inc., dated
August 8, 1995 (the "Purchase and Sale
Agreement"). The XXXXXXXXX Company/GWEC
Contract dated March 2, 1995 shall cease
being a part of this Agreement on June 30,
1996.
COVENANTS: GWEC agrees to at all times conduct their
operations in good faith so as not to
subvert the intent of the parties herein.
AUDITS: (a) Giant, or its designated independent
auditing firm, shall have the right to
review and audit the books and records of
GWEC respecting the payments required
herein. GWEC shall provide Giant with any
information required to determine such
payments. Except as provided below, Giant
shall bear the costs of any audit conducted
by it. Giant shall maintain the
confidentiality of all nonpublic
information relating to GWEC.
(b) Each payment shall be final unless
Giant gives written objection within one
year after the payment.
(c) All late payments and all amounts found
to be due to Giant shall bear interest at
the lesser of 10 percent per annum and the
maximum legal rate. If Giant objects to a
payment, the payment shall not be final
until it is resolved by agreement of the
parties or by arbitration pursuant to this
Agreement. Payments due to reasonable and
customary accounting adjustments are not
subject to the interest penalty described
herein.
ARBITRATION: (a) The parties agree to submit all
controversies, claims and matters of
difference relating to the determination of
payments to arbitration.
(b) The party desiring arbitration shall so
notify the other party, identifying in
reasonable detail the matters to be
arbitrated and the relief sought.
Arbitration hereunder shall be by a partner
or member in a neutral national certified
public accounting firm not affiliated with
either party. The American Arbitration
Association ("AAA") shall submit a list of
persons meeting the criteria outlined above
and the parties shall mutually agree upon
the arbitrator. In the event that the
parties fail to select an arbitrator as
required above, the AAA shall select the
arbitrator.
(c) All matters arbitrated hereunder shall
be arbitrated in Albuquerque, New Mexico
and shall be governed by New Mexico law.
Arbitration shall be conducted in
accordance with the Commercial Arbitration
rules of the AAA, except to the extent such
Rules conflict with the express provisions
of this Agreement (which shall prevail in
the event of such conflict). The
arbitrator shall conduct a hearing no later
than 60 days after submission of the matter
to arbitration, and a decision shall be
rendered by the arbitrator within 30 days
of the hearing. Any award entered shall be
made by a written opinion stating the
reasons for the award made.
(d) This submission and agreement to
arbitrate shall be specifically
enforceable.
(e) If the arbitration award reflects an
underpayment of the disputed payment by an
amount greater than five percent of the
correct amount, GWEC shall pay the AAA's
fees, the arbitrator's fee, and Giant's
audit costs and attorneys' and experts'
fees, provided these fees are reasonable.
Giant shall pay the AAA's fees, the
arbitrator's fees, and GWEC attorneys' and
experts' fees, if the arbitration award
reflects that the disputed payment was
equal to or greater than the correct
amount. Giant shall pay the AAA's fees and
the arbitrator's fees, and each Party shall
pay its own attorneys' and experts' fees,
if the arbitration award reflects an
underpayment of the disputed payment by an
amount up to five percent of the correct
amount.
ADDITIONAL
PROVISIONS: GWEC'S "Purchase Price" of the barrels
shall be defined as the per barrel monthly
weighted average price (i) paid to the
supplier; plus or minus as applicable (ii)
all reasonable pipeline charges, or
credits, paid to or received from any other
entity that are directly related to the
transportation or exchange of the barrels
that are the subject of the Contracts to a
Platt's trading location, including, but
not limited to, tariffs, line loss and
gravity and sulfur bank fees or credits,
provided said charges are not included in
the price paid to the supplier; plus or
minus as applicable (iii) all trading
differentials for the month of delivery as
published by Platt's for the respective
quality from the trading locations into WTI
at Cushing, Oklahoma; plus (iv) any
reasonable and customary accounting
adjustments necessary due to volume
imbalances or other factors; plus (v) any
monthly administrative fees paid under the
Contracts.
GWEC shall account to Giant for any
rebates/additional charges when received or
paid.
PLEASE RETURN WHITE COPY TO GIANT REFINING COMPANY. THANK YOU.
GARY-WILLIAMS ENERGY CORPORATION (GWEC)
BY_____________________________________
GIANT REFINING COMPANY (GIANT)
BY_____________________________________
<PAGE>
<PAGE>
SCHEDULE 1.01.1
EARNOUT
This Schedule 1.01.1 is part of the Purchase and Sale
Agreement (the "PURCHASE AGREEMENT") among Bloomfield Refining
Company, a Delaware corporation ("BRC"), Gary-Williams Energy
Corporation, a Delaware corporation ("GWEC") (collectively,
"SELLERS"), and Giant Industries Arizona, Inc. ("BUYER") and
provides for the payment by Buyer of an Earnout, as defined in the
Purchase Agreement for the Refinery.
ARTICLE I
DEFINITIONS
As used in this Schedule, the following terms shall have the
following meanings.
"AFFILIATE" when used with respect to any person, shall mean
any entity directly or indirectly controlling, controlled by or
under common control with such person.
"CINIZA REFINERY" shall mean that refinery owned by Buyer
located near Gallup, New Mexico.
"DEEMED DAILY REFINERY CAPACITY" shall mean 14,700 barrels per
day for calendar years 1997 and 2001, and 16,000 barrels per day
for all other periods. Subject to the provisions of Section 5.01
regarding Force Majeure, the Deemed Daily Refinery Capacity shall
be used to determine the Earnout Payment as provided below
regardless of the actual level of production from or capacity of
the Refinery or the Ciniza Refinery.
"EFFECTIVE TIME" shall have the meaning ascribed to such term
in the Purchase Agreement.
"FORCE MAJEURE" shall mean any cause or causes beyond the
control of Buyer that materially prevents Buyer from operating
either the Refinery or the Ciniza Refinery in the same manner that
it had been operating the refineries prior to the occurrence of
such cause, including but not limited to the following: acts of
God; fire; storm; flood; earthquake; wash outs; explosions;
accidents; acts of public enemy; rebellion; strikes; lock-outs;
disputes or differences with workmen; labor shortages; industry
disturbances; failure of power or utilities; interruption,
disruption or breakdown of supply, production, manufacture,
storage, transportation, sales, distribution, or delivery; breakage
or accident to machinery, equipment or pipelines; and restrictions
or restraints imposed by law or by rule, regulation or order of
governmental authorities, whether federal, state or local (but not
including any increased costs of compliance with existing or future
laws, rules, regulations or orders); provided, however, that
neither lack of money, changes in market conditions nor reduced
availability of raw materials due to natural decline or increased
costs of raw materials shall constitute Force Majeure.
"GIANT" shall mean Giant Industries, Inc., a Delaware
corporation.
"REFINERY MARGIN" shall mean the refinery-sourced revenues
(including all business interruption insurance proceeds
attributable to the Refinery or the Ciniza Refinery that Buyer
accrues) less the associated cost of revenues, stated on a per
barrel basis for the refinery-sourced sales barrels. The Refinery
Margin will be the weighted average for both the Ciniza Refinery
and the Refinery. The Refinery Margin calculation shall be based
on generally accepted accounting principles applied consistently
with Buyer's historical practices used in calculating the "Refinery
Margin" that Buyer currently reports in its public filings with the
Securities and Exchange Commission.
The Refinery Margin shall be calculated based on
refinery-sourced sales barrels. Refinery-sourced sales barrels
shall include refinery direct sales, Affiliate sales, exchange
sales, and any other disposition for value, but not outside
purchases of finished products (i.e., the number of barrels of such
outside products shall not be included in the number of barrels of
refinery-sourced sales barrels in determining the per barrel
Refinery Margin). Refinery-sourced revenues shall consist of the
revenues from sales of the various finished petroleum products
manufactured by the applicable refinery and sold, all of which
shall be reflected in Buyer's billing system including sales to
Affiliates. Revenues shall be adjusted for rebates and credits.
Finished product freight and superfund tax and other taxes
collected by Buyer (but not taxes levied on the Buyer, e.g. income
taxes, etc.) shall be reductions to revenues. Differential income
on product exchanges shall also be included in revenues.
Cost of revenues shall consist of the purchase of raw
materials to be manufactured at the refineries (excluding
chemicals, operating expenses and catalysts). Raw material cost
includes all freight to move the raw materials to the refineries
and gains or losses resulting from hedging contracts associated
with raw materials. Outside purchases of finished product (net of
revenues) shall be included in cost of revenues. Gains or losses
from raw materials exchanges shall be included in cost of revenues
(including as gains all payments to Buyer by GWEC under that Crude
Oil Contract to be executed by GWEC and Buyer pursuant to Section
7.03(k) of the Purchase Agreement. Inventory changes shall also be
reflected in the cost of revenues and shall be stated at the lower
of cost or market with cost determined by the last-in, first-out
method of accounting. Finished products shall be valued in
inventory based on a relative sales value method. Gains and losses
resulting from speculative contracts associated with raw materials
or finished products shall not be included in cost of revenues.
Produced fuel consumed in refinery operations shall be included in
refinery-sourced revenues and in the cost of revenues so as to have
no effect on the Refinery Margin.
Affiliates of Buyer may supply raw materials, purchase
finished products from Buyer, and provide associated transportation
services. Transactions with Affiliates shall continue to be priced
competitively with similar bona fide arms' length transactions and
in a manner consistent with Buyer's historical practices. The
transportation cost for crude oil shipped through the Pipeline
shall be the tariff charge, as in effect from time to time,
provided that Buyer may seek increases in the tariff charge only to
reflect increased Pipeline operating or capital costs determined in
a manner consistent with the manner in which the tariff has
historically been set for the Pipeline.
If the Ciniza Refinery ceases to be owned by Buyer or an
Affiliate of Buyer, the Refinery Margin shall be calculated by
reference to the Refinery only and not the Ciniza Refinery.
"PERMITTED LIEN" shall mean the following:
(i) liens for taxes or assessments not yet delinquent
or, if delinquent, that are being contested in good
faith in the ordinary course of business and which
have been reserved against if required by generally
accepting accounting practices consistently applied;
(ii) materialman's, mechanic's, repairman's, employee's,
contractor's, operator's and other similar liens or
charges arising in the ordinary course of business
securing amounts not yet due and payable and which
have been reserved against if required by generally
accepting accounting practices consistently applied;
(iii) liens, burdens and encumbrances burdening the
Refinery or the Pipeline at the time the same are
conveyed to Buyer; and
(iv) easements, rights-of-way, and servitudes that do not
interfere materially with the operation of the
affected asset.
"PIPELINE" shall mean the raw materials pipeline located in
San Juan County, New Mexico delivering crude oil to the Refinery.
"REFINERY" shall mean the refinery commonly known as the
Bloomfield Refinery located near Bloomfield, New Mexico.
ARTICLE II
EARNOUT
2.01 EARNOUT PAYMENTS. On or before 90 days after the end of
each calendar year commencing with 1995, Buyer shall pay to BRC by
wire transfer at such account as BRC may specify, an amount (the
"EARNOUT PAYMENT") determined as follows:
(a) If the Refinery Margin is $4.25 or less for the
applicable period, no Earnout Payment shall be due.
(b) If the Refinery Margin is greater than $4.25 but
less than or equal to $6.25 for the applicable period, the Earnout
Payment shall equal (i) 60% of the amount by which the Refinery
Margin exceeds $4.25, MULTIPLIED BY (ii) the sum of the Deemed
Daily Refinery Capacity for each day of the applicable period.
(c) If the Refinery Margin exceeds $6.25 for the
applicable period, the Earnout Payment shall equal (i) (A) $1.20,
plus (B) 80% of the amount by which the Refinery Margin exceeds
$6.25, MULTIPLIED BY (ii) the sum of the Deemed Daily Refinery
Capacity for each day of the applicable period.
(d) The "applicable period" shall be (i) the period from
the Effective Time through December 31, 1995, (ii) each calendar
year thereafter, and (iii) if the Buyer's obligation to make
Earnout Payments terminates pursuant to Section 2.02(b) other than
on January 1 of a calendar year, the period from January 1 through
the day such obligation terminates.
(e) The Earnout Payment shall be calculated in
accordance with the terms of this Schedule 1.01.1 using generally
accepted accounting principles as applied to the refineries'
operations, consistently applied from period to period.
(f) A sample calculation of the Earnout Payment is set
forth on Exhibit 2.01(f) hereto.
(g) If all or substantially all of the Refinery is
destroyed by fire or other casualty or taken by condemnation, and
the Buyer decides to not replace or rebuild the Refinery, Buyer
shall pay to BRC an amount equal to BRC's Share of any insurance
proceeds, damage awards and condemnation awards received by Buyer
relating to such occurrence or taking. "BRC's Share" shall be a
fraction whose numerator shall be 25 multiplied by 1.5 multiplied
by the number of Remaining Days and whose denominator shall be (i)
80 multiplied by (ii) the number of days from the Effective Time
through December 31, 2001 plus the aggregate number of Force
Majeure Days that occurred between the Effective Time and the
casualty event or taking; provided that BRC's Share shall not
exceed 25/80ths. The "Remaining Days" shall be the number of days
from the casualty or taking through December 31, 2001 plus the
aggregate number of Force Majeure Days that occurred between the
Effective Time and the casualty event or taking. Such payment to
BRC shall be treated as an Earnout Payment. Upon receipt of such
payment, the obligation of the Buyer to make Earnout Payments shall
terminate.
(h) BRC shall have the right to assign its rights under
this Schedule 1.01.1 to any of its or GWEC's Affiliates, subject to
the Buyer's right of setoff.
2.02 TERMINATION.
(a) Buyer's obligation to make the Earnout Payments
shall terminate when BRC has received Earnout Payments with an
aggregate net present value (as of the Effective Time) of
$25,000,000.00 using a discount rate of 9.75% per annum. Each
Earnout Payment shall be discounted from the date it is actually
received by BRC to the Effective Time. Buyer will have the right
to prepay Earnout Payments using a net present value discount rate
of 9.75% per annum.
(b) The Earnout Payment shall accrue and be payable with
respect to the period commencing at the Effective Time and
continuing through and including December 31, 2001 plus a period
equal to the aggregate number of Force Majeure Days as described in
Section 5.01.
(c) A sample calculation of the net present value of an
assumed hypothetical series of Earnout Payments, and the
application of the extension for Force Majeure Days as described in
Section 5.01 is set forth in Exhibit 2.012(f).
ARTICLE III
COVENANTS
3.01 COVENANTS OF BUYER. At all times from the date hereof
until the termination of Buyer's obligation to make Earnout
Payments, Buyer shall:
(a) Conduct its operations in good faith so as not to
subvert the intent of the parties herein.
(b) Not mortgage, pledge or hypothecate the Pipeline or
the Refinery or create or allow to remain thereon any lien, charge
or encumbrance of any character, except Permitted Liens.
(c) Not assign, sell, convey or otherwise transfer the
Refinery (and Giant will not and will not permit its Affiliates, to
sell, exchange, or transfer by merger or otherwise a controlling
interest in the voting stock of the Affiliate of Giant owning the
Refinery) other than to an Affiliate of Giant, unless in either
case BRC expressly consents thereto in writing, the transferee
expressly agrees to assume and perform all of Buyer's obligations
under this instrument and such sale, lease, conveyance, transfer or
assignment is made and accepted expressly subject and subordinate
to this instrument. Buyer shall remain liable for all of its
obligations under this Schedule 1.01.1 notwithstanding any such
sale, transfer or assignment.
(d) Not subcontract or otherwise allow any third party
to operate the Refinery, until and unless the successor operator
has been approved in writing by BRC, which approval will not be
unreasonably withheld, or unless Buyer remains ultimately
responsible for the operation of the Refinery.
(e) Permit authorized representatives of BRC, at a
reasonable time based on reasonable notice, but at BRC's risk and
expense, to inspect the Refinery.
3.02 INCORPORATION OF INDENTURE COVENANTS-NO CHANGE OF
CONTROL. Giant and Buyer hereby incorporate by reference their
covenants set forth in Articles Four and Five of that Indenture
attached hereto as Exhibit 3.02 and hereby make such covenants to
BRC.
3.03 REMEDIES. Until the time the Buyer has fully discharged
its obligation to make Earnout Payments, if Buyer shall fail to
perform or observe, in any material respect, any of its obligations
or covenants, BRC may recover damages and seek other remedies
available to BRC at law or in equity.
ARTICLE IV
REPORTING
4.01 REPORTS. Buyer shall deliver to Seller the following
statements and reports:
(a) Quarterly, within 45 days after the end of each
quarter for which such report is given and to the extent such
information is available, a report reflecting the calculation of
Refinery Margin for the quarter and year-to-date.
(b) With each Earnout Payment, of if no Earnout Payment
is due, a statement, prepared and certified by Buyer's Chief
Financial Officer, together with the supporting detail, reflecting
the calculation of Refinery Margin and the Earnout Payment for the
applicable period.
4.02 AUDITS.
(a) BRC, or it designated independent auditing firm,
shall have the right to review and audit the books and records of
Buyer respecting the calculation of Refinery Margin. Buyer shall
provide BRC with any information required to determined Refinery
Margin. Except as provided in Section 4.03(e), BRC shall bear the
costs of any audit conducted by it. BRC shall maintain the
confidentiality of all non-public information relating to Buyer or
the refineries.
(b) Each Earnout Payment shall be final unless BRC gives
written objection following completion of its audit, as described
in Section 4.02(a), within one year after the Earnout Payment.
(c) All late payments of Earnout Payments and all
amounts found to be due to BRC shall bear interest at the lesser of
15 percent per annum and the maximum legal rate. If BRC objects,
the Earnout Payment shall not be final until it is resolved by
agreement of the parties or arbitration pursuant to Section 4.03.
If Buyer pays the interest due on a late Earnout Payment or other
amounts found to be due, the net present value of such Earnout
Payment for purposes of Section 2.02(a) shall be determined by
discounting such Earnout Payment from the date on which it was due
and payable, notwithstanding that it was later paid.
4.03 ARBITRATION.
(a) The parties agree to submit all controversies,
claims and matters of difference relating to the determination of
Earnout Payments to arbitration.
(b) The party desiring arbitration shall so notify the
other party, identifying in reasonable detail the matters to be
arbitrated and the relief sought. Arbitration hereunder shall be
by a partner or member in a neutral national certified public
accounting firm not affiliated with either party. The American
Arbitration Association ("AAA") shall submit a list of persons
meeting the criteria outlined above and the parties shall mutually
agree upon the arbitrator. In the event that the parties fail to
select an arbitrator as required above, the AAA shall select the
arbitrator.
(c) All matters arbitrated hereunder shall be arbitrated
in Albuquerque, New Mexico and shall be governed by New Mexico law.
Arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the AAA, except to the extent such Rules
conflict with the express provisions of this Section 4.03 (which
shall prevail in the event of such conflict). The arbitrator shall
conduct a hearing no later than 60 days after submission of the
matter to arbitration, and a decision shall be rendered by the
arbitrator within 30 days of the hearing.
(d) This submission and agreement to arbitrate shall be
specifically enforceable.
(e) If the arbitration award reflects an underpayment of
the disputed Earnout Payment by an amount greater than five percent
of the correct amount, Buyer shall pay the AAA's fees, the
arbitrator's fees, and BRC's audit costs and attorneys' and
experts' fees, provided those fees are reasonable. BRC shall pay
the AAA's fees, the arbitrator's fees, and the Buyer's attorneys'
and experts' fees (provided those fees are reasonable), if the
arbitration award reflects that the disputed Earnout Payment was
equal to or greater than the correct amount. BRC shall pay the
AAA's fees and the arbitrator's fees, and each Party shall pay its
own attorneys' and experts' fees, if the arbitration award reflects
an underpayment of the disputed Earnout Payment by an amount up to
five percent of the correct amount.
ARTICLE V
MISCELLANEOUS
5.01 FORCE MAJEURE. In the event that Buyer is rendered
unable by reason of an event of Force Majeure to operate the
Refinery and the Ciniza Refinery at a combined production level of
at least 32,000 barrels of refined products per day, Buyer shall
give BRC written notice and full particulars of any event of Force
Majeure within 10 days thereafter. Each such day so specified in a
timely notice from Buyer shall be called a "FORCE MAJEURE DAY"
provided that no such day for which Buyer receives business
interruption insurance (without regard to the amount of such
coverage) shall be a Force Majeure Day. Except as provided in
Section 2.01(g), Buyer shall remedy Force Majeure conditions as
soon as reasonably possible, including repairing or rebuilding the
Refinery and the Ciniza Refinery.
5.02 TREATMENT FOR TAX PURPOSES. BRC and Buyer shall treat
and report the Earnout Payments under the installment method of
accounting for taxation purposes within the meaning of section 453
of the Internal Revenue Code and as "non-quotable contingent
payout" within proposed Treas. Reg. S.S. 1.1275-4(c)(4).
5.03 NOTICES. All notices and communications required or
permitted under this Schedule 1.01.1 shall be in writing and shall
be addressed as follows:
IF TO SELLERS:
Bloomfield Refining Company
Gary-Williams Energy Corporation
370 Seventeenth Street, Suite 5300
Denver, Colorado 80202
Attention: David J. Younggren
IF TO BUYER:
Giant Industries Arizona, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85254
Attention: Frederic L. Holliger
5.04 AMENDMENT. This Schedule 1.01.1 may not be altered or
amended, nor any rights hereunder be waived, except by an
instrument in writing executed by the party or parties to be
charged with such amendment or waiver.
5.05 GOVERNING LAW. This Schedule 1.01.1 and the transactions
contemplated hereby shall be construed in accordance with, and
governed by, the laws of the State of New Mexico.
5.06 LEGAL RATE. Notwithstanding anything to the contrary
herein, no portion of any payment made hereunder that is treated as
interest for purposes of any usury or other limitation on the rate
of interest that may be charged shall exceed the maximum legal rate
permitted under applicable law, and, if any such rate is found to
exceed the maximum legal rate, Buyer shall be required to pay only
the maximum legal rate.
<PAGE>
<PAGE>
Exhibit 2.0100
Sample calculations of the Earnout Payment
<TABLE>
<CAPTION>
Example Year 1996 1996
--------- ---------
<S> <C> <C> <C> <C>
Base margin 4.25 4.25
Example margin 6.25 6.75
Difference 2.00 2.50 2.00 0.50
---------
Earnout percentage 60% 60% 60%
Earnout margin 1.20 1.20 0.40
--------- --------- ---------
"Deemed Daily Refinery Capacity" 16,000 16,000 16,000
Number of days 366 365 365
Annual refinery capacity 5,840,000 5,840,000 5,840,000
========= ========= =========
"Earnout Payment" 7,008,000 9,344,000 7,008,000 2,336,000
========= ========= ========= =========
</TABLE>
<PAGE>
<PAGE>
Exhibit 2.0200
Sample calculation of the net present value of an assumed
hypothetical series of Earnout Payments
<TABLE>
<CAPTION>
Net
Present
1997 1998 1999 2000 2001 2002 Value
--------- --------- --------- --------- --------- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Assumed "Earnout Payments"
1996 7,008,000 6,385,421
1997 0 6,438,600 5,345,427
1998 0 0 7,008,000 5,301,277
1999 0 0 0 7,008,000 4,830,321
2000 0 0 0 0 4,995,901 3,137,554
2001 0 0 0 0 0 0 0
25,000,000
</TABLE>
Note 1: Assumed "Effective Time" is January 1, 1996
Note 2: Assumed "Earnout Payment" date is January 1 of each
subsequent year
Example of application of the extension for Force Majeure Days
If an explosion at the Refinery shuts it down for a period of 45
days in 1996, and the deductible period for business interruption
insurance is 15 days, then the Earnout Payment period is extended
through January 15, 2002. If the explosion was not covered by
business interruption insurance, then the Earnout Payment period is
extended through February 14, 2002. In the first example, the
Force Majeure Days are 15 days since that is the period not
covered by business interruption insurance. In the second example,
the Force Majeure Days are 45 days since the incident was not
covered by business interruption insurance. In either case, the
complete cessation of production at the Refinery would reduce the
combined production level of both refineries to less than 32,000
barrels of refined products per day.
Prior to the Closing, the parties shall jointly expand Exhibit
2.01(f) to explain in reasonable detail the computation of Refinery
Margin for the Refinery and the Ciniza Refinery using the
accounting information for calendar year 1994.<PAGE>
<PAGE>
SCHEDULE 1.01.2
Excluded Contracts
CONTRACT
DESCRIPTION PARTIES DATE NOTES
Crude Purchase Gary-Williams Energy 6/1/87 Amendment #28
Contract-On Shore Corporation ("GWEC")
and U.S. Minerals
Management Service
("MMS")
Crude Purchase GWEC and U.S. MMS 10/14/94
Contract-Royalty-
in-Kind
Crude Contract GWEC and Conoco 9/6/90
Crude Contract GWEC and Unocal Refining 12/9/94
& Marketing Division
Crude Contract GWEC and Texaco Trading 6/29/90
and Transportation Inc.
Crude Contract GWEC and Shell Oil 3/2/95
Company
Crude Contract GWEC and Amoco 8/16/94
Production Company
Crude Contract GWEC and Conoco Inc. 5/22/95
Crude Contract GWEC and Mobil Oil 6/20/91
Corporation
Marketing Agreement GWEC and Bloomfield 7/1/91
Refining Company
Management Agreement GWEC and Bloomfield 7/1/91
Refining Company<PAGE>
<PAGE>
SCHEDULE 1.01.3
PROCESSING UNITS, SHIPPING FACILITIES AND TERMINALS
REFINERY UNITS
Crude Distillation Unit.
Catalytic Reforming Unit.
Fluid Catalytic Cracking Unit (FCCU).
Catalytic Polymerization (Cat/Poly) Unit.
Distillate Hydrotreater.
Naphtha Hydrotreater.
Sulfur Recovery Unit.
Merox Treaty Unit (LPG).
Merox Treaty Unit (Jet Fuel).
SUPPORTING REFINERY FACILITIES
Refinery Tankage: 630,000 barrels of total storage, along with
additive addition systems.
Crude Oil and Other Product Truck Unloading Facilities: Five truck
unloading stations.
Product Truck Loading: Four-bay product truck terminal, with
cardlock, mixing, additive, computer and other peripheral systems.
Office and Lab: Laboratory facility and an office building.
Fire and Safety Systems: The fire fighting system, includes
process area, tank farm, product rack, and crude and LPG unloading
area fire loop headers, a 65,000 barrel firewater reservoir tank
and a 1500 gpm diesel-driven firewater pump.
Steam Generation Systems: Water Treatment System and two natural
gas fired boilers for steam generation.
Cooling Water System: Two main cooling towers, water distribution
and treating systems.
Electrical System.
Process Water Disposal System.
Maintenance and Warehouse Facilities.
Vapor Relief and Flare System.
<PAGE>
<PAGE>
SCHEDULE 1.01.4
REFINERY SITE
The South One-Half of the Northwest Quarter (S1/2NW1/4); The
Northeast Quarter of the Southwest Quarter (NE1/4SW1/4); The North
One-Half of the Northwest Quarter of the Southwest Quarter
(N1/2NW1/4SW1/4) and the Southeast Quarter of the Northwest Quarter
of the Southwest Quarter (SE1/4NW1/4SW1/4) of Section 26;
AND
The Southeast Quarter of the Northeast Quarter (SE1/4NE1/4)
and the North One-Half of the Northeast Quarter of the Southeast
Quarter (N1/2NE1/4SE1/4) of Section 27;
AND
The West One-Half of the Northeast Quarter (W1/2NE1/4) of
Section 27;
EXCEPT the following part of said tract, to wit:
BEGINNING at the Northwest corner of said tract;
THENCE South 30 feet;
THENCE east parallel to the north line of said tract, 676.6 feet;
THENCE North 30 feet;
THENCE West along the North line of said tract 676.6 feet to the
place of beginning.
AND;
BEGINNING at a point which is 826.08 feet North 31 degrees 16'
East from the West Quarter Corner of said Section 27;
THENCE North 7 degrees 55' East 135.0 feet along the East Right of
Way of State Highway #44;
THENCE South 82 degrees 05' East 161.3 feet;
THENCE South 7 degrees 55' West 135.0 feet;
THENCE North 82 degrees 05' West 161.3 feet to the point of
beginning.
AND;
A tract of land situated in the Southeast Quarter of the
Northwest Quarter (SE1/4NW1/4) of said Section 27, more
particularly described as follow:
BEGINNING at a point which is the center of said SECTION 27;
THENCE N 00 degrees 23' 49" E along the North-South Centerline of
Section 27, a Distance of 554.30 feet, more or less, to a point on
the Easterly Right of Way of the Hammond Canal as described in
the San Juan County records in Book 633, Page 243B (Parcel No.
HMC);
THENCE Southwesterly along a non-tangent curve to the left as
described in said description 90 feet, more or less;
THENCE South 04 degrees 21' 30" West along a line tangent to said
curve 487.17 feet, more or less, along the Easterly Right of Way
line of the Hammond Canal to a point on the East-West Centerline of
Section 27;
THENCE North 89 degrees 24' 29" East 79.81 feet along said
East-West Centerline to the point of beginning.
All in Township 29 North of Range 11 West, N.M.P.M., San Juan
County, New Mexico.<PAGE>
<PAGE>
SCHEDULE 1.01.5
REFINERY SITE ENCUMBRANCES
1. Taxes for the year 1995, and thereafter.
2. Reservations contained in U.S. Patent recorded in Book 59,
Page 222 and in Book 48, Page 270 all of the San Juan County
Records.
3. Right of Way Easement from Austin A. Davis, a single person to
El Paso Natural Gas Company, dated March 13, 1951, recorded
January 11, 1952 in Book 172, Page 367 of the San Juan County
Records.
4. Right of Way Easement From August A. Davis to El Paso Natural
Gas Company dated September 22, 1952, recorded November 6,
1952 in Book 192, Page 171 of the San Juan County Records.
5. Right of Way Easement from Austin A. Davis, a single person to
El Paso Natural Gas Company, dated November 29, 1957, recorded
December 12, 1957 in Book 352, Page 126 of the San Juan County
Records.
6. Oil and Gas Lease between Austin A. Davis, single and Al
Greer, dated April 18, 1957, recorded January 2, 1958 in Book
351, Page 154 of the San Juan County Records. Any subsequent
assignments thereof.
7. Order Amending Decree Incorporating Hammond Conservancy
District in the District Court to the Public dated December 1,
1958, recorded December 2, 1958 in Book 396, Page 85 of the
San Juan County Records, and the decrees and orders referred
to therein.
8. Right of Way Easement from France R. Bryan and Jo Claire
Bryan, husband and wife to El Paso Natural Gas Company, dated
June 14, 1961, recorded June 19, 1961 in Book 487, Page 42 of
the San Juan County Records.
9. Grant of Right of Way Easement by and between F.R. Bryan and
Jo Claire Bryan, husband and wife and San Juan County, New
Mexico, dated November 26, 1962, recorded November 30, 1962 in
Book 536, Page 271 of the San Juan County Records.
10. Right of Way Easement by and between Buster Webb and Mrs.
Buster Webb, husband and wife and The City of Farmington
Electric Utility System and the Mountain States
Telephone & Telegraph Company, dated February 11, 1970,
recorded April 24, 1970 in Book 681, Page 594 of the San Juan
County Records.
11. Amended Easement by and between A.R. Webb and Barbara Webb;
F.M. Webb and Betty Webb and El Paso Natural Gas Company,
dated August 4, 1970, recorded September 21, 1970 in Book 686,
Page 345 amending easement recorded in Book 487,
Page 42 all of the San Juan County Records.
12. Ratification Agreement of Grant of Easement by A.R. Webb and
Barbara S. Webb, his wife to MAPCO, Inc., dated August 26,
1974 recorded September 23, 1974 in Book 733, Page 154 of the
San Juan County Records.
13. Grant of Easement from A.R. Webb and Barbara S. Webb, his wife
to MAPCO, Inc., a Delaware Corporation dated July 11, 1974,
recorded August 9, 1974 in Book 737, Page 55 of the San Juan
County Records.
14. Right of Way Easement from W.L. Dooley, Vice President of
Plateau, Inc., to El Paso Natural Gas Company, dated June 9,
1980, recorded July 7, 1980, in Book 885, Page 435 of the San
Juan County Records.
15. Right of Way Easement from W.L. Dooley, Vice President of
Plateau, Inc., to El Paso Natural Gas Company, dated June 9,
1980, recorded July 7, 1980 in Book 885, Page 436 of the San
Juan County Records.
16. Right of Way Easement from W.L. Dooley, Vice President of
Plateau, Inc. to El Paso Natural Gas Company, dated June 9,
1980, recorded August 5, 1980 in Book 888, Page 404 of the San
Juan County Records.
17. Right of Way Easement from Plateau, Inc., to Union Texas
Petroleum Corporation, dated April 2, 1983, recorded April 22,
1983 in Book 962, Page 532 of the San Juan County Records.
18. Right of Way Easement by and between Plateau, Inc., by W.L.
Dooley, Vice President and The City of Farmington Electric
Utility System and the Mountain States Telephone & Telegraph
Company, dated May 11, 1984, recorded June 27, 1984 in Book
996, Page 153 of the San Juan County Records.
19. Right of Way Easement from W.L. Dooley, Vice President of
Plateau, Inc., to Northwest Pipeline Corporation, dated July
17, 1984, recorded August 3, 1984 in Book 999, Page 226 of the
San Juan County Records.
20. Right of Way Easement from Austin A. Davis, a single person,
to El Paso Natural Gas Company, dated January 20, 1956,
recorded February 6, 1956 in Book 295, Page 52 of the San Juan
County Records.
21. Right of Way Easement by and between Kimbell-Campbell Corp.,
and the Basin Light and Power Company and Mountain States
Telephone & Telegraph Company, dated January 27, 1959,
recorded April 14, 1959 in Book 414, Page 35 of the San Juan
County Records.
22. Grant of Right of Way Easement by and between F.R. Bryan and
Jo Claire Bryan, husband and wife, and County of San Juan, New
Mexico, dated November 27, 1962, recorded November 30, 1962 in
Book 536, Page 272 of the San Juan County Records.
23. Amended Right of Way Easement between Plateau, Inc., by O. L.
Garretson, President and El Paso Natural Gas Company, dated
July 7, 1970, recorded September 21, 1970, in Book 686, Page
346 of the San Juan County Records.
24. Amending easement recorded in Book 487, Page 42 of the San
Juan County Records.
25. Partial Assignment of Right of Way from Southern Union Gas
Company to Southern Union Gathering Company, dated January 1,
1964, recorded March 4, 1964 in Book 574, Page 67 of the San
Juan County Records.
26. Amendment of Partial Assignment of Right of Way between
Southern Union Gathering Company, dated February 25, 1964,
recorded March 20, 1964 in Book 574, Page 109 amending right
of way recorded in Book 574, Page 67 all of the San Juan
County Records.
27. Right of Way Easement by and between Plateau, Inc., and the
City of Farmington Electric Utility System and the Mountain
States Telephone & Telegraph Company, dated June 14, 1976,
recorded August 2, 1976 in Book 770, Page 303 of the San Juan
County Records.
28. Right of Way Easement by and between Plateau, Inc., and the
Mountain States Telephone & Telegraph Company, dated July 23,
1976, recorded September 15, 1976 in Book 773, Page 437 of the
San Juan County Records.
29. Grant of Right of Way Easement by and between Plateau, Inc.,
and Joe M. Kaime and Wilma Jean Kaime, husband and wife, dated
March 1, 1977, recorded June 15, 1978 in Book 790, Page 286 of
the San Juan County Records.
30. Assignment from El Paso Natural Gas Company to Shell Pipe Line
Corporation, dated December 29, 1977, recorded February 24,
1978, in Book 797, Page 203 of the San Juan County Records.
31. Assignment from Shell Pipe Line Corporation to Plateau, Inc.,
a New Mexico Corporation and Thriftway Oil Company, a New
Mexico Corporation, dated March 29, 1978, recorded May 23,
1978 in Book 826, Page 533 of the San Juan County Records.
32. Grant of Right of Way Easement by and between Plateau, Inc.,
and Joe W. Kaime and Wilma Jean Kaime, husband and wife, dated
June 14, 1979, recorded August 22, 1979 in Book 861, Page 474
to correct right of way recorded in Book 790, Page 286 all of
the San Juan County Records.
33. Right of Way Easement from W.L. Dooley, Vice President of
Plateau, Inc., to El Paso Natural Gas Company, dated June 9,
1980, recorded July 24, 1980 in Book 888, Page 194 of the San
Juan County Records.
34. Assignment from Giant Industries, Inc., an Arizona
Corporation, to Ciniza Pipe Line, Inc., a New Mexico
Corporation, dated May 1, 1983, recorded May 6, 1983 in Book
965, Page 229 of the San Juan County Records.
35. Notice of Right of Way from the United States for the
construction of the Hammon Main Canal, dated July 12, 1983,
recorded July 12, 1983 in Book 970, Page 220 of the San
Juan County Records.
36. Reservations contained in U.S. Patent recorded in Book 2, Page
240 of the San Juan County Records.
37. Right of Way Easement from Lloyd D. Fitts, a single person, to
El Paso Natural Gas Company, dated January 15, 1953, recorded
March 14, 1953 in Book 203, Page 166 of the San Juan County
Records.
38. Right of Way Easement from Lloyd D. Fitts, a single person, to
El Paso Natural Gas Company, dated January 19, 1956, recorded
February 6, 1956, in Book 295, Page 53 of the San Juan County
Records.
39. Oil and Gas Lease between Grace Irene Pearce, a single woman
and Enid M. (Neibaur) Price, dated August 3, 1957, recorded
August 5, 1957 in Book 338, Page 194 of the San Juan County
Records.
40. Oil and Gas Lease between Grace Irene Pearce, a single woman
and Enid M. (Neibaur) Price, dated July 27, 1957, recorded
July 29, 1957 in Book 338, Page 140 corrected in Book 338,
Page 194 all of the San Juan County Records. Any subsequent
assignments thereof.
41. Right of Way Easement by and between Grace Irene Pearce,
divorced and the Basin Light and Power Company and Mountain
States Telephone & Telegraph Company, dated June 13, 1958,
recorded June 30, 1958 in Book 375, Page 261 of the San Juan
County Records.
42. Agreement by and between Grace Pearce and Pete Roberts, doing
business as Pete Roberts Construction Company, dated January
13, 1959, recorded February 2, 1959 in Book 404, Page 71 of
the San Juan County Records.
43. Assignment of Lease from Pete Roberts, doing business as Pete
Roberts Construction Company, to Bloomfield Sand & Gravel,
Inc., dated January 30, 1959, recorded February 2, 1959 in
Book 404, Page 72, assignment agreement recorded in Book 404,
Page 71 all of the San Juan County Records.
44. Right of Way Easement by and between Grace Pearce, a single
woman and the Basin Light and Power Company and Mountain
States Telephone & Telegraph Company, dated December 3, 1958,
recorded January 28, 1959, in Book 402, Page 273 of the San
Juan County Records.
45. Lease Amendment between Grace Pearce and Pete Roberts dated
March 3, 1959, recorded March 16, 1959 in Book 409, Page 164
amending lease recorded in Book 404, Page 71 all of the San
Juan County Records.
46. Assignment of Lease from Bloomfield Sand & Gravel, Inc., to
River Sand & Gravel Co., a New Mexico Corporation, dated March
3, 1959, recorded March 16, 1959 in Book 409, Page 165
assigning lease recorded in Book 404, Page 71 and assigned in
Book 404, Page 72 all of the San Juan County Records.
47. Right of Way Easement by and between Grace Irene Pearce
divorced and the Town of Farmington Electric System and
Mountain States Telephone & Telegraph Company, dated May 25,
1959, recorded September 21, 1959 in Book 430, Page 103 of the
San Juan County Records.
48. Contract Compensating Landowner for Government use of reserved
right of way between the United States of America and Plateau,
Inc., dated November 25, 1966, recorded January 24, 1967 in
Book 645, Page 66 of the San Juan County Records.
49. Lease for Sand and Gravel by and between Donald L. Mangum and
Myrna J. Mangum and Alcora Materials Company, dated March 9,
1973, recorded July 7, 1973 in Book 752, Page 113 of the San
Juan County Records.
50. Assignment of Lease between Alcora Materials Company and Arco
Materials, Inc., dated April 14, 1977, recorded April 15,
1977, in Book 780, Page 549 assigning lease dated March 9,
1973 all of the San Juan County Records.
51. Right of Way Easement by and between Plateau, Inc., and the
City of Farmington Electric Utility System and the Mountain
States Telephone & Telegraph Company, dated August 12, 1977,
recorded September 8, 1977 in Book 796, Page 66 of the San
Juan County Records.
52. Lease for Sand & Gravel by and between Donald L. Mangum and
Myrna J. Mangum and Alcora Materials Company, dated March 9,
1973, recorded September 10, 1980 in Book 886, Page 443 of the
San Juan County Records.
53. Right of Way Easement from W.L. Dooley, Vice President of
Plateau, Inc., to the Mountain States Telephone & Telegraph
Company, dated November 3, 1980, recorded November 7, 1980 in
Book 895, Page 534 of the San Juan County Records.
54. Right of Way by and between Plateau, Inc., by R.G. Perry
Executive Vice President and the City of Farmington Electric
Utility System and the Mountain States Telephone & Telegraph
Company, dated September 10, 1982, recorded October 14, 1982
in Book 944, Page 420 of the San Juan County Records.
55. Right of Way Easement by and between Plateau, Inc., by Lee S.
Woodside, Vice President of Refining and the City of
Farmington Electric Utility System and the Mountain States
Telephone & Telegraph Company, dated March 16, 1983, recorded
April 5, 1983 in Book 962, Page 234 of the San Juan County
Records.
56. Right of Way deed from J.T. Lynn, Administrator, estate of
John P. Lynn, deceased, Fred L. Lawson and Grace P. Lawson,
his wife to Southern Union Production Company of New Mexico
dated September 3, 1932, recorded September 16, 1932 in Book
91, Page 69 of the San Juan County Records.
57. Right of Way Grant from Fred L. Lawson and Grace Lawson, his
wife to New Mexico Gas Company, dated January 18, 1940,
recorded January 18, 1940 in Book 102, Page 53 of the San Juan
County Records.
58. Right of Way from Joe Mangum to Mountain States Telephone &
Telegraph Co., dated June 15, 1945, recorded October 8, 1945
in Book 102, Page 630 of the San Juan County Records.
59. Oil and Gas Lease by and between Joe Mangum and Mamie Mangum
and Southern Union Production Company, dated August 30, 1946,
recorded May 20, 1946 in Book 89, Page 819 of the San Juan
County Records. Any Subsequent Assignments thereof.
60. Right of Way Easement by and between Mamie Mangum, a single
person and the Basin Light and Power Company, dated October
19, 1954, recorded October 25, 1984 in Book 259, Page 159 of
the San Juan County Records.
61. Right of Way Easement by and between Mamie Mangum, a widow and
Plateau, Inc., dated May 18, 1960, recorded May 18, 1960 in
Book 453, Page 16 of the San Juan County Records.
62. Right of Way Easement by and between Harvey Salmon and Eva S.
Salmon, husband and wife and Plateau, Inc., dated June 29,
1960, recorded August 4, 1960 in Book 459, Page 93 of the San
Juan County Records.
63. Right of Way Easement by and between Mamie Mangum, a widow and
the Town of Farmington Electric Utility System and the
Mountain States Telephone & Telegraph Company, dated May 23,
1962, recorded October 12, 1962 in Book 531, Page 210 of the
San Juan County Records.
64. Right of Way Easement from Mamie Mangum, a widow to Southern
Union Gas Company, dated August 13, 1963, recorded September
18, 1963 in Book 561, Page 181 of the San Juan County Records.
65. Right of Way Easement from Mamie Mangum, a widow to Southern
Union Gas Company, dated August 13, 1963, recorded September
18, 1963 in Book 561, Page 182 of the San Juan County Records.
66. Contract Compensating Landowner for Government use of reserved
right of way between the United States of America and Mamie
Mangum, a widow and Donald L. Mangum and Myrna Mangum, aka
Myrna J. Mangum, his wife, dated December 8, 1965, recorded
July 11, 1966 in Book 633, Page 243 of the San Juan County
Records.
67. Partial Assignment of right of way from Southern Union Gas
Company, a Delaware Corporation to Southern Union Production
Company, a Delaware Corporation, dated December 5, 1975,
recorded January 15, 1976 in Book 759, Page 421 assigning
right of way recorded in Book 91, Page 69 all of the San Juan
County Records.
68. Any loss or damage by virtue of Hammon Canal not being within
its designated right of way.
69. Right of Way from Plateau, Inc., to Union Texas Petroleum
Corporation dated March 2, 1983, recorded April 1, 1983 in
Book 962, Page 170 of the San Juan County Records.
70. Reservations contained in U.S. Patent recorded in Book 1, Page
191 of the San Juan County Records.
71. Assignment and Delegation from Southern Union Company to
Public Service Company of New Mexico dated January 28, 1985,
recorded February 1, 1985 in Book 1012, Page 24 and as amended
by Amended Assignment and Delegation recorded February 17,
1986 in Book 1037, Page 601, all of the San Juan County
Records.
72. Assignment from Thirftway Co., a New Mexico corporation to
Thirftway Pipeline Transportation dated November 15, 1988,
recorded April 10, 1989 in Book 1101, Page 291 of the San Juan
County Records.
73. Right of Way Easement by and between Mrs. Mamie Mangum, widow
and the Basin Light and Power Company and Mountain States
Telephone & Telegraph Company, dated January 28, 1959,
recorded April 14, 1959 in Book 414, Page 34 of the San Juan
County Records.
74. Right of Way Easement by and between Austin A. Davis, a single
person to El Paso Natural Gas Company, a corporation dated
February 9, 1953, recorded February 21, 1953 in Book 202, Page
92 of the San Juan County Records.
75. Title to all of the oil, gas and other minerals and mineral
substances, and all rights, privileges and easements
appurtenant thereto as reserved/conveyed in Mineral Deeds
recorded in Book 465, page 194, Book 465, page 196, Book 465,
page 310 and in Book 515, page 130 and in Warranty Deeds
recorded in Book 467, page 3 and in Book 467, page 4, of the
San Juan County Records.
76. Terms, conditions and provisions of the Oil and Gas Leases
recorded in Book 51, page 39 and in Book 145, page 321 of the
San Juan County Records.
77. Easement to United States of America recorded in Book 93, page
624 of the San Juan County Records.
78. Easement to City of Farmington Electric Utility System and
Mountain States Telephone and Telegraph Company recorded in
Book 1191, page 583 of the San Juan County Records.
79. Right-of-way for Hammond Canal and Sullivan Road as presently
in existence across subject property.
80. Title to all of the oil, gas and other minerals and mineral
substances, and all rights, privileges and easements
appurtenant thereto as reserved/conveyed in Mineral Deeds
recorded in Book 457, page 82 and in Book 473, page 98 of the
San Juan County Records.
81. Terms, conditions and provisions of the Oil and Gas Leases
recorded in Book 99, page 370 of the San Juan County Records.
82. Easement to Kutz Canyon Water Users Association recorded in
Book 118, page 288 of the San Juan County Records.
83. Easement to San Juan County recorded in Book 107, page 80, in
Book 107, page 82 and in Book 107, page 83 of the San Juan
County Records.
84. Title to all of the oil, gas and other minerals and mineral
substances, and all rights, privileges and easements
appurtenant thereto as reserved/conveyed in Warranty Deed
recorded in Book 474, page 257, of the San Juan County
Records.
85. Any adverse claim based upon the assertion that some portion
of subject property has been brought within the boundaries
thereof by an avulsive movement of the San Juan River, or has
been formed by accretion to any such portion.
86. Deviation of fences from the West and South property lines as
revealed and depicted by that certain Retracement Survey
prepared for Bloomfield Refinery by San Juan Engineers dated
July 18, 1991.
Buyer has received copies of the foregoing and a Retracement Survey
for Bloomfield Refinery, prepared by San Juan Engineers, dated July
18, 1991 (the "Survey"). The terms and provisions of the easements
described above are acceptable to Buyer, but the Survey does not
set forth all such easements (the easements not set forth on the
Survey shall be referred to as the "Excepted Easements"). Buyer
shall have until August 31, 1995, to determine the location of the
Excepted Easements on the Refinery Site. Buyer shall notify
Sellers in writing on or before such date if Buyer believes that
the location of the Excepted Easements would interfere materially
with the operation or use of the Refinery as it is now operated or
used and as it has been operated or used on a historical basis, or
result in a Material Effect. If Buyer has given such a notice and
the location of the Excepted Easements does, in fact, interfere
materially with the operation or use of the Refinery as it is now
operated or used and it has been operated or used on a historical
basis or result in a Material Effect, notwithstanding anything
contained in this Agreement to the contrary, this Agreement shall
terminate and neither Buyer nor Sellers shall have any further
duties, obligations or liabilities to each other. If Buyer
notifies Sellers on or before August 31, 1995, that Buyer believes
that location of the Excepted Easements does not interfere with the
operation or use of the Refinery as it is now operated or used and
as it has been operated or used on a historical basis or result in
a Material Effect, or if Buyer does not notify Sellers by such
date, this Agreement shall continue and be in full force and effect
in accordance with its terms and the Excluded Easements will be
deemed to not interfere with the operation or use of the Refinery
as it is now operated or used and it has been operated or used on a
historical basis, and the Excepted Easements shall be Refinery Site
Encumbrances all in accordance with this Agreement.
<PAGE>
<PAGE>
SCHEDULE 2.04
ALLOCATION OF PURCHASE PRICE
Refinery units & facilities $53,750,000
Buildings and contents 850,000
Autos 100,000
Remote lact units 150,000
San Juan pipeline assets 150,000
$55,000,000
<PAGE>
<PAGE>
SCHEDULE 3.01(E)
CONTESTED TAXES
NONE
<PAGE>
<PAGE>
SCHEDULE 3.01(g)
LITIGATION
NONE
<PAGE>
<PAGE>
SCHEDULE 3.01(J)
CAPITAL PROJECTS
PROJECT IN WORK
ADDITIONAL STORAGE TANKS. This project involves the movement
of two 55,000 barrel, internal floating roof, storage tanks
from Fruita, Colorado to the Refinery. The tanks have been
dismantled and moved to the Refinery and the first tank is
currently being constructed. The foundation construction is
also in progress. Much of the piping materials have been
received and construction is starting by use of a contract
welder. These tanks are being built as additional naphtha and
gasoline storage for periods of reduced crude availability.
One of the tanks will eventually replace existing bolted
naphtha tanks and the other would be used as an Isomerate
storage tank if the unit was constructed.
Total Estimated Costs: $850,000
Estimated Costs Remaining To Be Paid: $660,000
PROJECTS TO BE DONE
1. REFORMER FIREPROOFING. Ongoing projects to repair refinery
fireproofing.
Total Estimated Costs: $41,850
Estimated Costs Remaining To Be Paid: $41,850
2. FIREFIGHTING FOR TANK 31. Improvement to the firefighting for
tank 31 (crude storage).
Total Estimated Costs: $25,000
Estimated Costs Remaining To Be Paid: $25,000
3. TANK FARM STAIRWAYS. Add stairways in the tank farm to allow
safer access into the tank dikes.
Total Estimated Costs: $15,000
Estimated Costs Remaining To Be Paid: $15,000
4. BLENDING. Change to blending premium gasoline instead of
reformate to make the higher octane products.
Total Estimated Costs: $25,000
Estimated Costs Remaining To Be Paid: $25,000
5. CONVERTING TO ELECTRIC BLEND METERS. Convert bay III of the
loading rack to electronic blend meters.
Total Estimated Costs: $50,000
Estimated Costs Remaining To Be Paid: $50,000
<PAGE>
<PAGE>
SCHEDULE 3.01(K)
COLLECTIVE BARGAINING AGREEMENTS
Collective Bargaining Agreement, dated effective June 1,
1993, between Bloomfield Refining Company and its refinery
employees represented by the Oil, Chemical and Atomic Workers
International Union, AFL-CIO and its Local Union 2-972.
<PAGE>
<PAGE>
SCHEDULE 3.01(L)
WATER AND WATER RIGHTS
BRC uses approximately 417 acre feet of water per year in its
refining operations. Of such amount, 340 acre feet per year have
been purchased from the Bureau of Reclamation (the "BUREAU") out of
the Navajo Reservoir and 77.838 acre feet are owned by BRC.
A. PURCHASED RIGHTS.
Prior to 1990, BRC regularly obtained one year water service
contacts from the Bureau. Since 1990, however, the Bureau has been
required by the Endangered Species Act to consult with the Fish and
Wildlife Service ("FWS") prior to entering into each new water
service contract with BRC (and other water users). As a result,
BRC has had only one water contract since April of 1990. The term
of the last water contract ran from October 21, 1992 through
October 20, 1993.
The Bureau and the FWS have been conducting an informal
consultation for close to a year in connection with BRC's proposed
water contract. In late 1994, the FWS notified the Bureau that FWS
would require formal consultation because of the likely effect of
BRC's water contract on the critical habitat of the Colorado
squawfish and the razorback sucker, which have been listed by the
EPA as endangered. The Bureau has prepared a biological assessment
of the effects of the proposed contract on the endangered species,
and has concluded that there will be no adverse effects on the
various species or their designated critical habitat. The
biological assessment prepared by the Bureau reviewed and analyzed
all relevant data from water quality testing which was done in the
area surrounding the Refinery, and found no indications of
pollutants emanating from the Refinery. This biological assessment
has been sent to the FWS for its use in preparing its official
biological opinion. FWS has a statutory time period of 90 days
(which may be extended for an additional 60 days) within which to
complete the formal consultation. FWS must deliver its biological
opinion within 45 days after formal consultation has been
completed.
Although not assured, it is likely that the final biological
opinion of the FWS will be similar to the biological opinion
prepared by FWS for the 1992 water service contract, and will
result in a "no jeopardy" finding. A "no jeopardy" finding would
permit the Bureau to enter into a water service contract with BRC.
<PAGE>
<PAGE>
B. OWNED RIGHTS.
BRC owns the following water rights to 77.838 acre feet of
water from the San Juan River:
NM STATE ENGINEER CONTRACT DESCRIPTION ACRE FT/YR
FILE NO.
2593-2 Water Rights Ownership 24.850
2593-2A Water Rights Ownership 10.000
2593-2B Water Rights Ownership 32.820
2593-2C Water Rights Ownership 10.168
<PAGE>
<PAGE>
SCHEDULE 3.01(M)
FINANCIAL STATEMENTS
INDEX
1. Bloomfield Refining Company -- Financial Statements, together
with Report of Independent Public Accountants, as of December
31, 1991 and 1990.
2. Bloomfield Refining Company -- Financial Statements, together
with Report of Independent Public Accountant, as of December
31, 1992 and 1991.
3. Bloomfield Refining Company -- Financial Statements, together
with Report of Independent Public Accountant, as of December
31, 1993 and 1992.
4. Bloomfield Refining Company -- Financial Statements, together
with Report of Independent Public Accountant, as of December
31, 1994 and 1993.
5. Bloomfield Refining Company -- Interim Financial Statements, as
of March 31, 1995 (unaudited).
6. Bloomfield Refining Company -- Operating Results for April,
1995.
7. Bloomfield Refining Company -- Operating Results for May, 1995.<PAGE>
<PAGE>
ARTHUR
ANDERSEN
ARTHUR ANDERSEN & CO. SC
BLOOMFIELD REFINING COMPANY
FINANCIAL STATEMENTS
TOGETHER WITH REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
AS OF DECEMBER 31, 1991, AND 1990<PAGE>
<PAGE>
_____________________
Arthur Andersen & Co.
_____________________
717-17th Street
Denver CO 80202
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Bloomfield Refining Company:
We have audited the accompanying balance sheets of Bloomfield
Refining Company (a Delaware corporation), as of December 31, 1991
and 1990, and the related statements of income, retained earnings
and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Bloomfield Refining Company as of December 31, 1991 and 1990, and
the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN & CO.
Denver, Colorado,
March 30, 1992.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
BALANCE SHEETS
DECEMBER 31, 1991 AND DECEMBER 31, 1990
<CAPTION>
ASSETS
CURRENT ASSETS 1991 1990
----------- -----------
<S> <C> <C>
Cash and temporary investments $ 6,769,190 $ 6,980,463
Accounts receivable - affiliates 4,405,176 9,936,051
Accounts receivable 277,136 39,943
Inventories 7,899,175 9,609,612
Prepaid expenses and other 2,408,952 573,975
----------- -----------
Total current assets 21,759,629 27,140,044
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 12,127,034 11,113,501
Gas plants, property and equipment 3,932,621 ---
Less: Accumulated depreciation (2,555,378) (1,622,876)
----------- -----------
13,504,277 9,490,625
Construction in progress 523,427 198,068
----------- -----------
Total property, plant and equipment 14,027,704 9,688,693
----------- -----------
Prepaid expenses and other 399,146 11,585
----------- -----------
TOTAL ASSETS $36,186,479 $36,840,322
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES 1991 1990
----------- -----------
Accounts payable - affiliates $ 9,180,281 $12,199,594
Accounts payable 487,414 661,459
Current portion of long-term debt 4,450,000 ---
Income taxes payable - affiliate 1,191,500 155,240
Accrued liabilities 875,788 690,281
Accrued turnaround costs --- 660,986
----------- -----------
Total current liabilities 16,184,983 14,367,560
----------- -----------
NON-CURRENT LIABILITIES
Long-term debt, excluding current portion 3,693,763 ---
Accrued turnaround costs 1,418,741 801,110
Other 83,260 16,302
----------- -----------
Total non-current liabilities 5,195,764 817,412
----------- -----------
Deferred income taxes 238,000 238,000
Commitments and contingencies (Note 9)
SHAREHOLDER'S EQUITY
Common stock, .01 par value: 1,000
voting shares authorized, issued and
outstanding 10 10
Contributed capital 3,200,090 3,200,090
Retained earnings 11,367,632 18,217,250
----------- -----------
Total shareholder's equity 14,567,732 21,417,350
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $36,186,479 $36,840,322
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1991 AND 1990
<CAPTION> 1991 1990
------------ ------------
<S> <C> <C>
Operating revenues $134,027,081 $156,400,077
Operating expenses 124,267,090 141,760,077
------------ ------------
Gross margin 9,759,991 14,640,000
General and administrative expenses 6,310,348 3,958,008
------------ ------------
Operating income 3,449,643 10,681,992
------------ ------------
OTHER INCOME (EXPENSE)
Interest income 120,508 ---
Interest expense (415,401) (5)
Other 89,632 16,632
------------ ------------
(205,261) 16,627
------------ ------------
Income before income taxes 3,244,382 10,698,619
INCOME TAX (EXPENSE) BENEFIT (NOTE 4)
Current (1,094,000) (57,740)
Deferred --- 115,000
------------ ------------
(1,094,000) 57,260
------------ ------------
NET INCOME $ 2,150,382 $ 10,755,879
============ ============
STATEMENTS OF RETAINED EARNINGS
Balance at January 1 $ 18,217,250 $ 12,461,371
Net income 2,150,382 10,755,879
Dividends (9,000,000) (5,000,000)
------------ ------------
BALANCE AT DECEMBER 31 $ 11,367,632 $ 18,217,250
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1991 AND 1990
<CAPTION> 1991 1990
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 139,358,483 $ 154,264,371
Cash paid to suppliers and employees (132,338,157) (142,755,496)
Cash outlay for turnaround (844,354) (156,024)
Interest received 113,933 ---
Interest paid (363,237) (5)
Income taxes 81,163 ---
Deposit 5,689 (5,689)
Other (34,370) 46,117
------------- -------------
Net cash provided by operating activities 5,979,150 11,393,274
------------- -------------
Cash flows used by investing activities:
Capital expenditures - refinery (1,386,071) (757,222)
Acquisition of gas plants (3,792,060) ---
Capital expenditures - gas plants (156,055) ---
------------- -------------
Net cash used by investing activities (5,334,186) (757,222)
------------- -------------
Cash flows used by financing activities:
Borrowings under term loan agreement 8,500,000 ---
Proceeds received from acquisition of gas plant note 775,218 ---
Principal payments on debt (1,131,455) ---
Dividends distributed (9,000,000) (5,000,000)
------------- -------------
Net cash used by financing activities (856,237) (5,000,000)
------------- -------------
Net (decrease) increase in cash and temporary investments (211,273) 5,636,052
Cash and temporary investments at beginning of year 6,980,463 1,344,411
------------- -------------
Cash and temporary investments at end of year $ 6,769,190 $ 6,980,463
============= =============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1991 AND 1990
<CAPTION> 1991 1990
----------- -----------
<S> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net income $ 2,150,382 $10,755,879
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 932,502 602,035
Accrued turnaround costs 800,999 970,872
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 5,309,176 (1,772,673)
Decrease (increase) in inventories 1,710,437 (1,406,551)
Increase in prepaid expenses and other (2,222,538) (225,244)
Decrease in other assets --- 665
(Decrease) increase in accounts payable (3,146,179) 2,633,853
Increase in income taxes payable - affiliate 1,036,260 57,740
Increase in accrued liabilities 185,507 47,722
Decrease in accrued turnaround costs (844,354) (156,024)
Increase in other liabilities 66,958 ---
Decrease in deferred income taxes --- (115,000)
----------- -----------
Net cash provided by operating activities $ 5,979,150 $11,393,274
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
BLOOMFIELD REFINING COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND AND ORGANIZATION
---------------------------
On August 31, 1984, Bloomfield Refining Company, a Delaware
corporation (the Company), was incorporated. The Company's primary
activities are the refining of petroleum products and gas plant
operations. The Company is a wholly-owned subsidiary of Gary-Williams
Energy Corporation (GWEC) and operates a refinery in Bloomfield, New
Mexico with a throughput capacity of 17,000 barrels per day. Effective
July 1, 1991, the Company purchased certain ownership interests in two
gas plants located in Utah and the net assets of a gas plant located in
Colorado from GWEC.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
--------------------------------------------
CASH AND TEMPORARY INVESTMENTS
- ------------------------------
For purposes of these statements, the Company considers
investments purchased with an original maturity of three months or less
to be cash or temporary investments.
INVENTORIES
- -----------
Inventories are valued at the lower of first-in, first-out cost or
market. Inventories at December 31, 1991 and 1990 are as follows:
<TABLE>
<CAPTION>
1991 1990
---------- ----------
<S> <C> <C>
Refined, unrefined and intermediate products $5,412,447 $6,861,818
Crude oil 1,411,844 1,765,125
Materials and supplies 1,074,884 982,669
---------- ----------
$7,899,175 $9,609,612
========== ==========
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
- -----------------------------
The initial purchase and additions to property, plant and
equipment are recorded at cost. Depreciation is provided using the
straight-line method based on estimated useful lives ranging from 2 to
35 years.
Ownership interests in gas plants are recorded at cost and
proportionately consolidated for financial statement purposes.
Depreciation is provided using the straight-line method with estimated
useful lives ranging from 5 to 12 years.
GENERAL AND ADMINISTRATIVE EXPENSES
- -----------------------------------
The Company reimburses GWEC and an affiliate for general and
administrative services relating to the supply and marketing of raw
materials and refined products and gas plant operations.
ACCRUED TURNAROUND COSTS
- ------------------------
Major repair and maintenance expenses (turnaround costs) are
accrued and charged to current operations in anticipation of the work
to be performed in future periods to renew the related refinery assets.
Accrued turnaround costs are classified as either current or non-
current liabilities based upon the current scheduling of major
expenditures.
(3) LONG-TERM DEBT
--------------
Long-term debt consists of the following:
<TABLE>
<CAPTION>
Current Long-Term
Total Portion Portion
---------- ---------- ----------
<S> <C> <C> <C>
Note payable to a bank (a) $7,437,500 $4,250,000 $3,187,500
Note payable-affiliate (b) 706,263 200,000 506,263
---------- ---------- ----------
December 31, 1991 $8,143,763 $4,450,000 $3,693,763
========== ========== ==========
</TABLE>
(a) On September 4, 1991, the Company and GWEC (collectively, the
Borrower) jointly entered into an amended credit agreement whereby the
Company received loan proceeds of $8,500,000. The proceeds of the loan
were used to acquire, from GWEC, the gas plants located in Utah and
Colorado, to pay dividends to GWEC and for general corporate purposes.
On December 6, 1991, the Borrower entered into a new credit agreement
whereby loan proceeds of $7,791,667 were received and used to repay the
outstanding balance on the $8,500,000 bank term loan and whereby a new
revolving credit facility was established. Under terms of the
revolving credit facility, the Borrower may borrow up to $5,000,000 in
cash and/or issue letters of credit which in the aggregate cannot
exceed the lesser of $35,000,000 or the borrowing base. The borrowing
base, which consists principally of accounts receivable, inventory, and
exchange balances was approximately $24,000,000 and $20,000,000 as of
December 31, 1991 and March 30, 1992. The Borrower had no amounts
outstanding under the revolving credit facility, however, had issued
letters of credit totalling approximately $21,000,000 as of December
31, 1991.
The revolving credit facility and term loan bear interest at a
rate based on the bank's prime rate. Alternatively, interest rates can
be fixed for 30,60, or 90 day periods on portions of the term loan at a
floating Eurocurrency rate. At December 31, 1991, the weighted average
rate being paid was approximately 7.50%. The term notes call for
minimum monthly principal payments of $354,167 with the final payment
due in August, 1993. These loans are secured by substantially all of
the assets of the Company and, among other things, require maintenance
of certain financial covenants and ratios. The revolving credit
facility matures November 30, 1992; however, the credit agreement
allows for the Borrower to request extensions of the maturity date.
(b) The note is a 9% interest bearing non-recourse note issued in
connection with the acquisition of a partial ownership interest in a
gas plant. The note is secured by the ownership interest and is
payable over a maximum period of 15 years, ending September 30, 2001.
The monthly installments are determined by the prior month's net cash
flow. The note is payable to an affiliate.
(4) INCOME TAXES
------------
The Company and GWEC are members of a consolidated tax group which
files a consolidated federal income tax return. On January 1, 1991, an
agreement was entered into between the Company and GWEC whereby the
Company determines, on a stand alone basis, the tax liability or
benefit as if it were not a member of the tax group. The Company then
reimburses or is reimbursed by GWEC for its income tax liability or
benefit.
Deferred income taxes are provided as a result of recording income
and expenses, principally depreciation and turnaround expenses, in
different periods for financial and tax accounting purposes.
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 96, "Accounting for Income Taxes" which was
superseded in February 1992 by Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes" which
provides for the recognition of deferred tax assets arising from
existing potential future tax benefits. The Company is required to
adopt SFAS 109 in calendar year 1993 and does not anticipate that such
adoption will have a material impact on the Company's financial
position.
(5) OPERATING REVENUES AND EXPENSES BY SEGMENTS
--------------------------------------------
The following segment information reflects operating revenues,
operating expenses and gross margins for the twelve months ended
December 31, 1991 and 1990.
<TABLE>
<CAPTION>
Refining Gas Plants Total
------------ ---------- ------------
December 31, 1991
------------------------------------------
<S> <C> <C> <C>
Operating Revenues $131,917,131 $2,109,950 $134,027,081
Operating Expenses 122,884,788 1,382,302 124,267,090
------------ ---------- ------------
Gross Margin $ 9,032,343 $ 727,648 $ 9,759,991
============ ========== ============
December 31, 1990
------------------------------------------
Operating Revenues $156,400,077 $ --- $156,400,077
Operating Expenses 141,760,077 --- 141,760,077
------------ ---------- ------------
Gross Margin $ 14,640,000 $ --- $ 14,640,000
============ ========== ============
</TABLE>
(6) RELATED PARTY TRANSACTIONS
--------------------------
Effective July 1, 1991, a supply and marketing service agreement
was entered into between the Company and GWEC, whereas GWEC purchases
crude oil and other raw materials for resale to the Company, at cost,
for processing at the refinery. The intercompany purchase of raw
materials include all amounts legally accrued and owing by GWEC to
third parties, including prepayments and offsite inventory. Also, the
Company sells refined petroleum products to GWEC, at market, for resale
by GWEC. For the supply and marketing services provided by GWEC, the
Company pays a management fee pursuant to the terms of a management
agreement. Prior to July 1, 1991, GWEC sold crude oil and raw
materials to the Company at cost plus $.01 per gallon and purchased
refined products from the Company at market less $.01 per gallon.
(7) EMPLOYEE BENEFIT PLANS
----------------------
The Company has a profit sharing plan (defined contribution plan)
covering certain non-union employees who meet eligibility requirements
as to age and length of service. Contributions to the plan are
determined annually by the Company. Contributions of $162,515 and
$67,050 were accrued for the twelve months ended December 31, 1991 and
1990, respectively.
The Company has a defined benefit pension plan for union
employees. The benefits are based on a percentage of the employee's
final earnings, as defined, and years of credited service, up to a
maximum of 30 years. The Company's funding policy is to contribute
annually an amount to fund normal cost and amortize unfunded actuarial
liabilities over 19 years. Plan assets at December 31, 1991 and 1990
consist primarily of private and public debt and equity investments.
The following table sets forth the funded status and amounts
recognized in the Company's statements of financial position and income
at December 31, 1991 and 1990:
<TABLE>
<CAPTION>
1991 1990
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $228,124 and $147,652 at
December 31, 1991 and 1990, respectively $(248,606) $(161,342)
========= =========
Projected benefit obligation for service rendered to date (248,606) (161,342)
Plan assets at fair value 165,346 118,846
--------- ---------
Projected benefit obligation in excess of plan assets (83,260) (42,496)
Unrecognized net obligation existing at January 1, 10,920 11,585
Prior service cost not yet recognized 15,811 ---
Unrecognized net loss from past experience different
from that assumed and effects of changes in
assumptions 78,558 27,917
Adjustment to recognize minimum liability (105,289) (39,502)
--------- ---------
Accrued pension liability included in other liabilities $ (83,260) $ (42,496)
========= =========
Net pension cost includes the following components:
Service cost $ 26,500 $ 30,174
Interest cost 14,302 10,568
Actual return on plan assets (14,298) (2,792)
Net amortization and deferral of other components 4,823 (5,342)
--------- ---------
Net periodic pension cost $ 31,327 $ 32,608
========= =========
</TABLE>
The discount rate used in determining the actuarial present value
of the projected benefit obligation was 6.75% and 7.499% for 1991 and
1990, respectively. The average rate of increase in future
compensation levels and the expected long-term rate of return on
pension plan assets was 0% and 9.0%, respectively in both years.
(8) MAJOR CUSTOMERS
---------------
During the years ended December 31, 1991 and 1990, the Company
sold 100% of the refined products to GWEC. Also, during that period,
the Company purchased 100% of the crude oil and raw materials from
GWEC.
(9) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company paid (received) a retainer fee to (from) a third party
based on 5% of the net income (loss) before taxes. This fee is
included in general and administrative expenses and was $(22,207) and
$550,300 for the years ended December 31, 1991 and 1990, respectively.
Effective February 1, 1991, this agreement was terminated and new
agreements were entered into between GWEC and affiliates of the third
party providing for payment of consulting fees of $50,000 per month
until January 31, 1992 and $15,000 per calendar quarter from 1992 to
2001. In addition, a retainer fee of $1,000,000, plus interest, is
payable for services to be provided in 1992 and 1993.
The Company is subject to various environmental and other
regulations primarily administered by the United States Environmental
Protection Agency, the New Mexico Health and Environmental Department
and the New Mexico Environmental Improvement Division. Management of
the Company believes it has complied with all aspects associated with
these regulations.
A Company affiliate entered into a ten year lease agreement for
office space in November 1989. The Company has guaranteed the
performance of the affiliate's obligations. Terms of the lease provide
for annual rentals of $396,000 in the second year and escalating to
$796,000 in years six through ten. In addition to the rent, the
Company has guaranteed the annual payment of $276,000 in occupancy
costs with provisions for escalation based on actual expenses. The
total estimated costs for rentals and operating expenses for 1992
amounts to $735,000.<PAGE>
<PAGE>
ARTHUR
ANDERSEN
ARTHUR ANDERSEN & CO. SC
BLOOMFIELD REFINING COMPANY
FINANCIAL STATEMENTS
TOGETHER WITH REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
AS OF DECEMBER 31, 1992 AND 1991<PAGE>
<PAGE>
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Bloomfield Refining Company:
We have audited the accompanying balance sheets of Bloomfield
Refining Company (a Delaware corporation), as of December 31, 1992
and 1991, and the related statements of income, retained earnings
and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Bloomfield Refining Company as of December 31, 1992 and 1991, and
the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN & CO.
Denver, Colorado,
March 30, 1993.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
BALANCE SHEETS
DECEMBER 31, 1992 AND 1991
<CAPTION>
ASSETS
CURRENT ASSETS 1992 1991
----------- -----------
<S> <C> <C>
Cash and temporary investments $ 7,291,275 $ 6,769,190
Accounts receivable - affiliates 5,486,216 4,405,176
Accounts receivable 57,241 277,136
Inventories 7,861,852 7,899,175
Prepaid expenses - crude oil 432,432 1,431,245
Prepaid expenses and other 1,556,214 977,707
----------- -----------
Total current assets 22,685,230 21,759,629
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 12,517,487 12,127,034
Gas plants, property and equipment 4,584,015 3,932,621
Less: Accumulated depreciation (3,641,734) (2,555,378)
----------- -----------
13,459,768 13,504,277
Construction in progress 950,020 523,427
----------- -----------
Total property, plant and equipment 14,409,788 14,027,704
----------- -----------
Prepaid expenses and other 25,206 399,146
----------- -----------
TOTAL ASSETS $37,120,224 $36,186,479
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES 1992 1991
----------- -----------
Accounts payable - affiliates $ 9,319,171 $ 9,180,281
Accounts payable 429,096 487,414
Current portion of long-term debt 2,767,496 4,450,000
Accrued liabilities 1,201,860 875,788
Accrued turnaround costs 2,604,232 ---
Income taxes payable - affiliate 1,122,000 1,191,500
----------- -----------
Total current liabilities 17,443,855 16,184,983
----------- -----------
NON-CURRENT LIABILITIES
Long-term debt, excluding current portion --- 3,693,763
Accrued turnaround costs --- 1,418,741
Other 160,692 83,260
----------- -----------
Total non-current liabilities 160,692 5,195,764
----------- -----------
Deferred income taxes 238,000 238,000
Commitments and contingencies (Note 9)
SHAREHOLDER'S EQUITY
Common stock, .01 par value: 1,000
voting shares authorized, issued and
outstanding 10 10
Contributed capital 3,200,090 3,200,090
Retained earnings 16,077,577 11,367,632
----------- -----------
Total shareholder's equity 19,277,677 14,567,732
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $37,120,224 $36,186,479
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1992 AND 1991
<CAPTION> 1992 1991
------------ ------------
<S> <C> <C>
Operating revenues $143,974,427 $134,027,081
Operating expenses 124,573,250 124,190,901
------------ ------------
Gross margin 19,401,177 9,836,180
General and administrative expenses 8,542,979 6,386,537
------------ ------------
Operating income 10,858,198 3,449,643
------------ ------------
OTHER INCOME (EXPENSE)
Gain on sale of gas plant assets (Note 1) 1,495,553 ---
Interest income 272,471 120,508
Interest expense (753,046) (415,401)
Other 89,671 89,632
------------ ------------
1,104,649 (205,261)
------------ ------------
Income before income taxes 11,962,847 3,244,382
INCOME TAX EXPENSE (NOTE 4)
Current (4,993,000) (1,094,000)
Deferred --- ---
------------ ------------
(4,993,000) (1,094,000)
------------ ------------
NET INCOME $ 6,969,847 $ 2,150,382
============ ============
STATEMENTS OF RETAINED EARNINGS
Balance at January 1 $ 11,367,632 $ 18,217,250
Net income 6,969,847 2,150,382
Dividends (2,230,572) (9,000,000)
Excess of additional pension liability
over unrecognized prior service cost (29,330) ---
------------ ------------
BALANCE AT DECEMBER 31 $ 16,077,577 $ 11,367,632
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992 AND 1991
<CAPTION> 1992 1991
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 143,704,941 $ 139,358,483
Cash paid to suppliers and employees (130,035,607) (132,338,157)
Cash outlay for turnaround (3,522) (844,354)
Interest received 264,519 113,933
Interest paid (806,318) (363,237)
Income taxes (5,062,500) 81,163
Deposits --- 5,689
Other 135,602 (34,370)
------------- -------------
Net cash provided by operating activities 8,197,115 5,979,150
------------- -------------
Cash flows from investing activities:
Capital expenditures - refinery (743,730) (1,386,071)
Acquisition of gas plant interests (Note 1) (2,544,653) (3,792,060)
Capital expenditures - gas plants (88,426) (156,055)
Proceeds from sale of gas plant assets 3,308,618 ---
------------- -------------
Net cash used in investing activities (68,191) (5,334,186)
------------- -------------
Cash flows from financing activities:
Borrowings under term loan agreement --- 8,500,000
Proceeds received from acquisition of gas plant note --- 775,218
Principal payments on debt (5,376,267) (1,131,455)
Dividends distributed (2,230,572) (9,000,000)
------------- -------------
Net cash used in financing activities (7,606,839) (856,237)
------------- -------------
Net increase (decrease) in cash and temporary investments 522,085 (211,273)
Cash and temporary investments at beginning of year 6,769,190 6,980,463
------------- -------------
Cash and temporary investments at end of year $ 7,291,275 $ 6,769,190
============= =============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992 AND 1991
<CAPTION> 1992 1991
----------- -----------
<S> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net income $ 6,969,847 $ 2,150,382
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of assets (1,495,553) ---
Depreciation 1,288,601 932,502
Accrued turnaround costs 883,716 800,999
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (873,550) 5,309,176
Decrease in inventories 37,323 1,710,437
Decrease (increase) in prepaid expenses and other 461,337 (2,222,538)
Decrease in other assets 387,561 ---
Decrease in accounts payable (13,964) (3,146,179)
(Decrease) increase in income taxes payable - affiliate (69,500) 1,036,260
Increase in accrued liabilities 242,090 185,507
Increase (decrease) in accrued turnaround costs 301,775 (844,354)
Increase in other liabilities 77,432 66,958
----------- -----------
Net cash provided by operating activities $ 8,197,115 $ 5,979,150
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
BLOOMFIELD REFINING COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND AND ORGANIZATION
---------------------------
Organization
- ------------
On August 31, 1984, Bloomfield Refining Company, a Delaware
corporation (the Company), was incorporated. The Company's primary
activities are the refining of petroleum products and gas plant
operations. The Company is a wholly-owned subsidiary of Gary-Williams
Energy Corporation (GWEC) and operates a refinery in Bloomfield, New
Mexico with a throughput capacity of 17,000 barrels per day. Effective
July 1, 1991, the Company purchased certain ownership interests in two
gas plants located in Utah and the net assets of a gas plant located in
Colorado from GWEC.
Gas Plants
- ----------
On August 7, 1992, the Company purchased an additional twenty-six
percent (26%) undivided interest in a gas plant GWEC operates in Uintah
and Duchesne Counties, Utah for cash and a promissory note, paid in
full in September, 1992. Net ownership income of $455,750, including
interest expense, from the effective date of the purchase, March 1,
1992, through July 31, 1992 relating to the increased ownership
interest was offset against the gross purchase price of $2,550,000.
On December 8, 1992, the Company increased its ownership interest
in the same gas plant GWEC operates in Uintah and Duchesne Counties,
Utah to forty-five percent (45%) by purchasing another ten percent
(10%) undivided interest from a third party. Net ownership income of
$134,508 from the effective date of the purchase, September 1, 1992,
through November 30, 1992 relating to the increased ownership interest
was offset against the gross purchase price of $612,168.
During 1992, the Company sold all rights, title and interest in a
gas plant gathering system, an extraction plant, and certain related
equipment and appurtenances located in Colorado to third parties for
$3,296,943, resulting in a gain on sale of gas plant assets of
$1,495,553.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
--------------------------------------------
Cash and Temporary Investments
- ------------------------------
For purposes of these statements, the Company considers
investments purchased with an original maturity of three months or less
to be cash or temporary investments.
Inventories
- -----------
Inventories are valued at the lower of first-in, first-out cost or
market. Inventories at December 31, 1992 and December 31, 1991 are as
follows:
<TABLE>
<CAPTION>
December 31, December 31,
1992 1991
----------- -----------
<S> <C> <C>
Refined, unrefined and intermediate products $5,361,150 $5,412,447
Crude oil 1,580,418 1,411,844
Materials and supplies 920,284 1,074,884
---------- ----------
$7,861,852 $7,899,175
========== ==========
</TABLE>
Property, Plant and Equipment
- -----------------------------
The initial purchase and additions to property, plant and
equipment are recorded at cost. Depreciation is provided using the
straight-line method based on estimated useful lives ranging from 2 to
35 years.
Ownership interests in gas plants are recorded at cost and
proportionately consolidated for financial statement purposes.
Depreciation is provided using the straight-line method with estimated
useful lives ranging from 5 to 10 years.
General and Administrative Expenses
- -----------------------------------
The Company reimburses GWEC and an affiliate for general and
administrative services relating to the supply and marketing of raw
materials and refined products and gas plant operations.
Accrued Turnaround Costs
- ------------------------
Major repair and maintenance expenses (turnaround costs) are
accrued and charged to current operations in anticipation of the work
to be performed in future periods to renew the related refinery assets.
Accrued turnaround costs are classified as either current or non-
current liabilities based upon the scheduling of major expenditures.
Reclassifications
- -----------------
Certain prior year amounts have been reclassified for consistency with
the current year presentation.
(3) LONG-TERM DEBT
--------------
Long-term debt consists of the following:
<TABLE>
<CAPTION>
Current Long-Term
Total Portion Portion
---------- ---------- ----------
<S> <C> <C> <C>
Note payable to a bank (a) $2,767,496 $2,767,496 $ ---
---------- ---------- ----------
December 31, 1992 $2,767,496 $2,767,496 $ ---
========== ========== ==========
Note payable to a bank (a) $7,437,500 $4,250,000 $3,187,500
Note payable-affiliate (b) 706,263 200,000 506,263
---------- ---------- ----------
December 31, 1991 $8,143,763 $4,450,000 $3,693,763
========== ========== ==========
</TABLE>
(a) The Company has a revolving credit facility with a bank under
which it may borrow up to $5,000,000 in cash and/or issue letters of
credit which in the aggregate cannot exceed the lesser of $35,000,000
or the borrowing base. The borrowing base, which consists principally
of accounts receivable, inventory, and exchange balances was
approximately $22,000,000 and $24,000,000 as of December 31, 1992 and
1991. The Company had no amounts outstanding under the revolving
credit facility, however, letters of credit totalling approximately
$18,000,000 and $21,000,000 had been issued as of December 31, 1992 and
1991.
The revolving credit facility and term loan bear interest at a
rate based on the bank's prime rate. Alternatively, interest rates can
be fixed for 30, 60, or 90 day periods on portions of the term loan at
a floating Eurocurrency rate. At December 31, 1992 and 1991, the
weighted average rate being paid was approximately 6.50% and 7.50%,
respectively. The term notes call for minimum monthly principal
payments of $354,167 with the final payment due in August, 1993. These
loans are secured by substantially all of the assets of the Company
and, among other things, require maintenance of certain financial
covenants and ratios. The revolving credit facility matures August 31,
1993; however, the credit agreement provides for extensions of the
maturity date.
On October 15, 1992, the credit agreement was amended to allow the
Company to draw up to $7,000,000 by December 31, 1993, for capital
projects (see Note 9) at the Bloomfield refinery at an interest rate of
2% over prime. This loan will be amortized monthly over two years
beginning the earlier of January, 1994, or the month following
completion of the projects at which time the interest rate is reduced
to 1.50% over prime. No amounts had been drawn on this note as of
December 31, 1992 and as of March 30, 1993, $1,700,000 has been drawn.
(b) The note was a 9% interest bearing non-recourse note issued in
connection with the acquisition of a partial ownership interest in a
gas plant. The note was secured by the ownership interest and in June,
1992, the note was paid in full.
(4) INCOME TAXES
------------
The Company and GWEC are members of a consolidated tax group which
files a consolidated federal income tax return. On January 1, 1991, an
agreement was entered into between the Company and GWEC whereby the
Company determines, on a stand alone basis, the tax liability or
benefit as if it were not a member of the tax group. The Company then
reimburses or is reimbursed by GWEC for its income tax liability or
benefit.
Deferred income taxes are provided as a result of recording income
and expenses, principally depreciation and turnaround expenses, in
different periods for financial and tax accounting purposes.
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 96, "Accounting for Income Taxes" which was
superseded in February 1992 by Statement of Financial Accounting
Standards No. 109 (SFAS 109), "Accounting for Income Taxes" which
provides for the recognition of deferred tax assets arising from
existing potential future tax benefits. The Company is required to
adopt SFAS 109 in calendar year 1993 and does not anticipate that such
adoption will have a material impact on the Company's financial
position.
(5) OPERATING REVENUES AND EXPENSES BY SEGMENTS
--------------------------------------------
The following segment information reflects operating revenues,
operating expenses and gross margins for the years ended December 31,
1992 and 1991.
<TABLE>
<CAPTION>
Refining Gas Plants Total
------------ ---------- ------------
December 31, 1992
------------------------------------------
<S> <C> <C> <C>
Operating Revenues $140,088,307 $3,886,120 $143,974,427
Operating Expenses 122,005,814 2,567,436 124,573,250
------------ ---------- ------------
Gross Margin $ 18,082,493 $1,318,684 $ 19,401,177
============ ========== ============
December 31, 1991
------------------------------------------
Operating Revenues $131,917,131 $2,109,950 $134,027,081
Operating Expenses 122,808,599 1,382,302 124,190,901
------------ ---------- ------------
Gross Margin $ 9,108,532 $ 727,648 $ 9,836,180
============ ========== ============
</TABLE>
(6) RELATED PARTY TRANSACTIONS
--------------------------
Effective July 1, 1991, a supply and marketing service agreement
was entered into between the Company and GWEC, whereas GWEC purchases
crude oil and other raw materials for resale to the Company, at cost,
for processing at the refinery. The intercompany purchase of raw
materials include all amounts legally accrued and owing by GWEC to
third parties, including prepayments and offsite inventory. Also, the
Company sells refined petroleum products to GWEC, at market, for resale
by GWEC. For the supply and marketing services provided by GWEC, the
Company pays a management fee pursuant to the terms of a management
agreement. Prior to July 1, 1991, GWEC sold crude oil and raw
materials to the Company at cost plus $.01 per gallon and purchased
refined products from the Company at market less $.01 per gallon.
On December 1, 1992, the Company guaranteed the payment by GWEC of
an aggregate maximum at any one time of $2,000,000 of present and/or
future indebtedness owed to a third party crude supplier.
(7) EMPLOYEE BENEFIT PLANS
----------------------
The Company has a profit sharing plan (defined contribution plan)
covering certain non-union employees who meet eligibility requirements
as to age and length of service. Contributions to the plan are
determined annually by the Company. Contributions of $169,002 and
$162,515 were accrued for the years ended December 31, 1992 and
December 31, 1991, respectively.
The Company has a defined benefit pension plan for union
employees. The benefits are based on a percentage of the employee's
final earnings, as defined, and years of credited service, up to a
maximum of 30 years. The Company's funding policy is to contribute
annually an amount to fund normal cost and amortize unfunded actuarial
liabilities over 19 years. Plan assets at December 31, 1992 and 1991
consist primarily of private and public debt and equity investments.
The following table sets forth the funded status and amounts
recognized in the Company's statements of financial position and
operations at December 31, 1992 and 1991:
<TABLE>
<CAPTION>
1992 1991
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $364,702 and $228,124 at
December 31, 1992 and 1991, respectively $(377,359) $(248,606)
========= =========
Projected benefit obligation for service rendered to date (377,359) (248,606)
Plan assets at fair value 216,667 165,346
--------- ---------
Projected benefit obligation in excess of plan assets (160,692) (83,260)
Unrecognized net obligation existing at January 1, 10,255 10,920
Prior service cost not yet recognized 14,951 15,811
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions 176,517 78,558
Adjustment to recognize minimum liability (201,723) (105,289)
--------- ---------
Accrued pension liability included in other liabilities $(160,692) $ (83,260)
========= =========
Net pension cost includes the following components:
Service cost $ 35,988 $ 26,500
Interest cost 18,060 14,302
Actual return on plan assets (18,597) (14,298)
Net amortization and deferral of other components 6,712 4,823
--------- ---------
Net periodic pension cost $ 42,163 $ 31,327
========= =========
</TABLE>
The discount rate used in determining the actuarial present value
of the projected benefit obligation was 5.75% and 6.75% for 1992 and
1991, respectively. The average rate of increase in future
compensation levels was 0% and the expected long-term rate of return on
pension plan assets was 9.0% in both years.
(8) MAJOR CUSTOMERS
---------------
During the years ended December 31, 1992 and 1991, the Company
sold 100% of the refined products to GWEC. Also, during that period,
the Company purchased 100% of the crude oil and raw materials from
GWEC.
(9) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company paid (received) a retainer fee to (from) a third party
based on 5% of the net income (loss) before taxes. This fee is
included in general and administrative expenses. Effective February 1,
1991, this agreement was terminated and new agreements were entered
into between GWEC and affiliates of the third party providing for
payment of consulting fees of $15,000 per calendar quarter from 1992 to
2001. In addition, a retainer fee of $1,000,000 was paid by GWEC and
reimbursed by the Company for services to be provided in 1992 and 1993
and is being amortized on a straight-line basis.
The Company is subject to various environmental and other
regulations primarily administered by the United States Environmental
Protection Agency, the New Mexico Health and Environmental Department
and the New Mexico Environmental Improvement Division. Management of
the Company believes it has complied with all aspects associated with
these regulations. In December, 1992 the Company entered into an
administrative order with the Environmental Protection Agency to
perform certain environmental work. An environmental liability reserve
in the amount of $362,000 was accrued in 1992 for work to be performed
in 1993 to assess the nature of any environmental cleanup requirements
at the refinery.
A Company affiliate entered into a ten year lease agreement for
office space in November 1989. The Company has guaranteed the
performance of the affiliate's obligations. Terms of the lease provide
for annual rentals of $396,000 in the second year and escalating to
$796,000 in years six through ten. In addition to the rent, the
Company has guaranteed the annual payment of $276,000 in occupancy
costs with provisions for escalation based on actual expenses. The
total estimated costs for rentals and operating expenses for 1993
amounts to $799,000.
In December, 1992, the Company engaged a contractor to engineer,
fabricate and install a diesel desulfurization unit to be operational
at the refinery in 1993 for a total contract price of $3,646,391
exclusive of any applicable sales and/or use taxes and subject to
adjustment for any changes in the work directive.<PAGE>
<PAGE>
ARTHUR
ANDERSEN
ARTHUR ANDERSEN & CO. SC
BLOOMFIELD REFINING COMPANY
FINANCIAL STATEMENTS
TOGETHER WITH REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
AS OF DECEMBER 31, 1993 AND 1992<PAGE>
<PAGE>
ARTHUR ANDERSEN & CO.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Bloomfield Refining Company:
We have audited the accompanying balance sheets of Bloomfield
Refining Company (a Delaware corporation), as of December 31,
1993 and 1992, and the related statements of operations,
retained earnings and cash flows for the years then ended.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Bloomfield Refining Company as of December 31,
1993 and 1992, and the results of its operations and its cash
flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ ARTHUR ANDERSEN & CO.
Denver, Colorado,
March 25, 1994.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
<CAPTION>
ASSETS
CURRENT ASSETS 1993 1992
----------- -----------
<S> <C> <C>
Cash and temporary investments $ 9,501,500 $ 7,291,275
Accounts receivable - affiliates 5,646,661 5,486,216
Accounts receivable 35,783 57,241
Inventories 6,046,026 7,861,852
Prepaid expenses - crude oil 819,868 432,432
Prepaid expenses and other 879,839 1,556,214
Deferred tax asset 291,500 ---
----------- -----------
Total current assets 23,221,177 22,685,230
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 22,177,094 12,517,487
Gas plants, property and equipment 4,652,324 4,584,015
Less: Accumulated depreciation (4,854,519) (3,641,734)
----------- -----------
21,974,899 13,459,768
Construction in progress 409,970 950,020
----------- -----------
Total property, plant and equipment 22,384,869 14,409,788
----------- -----------
Other 240,720 25,206
----------- -----------
TOTAL ASSETS $45,846,766 $37,120,224
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES 1993 1992
----------- -----------
Accounts payable - affiliates $ 8,513,020 $ 9,319,171
Accounts payable 935,698 429,096
Current portion of long-term debt 2,875,000 2,767,496
Accrued liabilities 1,260,047 1,201,860
Accrued turnaround costs --- 2,604,232
Income taxes payable - affiliate 2,496,600 1,122,000
----------- -----------
Total current liabilities 16,080,365 17,443,855
----------- -----------
NON-CURRENT LIABILITIES
Deferred income taxes 1,750,300 238,000
Accrued turnaround costs 810,119 ---
Other 151,359 160,692
----------- -----------
Total non-current liabilities 2,711,778 398,692
----------- -----------
Commitments and contingencies (Note 9)
SHAREHOLDER'S EQUITY
Common stock, .01 par value: 1,000
voting shares authorized, issued and
outstanding 10 10
Contributed capital 3,200,090 3,200,090
Retained earnings 23,854,523 16,077,577
----------- -----------
Total shareholder's equity 27,054,623 19,277,677
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $45,846,766 $37,120,224
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
<CAPTION> 1993 1992
------------ ------------
<S> <C> <C>
Operating revenues $148,822,139 $143,974,427
Operating expenses 118,026,762 124,573,250
------------ ------------
Gross margin 30,795,377 19,401,177
General and administrative expenses 8,470,542 8,542,979
------------ ------------
Operating income 22,324,835 10,858,198
------------ ------------
OTHER INCOME (EXPENSE)
(Loss) gain on sale of assets (Note 1) (8,503) 1,495,553
Interest income 259,062 272,471
Interest expense (357,446) (753,046)
Other 15,839 89,671
------------ ------------
(91,048) 1,104,649
------------ ------------
Income before income taxes 22,233,787 11,962,847
INCOME TAX EXPENSE (NOTE 4)
Current (7,635,100) (4,993,000)
Deferred (1,220,800) ---
------------ ------------
(8,855,900) (4,993,000)
------------ ------------
NET INCOME $ 13,377,887 $ 6,969,847
============ ============
STATEMENTS OF RETAINED EARNINGS
Balance at January 1 $ 16,077,577 $ 11,367,632
Net income 13,377,887 6,969,847
Dividends (5,600,941) (2,230,572)
Excess of additional pension liability
over unrecognized prior service cost --- (29,330)
------------ ------------
BALANCE AT DECEMBER 31 $ 23,854,523 $ 16,077,577
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
<CAPTION> 1993 1992
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 148,745,079 $ 143,704,941
Cash paid to suppliers and employees (122,246,277) (130,035,607)
Cash outlay for turnaround (3,202,273) (3,522)
Interest received 263,429 264,519
Interest paid (359,739) (806,318)
Income taxes paid (6,260,500) (5,062,500)
Other 7,703 135,602
------------- -------------
Net cash provided by operating activities 16,947,422 8,197,115
------------- -------------
Cash flows from investing activities:
Capital expenditures - refinery (8,744,591) (743,730)
Capital expenditures - gas plants (528,826) (2,633,079)
Proceeds from sale of assets 29,657 3,308,618
------------- -------------
Net cash used in investing activities (9,243,760) (68,191)
------------- -------------
Cash flows from financing activities:
Borrowings under term loan agreement 3,000,000 ---
Principal payments on debt (2,892,496) (5,376,267)
Dividends distributed (5,600,941) (2,230,572)
------------- -------------
Net cash used in financing activities (5,493,437) (7,606,839)
------------- -------------
Net increase in cash and temporary investments 2,210,225 522,085
Cash and temporary investments at beginning of year 7,291,275 6,769,190
------------- -------------
Cash and temporary investments at end of year $ 9,501,500 $ 7,291,275
============= =============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993 AND 1992
<CAPTION> 1993 1992
----------- -----------
<S> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net income $13,377,887 $ 6,969,847
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss (gain) on sale of assets 8,503 (1,495,553)
Depreciation 1,370,415 1,288,601
Accrued turnaround costs 1,014,887 883,716
Changes in assets and liabilities:
Increase in accounts receivable (150,662) (873,550)
Decrease in inventories 1,815,826 37,323
Decrease in prepaid expenses and other 462,695 461,337
Increase in deferred tax asset (291,500) ---
Decrease in other assets --- 387,561
Decrease in accounts payable (787,383) (13,964)
Increase (decrease) in income taxes payable - affiliate 1,374,600 (69,500)
Increase in accrued liabilities 58,187 242,090
(Decrease) increase in accrued turnaround costs (2,809,000) 301,775
(Decrease) increase in other liabilities (9,333) 77,432
Increase in deferred income taxes 1,512,300 ---
----------- -----------
Net cash provided by operating activities $16,947,422 $ 8,197,115
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
BLOOMFIELD REFINING COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND AND ORGANIZATION
---------------------------
Organization
- ------------
On August 31, 1984, Bloomfield Refining Company, a Delaware
corporation (the Company), was incorporated. The Company's primary
activities are the refining of petroleum products and gas plant
operations. The Company is a wholly-owned subsidiary of
Gary-Williams Energy Corporation (GWEC). The Company operates a
refinery in Bloomfield, New Mexico with a throughput capacity of
17,000 barrels per day and has ownership interests in two gas
plants located in Utah.
Gas Plants
- ----------
On August 7, 1992, the Company purchased an additional
twenty-six percent (26%) undivided interest in a gas plant GWEC
operates in Uintah and Duchesne Counties, Utah for cash and a
promissory note, paid in full in September, 1992. Net ownership
income of $455,750, including interest expense, from the effective
date of the purchase, March 1, 1992, through July 31, 1992 relating
to the increased ownership interest was offset against the gross
purchase price of $2,550,000.
On December 8, 1992, the Company increased its ownership
interest in the same gas plant GWEC operates in Uintah and Duchesne
Counties, Utah to approximately forty-eight percent (48%) by
purchasing another ten percent (10%) undivided interest from a
third party. Net ownership income of $134,508 from the effective
date of the purchase, September 1, 1992, through November 30, 1992,
relating to the increased ownership interest was offset against the
gross purchase price of $612,168.
During 1992, the Company sold all rights, title and interest in
a gas plant gathering system, an extraction plant, and certain
related equipment and appurtenances located in Colorado to third
parties, resulting in a gain on sale of gas plant assets of
$1,495,553.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Cash and Temporary Investments
- ------------------------------
For purposes of these statements, the Company considers
investments purchased with an original maturity of three months or
less to be cash or temporary investments.
Inventories
- -----------
Inventories are valued at the lower of first-in, first-out
cost or market. Inventories at December 31, 1993 and 1992, are as
follows:
<TABLE>
<CAPTION>
December 31, December 31,
1993 1992
----------- -----------
<S> <C> <C>
Refined, unrefined and intermediate products $3,692,757 $5,361,150
Crude oil 1,432,350 1,580,418
Materials and supplies 920,919 920,284
---------- ----------
$6,046,026 $7,861,852
========== ==========
</TABLE>
Property, Plant and Equipment
- -----------------------------
The initial purchase and additions to property, plant and
equipment are recorded at cost. Depreciation is provided using the
straight-line method based on estimated useful lives ranging from 2
to 35 years, with an average life of approximately 19 years.
Ownership interests in gas plants are recorded at cost and
proportionately consolidated for financial statement purposes.
Depreciation is provided using the straight-line method with
estimated useful lives ranging from 5 to 10 years, with an average
life of approximately 7 years.
General and Administrative Expenses
- -----------------------------------
The Company reimburses GWEC for general and administrative
services relating to the supply and marketing of raw materials and
refined products and gas plant operations.
Accrued Turnaround Costs
- ------------------------
Major repair and maintenance expenses (turnaround costs) are
accrued and charged to current operations in anticipation of the
work to be performed in future periods to renew the related
refinery assets. Accrued turnaround costs are classified as either
current or non-current liabilities based upon the scheduling of
major expenditures.
Capitalized Interest
- --------------------
The Company capitalizes interest on debt associated with the
financing of capital construction projects. During 1993, interest
of $109,480 was capitalized to property, plant and equipment.
Reclassifications
- -----------------
Certain prior year amounts have been reclassified to conform
with the current year presentation.
(3) LONG-TERM DEBT
--------------
The Company has a revolving credit facility with a bank under
which it may borrow up to $5,000,000 in cash and/or issue letters
of credit which in the aggregate cannot exceed the lesser of
$35,000,000 or the borrowing base. The borrowing base, which
consists principally of accounts receivable, inventory, and
exchange balances was approximately $18,000,000 and $22,000,000 as
of December 31, 1993 and 1992. The Company had no amounts
outstanding under the revolving credit facility, however, letters
of credit totalling approximately $14,000,000 and $18,000,000 had
been issued as of December 31, 1993 and 1992.
The revolving credit facility and a related term loan facility
bear interest at a rate based on the bank's prime rate.
Alternatively, interest rates can be fixed for 30, 60, or 90 day
periods on portions of the term loan at a floating Eurocurrency
rate. The term notes called for minimum monthly principal payments
of $354,167 with the final payment due in August, 1993; however,
the Company prepaid the loan in June, 1993. At December 31, 1992,
the weighted average interest rate being paid was approximately
6.5%. The credit facility and related term loan are secured by
substantially all of the assets of the Company and, among other
things, requires the maintenance of certain financial covenants and
ratios. The revolving credit facility matures November 15, 1994;
however, the credit agreement provides for extensions of the
maturity date.
The Company borrowed $3,000,000 for capital projects at the
Bloomfield refinery pursuant to an October 15, 1992 amendment to
the credit agreement. Interest is based on the bank's prime rate
or alternatively, interest rates can be fixed for 30, 60 or 90 day
periods on portions of the term loan at a floating Eurocurrency
rate. At December 31, 1993, the weighted average interest rate
being paid was approximately 6.2%. This loan is being amortized
monthly over two years commencing December, 1993. Additional loan
payments are required when operating cash flows exceed levels as
defined in the credit agreement. However, the entire balance has
been classified as current in the accompanying financial statements
as management expectS to pay the entire balance before December
31, 1994.
(4) INCOME TAXES
------------
The Company and GWEC are members of a consolidated tax group
which files a consolidated federal income tax return. An agreement
was entered into between the Company and GWEC whereby the Company
determines, on a stand alone basis, the tax liability or benefit as
if it were not a member of the tax group. The Company then
reimburses GWEC for its income tax liability. The Company is
entitled to be reimbursed by GWEC for its income tax benefit when
the Company could otherwise have utilized such benefit on a stand
alone basis.
Effective January 1, 1993, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", (SFAS 109). SFAS 109 requires that deferred
income taxes be recognized for the differences between the tax and
financial reporting bases of assets and liabilities at each year-
end based on enacted tax laws and statutory tax rates. Valuation
allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. The adoption of SFAS
109 had no material impact on the Company's financial position or
results of operations for the year ended December 31, 1993.
The net deferred tax liability as of December 31, 1993 consists of
the following:
<TABLE>
<CAPTION>
<S> <C>
Gross deferred tax assets $ (606,640)
Gross deferred tax liabilities 2,065,440
----------
1,458,800
Valuation allowance ---
----------
Net deferred tax liability $1,458,800
==========
</TABLE>
Deferred tax assets and liabilities result primarily from
inventory costs capitalized for tax, accounting reserves and from
recording depreciation and turnaround expenses in different periods
for financial and tax accounting purposes. In management's
opinion, it is more likely than not that the gross deferred tax
assets will be realized based on past earnings history.
The difference between the Company's tax provision at the
federal statutory rate and the effective rate for the years ended
December 31, 1993 and 1992 is due primarily to state income taxes.
(5) OPERATING REVENUES AND EXPENSES BY SEGMENTS
--------------------------------------------
The following segment information reflects operating revenues,
operating expenses and gross margins for the years ended December
31, 1993 and 1992.
<TABLE>
<CAPTION>
Refining Gas Plants Total
------------ ---------- ------------
December 31, 1993
------------------------------------------
<S> <C> <C> <C>
Operating Revenues $145,878,017 $2,944,122 $148,822,139
Operating Expenses 115,829,494 2,197,268 118,026,762
------------ ---------- ------------
Gross Margin $ 30,048,523 $ 746,854 $ 30,795,377
============ ========== ============
December 31, 1992
------------------------------------------
Operating Revenues $140,088,307 $3,886,120 $143,974,427
Operating Expenses 122,005,814 2,567,436 124,573,250
------------ ---------- ------------
Gross Margin $ 18,082,493 $1,318,684 $ 19,401,177
============ ========== ============
</TABLE>
(6) RELATED PARTY TRANSACTIONS
--------------------------
A supply and marketing service agreement was entered into
between the Company and GWEC, whereas GWEC purchases crude oil and
other raw materials for resale to the Company, at cost, for
processing at the refinery. The intercompany purchase of raw
materials includes all amounts accrued and owing by GWEC to third
parties, including prepayments and offsite inventory. Also, the
Company sells refined petroleum products to GWEC, at market, for
resale by GWEC.
On December 1, 1993 and 1992, the Company guaranteed the
payment of GWEC of an aggregate maximum at any one time of
$2,000,000 of present and/or future indebtedness owed to a third
party crude supplier.
(7) EMPLOYEE BENEFIT PLANS
----------------------
The Company has a profit sharing plan (defined contribution
plan) covering certain non-union employees who meet eligibility
requirements as to age and length of service. Contributions to the
plan are determined annually by the Company. Contributions of
$173,139 and $169,002 were accrued for the years ended December 31,
1993 and December 31, 1992, respectively.
The Company also has a defined benefit pension plan for union
employees. The benefits are based on a percentage of the
employee's final earnings, as defined, and years of credited
service, up to a maximum of 30 years. The Company's funding policy
is to contribute annually an amount to fund normal cost and
amortize unfunded actuarial liabilities over 19 years. Plan assets
at December 31, 1993 and 1992 consist primarily of private and
public debt and equity investments.
The following table sets forth the funded status and amounts
recognized in the Company's statements of financial position and
operations at December 31, 1993 and 1992:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $406,405 and $364,702 at
December 31, 1993 and 1992, respectively $(424,162) $(377,359)
========= =========
Projected benefit obligation for service rendered to date $(424,162) $(377,359)
Plan assets at fair value 272,803 216,667
--------- ---------
Projected benefit obligation in excess of plan assets (151,359) (160,692)
Unrecognized net obligation existing at January 1 9,590 10,255
Prior service cost not yet recognized 14,091 14,951
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions 160,797 176,517
Adjustment to recognize minimum liability (184,478) (201,723)
--------- ---------
Accrued pension liability included in other liabilities $(151,359) $(160,692)
========= =========
Net pension cost includes the following components:
Service cost $ 49,580 $ 35,988
Interest cost 23,202 18,060
Actual return on plan assets (31,641) (18,597)
Net amortization and deferral of other components 20,237 6,712
--------- ---------
Net periodic pension cost $ 61,378 $ 42,163
========= =========
</TABLE>
The discount rate used in determining the actuarial present value
of the projected benefit obligation was 6.00% and 5.75% for 1993 and
1992, respectively. The average rate of increase in future
compensation levels was 0% and the expected long-term rate of return on
pension plan assets was 8.0% and 9.0% in 1993 and 1992, respectively.
(8) MAJOR CUSTOMERS AND SUPPLIERS
-----------------------------
During the years ended December 31, 1993 and 1992, the Company
sold 100% of the refined products to GWEC. Also, during that period,
the Company purchased 100% of the crude oil and raw materials from
GWEC.
(9) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company is subject to certain environmental and other
regulations primarily administered by the United States Environmental
Protection Agency and various state agencies. Management of the
Company believes it has complied with all material aspects associated
with these regulations. In December, 1992, the Company entered into an
administrative order with the Environmental Protection Agency to
perform certain environmental work. An environmental liability reserve
in the amount of $362,000 was accrued in 1992 for work to be performed
in 1993 and 1994 to assess the nature of any environmental cleanup
requirements at the refinery. As of December 31, 1993, the cash outlay
recorded against the reserve was $87,759.
The Company is subject to various claims and business disputes in
the ordinary course of business. Management does not anticipate that
the ultimate outcome of these issues will have a material impact on the
Company's financial position or results of operations.
An affiliate of the Company entered into a ten year lease
agreement for office space in November 1989. The Company has
guaranteed the performance of the affiliate's obligations. Terms of
the lease provide for annual rentals of $490,000 in the fourth year
(1993) and escalating to $796,000 in years six through ten. In
addition to the rent, the Company has guaranteed the annual payment of
$276,000 in occupancy costs with provisions for escalation based on
actual expenses. The total estimated costs for rentals and operating
expenses for 1994 amounts to $871,000. Currently, the affiliate of the
Company is subleasing certain office space to a third party and a
related party.
<PAGE>
<PAGE>
ARTHUR ANDERSEN LLP
BLOOMFIELD REFINING COMPANY
FINANCIAL STATEMENTS
TOGETHER WITH REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS
AS OF DECEMBER 31, 1994 AND 1993<PAGE>
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholder of Bloomfield Refining Company:
We have audited the accompanying balance sheets of Bloomfield
Refining Company (a Delaware corporation) as of December 31,
1994 and 1993, and the related statements of operations,
retained earnings and cash flows for the years then ended.
These financial statements are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Bloomfield Refining Company as of December 31,
1994 and 1993, and the results of its operations and its cash
flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Denver, Colorado,
March 30, 1995.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
<CAPTION>
ASSETS
CURRENT ASSETS 1994 1993
----------- -----------
<S> <C> <C>
Cash and temporary investments $ 8,379,601 $10,800,111
Accounts receivable - affiliates 6,008,872 5,646,661
Accounts receivable 257,820 35,783
Inventories 7,887,826 6,046,026
Prepaid crude oil - affiliate 2,312,338 819,868
Prepaid expenses and other 584,495 879,839
Deferred tax asset --- 291,500
----------- -----------
Total current assets 25,430,952 24,519,788
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 23,165,353 22,177,094
Gas plants, property and equipment 4,855,654 4,652,324
Less: Accumulated depreciation (6,550,919) (4,854,519)
----------- -----------
21,470,088 21,974,899
Construction in progress 147,712 409,970
----------- -----------
Total property, plant and equipment 21,617,800 22,384,869
----------- -----------
Other 289,005 240,720
----------- -----------
TOTAL ASSETS $47,337,757 $47,145,377
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES 1994 1993
----------- -----------
Accounts payable - affiliates $10,853,802 $ 8,513,020
Accounts payable 649,983 935,698
Current portion of long-term debt --- 2,875,000
Accrued liabilities 2,227,067 2,558,658
Income taxes payable - affiliate --- 2,496,600
----------- -----------
Total current liabilities 13,730,852 17,378,976
----------- -----------
NON-CURRENT LIABILITIES
Deferred income taxes, net 1,184,500 1,750,300
Accrued turnaround costs 1,953,671 810,119
Other 130,312 151,359
----------- -----------
Total non-current liabilities 3,268,483 2,711,778
----------- -----------
Commitments and contingencies (Note 9)
SHAREHOLDER'S EQUITY
Common stock, .01 par value: 1,000
voting shares authorized, issued and
outstanding 10 10
Contributed capital 3,200,090 3,200,090
Retained earnings 27,138,322 23,854,523
----------- -----------
Total shareholder's equity 30,338,422 27,054,623
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $47,337,757 $47,145,377
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<CAPTION> 1994 1993
------------ ------------
<S> <C> <C>
Operating revenues $141,701,590 $148,822,139
Operating expenses 114,999,480 118,026,762
------------ ------------
Gross margin 26,702,110 30,795,377
General and administrative expenses 7,529,972 8,470,542
------------ ------------
Operating income 19,172,138 22,324,835
------------ ------------
OTHER INCOME (EXPENSE)
Gain (loss) on sale of assets 8,568 (8,503)
Interest income 375,022 259,062
Interest expense (265,862) (357,446)
Other 268,858 15,839
------------ ------------
386,586 (91,048)
------------ ------------
Income before income taxes 19,558,724 22,233,787
INCOME TAX EXPENSE (NOTE 4)
Current (7,396,500) (7,635,100)
Deferred (248,800) (1,220,800)
------------ ------------
(7,645,300) (8,855,900)
------------ ------------
Net Income $ 11,913,424 $ 13,377,887
============ ============
STATEMENTS OF RETAINED EARNINGS
Balance at January 1 $ 23,854,523 $ 16,077,577
Net income 11,913,424 13,377,887
Dividends (8,629,625) (5,600,941)
------------ ------------
BALANCE AT DECEMBER 31 $ 27,138,322 $ 23,854,523
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<CAPTION> 1994 1993
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 141,129,762 $ 148,745,079
Cash paid to suppliers and employees (120,708,328) (120,947,666)
Cash outlay for turnaround --- (3,202,273)
Interest received 382,751 263,429
Interest paid (266,117) (359,739)
Income taxes (10,416,200) (6,260,500)
Other 266,933 7,703
------------- -------------
Net cash provided by operating activities 10,388,801 18,246,033
------------- -------------
Cash flows from investing activities:
Capital expenditures - refinery (1,276,862) (8,744,591)
Capital expenditures - gas plants (29,574) (528,826)
Proceeds from sale of assets 1,750 29,657
------------- -------------
Net cash used in investing activities (1,304,686) (9,243,760)
------------- -------------
Cash flows from financing activities:
Borrowings under revolving credit agreement --- 3,000,000
Principal payments on debt (2,875,000) (2,892,496)
Dividends distributed (8,629,625) (5,600,941)
------------- -------------
Net cash used in financing activities (11,504,625) (5,493,437)
------------- -------------
Net (decrease) increase in cash and temporary investments (2,420,510) 3,508,836
Cash and temporary investments at beginning of year 10,800,111 7,291,275
------------- -------------
Cash and temporary investments at end of year $ 8,379,601 $ 10,800,111
============= =============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
<CAPTION> 1994 1993
----------- -----------
<S> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net income $11,913,424 $13,377,887
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,739,979 1,370,415
Accrued turnaround costs 1,143,552 1,014,887
(Gain) loss on sale of assets (8,568) 8,503
Changes in assets and liabilities:
Increase in accounts receivable (584,248) (150,662)
(Increase) decrease in inventories (1,841,800) 1,815,826
(Increase) decrease in prepaid expenses and other (1,370,882) 462,695
Decrease (increase) in deferred tax asset 291,500 (291,500)
Increase in other assets (48,285) ---
Increase (decrease) in accounts payable 2,569,167 (787,383)
(Decrease) increase in accrued liabilities (331,591) 1,356,798
(Decrease) increase in income taxes payable - affiliate (2,496,600) 1,374,600
Decrease in accrued turnaround costs --- (2,809,000)
Decrease in other liabilities (21,047) (9,333)
(Decrease) increase in deferred income taxes (565,800) 1,512,300
----------- -----------
Net cash provided by operating activities $10,388,801 $18,246,033
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
BLOOMFIELD REFINING COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND AND ORGANIZATION
---------------------------
Organization
- ------------
On August 31, 1984, Bloomfield Refining Company, a Delaware
corporation (the Company), was incorporated. The Company's primary
activities are the refining of petroleum products and gas plant
operations. The Company is a wholly-owned subsidiary of
Gary-Williams Energy Corporation (GWEC). The Company operates a
refinery in Bloomfield, New Mexico with a throughput capacity of
17,000 barrels per day and has ownership interests in two gas
plants located in Utah.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Cash and Temporary Investments
- ------------------------------
For purposes of these statements, the Company considers
investments purchased with an original maturity of three months or
less to be cash or temporary investments. Temporary investments
consist primarily of certificates of deposit and commercial paper.
These securities are classified as held to maturity investments as
defined by Statement of Financial Accounting Standards No. 115. At
December 31, 1994 and 1993, these securities are recorded at a
market value of $7,663,000 and $8,520,000, respectively. Realized
gains and losses from sales of these securities are included in
interest income in the accompanying statements of operations. The
net unrealized gain or loss on these securities was not material as
of December 31, 1994 and 1993.
Inventories
- -----------
Inventories are valued at the lower of first-in, first-out
cost or market. Inventories at December 31, 1994 and 1993 are as
follows:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
----------- -----------
<S> <C> <C>
Refined, unrefined and intermediate products $4,181,728 $3,692,757
Crude oil 2,811,004 1,432,350
Materials and supplies 895,094 920,919
---------- ----------
$7,887,826 $6,046,026
========== ==========
</TABLE>
Property, Plant and Equipment
- -----------------------------
The initial purchase and additions to property, plant and
equipment are recorded at cost. Depreciation is provided using the
straight-line method based on estimated useful lives ranging from 2
to 35 years, with an average initial life of approximately 19
years.
Ownership interests in gas plants are recorded at cost and
proportionately consolidated for financial statement purposes.
Depreciation is provided using the straight-line method with
estimated useful lives ranging from 5 to 10 years, with an average
initial life of approximately 7 years.
General and Administrative Expenses
- -----------------------------------
The Company reimburses GWEC for general and administrative
services relating to the supply and marketing of raw materials and
refined products and gas plant operations.
Accrued Turnaround Costs
- ------------------------
Major repair and maintenance expenses (turnaround costs) are
accrued and charged to current operations in anticipation of the
work to be performed in future periods to renew the related
refinery assets. Accrued turnaround costs are classified as either
current or non-current liabilities based upon the scheduling of
major expenditures.
Capitalized Interest
- --------------------
The Company capitalizes interest on debt associated with the
financing of capital construction projects. During 1993 interest
of $109,480 was capitalized to property, plant and equipment. No
such interest was capitalized during 1994.
Reclassifications
- -----------------
Certain prior year amounts have been reclassified for
consistency with the current year presentation.
(3) LONG-TERM DEBT
--------------
The Company has a revolving credit facility, as amended, with
a group of banks under which it may borrow up to $8,000,000 in cash
and/or issue letters of credit which in the aggregate cannot exceed
the lesser of $35,000,000 or the borrowing base. The borrowing
base, which consists principally of accounts receivable, inventory,
exchange balances and unused outstanding letters of credit was
approximately $21,000,000 and $18,000,000 as of December 31, 1994
and 1993. The Company had no amounts outstanding under the
revolving credit facility, however, letters of credit totaling
approximately $20,000,000 and $14,000,000 had been issued as of
December 31, 1994 and 1993. Borrowings under the revolving credit
facility bear interest at a rate based on the bank's prime rate.
The credit facility is secured by substantially all of the
assets of the Company and, among other things, requires the
maintenance of certain financial covenants and ratios. The
revolving credit facility matures June 1, 1996; however, the credit
agreement provides for extensions of the maturity date.
The Company borrowed $3,000,000 in 1993 for capital projects
at the Bloomfield refinery pursuant to an amendment to the credit
agreement. Interest was based on the bank's prime rate or
alternatively, interest rates could be fixed for 30, 60 or 90 day
periods on portions of the term loan at a floating Eurocurrency
rate. At December 31, 1993, the weighted average interest rate
being paid was approximately 6.2%. The entire balance was paid
during 1994.
(4) INCOME TAXES
------------
The Company and GWEC are members of a consolidated tax group
which files a consolidated federal income tax return. An agreement
was entered into between the Company and GWEC whereby the Company
determines, on a stand alone basis, the tax liability or benefit as
if it were not a member of the tax group. The Company then
reimburses GWEC for its current income tax liability on a quarterly
basis. Deferred income taxes are paid to GWEC periodically. The
Company is entitled to be reimbursed by GWEC for its income tax
benefit when the Company could otherwise have utilized such benefit
on a stand alone basis.
Effective January 1, 1993, the Company adopted the provisions
of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", (SFAS 109). SFAS 109 requires that deferred
income taxes be recognized for the differences between the tax and
financial reporting bases of assets and liabilities at each year-
end based on enacted tax laws and statutory tax rates. Valuation
allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. The adoption of SFAS
109 had no material impact on the Company's financial position or
results of operations for the year ended December 31, 1993.
The net deferred tax liability consists of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1994 1993
------------ ------------
<S> <C> <C>
Gross deferred tax assets $(1,090,700) $ (606,640)
Gross deferred tax liabilities 2,798,300 2,065,440
----------- -----------
1,707,600 1,458,800
Payments to affiliate (523,100) ---
Valuation allowance --- ---
----------- -----------
Net deferred tax liability $ 1,184,500 $ 1,458,800
=========== ===========
</TABLE>
Deferred tax assets and liabilities result primarily from
inventory costs capitalized for tax, accounting reserves and from
recording depreciation and turnaround expenses in different periods
for financial and tax accounting purposes. In management's
opinion, it is more likely than not that the gross deferred tax
assets will be realized based on past earnings history.
The difference between the Company's tax provision at the
federal statutory rate and the effective rate for the years ended
December 31, 1994 and 1993 is due primarily to state income taxes.
Tax Deficiency
- --------------
The Internal Revenue Service concluded a field audit of the
consolidated tax group's income tax return for the fiscal year 1990
resulting in a "Notice of Deficiency" for that fiscal year.
Proposed adjustments to income and tax credits resulted in a
proposed tax deficiency of approximately $4,800,000 plus penalties.
The Company filed a petition with the United States Tax Court
contesting the notice and believes that it has meritorious legal
defenses to the proposed tax deficiency, but the ultimate outcome
of the Tax Court case is uncertain.
(5) OPERATING REVENUES AND EXPENSES BY SEGMENTS
--------------------------------------------
The following segment information reflects operating revenues,
operating expenses and gross margins for the years ended December
31, 1994 and 1993.
<TABLE>
<CAPTION>
Refining Gas Plants Total
------------ ---------- ------------
December 31, 1994
------------------------------------------
<S> <C> <C> <C>
Operating Revenues $139,073,511 $2,628,079 $141,701,590
Operating Expenses 112,824,818 2,174,662 114,999,480
------------ ---------- ------------
Gross Margin $ 26,248,693 $ 453,417 $ 26,702,110
============ ========== ============
December 31, 1993
------------------------------------------
Operating Revenues $145,878,017 $2,944,122 $148,822,139
Operating Expenses 115,829,494 2,197,268 118,026,762
------------ ---------- ------------
Gross Margin $ 30,048,523 $ 746,854 $ 30,795,377
============ ========== ============
</TABLE>
(6) RELATED PARTY TRANSACTIONS
--------------------------
A supply and marketing service agreement was entered into
between the Company and GWEC, whereby GWEC purchases crude oil and
other raw materials for resale to the Company, at cost, for
processing at the refinery. The intercompany purchase of raw
materials include all amounts accrued and owing by GWEC to third
parties, including prepayments and offsite inventory. Also, the
Company sells refined petroleum products to GWEC, at market, for
resale by GWEC.
The Company has guaranteed the payment by GWEC of an aggregate
maximum at any one time of $2,000,000 of present and/or future
indebtedness owed to a third party crude oil supplier.
(7) EMPLOYEE BENEFIT PLANS
----------------------
The Company has a profit sharing plan (defined contribution
plan) covering certain non-union employees who meet eligibility
requirements as to age and length of service. Contributions to the
plan are determined annually by the Company. Contributions of
$187,357 and $173,139 were accrued for the years ended December 31,
1994 and 1993, respectively.
The Company also has a defined benefit pension plan for union
employees. The Company's funding policy is to contribute annually
an amount to fund normal cost and amortize unfunded actuarial
liabilities over 19 years. Plan assets at December 31, 1994 and
1993 consist primarily of private and public debt and equity
investments.
In prior years, benefits were based on a percentage of the
employee's earnings, as defined, as of June 1, 1990, and years of
credited service up to a maximum of 30 years. In 1994, the plan
was amended to base benefits on a percentage of the employee's
earnings as of June 1, 1993.
The following table sets forth the funded status and amounts
recognized in the Company's statements of financial position and
operations at December 31, 1994 and 1993, for the defined benefit
pension plan:
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $417,559 and $406,405 at
December 31, 1994 and 1993, respectively $(433,264) $(424,162)
========= =========
Projected benefit obligation for service rendered to date $(433,264) $(424,162)
Plan assets at fair value 302,952 272,803
--------- ---------
Projected benefit obligation in excess of plan assets (130,312) (151,359)
Unrecognized net obligation existing at January 1, 1989
being recognized over 19 years 8,926 9,590
Prior service cost not yet recognized 77,483 14,091
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions 70,391 160,797
Adjustment to recognize minimum liability (156,800) (184,478)
--------- ---------
Accrued pension liability included in other liabilities $(130,312) $(151,359)
========= =========
Net pension cost includes the following components:
Service cost $ 55,079 $ 49,580
Interest cost 29,266 23,202
Actual return on plan assets 6,557 (31,641)
Net amortization and deferral of other components (19,922) 20,237
--------- ---------
Net periodic pension cost $ 70,980 $ 61,378
========= =========
</TABLE>
The discount rate used in determining the actuarial present value
of the projected benefit obligation was 7.0% for 1994 and 6.0% for
1993. The expected long-term rate of return on pension plan assets was
8.0% in 1994 and 1993.
(8) MAJOR CUSTOMERS
---------------
During the years ended December 31, 1994 and 1993, the Company
sold 100% of the refined products to GWEC. Also, during that period,
the Company purchased 100% of the crude oil and raw materials from
GWEC.
(9) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company is subject to certain environmental and other
regulations primarily administered by the United States Environmental
Protection Agency (E.P.A.) and various state agencies. Management of
the Company believes it has complied with all material aspects
associated with these regulations. The Company entered into an
administrative order with the E.P.A. to perform a study to assess the
nature of any environmental cleanup requirements at the refinery which
was substantially completed in 1994. Management is currently
evaluating the E.P.A.'s response and is uncertain as to what, if any,
additional costs may be required.
The Company is subject to various claims and business disputes in
the ordinary course of business. Management does not anticipate that
the ultimate outcome of these issues will have a material impact on the
Company's financial position or results of operations.
An affiliate of the Company entered into a ten year lease
agreement for office space in November 1989. The Company has
guaranteed the performance of the affiliate's obligations. Terms of
the lease provided for annual rent of $553,000 in 1994 and escalating
to $796,000 in years six through ten. In addition to the rent, the
Company has guaranteed the annual payment of $318,000 in occupancy
costs with provisions for escalation based on actual expenses.
Currently, the affiliate of the Company is subleasing certain office
space to a third party and a related party.
<PAGE>
<PAGE>
BLOOMFIELD REFINING COMPANY
INTERIM FINANCIAL STATEMENTS
AS OF MARCH 31, 1995
(UNAUDITED)
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
BALANCE SHEETS
MARCH 31, 1995 AND DECEMBER 31, 1994
<CAPTION>
ASSETS
March 31,
1995 December 31,
CURRENT ASSETS (Unaudited) 1994
----------- -----------
<S> <C> <C>
Cash and temporary investments $ 2,620,153 $ 4,888,567
Accounts receivable - affiliates 7,047,961 6,008,872
Accounts receivable 239,707 257,820
Inventories 9,143,322 7,887,826
Prepaid crude oil - affiliate 6,018,887 5,803,372
Prepaid expenses and other 352,072 584,495
----------- -----------
Total current assets 25,422,102 25,430,952
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 23,165,353 23,165,353
Gas plants, property and equipment 4,901,295 4,855,654
Less: Accumulated depreciation (6,980,954) (6,550,919)
----------- -----------
21,085,694 21,470,088
Construction in progress 630,830 147,712
----------- -----------
Total property, plant and equipment 21,716,524 21,617,800
----------- -----------
Other 285,394 289,005
----------- -----------
TOTAL ASSETS $47,424,020 $47,337,757
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
March 31,
1995 December 31,
CURRENT LIABILITIES (Unaudited) 1994
----------- -----------
Accounts payable - affiliates $11,408,489 $10,853,802
Accounts payable 449,592 649,983
Accrued liabilities 2,238,788 2,227,067
Income taxes payable - affiliate 963,000 ---
----------- -----------
Total current liabilities 15,059,869 13,730,852
----------- -----------
NON-CURRENT LIABILITIES
Deferred income taxes, net 9,500 1,184,500
Accrued turnaround costs 2,239,559 1,953,671
Other 114,733 130,312
----------- -----------
Total non-current liabilities 2,363,792 3,268,483
----------- -----------
Commitments and contingencies (Note 9)
SHAREHOLDER'S EQUITY
Common stock, .01 par value 1,000
voting shares authorized, issued and
outstanding 10 10
Contributed capital 3,200,090 3,200,090
Retained earnings 26,800,259 27,138,322
----------- -----------
Total shareholder's equity 30,000,359 30,338,422
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $47,424,020 $47,337,757
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of
these balance sheets.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
<CAPTION> 1995 1994
------------ ------------
<S> <C> <C>
Operating revenues $ 29,962,961 $ 29,495,052
Operating expenses 25,799,986 24,052,808
------------ ------------
Gross margin 4,162,975 5,442,244
General and administrative expenses 1,740,486 1,795,578
------------ ------------
Operating income 2,422,489 3,646,666
------------ ------------
OTHER INCOME (EXPENSE)
Interest income 73,510 68,042
Interest expense (64,197) (81,550)
Other 66,335 25,458
------------ ------------
75,648 11,950
------------ ------------
Income before income taxes 2,498,137 3,658,616
INCOME TAX EXPENSE (NOTE 4)
Current (963,000) (1,350,000)
Deferred (9,500) (43,300)
------------ ------------
(972,500) (1,393,300)
------------ ------------
Net Income $ 1,525,637 $ 2,265,316
============ ============
STATEMENTS OF RETAINED EARNINGS
Balance at January 1 $ 27,138,322 $ 23,854,523
Net income 1,525,637 2,265,316
Dividends (1,863,700) ---
------------ ------------
BALANCE AT MARCH 31 $ 26,800,259 $ 26,119,839
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994
<CAPTION> 1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Reconciliation of net income to net cash provided by
(used in) operating activities:
Net income $ 1,525,637 $ 2,265,316
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 430,035 428,055
Accrued turnaround costs 285,888 285,888
Changes in assets and liabilities:
Increase in accounts receivable (1,020,976) (452,743)
Increase in inventories (1,255,496) (441,575)
Decrease in prepaid expenses and other 16,908 426,263
Increase in deferred tax asset --- (21,300)
Decrease in other assets 3,611 3,611
Increase (decrease) in accounts payable 244,523 (1,921,652)
Increase (decrease) in accrued liabilities 11,721 (219,324)
Increase in income taxes payable-affiliate 963,000 1,350,000
Decrease in other liabilities (15,579) ---
(Decrease) increase in deferred income taxes (1,175,000) 64,600
----------- -----------
Net cash (used in) provided by operating activities $ 14,272 $ 1,767,139
=========== ===========
Cash flows used in investing activities:
Capital expenditures - refinery (373,345) (756,002)
Capital expenditures - gas plants (45,641) (15,889)
----------- -----------
Net cash used in investing activities (418,986) (771,891)
----------- -----------
Cash flows used in financing activities:
Principal payments on debt --- (975,000)
Dividends distributed (1,863,700) ---
----------- -----------
Net cash used in financing activities (1,863,700) (975,000)
----------- -----------
Net (decrease) increase in cash and temporary investments (2,268,414) 20,248
Cash and temporary investments at beginning of year 4,888,567 9,501,500
----------- -----------
Cash and temporary investments at end of period $ 2,620,153 $ 9,521,748
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<PAGE>
BLOOMFIELD REFINING COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) BACKGROUND AND ORGANIZATION
---------------------------
Organization
- ------------
On August 31, 1984, Bloomfield Refining Company, a Delaware
corporation (the Company), was incorporated. The Company's primary
activities are the refining of petroleum products and gas plant
operations. The Company is a wholly-owned subsidiary of
Gary-Williams Energy Corporation (GWEC). The Company operates a
refinery in Bloomfield, New Mexico with a throughput capacity of
17,000 barrels per day and has ownership interests in two gas
plants located in Utah.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Cash and Temporary Investments
- ------------------------------
For purposes of these statements, the Company considers
investments purchased with an original maturity of three months or
less to be cash or temporary investments. Temporary investments
consist primarily of commercial paper and money market funds.
These securities are classified as held to maturity investments as
defined by Statement of Financial Accounting Standards No. 115. At
March 31, 1995 and December 31, 1994, these securities are recorded
at a market value of $2,082,000 and $7,663,000, respectively.
Realized gains and losses from sales of these securities are
included in interest income in the accompanying statements of
operations. The net unrealized gain or loss on these securities
was not material as of March 31, 1995 and December 31, 1994.
Inventories
- -----------
Inventories are valued at the lower of first-in, first-out
cost or market. Inventories at March 31, 1995 and December 31,
1994 are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- -----------
<S> <C> <C>
Refined, unrefined and intermediate products $5,276,421 $4,181,728
Crude oil 2,985,248 2,811,004
Materials and supplies 881,653 895,094
---------- ----------
$9,143,322 $7,887,826
========== ==========
</TABLE>
Property, Plant and Equipment
- -----------------------------
The initial purchase and additions to property, plant and
equipment are recorded at cost. Depreciation is provided using the
straight-line method based on estimated useful lives ranging from 2
to 35 years, with an average initial life of approximately 19
years.
Ownership interests in gas plants are recorded at cost and
proportionately consolidated for financial statement purposes.
Depreciation is provided using the straight-line method with
estimated useful lives ranging from 5 to 10 years, with an average
initial life of approximately 7 years.
General and Administrative Expenses
- -----------------------------------
The Company reimburses GWEC for general and administrative
services relating to the supply and marketing of raw materials and
refined products and gas plant operations.
Accrued Turnaround Costs
- ------------------------
Major repair and maintenance expenses (turnaround costs) are
accrued and charged to current operations in anticipation of the
work to be performed in future periods to renew the related
refinery assets. Accrued turnaround costs are classified as either
current or non-current liabilities based upon the scheduling of
major expenditures.
Capitalized Interest
- --------------------
The Company capitalizes interest on debt associated with the
financing of capital construction projects. No interest was
capitalized during the three months ended March 31, 1995 or during
1994.
Reclassifications
- -----------------
Certain prior year amounts have been reclassified for
consistency with the current year presentation.
(3) LONG-TERM DEBT
--------------
The Company has a revolving credit facility, as amended, with
a group of banks under which it may borrow up to $8,000,000 in cash
and/or issue letters of credit which in the aggregate cannot exceed
the lesser of $35,000,000 or the borrowing base. The borrowing
base, which consists principally of accounts receivable, inventory,
exchange balances and unused outstanding letters of credit was
approximately $29,000,000 and $21,000,000 as of March 31, 1995 and
December 31, 1994. The Company had no amounts outstanding under
the revolving credit facility, however, letters of credit totaling
approximately $23,000,000 and $20,000,000 had been issued as of
March 31, 1995 and December 31, 1994. Borrowings under the
revolving credit facility bear interest at a rate based on the
bank's prime rate.
The credit facility is secured by substantially all of the
assets of the Company and, among other things, requires the
maintenance of certain financial covenants and ratios. The
revolving credit facility matures June 1, 1996; however, the credit
agreement provides for extensions of the maturity date.
The Company borrowed $3,000,000 in 1993 for capital projects
at the Bloomfield refinery pursuant to an amendment to the credit
agreement. The entire balance was paid during 1994.
(4) INCOME TAXES
------------
The Company and GWEC are members of a consolidated tax group
which files a consolidated federal income tax return. An agreement
was entered into between the Company and GWEC whereby the Company
determines, on a stand alone basis, the tax liability or benefit as
if it were not a member of the tax group. The Company then
reimburses GWEC for its current income tax liability on a quarterly
basis. Deferred income taxes are paid to GWEC periodically. The
Company is entitled to be reimbursed by GWEC for its income tax
benefit when the Company could otherwise have utilized such benefit
on a stand alone basis.
Deferred income taxes are recognized for the differences
between the tax and financial reporting bases of assets and
liabilities at each period-end based on enacted tax laws and
statutory tax rates. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to
be realized.
The net deferred tax liability consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Gross deferred tax assets $(1,212,600) $(1,090,700)
Gross deferred tax liabilities 2,929,700 2,798,300
----------- -----------
1,717,100 1,707,600
Payments to affiliate (1,707,600) (523,100)
Valuation allowance --- ---
----------- -----------
Net deferred tax liability $ 9,500 $ 1,184,500
=========== ===========
</TABLE>
Deferred tax assets and liabilities result primarily from
inventory costs capitalized for tax, accounting reserves and from
recording depreciation and turnaround expenses in different periods
for financial and tax accounting purposes. In management's
opinion, it is more likely than not that the gross deferred tax
assets will be realized based on past earnings history.
The difference between the Company's tax provision at the
federal statutory rate and the effective rate is due primarily to
state income taxes.
Tax Deficiency
- --------------
The Internal Revenue Service concluded a field audit of the
consolidated tax group's income tax return for the fiscal year 1990
resulting in a "Notice of Deficiency" for that fiscal year.
Proposed adjustments to income and tax credits resulted in a
proposed tax deficiency of approximately $4,800,000 plus penalties.
The Company filed a petition with the United States Tax Court
contesting the notice and believes that it has meritorious legal
defenses to the proposed tax deficiency, but the ultimate outcome
of the Tax Court case is uncertain.
(5) OPERATING REVENUES AND EXPENSES BY SEGMENTS
--------------------------------------------
The following segment information reflects operating revenues,
operating expenses and gross margins for the three months ended
March 31, 1995 and 1994.
<TABLE>
<CAPTION>
Refining Gas Plants Total
------------ ---------- ------------
March 31, 1995
------------------------------------------
<S> <C> <C> <C>
Operating Revenues $ 29,359,316 $ 603,645 $ 29,962,961
Operating Expenses 25,223,910 576,076 25,799,986
------------ ---------- ------------
Gross Margin $ 4,135,406 $ 27,569 $ 4,162,975
============ ========== ============
March 31, 1994
------------------------------------------
Operating Revenues $ 28,877,145 $ 617,907 $ 29,495,052
Operating Expenses 23,429,533 623,275 24,052,808
------------ ---------- ------------
Gross Margin $ 5,447,612 $ (5,368) $ 5,442,244
============ ========== ============
</TABLE>
(6) RELATED PARTY TRANSACTIONS
--------------------------
A supply and marketing service agreement was entered into
between the Company and GWEC, whereby GWEC purchases crude oil and
other raw materials for resale to the Company, at cost, for
processing at the refinery. The intercompany purchases of raw
materials include all amounts accrued and owing by GWEC to third
parties, including prepayments and offsite inventory. Also, the
Company sells refined petroleum products to GWEC, at market, for
resale by GWEC.
The Company has guaranteed the payment by GWEC of an aggregate
maximum at any one time of $2,000,000 of present and/or future
indebtedness owed to a third party crude oil supplier.
(7) EMPLOYEE BENEFIT PLANS
----------------------
The Company has a profit sharing plan (defined contribution
plan) covering certain non-union employees who meet eligibility
requirements as to age and length of service. Contributions to the
plan are determined annually by the Company. Contributions of
$47,522 and $45,537 were accrued for the three months ended March
31, 1995 and 1994, respectively.
The Company also has a defined benefit pension plan for union
employees. The Company's funding policy is to contribute annually
an amount to fund normal cost and amortize unfunded actuarial
liabilities over 19 years. Plan assets at March 31, 1995 and
December 31, 1994 consist primarily of private and public debt and
equity investments.
Benefits are based on a percentage of the employee's earnings,
as defined, as of June 1, 1993, and years of credited service up to
a maximum of 30 years.
The following table sets forth the funded status and amounts
recognized in the Company's statements of financial position and
operations at December 31, 1994 for the defined benefit pension plan:
<TABLE>
<CAPTION>
1994
---------
<S> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $417,559 at December 31, 1994 $(433,264)
=========
Projected benefit obligation for service rendered to date $(433,264)
Plan assets at fair value 302,952
---------
Projected benefit obligation in excess of plan assets (130,312)
Unrecognized net obligation existing at January 1, 1989
being recognized over 19 years 8,926
Prior service cost not yet recognized 77,483
Unrecognized net loss from past experience different from
that assumed and effects of changes in assumptions 70,391
Adjustment to recognize minimum liability (156,800)
---------
Accrued pension liability included in other liabilities $(130,312)
=========
Net pension cost includes the following components:
Service cost $ 55,079
Interest cost 29,266
Actual return on plan assets 6,557
Net amortization and deferral of other components (19,922)
---------
Net periodic pension cost $ 70,980
=========
</TABLE>
The discount rate used in determining the actuarial present
value of the projected benefit obligation was 7.0% for 1994. The
expected long-term rate of return on pension plan assets was 8.0%
in 1994.
(8) MAJOR CUSTOMERS
---------------
During the three months ended March 31, 1995 and 1994, the
Company sold 100% of the refined products to GWEC. Also, during
that period, the Company purchased 100% of the crude oil and raw
materials from GWEC.
(9) COMMITMENTS AND CONTINGENCIES
-----------------------------
The Company is subject to certain environmental and other
regulations primarily administered by the United States
Environmental Protection Agency (E.P.A.) and various state
agencies. Management of the Company believes it has complied with
all material aspects associated with these regulations. The
Company entered into an administrative order with the E.P.A. to
perform a study to assess the nature of any environmental cleanup
requirements at the refinery which was substantially completed in
1994. Management is currently evaluating the E.P.A.'s response and
is uncertain as to what, if any, additional costs may be required.
The Company is subject to various claims and business disputes
in the ordinary course of business. Management does not anticipate
that the ultimate outcome of these issues will have a material
impact on the Company's financial position or results of
operations.
An affiliate of the Company entered into a ten year lease
agreement for office space in November 1989. The Company has
guaranteed the performance of the affiliate's obligations. Terms
of the lease provided for annual rent of $796,000 in 1995 through
1999. In addition to the rent, the Company has guaranteed the
annual payment of $328,000 in occupancy costs with provisions for
escalation based on actual expenses. Currently, the affiliate of
the Company is subleasing certain office space to a third party and
a related party.<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
OPERATING RESULTS FOR APRIL, 1995
<CAPTION>
BBLS/ $/GAL/
DAY BBL $/AMOUNT
------------------------
<S> <C> <C> <C>
SALES:
Regular Gasoline 454 $0.6133 $351
Unleaded Gasoline 6,921 0.6333 5,523
Premium Unleaded 653 0.7057 581
#2 Diesel 4,040 0.5933 3,021
#1 Diesel 0 - 0
Jet Fuel JP-4 1,039 0.5933 777
Naphtha 153 0.4341 84
Propane/Butane 21 0.3501 9
#6 Burner Fuel 350 0.1276 56
Saturated LPG 1,136 0.3232 463
Refined Product - Other 0 - 0
------------------------
14,767 $24.52 $10,864
COST OF SALES:
Crude Oil 15,710 $18.54 $8,869
Crude Oil Value Change 0 - (130)
Reduced Crude 124 18.02 67
Butane 0 - 0
Natural Gasoline 441 17.36 230
MTBE 0 - 0
Misc Product - API (Other) 0 - 0
Product Purchases 0 - 0
Inventory Change - Volume (1,375) 27.59 (802)
Inventory Change - Value 0 - (336)
------------------------
14,899 $17.67 $7,897
GROSS MARGIN $6.64 $2,967
Yield 99.11%
PRODUCTION COSTS:
Direct Operating Costs $631
Maintenance 254
Utilities 239
Depreciation 92
-------
$1,216
-------
OTHER COSTS
General and Administrative $590
Interest and Other Expense 0
Interest and Other Income (34)
-------
$556
-------
INCOME BEFORE DIVISIONS $1,195
-------
TRANSPORTATION DIVISION ($34)
PIPELINE DIVISION 17
GAS PLANTS - BLUEBELL/ALTONAH 13
-------
TOTAL DIVISIONS ($4)
-------
INCOME (LOSS) BEFORE TAXES $1,191
-------
PROVISION FOR INCOME TAXES (463)
-------
NET INCOME (LOSS) AFTER TAXES $728
=======
/TABLE
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENT OF CASH FLOWS
FOR THE FOUR MONTHS ENDED APRIL 30, 1995
INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS
<CAPTION>
MONTH Y-T-D
---------- ----------
<S> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net Income (Loss) 858,795 2,505,649
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 143,182 573,217
Turnaround costs 95,296 381,184
(Gain) loss on Sale of Assets 0 0
Changes in assets and liabilities:
Decrease (increase) in accounts receivable-affiliate (4,262,448) (5,152,298)
Decrease (increase) in accounts receivable, net 97,396 14,008
Decrease (increase) in inventories 39,777 (1,215,720)
Decrease (increase) in prepaid expenses 91,217 (3,744,982)
Decrease (increase) in deferred tax asset 0 0
Decrease (increase) in other assets 1,204 4,815
Decrease (increase) in interco def inc tax rec 0 0
Increase (decrease) in accounts payable - affiliate 372,033 (1,709,383)
Increase (decrease) in accounts payable 2,474,103 4,193,931
Increase (decrease) in income tax payable 463,000 1,249,000
Increase (decrease) in accrued liabilities (105,416) (1,716,545)
Increase (decrease) in other liabilities 0 26,487
Increase (decrease) in deferred income taxes 0 (1,184,500)
---------- ----------
Net cash provided (used) by operating activities 268,139 (5,775,137)
---------- ----------
Cash flows from investing activities:
Capital expenditures-refinery and construction in progress (208,537) (635,521)
Capital expenditures-gas plants (59,602) (105,243)
---------- ----------
Net cash provided (used) in investing activities (268,139) (740,764)
---------- ----------
Cash flows from financing activities:
Borrowings under note payable 0 0
Principal payments on debt 0 0
Dividends distributed 0 (1,863,700)
---------- ----------
Net cash provided (used) by financing activities 0 (1,863,700)
---------- ----------
Net increase(decrease) in cash and temporary investments 0 (8,379,601)
Cash and temporary investments at beginning of period 0 8,379,601
---------- ----------
Cash and temporary investments at end of period 0 (0)
========== ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
BALANCE SHEETS
APRIL 30, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
ASSETS
APRIL 30 DECEMBER 31
1995 1994
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and temporary investments $ --- $ 8,379,601
Accounts receivable - affiliates 11,161,170 6,008,872
Accounts receivable, net 243,812 257,820
Inventories 9,103,546 7,887,826
Prepaid expenses and other 6,641,815 2,896,833
Deferred tax asset --- ---
----------- -----------
Total current assets 27,150,343 25,430,952
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 23,165,353 23,165,353
Gas plant, property and equipment 4,960,897 4,855,654
Less: Accumulated depreciation (7,124,136) (6,550,919)
----------- -----------
21,002,114 21,470,088
Construction in progress 783,233 147,712
----------- -----------
Total property, plant and equipment 21,785,347 21,617,800
----------- -----------
OTHER ASSETS
Interco Deferred Inc Tax Rec --- ---
Other Assets 284,190 289,005
----------- -----------
Total other assets 284,190 289,005
----------- -----------
TOTAL ASSETS $49,219,880 $47,337,757
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
APRIL 30 DECEMBER 31
CURRENT LIABILITIES 1995 1994
----------- -----------
Accounts payable - affiliates $ 9,144,419 $10,853,802
Accounts payable 4,843,914 649,983
Income taxes payable - affiliate 1,249,000 ---
Accrued liabilities 510,522 2,227,067
----------- -----------
Total current liabilities 15,747,855 13,730,852
----------- -----------
NON-CURRENT LIABILITIES
Deferred income taxes --- 1,184,500
Accrued turnaround costs 2,334,855 1,953,671
Other 156,799 130,312
----------- -----------
Total non-current liabilities 2,491,654 3,268,483
----------- -----------
SHAREHOLDER'S EQUITY
Common stock, .01 par value: 1,000
voting shares authorized, issued and
outstanding 10 10
Contributed capital 3,200,090 3,200,090
Dividends distributed (58,644,838) (56,781,138)
Retained earnings 86,425,109 83,919,460
----------- -----------
Total shareholder's equity 30,980,371 30,338,422
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $49,219,880 $47,337,757
=========== ===========
/TABLE
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
OPERATING RESULTS FOR MAY, 1995
<CAPTION>
BBLS/ $/GAL/
DAY BBL $/AMOUNT
------------------------
<S> <C> <C> <C>
SALES:
Regular Gasoline 73 0.6519 $62
Unleaded Gasoline 8,359 0.6792 7,392
Premium Unleaded 1,033 0.7451 1,002
#2 Diesel 5,005 0.6226 4,057
#1 Diesel 0 - 0
Jet Fuel JP-4 978 0.6617 842
Naphtha 267 0.4361 152
Propane/Butane 35 0.3409 16
#6 Burner Fuel 228 0.1262 38
Saturated LPG 1,159 0.3273 494
Refined Product - Other 0 - 0
------------------------
17,137 $26.46 $14,055
COST OF SALES:
Crude Oil 16,103 $18.86 $9,404
Crude Oil Value Change 0 - 9
Reduced Crude 371 21.65 249
Butane 0 - 0
Natural Gasoline 286 18.37 163
MTBE 44 37.04 50
Misc Product - API (Other) 476 26.10 385
Product Purchases 0 - 0
Inventory Change - Volume 224 (22.32) (15)
Inventory Change - Value 0 - (140)
------------------------
17,503 $18.62 $10,105
GROSS MARGIN $7.28 $3,950
Yield 97.91%
PRODUCTION COSTS:
Direct Operating Costs $519
Maintenance 272
Utilities 237
Depreciation 92
-------
$1,119
-------
OTHER COSTS
General and Administrative $576
Interest and Other Expense 0
Interest and Other Income (33)
-------
$543
-------
INCOME BEFORE DIVISIONS $2,288
-------
TRANSPORTATION DIVISION ($28)
PIPELINE DIVISION 26
GAS PLANTS - BLUEBELL/ALTONAH 48
-------
TOTAL DIVISIONS $46
-------
INCOME (LOSS) BEFORE TAXES $2,334
-------
PROVISION FOR INCOME TAXES (908)
-------
NET INCOME (LOSS) AFTER TAXES $1,426
=======
/TABLE
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
STATEMENT OF CASH FLOWS
FOR THE FIVE MONTHS ENDED MAY 31, 1995
INCREASE (DECREASE) IN CASH AND TEMPORARY INVESTMENTS
<CAPTION>
MONTH Y-T-D
---------- ----------
<S> <C> <C>
Reconciliation of net income to net cash provided
by operating activities:
Net Income (Loss) 1,582,185 4,065,820
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 142,638 715,855
Turnaround costs 95,296 476,480
(Gain) loss on Sale of Assets 0 0
Changes in assets and liabilities:
Decrease (increase) in accounts receivable-affiliate 3,192,934 (1,959,364)
Decrease (increase) in accounts receivable, net (49,048) (35,040)
Decrease (increase) in inventories (938,822) (2,161,418)
Decrease (increase) in prepaid expenses 13,128 (3,731,853)
Decrease (increase) in deferred tax asset 0 0
Decrease (increase) in other assets 1,204 6,018
Decrease (increase) in interco def inc tax rec 0 0
Increase (decrease) in accounts payable - affiliate 1,667,350 (42,033)
Increase (decrease) in accounts payable (2,517,577) 1,676,355
Increase (decrease) in income tax payable 908,000 2,144,000
Increase (decrease) in accrued liabilities 64,635 (1,651,910)
Increase (decrease) in other liabilities 0 26,487
Increase (decrease) in deferred income taxes 0 (1,184,500)
---------- ----------
Net cash provided (used) by operating activities 4,161,923 (1,655,103)
---------- ----------
Cash flows from investing activities:
Capital expenditures-refinery and construction in progress (155,183) (790,704)
Capital expenditures-gas plants (32,983) (138,226)
---------- ----------
Net cash provided (used) in investing activities (188,166) (928,930)
---------- ----------
Cash flows from financing activities:
Borrowings under note payable 0 0
Principal payments on debt 0 0
Dividends distributed 0 (1,863,700)
---------- ----------
Net cash provided (used) by financing activities 0 (1,863,700)
---------- ----------
Net increase(decrease) in cash and temporary investments 3,973,757 (4,447,733)
Cash and temporary investments at beginning of period (41,889) 8,379,601
---------- ----------
Cash and temporary investments at end of period 3,931,868 3,931,868
========== ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
BLOOMFIELD REFINING COMPANY
BALANCE SHEETS
MAY 31, 1995 AND DECEMBER 31, 1994
(UNAUDITED)
<CAPTION>
ASSETS
MAY 31 DECEMBER 31
1995 1994
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and temporary investments $ 3,931,868 $ 8,379,601
Account receivable - affiliates 7,968,236 6,008,872
Accounts receivable, net 292,860 257,820
Inventories 10,049,244 7,887,826
Prepaid expenses and other 6,628,686 2,896,833
Deferred tax asset --- ---
----------- -----------
Total current assets 28,870,894 25,430,952
----------- -----------
PROPERTY, PLANT AND EQUIPMENT
Refinery property, plant and equipment 23,172,404 23,165,353
Gas plant, property and equipment 4,993,880 4,855,654
Less: Accumulated depreciation (7,266,774) (6,550,919)
----------- -----------
20,899,510 21,470,088
Construction in progress 931,365 147,712
----------- -----------
Total property, plant and equipment 21,830,875 21,617,800
----------- -----------
OTHER ASSETS
Interco Deferred Inc Tax Rec --- ---
Other Assets 282,987 289,005
----------- -----------
Total other assets 282,987 289,005
----------- -----------
TOTAL ASSETS $50,984,756 $47,337,757
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
MAY 31 DECEMBER 31
CURRENT LIABILITIES 1995 1994
----------- -----------
Accounts payable - affiliates $10,811,769 $10,853,802
Accounts payable 2,326,338 649,983
Income taxes payable - affiliate 2,144,000 ---
Accrued liabilities 575,157 2,227,067
----------- -----------
Total current liabilities 15,857,264 13,730,852
----------- -----------
NON-CURRENT LIABILITIES
Deferred income taxes --- 1,184,500
Accrued turnaround costs 2,430,151 1,953,671
Other 156,799 130,312
----------- -----------
Total non-current liabilities 2,586,950 3,268,483
----------- -----------
SHAREHOLDER'S EQUITY
Common stock, .01 par value: 1,000
voting shares authorized, issued and
outstanding 10 10
Contributed capital 3,200,090 3,200,090
Dividends distributed (58,644,838) (56,781,138)
Retained earnings 87,985,280 83,919,460
----------- -----------
Total shareholder's equity 32,540,542 30,338,422
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $50,984,756 $47,337,757
=========== ===========
/TABLE
<PAGE>
<PAGE>
SCHEDULE 3.01(n)
SUMMARY OF OPERATIONS
BLOOMFIELD REFINING COMPANY
FIVE YEAR HISTORICAL EBITD
($ IN THOUSANDS)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 Average
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Sales - BPD 14,738 13,820 14,616 15,585 16,009 14,954
Gross Margin - $/B 6.25 4.77 5.63 7.41 6.82 6.18
Sales $172,244 $132,814 $140,123 $145,864 $139,040 $146,017
Raw Materials 138,608 108,742 110,089 103,684 99,218 112,068
------- ------- ------- ------- ------- -------
Gross Margin 33,636 24,072 30,034 42,180 39,822 33,949
Direct Operating Costs 5,309 5,694 5,808 5,892 6,078 5,756
Maintenance (Incl. Turnaround Accrual) 3,195 3,105 2,964 3,022 3,677 3,193
Utilities 2,505 2,542 2,425 2,607 3,152 2,646
Refinery G&A (1) 1,190 1,355 1,405 1,329 1,599 1,376
Transportation & Pipeline Divisions (2) (221) (127) (137) (263) (665)
(283)
------- ------- ------- ------- ------- -------
EARNINGS BEFORE INTEREST,
TAXES AND DEPRECIATION 21,658 11,503 17,569 29,593 25,981 21,261
======= ======= ======= ======= ======= =======
</TABLE>
(1) Excludes G&A allocated from Denver Office.
(2) Transportation and pipeline fees are included as costs in raw
materials expense and as revenues in these divisions.<PAGE>
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED AND SCHEDULE FILED
WITH THE SEC UNDER SEPARATE COVER.
SCHEDULE 3.02.g
CERTAIN PERMITS, LICENSES AND CONTRACTS
ACCEPTED BY PURCHASER
Contract Description: Refined Product Exchange
Parties: Gary-Williams Energy Corporation ("GWEC") and XXXXXXXXXX
Date: 3/24/88, effective 5/1/88
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of other party
Contract Description: Refined Product Sales
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 2/1/95
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of other party,
approval will not be unreasonably withheld
Contract Description: Refined Product Sales
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 12/17/91, effective 1/1/92
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent
Contract Description: Refined Product Exchange
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 12/6/90, effective 12/1/90
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with notice and consent of other party
Contract Description: Refined Product Exchange
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 8/12/91, effective 9/1/91
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of other party
Contract Description: Refined Product Sales
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 1/24/94, effective 2/1/94
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of other party
Contract Description: Refined Product Sales
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXX
Date: 7/26/94, effective 8/1/94
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of other party
Contract Description: Refined Product Exchange
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 8/25/89, effective 9/1/89
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of other party
Contract Description: Y Grade Sales Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXX
Date: 5/1/88
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with consent of both parties
Contract Description: Refined Product Exchange/Buyback
Parties: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 12/20/84, effective 1/1/85
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of other party
Contract Description: JP-8 Sales Contract on a bulk basis
Parties: Defense Fuel Supply Center
Date: 3/30/95, effective 10/1/95
Termination: Government may terminate performance of work under the
contract in whole or in part
Assignability: Yes, covered by F.A.R. regulations as a "novation"
Contract Description: JP-4 Sales Contract on a bulk basis
Parties: Defense Fuel Supply Center
Date: 9/19/94, effective 10/1/94
Termination: Government may terminate performance of work under the
contract in whole or in part
Assignability: Yes, covered by F.A.R. regulations as a "novation"
Contract Description: Loading Rack Agreement
Parties: GWEC
Notes: Sample form provided
Contract Description: Truck Lease
Parties: GWEC
Notes: Sample form provided
Contract Description: Standby Services Agreement
Parties: Bloomfield Refining Company ("BRC") and City of Bloomfield
Date: 7/1/90, as amended 6/5/95
Termination: Year to year after 6/30/95, terminable on 90 days' notice
prior to end of term
Assignability: Yes, with prior written consent of other party
Notes: Agreement shall terminate immediately if BRC ceases to own the
Site or use the Site for operation of a refinery
Contract Description: Electric Utility System General Service Agreement
Parties: BRC and City of Farmington
Date: 7/14/87, as amended
Termination: Terminates 6/30/98
Assignability: Silent
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 3/1/93
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of other party
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 6/5/95
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
notice prior to end of term
Assignability: Yes, with prior written consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 6/5/95
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 6/29/90
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 5/18/94
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of both parties
Notes: Term is 18 months from date of first purchase, then month to month
Contract Description: Pipeline Services
Parties: BRC and Llaves Pipeline Limited
Date: 2/8/94
Termination: Month to month, terminable upon 30 days' notice by either
party
Assignability: Silent
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 4/6/95
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Silent
Notes: General Provisions not in file
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 1994
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of GWEC
Notes: Crude purchased under 100% indemnifying Dos
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 11/4/92, as amended
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 1/6/92
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 1/21/94
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 11/1/94
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 5/17/94
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes with prior written consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Notes: Appears crude purchase contract with XXXXXXXXXXX was assigned
to XXXXXXXXXX; however, no contract and no assignment or assumption
agreement in file
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 11/9/93
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 3/5/93
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior consent of both parties
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXX
Date: 7/1/87, as amended
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Silent
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 12/16/92
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Silent
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 1/24/95
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Silent
Notes: General provisions not in file
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 8/9/90
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of other party
Contract Description: Sulferox Usage Contract
Parties: BRC and Coastal Chemical Company, Inc.
Date: 1/11/95
Termination: Silent
Assignability: Silent
Contract Description: Sulferox Usage Contract
Parties: BRC and The Dow Chemical Company
Date: 9/29/94
Termination: Terminates 24 months from 1/1/94
Assignability: Silent
Contract Description: Shell Sulferox Process - Confidence Agreement
Parties: BRC and The Dow Chemical Company
Date: 10/25/91
Termination: Silent
Assignability: Silent
Contract Description: Sulferox Process License Agreement
Parties: BRC and The Dow Chemical Company
Date: 1/19/93
Termination: Expires 20 years from 1/19/93
Assignability: Yes, with prior written consent of other party
Contract Description: Nondisclosure Letter Agreement
Parties: BRC and UOP
Date: 8/24/94
Termination: Silent
Assignability: Silent
Contract Description: Service Agreement
Parties: BRC and UOP
Date: 1/19/95
Termination: Silent
Assignability: Silent
Contract Description: Supplemental Agreement to Termination and Transfer
Agreement
Parties: BRC and UOP Process Division
Date: 11/1/84
Termination: Silent
Assignability: Silent
Contract Description: Termination and Transfer Agreement
Parties: BRC and UOP Process Division
Date: 11/1/84
Termination: Silent
Assignability: Silent
Contract Description: UOP Fluid Catalytic Cracking Process License
Agreement
Parties: BRC and UOP Process Division
Date: 11/1/84
Termination: Terminable upon 6 months' prior written notice
Assignability: Yes, with prior written consent of other party
(see Section 11.1 for other options)
Contract Description: UOP Fixed-Bed Platforming Process License Agreement
Parties: BRC and UOP Process Division
Date: 11/1/84
Termination: Terminable upon six months' prior written notice
Assignability: Yes, with prior written consent of other party (see
Section 11.1 for other options)
Contract Description: UOP Merox Process License Agreement
Parties: BRC and UOP Process Division
Date: 11/1/84
Termination: Terminable upon six months' prior written notice
Assignability: Yes, with prior written consent of other party (see
Section 11.1 for other options)
Contract Description: Radiation Machine Registration #IN 45086
Parties: BRC and State of New Mexico
Date: 1/4/94
Termination: Silent
Assignability: Silent
Contract Description: Stormwater General Permit No. NMR00A013
Parties: BRC and U.S. EPA
Date: 12/31/92
Contract Description: Oil Spill Response Plan*
Parties: BRC and U.S. EPA
Date: 12/20/94
Contract Description: Part B Operating Permit Application for Hazardous
Wastewater Treatment Surface Impoundments NMD 089 416416*
Parties: BRC and New Mexico Environment Department
Date: 9/24/94
Contract Description: Air Quality Permit No. 402-M-6
Parties: BRC and New Mexico Environment Department
Date: 5/30/95
Contract Description: Operating Permit Application No. P024
Parties: BRC and New Mexico Environment Department, Air Pollution Control
Bureau
Date: 6/21/95
Contract Description: Right-of-Way NM 65269*
Parties: BRC and U.S. Department of Interior Bureau of Land Management
Date: 10/30/87
Contract Description: Right-of-Way NMNM 68405*
Parties: BRC and U.S. Department of Interior Bureau of Land Management
Date: 1/14/92
Contract Description: Right-of-Way NMNM 93645*
Parties: BRC and U.S. Department of Interior Bureau of Land Management
Date: 12/29/94
Contract Description: Right-of-Way NMNM 91447*
Parties: BRC and U.S. Department of Interior Bureau of Land Management
Date: 5/6/94
Contract Description: Letter from the New Mexico Oil Conservation
Division approving the installation of Recovery Well Nos. 14, 15, 16, 17,
18, 19*
Parties: BRC and State of New Mexico Energy, Minerals and Natural
Resources Dept., Oil Conservation Division
Date: 6/4/90
Contract Description: Application filed with the Office of the State
Engineer for permitting of Recovery Well Nos. 1, 2, 3*
Parties: BRC and State of New Mexico
Date: 10/4/88
Contract Description: Discharge Plan GW-01*
Parties: BRC and State of New Mexico Energy, Minerals and Natural
Resources Dept., Oil Conservation Division
Date: 5/24/94
Contract Description: Certificate of Construction No. 2593-2 and 3385
Evaporation Ponds
Parties: BRC and State of New Mexico
Date: 10/21/94
Contract Description: Discharge Plan GW-130*
Parties: BRC and State of New Mexico Energy, Minerals and Natural
Resources Dept., Oil Conservation Division
Date: 11/5/93
Contract Description: Application for Permit for Alternate Point of
Diversion of Surface Waters No. 3385 River Terrace
Parties: BRC and State of New Mexico
Date: 7/17/89
Contract Description: Application for Permit for Alternate Point of
Diversion of Surface Waters No. 3385 Hammond Ditch
Parties: BRC and State of New Mexico
Date: 8/6/87
Contract Description: Administrative Order on Consent Docket No. V1-303-H
Parties: BRC and U.S. EPA
Date: 12/31/92
Contract Description: Gas Sales/Purchase Contract
Parties: BRC and Conoco Inc.
Date: 7/1/95
Termination: One year term, then month to month, terminable on 30 days'
written notice.
Assignability: Silent
Notes: See Paragraph 13 - Confidentiality
Contract Description: Crude Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 8/1/95
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Silent
Contract Description: Crude Exchange Contract
Parties: GWEC and XXXXXXXXXXXXXXXXXXXXXXXXXX
Date: 5/27/87
Termination: XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Assignability: Yes, with prior written consent of other party
*Buyer has not reviewed these documents in their entirety.
Notwithstanding Section 3.02(g), as soon as practicable after the date
hereof, Sellers shall supply such documents to Buyer. Buyer shall notify
Sellers in writing within 3 business days after receipt thereof if such
documents do not meet the criteria of Section 3.02(g), in which event,
and notwithstanding anything contained in this Agreement to the contrary,
this Agreement shall terminate and neither Buyer nor Seller shall have
any further duties, obligations or liabilities to each other under this
Agreement. If Buyer notifies Sellers within such 3-day period that such
documents meet the criteria set forth in Section 3.02(g), or if Buyer
does not notify Sellers within such 3-day period, this Agreement shall
continue and be in full force and effect in accordance with its terms and
such documents will be deemed to meet the criteria of Section 3.02(g).<PAGE>
<PAGE>
SCHEDULE 5.02(A)
RETAINED EMPLOYEES
Dave Roderick
<PAGE>
<PAGE>
Contract No.__________
SCHEDULE 6.02(i)
BOR Draft Permit
UNITED STATES
DEPARTMENT OF THE INTERIOR
BUREAU OF RECLAMATION
COLORADO RIVER STORAGE PROJECT
NAVAJO UNIT
DRAFT
WATER SERVICE CONTRACT BETWEEN THE UNITED STATES AND
BLOOMFIELD REFINING COMPANY
FOR FURNISHING WATER
THIS CONTRACT, made this _____ day of _____________________,
19_____, pursuant to the Act of Congress approved June 17, 1902 (32
Stat. 388), and acts amendatory thereof or supplementary thereto,
and particularly pursuant to the Colorado River Storage Project Act
approved April 11, 1956 (70 Stat. 105), between THE UNITED STATES
OF AMERICA, hereinafter referred to as the United States,
represented by the officer executing this contract, his duly
appointed successor or his duly authorized representative,
hereinafter referred to as the Contracting Officer, and Bloomfield
Refining Company, a company organized under the laws of the State
of Delaware, and subsidiary of Gary Williams Energy Corporation,
with an office at 370 17th St., Suite 5300, Denver, CO 80202,
hereinafter referred to as the Contractor.
WITNESSETH:
WHEREAS, the following statements are made in explanation:
(a) The United States has constructed Navajo Dam and
Reservoir as a unit of the Colorado River Storage Project, for the
furnishing of water for irrigation, municipal, industrial, and
other beneficial uses.
(b) The Contractor is in need of a municipal water supply for
industrial use in the area for a petroleum refinery, and water is
available on a temporary basis to supply the Contractor from Navajo
Reservoir.
NOW, THEREFORE, in consideration of the mutual and dependent
covenants herein contained, the parties hereto agree as follows:
GENERAL DEFINITIONS
(1) Where used in this contract:
(a) "Federal Reclamation Laws" means the Act of June 17,
1902 (32 Stat. 388), and all acts amendatory thereafter
supplementary thereto.
(b) "Secretary" or "Contracting Officer", or either of
them means the Secretary of the Interior or his duly authorized
representative.
(c) "Contractor" means Bloomfield Refining Company, a
company organized under the laws of the State of Delaware.
(d) "Service" means the United States Fish and Wildlife
Service.
TERM OF CONTRACT
2. (a) This contract shall be effective for 5 years from
the date of execution contingent upon reviews of the Contractor's
refinery operation as it relates to and is in compliance with the
Environmental Protection Agency (EPA), Region 6, Resource
Conversation and Recovery Act, Section 3013 Final Order, Section
3008(h) Final Order on Consent. Depending on reviews conducted by
the Contracting Officer, with EPA personnel for compliance with the
above requirements, the contract can be terminated by a 2-week
advance notice by the Contracting Officer for noncompliance with
these environmental laws as required in Articles 11(F) and 11(G) of
this contract.
(b) This contract is contingent on the issuance of a
current Diversion Permit by the State of New Mexico.
WATER DELIVERY
3. (a) The United States grants the Contractor the right,
during the term of this contract, to have delivered from Navajo
Reservoir, as hereinafter provided, 340 acre-feet of water per
year at such times as best suits its needs and the Contractor shall
pay for the water as provided in Article 5.
(b) The Contractor shall have no holdover rights to
water supplied under this contract from year to year. Any water
purchased hereunder not called for by the end of each contract year
shall become integrated with the water supply for all purposes of
the Navajo Reservoir and be available for all purposes at that
time.
FOR INDUSTRIAL USE
4. The water sold hereunder shall be used by the Contractor
for industrial use. The Contractor shall prepare and furnish such
reports on water use and related data as required by the
Contracting Officer.
RATE AND METHOD OF PAYMENT FOR WATER
5. The Contractor shall pay in advance for the quantity of
water which it has contracted to take and pay for, whether or not
it actually takes and uses such water, at a rate of $49.27 per
acre-foot, plus $1.00 per acre-foot for operation and maintenance
charges, for a total payment of $17,091.80.
COMPLIANCE WITH THE NATIONAL ENVIRONMENTAL POLICY ACT
AND THE ENDANGERED SPECIES ACT
6. (a) Net impacts on endangered species must be identified
and mitigated in order to comply with the National Environmental
Policy Act of 1969 (Public Law 91-190). The Contracting Officer
has consulted with the United States Fish and Wildlife Service
under Section 7 of the Endangered Species Act of 1973 (Public Law
93-205) to determine if use of water under this contract will
adversely impact endangered species.
(b) Pursuant to Section 7 of the Endangered Species Act,
the United States Fish and Wildlife Service rendered a biological
opinion, dated March 5, 1992, which identified adverse impacts to
the endangered Colorado squawfish and razorback sucker in
connection with use of water under this contract. As a
conversation measure taken against these adverse impacts, the
Service has recommended, and the Contractor agrees to pay a
surcharge as a condition of water service. This surcharge shall be
commensurate with the established rate for all municipal and
industrial water service from the initial units of the Colorado
River Storage Project. The rate has been set for the year 1995 at
$49.27 per acre-foot.
(c) The conservation measure surcharge payment is
separate from the payment to the Contracting Officer for water
service. The surcharge payment shall be made prior to the
execution of this contract. The surcharge payment shall be sent to
the United States Fish and Wildlife Service, P. O. Box 1306,
Albuquerque, New Mexico 87103.
MEASUREMENT AND RESPONSIBILITY FOR DISTRIBUTION
7. (a) The water to be furnished to the Contractor will be
measured by facilities of the United States and delivered into San
Juan River at the outlet works of Navajo Reservoir. The Contractor
shall suffer all distribution and administration losses from the
point of such delivery to the place of use. The Contractor agrees
to provide a measuring device, which is acceptable to the
Contracting Officer, at or near the Contractor's point of
diversion, to measure the quantity of water delivered and diverted
under this contract. The Contractor is responsible for making
arrangements with the State of New Mexico and others needed for the
transportation and diversion of such water. The Contractor shall
pay any charges from the New Mexico State Engineer's Office for the
distribution, handling, or administration of this water.
(b) The United States shall not be responsible for the
control, carriage, handling, use, disposal, or distribution of
water taken by the Contractor hereunder, and the Contractor shall
hold the United States harmless on account of damage or claim of
damage of any nature whatsoever, including property damage,
personal injury or death arising out of or connected with the
control, carriage, handling, use, disposal, or distribution of such
water by the Contractor.
(c) This contract and all water taken pursuant thereto
shall be subject to and controlled by the Colorado River Compact
dated November 24, 1922, and proclaimed by the President of the
United States, June 25, 1929, the Boulder Canyon Project Act
approved December 21, 1928, the Boulder Canyon Project Adjustment
Act of July 19, 1940, the Upper Colorado River Basin Compact dated
October 11, 1948, the Mexican Water Treaty of February 3, 1944, and
the Colorado River Basin Project Act of September 30, 1968, Public
Law 90-537. In the event water available to the Contractor is
required to be curtailed under and by reason of the provisions of
the foregoing acts, including the reaching of maximum use of water
allotted to the State of New Mexico, no liability shall attach to
the United States for such curtailment, and the Contractor agrees
to reduction of the amount of water taken hereunder as the
Secretary determines necessary to comply with the provisions of
said acts.
UNITED STATES NOT LIABLE FOR WATER SHORTAGE ADJUSTMENTS
8. On account of drought, errors in operation, or other
causes, there may occur at times, a shortage during any year in the
quantity of water available to the Contractor by the United States
pursuant to this contract through and by means of the project, and
in no event shall any liability accrue against the United States or
any of its officers, agents, or employees for any damage direct or
indirect, arising therefrom. In any year in which there may occur
such a shortage, the United States reserves the right to apportion
the available water supply among the Contractor and others
entitled, under existing and future contracts, to receive water
from the same project water supply all in a manner to be prescribed
by the Contracting Officer.
CHARGES FOR DELINQUENT PAYMENTS
9. (a) The Contractor shall be subject to interest,
administrative and penalty charges on delinquent installments or
payments, pursuant to Section 11 of the Debt Collection Act of 1982
(Public Law 97-365). When a payment is not received within 30 days
of the due date, the Contractor shall pay an interest charge for
each day the payment is delinquent beyond the due date. When a
payment becomes 60 days delinquent, the Contractor shall pay an
administrative charge to cover additional costs of billing and
processing the delinquent payment. When a payment is delinquent 90
days or more, the Contractor shall pay an additional penalty charge
of 6 percent per year for each day the payment is delinquent beyond
the due date. Further, the Contractor shall pay any fees incurred
for debt collection services associated with a delinquent payment.
(b) The interest charge rate shall be the greater of the
rate prescribed quarterly in the FEDERAL REGISTER by the Department
of the Treasury for application to overdue payments, or the
interest rate of 0.5 percent per month prescribed by Section 6 of
the Reclamation Project Act of 1939 (Public Law 76-260). The
interest charge rate shall be determined as of the due date and
remain fixed for the duration of the delinquent period.
(c) When a partial payment on a delinquent account is
received, the amount received shall be applied first to the penalty
and administrative charges, second, to the accrued interest, and
third to the overdue payment.
NOTICES
10. Any notice, demand, or request authorized or required by
this contract shall be deemed to have been given, on behalf of the
Contractor when mailed, postage prepaid, or delivered to the
Regional Director, Upper Colorado Region, Bureau of Reclamation, PO
Box 11568, 125 South State Street, Salt Lake City, Utah 84147, and
on behalf of the United States, when mailed, postage prepaid, or
delivered, to the Gary Williams Energy Corporation, 370 17th
Street, Suite 5300, Denver, Colorado 80202. The designation of the
addressee or the address may be changed by notice given in the same
manner as provided in this article for other notices.
STANDARD CONTRACT ARTICLES
11. The standard contract articles applicable to this
contract are listed below. The full text of these standard
articles is attached as Exhibit A and is hereby made a part of this
contract.
A. Contingent Upon Appropriation or Allotment of Funds
B. Officials Not to Benefit
C. Assignment Limited - Successor's and Assigns
Obligated
D. Books, Records, and Reports
E. Rules, Regulation, and Determinations
F. Quality of Water
G. Water and Air Pollution Control
H. Equal Opportunity
I. Compliance with Civil Rights Laws and Regulations
IN WITNESS WHEREOF, the parties hereto have signed their names
the day and year first above written.
THE UNITED STATES OF AMERICA
By:_______________________________
(seal) Regional Director
Bureau of Reclamation
By:_______________________________
ATTEST:
__________________________________
Secretary
<PAGE>
EXHIBIT A
A. CONTINGENT ON APPROPRIATION OR ALLOTMENT OF FUNDS
The expenditure or advance of any money or the performance of
any obligation of the United States under this contract shall be
contingent upon appropriation or allotment of funds. Absence of
appropriation or allotment of funds shall not relieve the
Contractor from any obligations under this contract. No liability
shall accrue to the United States in case funds are not
appropriated or allotted.
B. OFFICIALS NOT TO BENEFIT
No Member of or Delegate to Congress, Resident Commissioner or
official of the Contractor shall benefit from this contract other
than as a water user or landowner in the same manner as other water
users or landowners.
C. ASSIGNMENT LIMITED-SUCCESSORS AND ASSIGNS OBLIGATED
The provisions of this contract shall apply to and bind the
successors and assigns of the parties hereto, but no assignment or
transfer of this contract or any right or interest therein shall be
valid until approved in writing by the Contracting Officer.
D. BOOKS, RECORDS AND REPORTS
The Contractor shall establish and maintain accounts and other
books and records pertaining to administration of the terms and
conditions of this contract, including: the Contractor's financial
transactions, water supply data, project operation, maintenance and
replacement logs, and project land and right-of-way use agreements;
the water users' land-use (crop census), land-ownership,
land-leasing and water-use data; and other matters that the
Contracting Officer may require. Reports thereon shall be
furnished to the Contracting Officer in such form and on such date
or dates as the Contracting Officer may require. Subject to
applicable Federal laws and regulations, each party to this
contract shall have the right during office hours to examine and
make copies of the other party's books and records relating to
matters covered by this contract.
E. RULES, REGULATIONS, AND DETERMINATIONS
(1) The parties agree that the delivery of water or the use
of Federal facilities pursuant to this contract is subject to
Reclamation law, as amended and supplemented, and the rules and
regulations promulgated by the Secretary of the Interior under
Reclamation law.
(2) The Contracting Officer shall have the right to make
determinations necessary to administer this contract that are
consistent with the expressed and implied provisions of this
contract, the laws of the United States and the State, and the
rules and regulations promulgated by the Secretary of the Interior.
Such determinations shall be made in consultation with the
Contractor.
F. QUALITY OF WATER
The operation and maintenance of project facilities shall be
performed in such manner as is practicable to maintain the quality
of raw water made available through such facilities at the highest
level reasonably attainable, as determined by the Contracting
Officer. The United States does not warrant the quality of water
and is under no obligation to construct or furnish water treatment
facilities to maintain or better the quality of water.
G. WATER AND AIR POLLUTION CONTROL
The Contractor, in carrying out this contract, shall comply
with all applicable water and air pollution laws and regulations of
the United States and the State of New Mexico, and shall obtain all
required permits or licenses from the appropriate Federal, State,
or local authorities.
H. EQUAL OPPORTUNITY
During the performance of this contract, the Contractor agrees
as follows:
(1) The Contractor will not discriminate against any employee
or applicant for employment because of race, color, religion, sex,
or national origin. The Contractor will take affirmative action to
ensure that applicants are employed, and that employees are treated
during employment, without regard to their race, color, religion,
sex, or national origin. Such action shall include, but not be
limited to, the following: Employment, upgrading, demotion, or
transfer; recruitment or recruitment advertising; layoff or
termination; rates of pay or other forms of compensation; and
selection for training, including apprenticeship. The Contractor
agrees to post in conspicuous places, available to employees and
applicants for employment, notices to be provided by the
Contracting Officer setting forth the provisions of this
nondiscrimination clause.
(2) The Contractor will, in all solicitations or
advertisements for employees placed by or on behalf of the
Contractor, state that all qualified applicants will receive
consideration for employment without discrimination because of
race, color, religion, sex, or national origin.
(3) The Contractor will send to each labor union or
representative of workers, with which it has a collective
bargaining agreement or other contract or understanding, a notice,
to be provided by the Contracting Officer, advising the said labor
union or workers' representative of the Contractor's commitments
under Section 202 of Executive Order 11246 of September 24, 1965,
and shall post copies of the notice in conspicuous places available
to employees and applicants for employment.
(4) The Contractor will comply with all provisions of
Executive Order No. 11246 of September 24, 1965, as amended, and of
the rules, regulations, and relevant orders of the Secretary of
Labor.
(5) The Contractor will furnish all information and reports
required by said amended Executive Order and by the rules,
regulations, and orders of the Secretary of Labor, or pursuant
thereto, and will permit access to its books, records, and accounts
by the Contracting Officer and the Secretary of Labor for purposes
of investigation to ascertain compliance with such rules,
regulations, and orders.
(6) In the event of the Contractor's noncompliance with the
nondiscrimination clauses of this contract or with any of the such
rules, regulations, or orders, this contract may be canceled,
terminated, or suspended, in whole or in part, and the Contractor
may be declared ineligible for future Government contracts in
accordance with procedures authorized in said amended Executive
Order, and such other sanctions may be imposed and remedies invoked
as provided in said Executive Order, or by rule, regulation, or
order of the Secretary of Labor, or as otherwise provided by law.
(7) The Contractor will include the provisions of paragraphs
(1) through (7) in every subcontract or purchase order unless
exempted by the rules, regulations, or orders of the Secretary of
Labor issued pursuant to Section 204 of said amended Executive
Order, so that such provisions will be binding upon each
subcontractor or vendor. The Contractor will take such action with
respect to any subcontract or purchase order as may be directed by
the Secretary of Labor as a means of enforcing such provisions,
including sanctions for noncompliance: PROVIDED, HOWEVER, That in
the event the Contractor becomes involved in, or is threatened
with, litigation with a subcontractor or vendor as a result of such
direction, the Contractor may request the United States to enter
into such litigation to protect the interests of the United States.
I. COMPLIANCE WITH CIVIL RIGHTS LAWS AND REGULATIONS
(1) The Contractor shall comply with Title VI of the Civil
Rights Act of 1964 (42 U.S.C. 2000d), Section 504 of the
Rehabilitation Act of 1975 (Public Law 93-112, as amended), the Age
Discrimination Act of 1975 (42 U.S.C.6101, et. seq.) and any other
applicable civil rights laws, as well as with their respective
implementing regulations and guidelines imposed by the U.S.
Department of the Interior and/or Bureau of Reclamation.
(2) These statutes require that no person in the United
States shall, on the grounds of race, color, national origin,
handicap, or age, be excluded from participation in, be denied the
benefits of, or be otherwise subjected to discrimination under any
program or activity receiving financial assistance from the Bureau
of Reclamation. By executing this contract, the Contractor agrees
to immediately take any measures necessary to implement this
obligation, including permitting officials of the United States to
inspect premises, programs, and documents.
(3) The Contractor makes this agreement in consideration of
and for the purpose of obtaining any and all Federal grants, loans,
contracts, property discounts or other Federal financial assistance
extended after the date hereof to the Contractor by the Bureau of
Reclamation, including installment payments after such date on
account of arrangements for Federal financial assistance which were
approved before such date. The Contractor recognizes and agrees
that such Federal assistance will be extended in reliance on the
representations and agreements made in this article, and that the
United States reserves the right to seek judicial enforcement
thereof.
First Amendment
to
Purchase and Sale Agreement
between
Bloomfield Refining Company
and
Gary-Williams Energy Corporation,
as Sellers
and
Giant Industries Arizona, Inc.
as Buyer
This First Amendment (the "First Amendment")
to the Purchase and Sale Agreement dated as of August
8, 1995, is entered into as of the 29th day of
September 1995.
RECITALS
WHEREAS as of August 8, 1995, BLOOMFIELD
REFINING COMPANY, a Delaware corporation ("BRC") with
an address of 370 Seventeenth Street, Suite 5300,
Denver, Colorado 80202, GARY-WILLIAMS ENERGY
CORPORATION, a Delaware corporation ("GWEC"), with an
address of 370 Seventeenth Street, Suite 5300,
Denver, Colorado 80202 (BRC and GWEC are referred to
collectively as "Sellers"), and GIANT INDUSTRIES
ARIZONA, INC., an Arizona corporation ("Buyer"), with
an address of 23733 North Scottsdale Road,
Scottsdale, Arizona 85255, entered into a Purchase
and Sale Agreement (the "Purchase and Sale
Agreement").
WHEREAS, the Purchase and Sale Agreement
specified in Section 9.01 the termination of the
Purchase and Sale Agreement on or before October 1,
1995 in certain circumstances.
WHEREAS Buyer and Sellers wish to amend the
Purchase and Sale Agreement to extend that October 1,
1995 date through October 4, 1995.
NOW, THEREFORE, for and in consideration of
the premises and the mutual advantages accruing to
each of the parties, it is mutually agreed as
follows:
AGREEMENTS
1. All references in Section 9.01 of the Purchase
and Sale Agreement to October 1, 1995 are changed to
October 4, 1995.
2. Except as noted otherwise in this First
Amendment, all defined terms shall have the meaning
attributed to them in the Purchase and Sale Agreement.
3. Except as noted otherwise in this First
Amendment, all other terms and conditions of the
Purchase and Sale Agreement are unchanged and remain in
full force and effect.
Executed as of the date first above
mentioned.
SELLERS:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By: /s/ DAVID J. YOUNGGREN
______________________________________
David J. Younggren, Senior Vice President
GARY-WILLIAMS ENERGY
CORPORATION, a Delaware corporation
By: /s/ DAVID J. YOUNGGREN
______________________________________
David J. Younggren, Senior Vice President
BUYER:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By: /s/ FREDRIC L. HOLLIGER
______________________________________
Fredric L. Holliger, Executive Vice President
Second Amendment
to
Purchase and Sale Agreement
between
Bloomfield Refining Company
and
Gary-Williams Energy Corporation,
as Sellers
and
Giant Industries Arizona, Inc.
as Buyer
This Second Amendment (the "Second
Amendment") to the Purchase and Sale Agreement dated
as of August 8, 1995, is entered into as of the 2nd
day of October, 1995.
Recitals
WHEREAS, as of August 8, 1995, Bloomfield
Refining Company, a Delaware corporation ("BRC")
with an address of 370 Seventeenth Street, Suite
5300, Denver, Colorado 80202, Gary-Williams Energy
Corporation, a Delaware corporation ("GWEC"), with
an address of 370 Seventeenth Street, Suite 5300,
Denver, Colorado 80202 (BRC and GWEC are referred to
collectively as "Sellers"), and Giant Industries
Arizona, inc., an Arizona corporation ("Buyer"),
with an address of 23733 North Scottsdale Road,
Scottsdale, Arizona 85255, entered into a Purchase
and Sale Agreement (the "Purchase and Sale
Agreement").
WHEREAS, Section 1.01 of the Purchase and
Sale Agreement defined the Effective Time as 7:00 AM
on the Closing Date.
WHEREAS, Buyer and Sellers wish to amend the
Purchase and Sale Agreement to change the Effective
Time from 7:00 AM to 12:01 AM as of the Closing
Date.
NOW, THEREFORE, for and in consideration of
the premises and the mutual advantages accruing to
each of the parties, it is mutually agreed as
follows:
Agreements
1. The definition of "Effective Time" in
the Purchase and Sale Agreement is amended to read
as follows:
"Effective Time" shall mean 12:01 AM on the Closing
Date, as such time is customarily observed in
Bloomfield, New Mexico.
2. All other Sections of the Purchase
and Sale Agreement referencing the "Effective Time"
shall be modified as necessary to give effect to the
time change referenced above.
3. Except as noted otherwise in this
Second Amendment, all defined terms shall have the
meaning attributed to them in the Purchase and Sale
Agreement.
4. Except as noted otherwise in this
Second Amendment, all other terms and conditions of
the Purchase and Sale Agreement, as amended, are
unchanged and remain in full force and effect.
Executed as of the date first above
mentioned.
SELLERS:
BLOOMFIELD REFINING COMPANY,
a Delaware corporation
By: /s/ DAVID J. YOUNGGREN
______________________________________
David J. Younggren, Senior Vice President
GARY-WILLIAMS ENERGY
CORPORATION, a Delaware corporation
By: /s/ DAVID J. YOUNGGREN
______________________________________
David J. Younggren, Senior Vice President
BUYER:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By: /s/ FREDRIC L. HOLLIGER
______________________________________
Fredric L. Holliger, Executive Vice President
CREDIT AGREEMENT
Dated as of October 4, 1995
among
GIANT INDUSTRIES, INC., as Borrower,
GIANT INDUSTRIES ARIZONA, INC.,
CINIZA PRODUCTION COMPANY,
SAN JUAN REFINING COMPANY,
GIANT EXPLORATION & PRODUCTION COMPANY, and
GIANT FOUR CORNERS, INC., as Guarantors
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent,
BANK OF AMERICA ILLINOIS, as a Bank and as
Letter of Credit Issuing Bank
and
THE OTHER FINANCIAL INSTITUTIONS PARTIES HERETO
- - - - - - - - - - - -
Arranged by
BA SECURITIES, INC.
<PAGE>
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS
1.01 Certain Defined Terms
1.02 Other Interpretive Provisions
1.03 Accounting Principles
ARTICLE II THE CREDITS
2.01 Amounts and Terms of Commitments
2.02 Certain Pricing Terms
2.03 Procedure for Borrowing
2.04 Conversion and Continuation Elections
2.05 Voluntary Termination or Reduction of Commitments
2.06 Optional Prepayments
2.07 Borrowing Base Determinations, Mandatory
Prepayments of Loans
2.08 Repayment
2.09 Fees
2.10 Computation of Fees and Interest
2.11 Payments by the Company
2.12 Payments by the Banks to the Agent
2.13 Sharing of Payments, Etc.
ARTICLE III THE LETTERS OF CREDIT
3.01 The Letter of Credit Facility.
3.02 Issuance, Amendment and Renewal of Letters of
Credit
3.03 Existing Bank of America Letters of Credit, Risk
Participations, Drawings and Reimbursements
3.04 Repayment of Participations
3.05 Role of the Issuing Bank
3.06 Obligations Absolute
3.07 Cash Collateral Pledge
3.08 Letter of Credit Fees
3.10 Uniform Customs and Practice
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
4.02 Illegality
4.03 Increased Costs and Reduction of Return
4.04 Funding Losses
4.05 Inability to Determine Rates
4.06 Certificates of Banks
4.07 Substitution of Banks
4.08 Survival
ARTICLE V CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions
5.02 Conditions to All Credit Extensions
ARTICLE VI REPRESENTATIONS AND WARRANTIES
6.01 Corporate Existence and Power
6.02 Corporate Authorization; No Contravention
6.03 Governmental Authorization
6.04 Binding Effect
6.05 Litigation
6.06 No Default
6.07 ERISA Compliance
6.08 Use of Proceeds; Margin Regulations
6.09 Title to Properties
6.10 Taxes
6.11 Financial Condition
6.12 Environmental Matters
6.13 Regulated Entities
6.14 No Burdensome Restrictions
6.15 Copyrights, Patents, Trademarks and Licenses, etc.
6.16 Subsidiaries
6.17 Insurance
6.18 Full Disclosure
6.20 Bloomfield Acquisition
ARTICLE VII AFFIRMATIVE COVENANTS
7.01 Financial Statements
7.02 Certificates; Other Information
7.03 Notices
7.04 Preservation of Corporate Existence, Etc
7.05 Maintenance of Property
7.06 Insurance
7.07 Payment of Obligations
7.08 Compliance with Laws
7.09 Compliance with ERISA
7.10 Inspection of Property and Books and Records
7.11 Environmental Laws
7.12 New Subsidiary Guarantors
7.13 Use of Proceeds
ARTICLE VIII NEGATIVE COVENANTS
8.01 Limitation on Liens
8.02 Disposition of Assets
8.03 Consolidations and Mergers
8.04 Loans and Investments
8.05 Limitation on Subsidiary Indebtedness
8.06 Transactions with Affiliates
8.07 Use of Proceeds
8.08 Contingent Obligations
8.09 Restricted Payments
8.10 Subsidiary Dividends
8.11 Senior Subordinated Notes
8.12 Minimum Consolidated Net Worth
8.13 Fixed Charge Coverage Ratio
8.14 Capitalization Ratio
8.15 ERISA
8.16 Change in Business
8.17 Accounting Changes
ARTICLE IX EVENTS OF DEFAULT
9.01 Event of Default
9.02 Remedies
9.03 Rights Not Exclusive
ARTICLE X THE AGENT
10.01 Appointment and Authorization
10.02 Delegation of Duties
10.03 Liability of Agent
10.04 Reliance by Agent
10.05 Notice of Default
10.06 Credit Decision
10.07 Indemnification
10.08 Agent in Individual Capacity
10.09 Successor Agent
10.10 Withholding Tax
ARTICLE XI MISCELLANEOUS
11.01 Amendments and Waivers
11.02 Notices
11.03 No Waiver; Cumulative Remedies
11.04 Costs and Expenses
11.05 Indemnity
11.06 Payments Set Aside
11.07 Successors and Assigns
11.08 Assignments, Participations, etc.
11.09 Set-off
11.10 Interest
11.11 Indemnity and Subrogation
11.12 Automatic Debits of Fees
11.13 Notification of Addresses, Lending Offices, Etc.
11.14 Counterparts
11.15 Severability
11.16 No Third Parties Benefitted
11.17 Governing Law
11.18 Waiver of Jury Trial
11.19 Entire Agreement
<PAGE>
<PAGE>
SCHEDULES
Schedule 1.01 Preferred Eligible Account Obligors
Schedule 2.01 Commitments
Schedule 2.02 Applicable Margin and Commitment Fee
Schedule 3.03 Existing Bank of America Letters of Credit
Schedule 6.05 Litigation
Schedule 6.07 ERISA
Schedule 6.11 Permitted Liabilities
Schedule 6.12 Environmental Matters
Schedule 6.16 Subsidiaries and Minority Interests
Schedule 6.17 Insurance Matters
Schedule 8.01 Permitted Liens
Schedule 8.05 Permitted Indebtedness
Schedule 8.08 Contingent Obligations
Schedule 11.02 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Company's Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F-1 Form of Facility A Note
Exhibit F-2 Form of Facility B Note
Exhibit G Form of Guaranty Agreement
Exhibit H Borrowing Base Report
<PAGE>
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of October 4,
1995, among GIANT INDUSTRIES, INC., a Delaware corporation (the
"Company"), GIANT INDUSTRIES ARIZONA, INC., an Arizona
corporation ("Arizona"), GIANT EXPLORATION & PRODUCTION
COMPANY, a Texas corporation ("Exploration"), SAN JUAN REFINING
COMPANY, a New Mexico corporation ("San Juan"), GIANT FOUR
CORNERS, INC., an Arizona corporation ("Corners"), and CINIZA
PRODUCTION COMPANY, a New Mexico corporation ("Ciniza")
(Arizona, Exploration, San Juan, Corners and Ciniza are
individually referred to herein as a "Guarantor" and
collectively as the "Guarantors"), the several financial
institutions from time to time parties to this Agreement
(collectively, the "Banks"; individually, a "Bank"), BANK OF
AMERICA ILLINOIS, as letter of credit issuing bank and a Bank,
and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
agent for the Banks.
WHEREAS, the Banks have agreed to make available to the
Company and the Company has agreed to borrow under, a Thirty
Million Dollar ($30,000,000.00) credit facility and a Forty
Million Dollar ($40,000,000.00) working capital and letter of
credit facility upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein and other good and
valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the
following meanings:
"Acquisition" means any transaction or series of
related transactions for the purpose of or resulting, directly
or indirectly, in (a) the acquisition of all or substantially
all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of 50% of the
capital stock of a corporation (or similar entity), which stock
has ordinary voting power for the election of the members of
the acquiree's board of directors or persons exercising similar
functions (other than stock having such power only by reason of
the happening of a contingency), or the acquisition of in
excess of 50% of the partnership interests or equity of any
Person not a corporation which acquisition gives the acquirer
the power to direct or cause the direction of the management
and policies of the acquiree, or (c) a merger or consolidation
or any other combination with another Person (other than a
Person that is a Subsidiary) provided that the Company or a
Subsidiary of the Company is the surviving entity.
"Affiliate" means, as to any Person, any other
Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. A
Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies
of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agent" means Bank of America National Trust and
Savings Association in its capacity as agent for the Banks
hereunder, and any successor agent arising under Section 10.09.
"Agent-Related Persons" means Bank of America
Illinois and any successor agent arising under Section 10.09
and any successor letter of credit issuing bank hereunder,
together with their respective Affiliates (including, in the
case of Bank of America Illinois, the Arranger and the Issuing
Bank), and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means the address for
payments set forth on Schedule 11.02 hereto in relation to the
Agent, or such other address as the Agent may from time to time
specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means with respect to Base Rate
Loans and Offshore Rate Loans, the specified percent per annum
set forth in Section 2.02 of this Agreement.
"Arranger" means BA Securities, Inc., a Delaware
corporation.
"Assignee" has the meaning specified in Subsection
11.08(a).
"Attorney Costs" means and includes all reasonable
fees and disbursements of any law firm or other external
counsel, the allocated cost of internal legal services and all
disbursements of internal counsel.
"Bank" has the meaning specified in the introductory
clause hereto. References to the "Banks" shall include Bank of
America Illinois, including in its capacity as Issuing Bank;
for purposes of clarification only, to the extent that Bank of
America Illinois may have any rights or obligations in addition
to those of the Banks due to its status as Issuing Bank, its
status as such will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy
Reform Act of 1978 (11 U.S.C. '101, et seq.).
"Base Rate" means, for any day, the higher of: (a)
0.50% per annum above the latest Federal Funds Rate; and (b)
the rate of interest in effect for such day as publicly
announced from time to time by BofA in San Francisco,
California, as its "reference rate." (The "reference rate" is
a rate set by BofA based upon various factors including BofA's
costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced
rate.) Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day
specified in the public announcement of such change.
"Base Rate Loan" means a Revolving Loan, or an L/C
Advance, that bears interest based on the Base Rate.
"Bloomfield Acquisition" means the acquisition of
assets by San Juan from Bloomfield Refining Company and
Gary-Williams Energy Corporation pursuant to the Purchase
Agreement.
"Bloomfield Refinery" shall mean the refinery
acquired by San Juan under the Bloomfield Acquisition.
"BofA" means Bank of America National Trust and
Savings Association, a national banking association.
"Borrower" shall mean the Company.
"Borrowing" means a borrowing hereunder consisting
of Revolving Loans of the same Interest Rate Type made to the
Company on the same day by the Banks under Article II, and,
other than in the case of Base Rate Loans, having the same
Interest Period.
"Borrowing Base" means the amount calculated monthly
pursuant to Section 2.07(a) based upon information contained in
the Borrowing Base Report.
"Borrowing Base Report" means that report delivered
monthly by the Company to the Agent in form of Exhibit "H"
hereto.
"Borrowing Date" means any date on which a Borrowing
occurs under Article II.
"Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in Chicago,
Illinois; Scottsdale, Arizona; or San Francisco, California are
authorized or required by law to close and, if the applicable
Business Day relates to any Offshore Rate Loan, means such a
day on which dealings are carried on in the applicable offshore
dollar interbank market.
"Capital Adequacy Regulation" means any guideline,
request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not
having the force of law, in each case, regarding capital
adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" shall mean, for any period,
expenditures (including, without limitation, the aggregate
amount of Capital Lease Obligations incurred during such
period) made by the Company or any of its Consolidated
Subsidiaries to acquire or construct fixed assets, plant and
equipment (including renewals, improvements and replacements)
during such period computed in accordance with GAAP.
"Capital Lease Obligations" shall mean, for any
Person, all obligations of such Person to pay rent or other
amounts under a lease of (or other agreement conveying the
right to use) Property to the extent such obligations are
required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP (including
Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board), and, for purposes of
this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with GAAP
(including such Statement No. 13).
"Capitalization Ratio" means, at any time, the ratio
of Consolidated Funded Indebtedness to Consolidated Total
Capitalization.
"Cash Collateralize" means to pledge and deposit
with or deliver to the Agent, for the benefit of the Agent, the
Issuing Bank and the Banks, as collateral for the L/C
Obligations, cash or deposit account balances pursuant to
documentation in form and substance satisfactory to the Agent
and the Issuing Bank (which documents are hereby consented to
by the Banks). Derivatives of such term shall have
corresponding meanings.
"Cash Equivalents" means: (a) securities issued or
fully guaranteed or insured by the United States Government or
any agency thereof and backed by the full faith and credit of
the United States having maturities of not more than twelve
(12) months from the date of acquisition; (b) certificates of
deposit, time deposits, Eurodollar time deposits, or bankers'
acceptances having in each case a tenor of not more than twelve
(12) months from the date of acquisition issued by any U.S.
commercial bank or any branch or agency of a non-U.S.
commercial bank licensed to conduct business in the U.S. having
combined capital and surplus of not less than Five Hundred
Million Dollars ($500,000,000) whose long term securities are
rated at least A (or then equivalent grade) by S&P and A2 (or
then equivalent grade) by Moody's at the time of acquisition;
(c) commercial paper of an issuer rated at least A-1 by S&P or
P-1 by Moody's at the time of acquisition, and in either case
having a tenor of not more than twelve (12) months; (d) debt
securities which are registered under the Securities Act of
1933, as amended (the "Securities Act") (and not "restricted
securities" in the Company's hands as defined in Rule 144 under
the Securities Act), or adjustable rate preferred stock traded
on a national securities exchange and issued by a corporation
duly incorporated under the laws of a state of the United
States, or issued by any state, county or municipality located
in the United States of America, provided, however, that such
debt securities are rated A2 by Moody's and A or better by S&P
at the time of acquisition, and such debt securities have a
maturity not in excess of twelve (12) months from the date of
creation thereof; (e) repurchase agreements with a term of not
more than seven days for underlying securities of the types
described in clauses (a) and (b) above; and (f) money market
mutual or similar funds having assets in excess of
$100,000,000.
"Change of Control" means (a) a purchase or
acquisition, directly or indirectly, by any "person" or "group"
within the meaning of Section 13(d)(3) and 14(d)(2) of the
Securities and Exchange Act of 1934 (a "Group"), of "beneficial
ownership" (as such term is defined in Rule 13d-3 under the
Exchange Act) of securities of the Company which, together with
any securities owned beneficially by any "affiliates" or
"associates" of such Group (as such terms are defined in Rule
12b-2 under the Exchange Act), shall represent more than fifty
percent (50%) of the combined voting power of the Company's
securities which are entitled to vote generally in the election
of directors and which are outstanding on the date immediately
prior to the date of such purchase or acquisition; or (b) a
sale of all or substantially all of the assets of the Company
and its Subsidiaries taken as a whole to any Person or Group;
or (c) the liquidation or dissolution of the Company; or (d)
the first day on which a majority of the Board of Directors of
the Company are not Continuing Directors (as herein defined).
As herein defined, "Continuing Directors" means any member of
the Board of Directors of the Company who (x) is a member of
such Board of Directors as of the date of this Agreement or (y)
was nominated for election or elected to such Board of
Directors with the affirmative vote of two-thirds of the
Continuing Directors who were members of such Board of
Directors at the time of such nomination or election.
"Ciniza Refinery" shall mean the refinery owned on
the date hereof by the Company or one of its Subsidiaries
located near Gallup, New Mexico.
"Closing Date" means the date on which all
conditions precedent set forth in Section 5.01 and 5.02 are
satisfied or waived by all Banks (or, in the case of Subsection
5.01(g), waived by the Person entitled to receive such
payment).
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Commitment" as to each Bank means the aggregate of
such Bank's Facility A Commitment and Facility B Commitment.
"Commitment Fee" has the meaning set forth in
Subsection 2.09(b).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit "C".
"Consolidated EBITDA" means, for the relevant
period, the sum of: (a) the Consolidated Net Income for such
period, (b) Consolidated Interest Expense, (c) all taxes
measured by income to the extent included in the determination
of such Consolidated Net Income, (d) all amounts treated as
expenses for depreciation and the amortization of intangibles
of any kind for such period to the extent included in the
determination of such Consolidated Net Income for the relevant
period, plus (e) any interest income.
"Consolidated Funded Indebtedness" means, for the
Company and its Consolidated Subsidiaries, at any time, without
duplication, the sum of: (a) liability for borrowed money or
for the deferred purchase price of property or services and (b)
obligations under leases which in accordance with GAAP should
be recorded as Capital Leases.
"Consolidated Interest Expense" means, for the
relevant period, for the Company and its Consolidated
Subsidiaries, without duplication, the sum of: (a) all interest
in respect of Indebtedness accrued or capitalized during such
period (whether or not actually paid during such period and
including fees payable in respect of letters of credit and
bankers' acceptances), (b) the net amount payable (or minus the
net amount receivable) under all Swap Contracts during such
period (whether or not actually paid or received during such
period), and (c) all dividends paid, declared or otherwise
accrued in respect of preferred stock.
"Consolidated Net Income" means, for any period, the
net income (or net loss) of the Company and its Consolidated
Subsidiaries for such period determined in accordance with
GAAP.
"Consolidated Net Worth" means, at any date, an
amount equal to the consolidated stockholders' equity of the
Company and its Consolidated Subsidiaries determined in
accordance with GAAP determined as of such date.
"Consolidated Subsidiaries" means, at any date, any
Subsidiary the accounts of which, in accordance with GAAP,
would be consolidated with those of the Company in its
consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Total Capitalization" means, at any
time, the sum of (a) Consolidated Funded Indebtedness and (b)
Consolidated Net Worth for such period.
"Contingent Obligation" means, as to any Person
without duplication, any direct or indirect liability of that
Person with or without recourse, (a) with respect to any
Indebtedness, lease, dividend, letter of credit or other
similar obligation (the "primary obligations") of another
Person (the "primary obligor"), including any obligation of
that Person (i) to purchase, repurchase or otherwise acquire
such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any
such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to maintain
the net worth or solvency or any balance sheet item, level of
income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of
the ability of the primary obligor to make payment of such
primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss
in respect thereof (each, a "Guaranty Obligation"); (b) with
respect to any Surety Instrument (other than any Letter of
Credit) issued for the account of that Person or as to which
that Person is otherwise liable for reimbursement of drawings
or payments; (c) to purchase any materials, supplies or other
property from, or to obtain the services of, another Person if
the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of
whether delivery of such materials, supplies or other property
is ever made or tendered, or such services are ever performed
or tendered, or (d) in respect of any Swap Contract. The
amount of any Contingent Obligation shall, in the case of
Guaranty Obligations, be deemed equal to the maximum stated or
determinable amount of the primary obligation in respect of
which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in
respect thereof, and in the case of other Contingent
Obligations, shall be equal to the maximum reasonably
anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person,
any provision of any security issued by such Person or of any
agreement, undertaking, contract, indenture, mortgage, deed of
trust or other instrument, document or agreement to which such
Person is a party or by which it or any of its property is
bound.
"Conversion/Continuation Date" means any date on
which, under Section 2.04, the Company (a) converts Loans of
one Interest Rate Type to another Interest Rate Type, or (b)
continues as Loans of the same Interest Rate Type, but with a
new Interest Period, Loans having Interest Periods expiring on
such date.
"Credit Extension" means and includes (a) the making
of any Revolving Loans hereunder, and (b) the Issuance of any
Letters of Credit hereunder.
"Default" means any event or circumstance which,
with the giving of notice, the lapse of time, or both, would
(if not cured or otherwise remedied during such time)
constitute an Event of Default.
"Default Rate" has the meaning set forth in
Subsection 2.08(c)(iii).
"Dollars", "dollars" and "$" each mean lawful money
of the United States.
"Effective Amount" means (i) with respect to any
Revolving Loans under Facility A or Facility B on any date, the
aggregate outstanding principal amount thereof after giving
effect to any Borrowings and prepayments or repayments of
Revolving Loans occurring on such date under such facility; and
(ii) with respect to any outstanding L/C Obligations on any
date, the amount of such L/C Obligations on such date after
giving effect to any Issuances of Letters of Credit occurring
on such date and any other changes in the aggregate amount of
the L/C Obligations as of such date, including as a result of
any reimbursements of drawings under any Letters of Credit or
any reductions in the maximum amount available for drawing
under Letters of Credit taking effect on such date.
"Eligible Assignee" means (i) a commercial bank
organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least
$100,000,000; (ii) a commercial bank organized under the laws
of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a
combined capital and surplus of at least $100,000,000, provided
that such bank is acting through a branch or agency located in
the United States; and (iii) a Person with a combined capital
and surplus of at least $100,000,000 that is primarily engaged
in the business of commercial banking and that is (A) a
Subsidiary of a Bank, (B) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (C) a Person of which a Bank is a
Subsidiary.
"Eligible Account Obligor" shall mean, on any date,
any Person obligated to pay a Receivable (i) that is not the
Company, a Subsidiary or Affiliate of the Company; (ii) that
has not filed for, and is not currently the object of, a
proceeding relating to its bankruptcy, insolvency,
reorganization, winding-up or composition or reorganization of
debts; (iii) that is in good standing with the Company and its
Subsidiaries and satisfies all applicable credit standards of
the Company and its Subsidiaries; and (iv) for which not more
than 50% of the aggregate value of the Receivables of such
Account Obligor have not been paid by the date 30 days after
the respective due dates therefor.
"Eligible Accounts Receivables" shall mean, on any
date, all Receivables denominated in Dollars payable by
Eligible Account Obligors except: (i) billed Receivables that
have not been paid by the date 30 days after the respective due
dates therefor; (ii) any Receivable subject to any asserted
defense, dispute, claim, offset or counterclaim, provided that,
if any such defense, dispute, claim, offset or counterclaim is
asserted with respect to such Receivable in an amount equal to
a sum certain, then such Receivable shall be an Eligible
Receivable to the extent the face amount thereof exceeds such
sum certain; (iii) all such Receivables subject to any
repurchase or return arrangement; (iv) Receivables of each
Eligible Account Obligor to the extent that the Receivables of
such Eligible Account Obligor exceed 10% of all Receivables;
and (v) all Receivables that are payable by their terms more
than 30 days from the respective invoice dates therefor.
"Eligible Refinery Hydrocarbon Inventory" means, at
any date, the aggregate value therefor on a FIFO basis
calculated in accordance with GAAP of all readily marketable,
saleable and useful Feedstocks, Intermediate Products and
Refined Products, owned by the Company and its Subsidiaries in
field production tanks, storage tanks and lines (including line
fills but excluding basic sediment and water and slop oil)
stored on or required for the Bloomfield Refinery, the Ciniza
Refinery, the Portales Refinery, the Company's or its
Subsidiaries' service stations and travel centers or the
Albuquerque Terminal and other Refined Products terminals owned
by the Company or its Subsidiaries which service the Company's
and its Subsidiaries' refineries, service stations and travel
centers.
"Environmental Claims" means all material claims by
any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental
Law, or for release or injury to the environment.
"Environmental Laws" means all material federal,
state or local laws, statutes, common law duties, rules,
regulations, ordinances and codes, together with all material
administrative orders, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities,
in each case relating to environmental, health, and safety
matters.
"ERISA" means the Employee Retirement Income
Security Act of 1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business
(whether or not incorporated) under common control with the
Company within the meaning of Section 414(b) or (c) of the Code
(and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with
respect to a Pension Plan; (b) a withdrawal by the Company or
any ERISA Affiliate from a Pension Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal
under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is
in reorganization; (d) the filing of a notice of intent to
terminate (other than pursuant to Section 4041(b) of ERISA),
the treatment of a Plan amendment as a termination under
Section 4041(c) or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might
reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan;
or (f) the imposition of any liability under Title IV of ERISA,
other than PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Company or any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning
specified in the definition of "Offshore Rate".
"Event of Default" means any of the events or
circumstances specified in Section 9.01.
"Exchange Act" means the Securities and Exchange Act
of 1934, and regulations promulgated thereunder.
"Existing Bank of America Letters of Credit" means
the letters of credit described in Schedule 3.03.
"Exploration and Production Assets" shall mean all
real and personal property used for the exploration, production
and gathering of oil, gas and other hydrocarbons similar to
such real and personal property now owned by Exploration and
Ciniza, provided such term shall not include any assets
downstream of such field gathering systems.
"Facility A Commitment", and "Facility B
Commitment", as to each Bank, have the meaning specified in
Section 2.01.
"Facility A Revolving Loan", and "Facility B
Revolving Loan", have the meaning specified in Section 2.01.
"Facility A Note" and "Facility B Note" means the
promissory notes specified in Section 2.01(a) in 2.01(b)
substantially in the same form as Exhibits "F-1" and "F-2",
including any amendment, modification, renewal or replacement
of such promissory notes.
"Facility A Termination Date" and "Facility B
Termination Date" means the earlier of (a) three years from the
Closing Date or (b) the date on which such Facility's
Commitment terminates in accordance with the provisions of this
Agreement.
"FDIC" means the Federal Deposit Insurance
Corporation, and any Governmental Authority succeeding to any
of its principal functions.
"Federal Funds Rate" means, for any day, the rate
set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption
"Federal Funds (Effective)"; or, if for any relevant day such
rate is not so published on any such preceding Business Day,
the rate for such day will be the arithmetic mean as determined
by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York, New York
time) on that day by each of three leading brokers of Federal
funds transactions in New York, New York selected by the Agent.
"Fee Letter" has the meaning specified in Subsection
2.09(a).
"Feedstocks" means all crude oil, natural gas
liquids, other hydrocarbons valued at the lower of cost or
market crude oil prices and ethanol valued at the lower of cost
or market, in so far as such Feedstocks are used or useful as
fuel or in the manufacture, processing, refining, or blending
of Intermediate Products and Refined Products at the
Bloomfield, Ciniza or Portales Refineries.
"FRB" means the Board of Governors of the Federal
Reserve System, and any Governmental Authority succeeding to
any of its principal functions.
"Fronting Fee" has the meaning set forth in Section
3.08(b).
"GAAP" means generally accepted accounting
principles set forth from time to time in the opinions and
pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of
the date of determination.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof,
any central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.
"Guarantor" means as of the date of Closing each of
Arizona, Exploration, San Juan, Four Corners, and Ciniza and
any other Subsidiary of the Company which is required to
execute a Guaranty under Section 7.12.
"Guaranty" means collectively each of the Guarantees
substantially in the form of Exhibit "G" hereto executed by
each of the Guarantors in favor of the Agent and the Banks, as
they may be amended, supplemented or otherwise modified from
time to time.
"Guaranty Obligation" has the meaning specified in
the definition of "Contingent Obligation."
"Highest Lawful Rate" means, as of a particular
date, the maximum nonusurious interest rate that may under
applicable federal and Texas law then be contracted for,
charged or received by the Banks in connection with the
Advances.
"Honor Date" has the meaning specified in Subsection
3.03(c).
"Indebtedness" of any Person means, without
duplication, (a) all indebtedness for borrowed money; (b) all
obligations issued, undertaken or assumed as the deferred
purchase price of property or services (other than trade
payables entered into in the ordinary course of business on
ordinary terms); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of
the seller or bank under such agreement in the event of default
are limited to repossession or sale of such property); (f) all
obligations with respect to Capital Leases; (g) all net
obligations with respect to Swap Contracts; (h) all
indebtedness referred to in clauses (a) through (g) above
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any
Lien upon or in property (including accounts and contracts
rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness;
and (i) all Guaranty Obligations in respect of indebtedness or
obligations of others of the kinds referred to in clauses (a)
through (g) above.
"Indemnified Liabilities" has the meaning specified
in Section 11.05.
"Indemnified Person" has the meaning specified in
Section 11.05.
"Independent Auditor" has the meaning specified in
Subsection 7.01(a).
"Index Debt Rating" means the rating applicable to
the Company's senior, unsecured, non-credit enhanced long term
indebtedness for borrowed money ("Index Debt") or if the
Company has no such rating, the implied rating established by
Moody's or S&P based upon the rating implied from the Company's
Senior Subordinated Debt as if the Company had Index Debt.
"Insolvency Proceeding" means (a) any case, action
or proceeding relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its
creditors generally or any substantial portion of its
creditors; undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Interest Payment Date" means, as to any Loan other
than a Base Rate Loan, the last day of each Interest Period
applicable to such Loan and, as to any Base Rate Loan, the last
Business Day of each calendar quarter and each date such Loan
is converted into another Interest Rate Type of Loan, provided,
however, that if any Interest Period for an Offshore Rate Loan
exceeds three months, the date that falls three months after
the beginning of such Interest Period, and the date that falls
three months after each Interest Payment Date thereafter for
such Interest Period, is also an Interest Payment Date.
"Interest Period" means, (a) as to any Offshore Rate
Loan, the period commencing on the Borrowing Date of such Loan
or on the Conversion/Continuation Date on which the Loan is
converted into or continued as Offshore Rate Loan, and ending
on the date one, two, three or six months thereafter as
selected by the Company in its Notice of Borrowing or Notice of
Conversion/Continuation; provided that: (i) if any Interest
Period would otherwise end on a day that is not a Business Day,
that Interest Period shall be extended to the following
Business Day unless, in the case of an Offshore Rate Loan, the
result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest
Period shall end on the preceding Business Day; (ii) any
Interest Period pertaining to an Offshore Rate Loan that begins
on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest
Period; and (iii) no Interest Period for any Revolving Loan
under either Facility A or Facility B shall extend beyond the
Revolving Termination Date for such facility.
"Interest Rate Type" means either the Base Rate of
interest or the Offshore Rate of interest charged against any
Loan or Loans hereunder.
"Intermediate Products" means all Feedstocks that
have been partially processed or refined as isomerate, cat
feed, gasoline components or naphtha and valued at the lower of
cost or market crude oil prices.
"IRS" means the Internal Revenue Service, and any
Governmental Authority succeeding to any of its principal
functions under the Code.
"Issuance Date" has the meaning specified in
Subsection 3.01(a).
"Issue" means, with respect to any Letter of Credit,
to issue or to extend the expiry of, or to renew or increase
the amount of, such Letter of Credit; and the terms "Issued,"
"Issuing" and "Issuance" have corresponding meanings.
"Issuing Bank" means Bank of America Illinois in its
capacity as issuer of one or more Letters of Credit hereunder,
together with any successor replacement letter of credit issuer
pursuant to Section 10.09, and with respect to the Existing
Bank of America Letters of Credit which have been issued by
BofA, "Issuing Bank" means BofA.
"L/C Advance" means each Bank's participation in any
L/C Borrowing in accordance with its Pro Rata Share.
"L/C Application" and "L/C Amendment Application"
means an application form for Issuance of, and for amendment of
Letters of Credit as shall at any time be in use at the Issuing
Bank.
"L/C Borrowing" means an extension of credit
resulting from a drawing under any Letter of Credit which shall
not have been reimbursed on the date when made in accordance
with Subsection 3.03(b) nor converted into a Borrowing of
Facility B Revolving Loans under Subsection 3.03(c).
"L/C Obligations" means at any time the sum of (a)
the aggregate undrawn amount of all Letters of Credit then
outstanding, plus (b) the amount of all unreimbursed drawings
under all Letters of Credit, including all outstanding L/C
Borrowings.
"L/C-Related Documents" means the Letters of Credit,
the L/C Applications, the L/C Amendment Applications and any
other document relating to any Letter of Credit, including any
of the Issuing Bank's standard form documents for letter of
credit issuances.
"Lending Office" means, as to any Bank, the office
or offices of such Bank specified as its "Lending Office" or
"Domestic Lending Office" or "Offshore Lending Office", as the
case may be, on Schedule 11.02, or such other office or offices
as such Bank may from time to time notify the Company and the
Agent.
"Letter of Credit Fee" means the fee payable
pursuant to Section 3.08 of this Agreement, calculated as set
forth in Section 2.02 of this Agreement.
"Letters of Credit" means the Existing Bank of
America Letters of Credit and any standby letters of credit
Issued by the Issuing Bank pursuant to Article III.
"Lien" means any security interest, mortgage, deed
of trust, pledge, hypothecation, assignment, charge or deposit
arrangement, encumbrance, lien (statutory or other) or
preferential arrangement of any kind or nature whatsoever in
respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a Capital
Lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such
lien relates as debtor, under the Uniform Commercial Code or
any comparable law) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of
a lessor under an Operating Lease.
"Loan" means an extension of credit by a Bank to the
Company under Article II or Article III in the form of a
Revolving Loan under the Facility A Loan or the Facility B Loan
or L/C Advance.
"Loan Documents" means this Agreement, any Notes,
the Guaranties, the Fee Letter, the L/C-Related Documents, and
all other documents delivered to the Agent or any Bank in
connection herewith.
"Majority Banks" means at any time Banks then
holding at least 66-2/3% of the then aggregate unpaid principal
amount of the Loans, or, if no such principal amount is then
outstanding, Banks then having at least 66-2/3% of the
Commitments.
"Margin Stock" means "margin stock" as such term is
defined in Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material
adverse change in, or a material adverse effect upon, the
operations, business, properties or financial condition of the
Company and its Subsidiaries taken as a whole, or as to the
Company or any Significant Subsidiary; (b) a material
impairment of the ability of the Company or any Significant
Subsidiary to perform under any Loan Document and to avoid any
Event of Default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against
the Company or any Significant Subsidiary of any Loan Document.
"Material Subsidiary" means, at any time, a
Subsidiary with total assets with a book value of $2,000,000 or
more.
"Moody's" means Moody's Investor Service, Inc.
"Multiemployer Plan" means a "multiemployer plan",
within the meaning of Section 4001(a)(3) of ERISA, to which the
Company or any ERISA Affiliate makes, is making, or is
obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make,
contributions.
"NBD Indenture" means that certain Indenture dated
November 23, 1993, between the Company, as Issuer, NBD Bank,
National Association, as Trustee, and others evidenced by the
NBD Subordinated Notes.
"NBD Subordinated Notes" means the $100,000,000
9-3/4% Senior Subordinated Notes due 2003 issued by the Company
under the NBD Indenture.
"Non-Discretionary Capital Expenditures" shall mean
all Capital Expenditures (a) required to be made to permit the
Company and its Subsidiaries to comply with any applicable law
(including any Environmental Law), rule, regulation or order of
any governmental or regulatory authority or (b) necessary to
permit the Company and its Subsidiaries to maintain the plant
and equipment used in their businesses in good working order
and condition.
"Note" means a Revolving Note executed by the
Company in favor of a Bank pursuant to Subsection 2.01(a) and
(b).
"Notice of Borrowing" means a notice in
substantially the form of Exhibit "A".
"Notice of Conversion/Continuation" means a notice
in substantially the form of Exhibit "B".
"Obligations" means all advances, debts,
liabilities, obligations, covenants and duties arising under
any Loan Document owing by the Company to any Bank, the Agent,
or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter
arising.
"Offshore Rate" means, for any Interest Period, with
respect to Offshore Rate Loans comprising part of the same
Borrowing, the rate of interest per annum (rounded upward to
the next 1/16th of 1%) determined by the Agent as follows:
Offshore Rate = LIBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any
day for any Interest Period the maximum reserve percentage
(expressed as a decimal, rounded upward to the next 1/100th of
1%) in effect on such day (whether or not applicable to any
Bank) under regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum
determined by the Agent to be the arithmetic mean (rounded
upward to the next 1/16th of 1%) of the rates of interest per
annum notified to the Agent by each Reference Bank as the rate
of interest at which dollar deposits in the approximate amount
of the amount of the Loan to be made or continued as, or
converted into, an Offshore Rate Loan by such Reference Bank
and having a maturity comparable to such Interest Period would
be offered to major banks in the London interbank market at
their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest
Period.
The Offshore Rate shall be adjusted automatically as to all
Offshore Rate Loans then outstanding as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Offshore Rate Loan" means a Loan that bears
interest based on the Offshore Rate.
"Operating Lease" means an operating lease
determined in accordance with GAAP.
"Organization Documents" means, for any corporation,
the certificate or articles of incorporation, the bylaws, any
certificate of determination or instrument relating to the
rights of preferred shareholders of such corporation, any
shareholder rights agreement, and all applicable resolutions of
the board of directors (or any committee thereof) of such
corporation.
"Other Taxes" means any present or future stamp or
documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of,
or otherwise with respect to, this Agreement or any other Loan
Documents.
"Participant" has the meaning specified in
Subsection 11.08(d).
"PBGC" means the Pension Benefit Guaranty
Corporation, or any Governmental Authority succeeding to any of
its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA, other than
a Multiemployer Plan, which the Company or any of its
Subsidiaries sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case
of a multiple employer plan (as described in Section 4064(a) of
ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Liens" has the meaning set forth in
Section 8.01.
"Person" means an individual, partnership,
corporation, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental
Authority.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which is subject to ERISA, other than a
Multiemployer Plan, and which the Company or any Subsidiary of
the Company sponsors or maintains or to which the Company or
any Subsidiary of the Company makes, is making, or is obligated
to make contributions and includes any Pension Plan.
"Preferred Eligible Account Obligor" means Eligible
Accounts Receivables that are either (i) fully supported by a
standby letter of credit issued by a commercial bank organized
under the laws of the United States having an "A2/A" rating or
better by Moody and S&P respectively or (ii) the account debtor
is a major international oil or other company rated "A2/A" or
better by Moody and S&P, respectively, or a Wholly Owned
Subsidiary of such company whose obligations are guaranteed by
such company as identified by the Company on Schedule 1.01
hereof as may be amended from time to time with the approval of
the Majority Banks.
"Principal Business" means (i) the business of the
exploration for, and development, acquisition, production,
processing, marketing, refining, storage and transportation of,
hydrocarbons, (ii) any related energy and natural resource
business, (iii) any business currently engaged in by the
Company or its Subsidiaries, (iv) convenience stores, retail
service stations, truck stops and other public accommodations
in connection therewith and (v) any activity or business that
is a reasonable extension, development or expansion of any of
the foregoing.
"Pro Rata Share" means, as to any Bank at any time,
the percentage equivalent (expressed as a decimal, rounded to
the ninth decimal place) at such time of such Bank's Commitment
divided by the combined Commitments of all Banks.
"Prudential Note Agreement" and "Prudential Notes"
means that certain Amended and Restated Note Agreement dated
September 30, 1993, as amended by Letter Amendment No. 1 dated
December 31, 1994 and Letter Amendment No. 2 dated May 9, 1995,
(as so amended the "Prudential Note Agreement") by and between
Arizona and the Company and The Prudential Insurance Company of
America ("Prudential") and Pruco Life Insurance Company
("Pruco") regarding the 10.91% Senior Notes due March 31, 1999,
and the Notes issued by Arizona to Prudential and Pruco
pursuant thereto.
"Purchase Agreement" means the Purchase and Sale
Agreement dated as of August 8, 1995 among Bloomfield Refining
Company and Gary-Williams Energy Corporation, as Sellers, and
Giant Industries Arizona, Inc., as Buyer, as same may be
amended, provided that if amended in any material respect, the
written consent of the Majority Banks shall be required.
"Receivables" shall mean, as to the Company or any
of its Subsidiaries, all accounts receivable, whether billed or
unbilled, arising out of the sale of inventory in the ordinary
course of business.
"Reference Bank" means BofA.
"Refined Products" means all gasoline, diesel,
aviation fuel, fuel oil, propane, ethanol, transmix and other
products processed, refined or blended from Feedstocks and
Intermediate Products valued at the lower of cost or market
prices.
"Regulation U" and "Regulation X" means Regulation U
and Regulation X, respectively, of the Board of Governors of
the Federal Reserve System from time to time in effect and
shall include any successor or other regulations or official
interpretations of said Board of Governors relating to the
subject matter addressed therein.
"Reportable Event" means, any of the events set
forth in Section 4043(b) of ERISA or the regulations
thereunder, other than any such event for which the 30-day
notice requirement under ERISA has been waived in regulations
issued by the PBGC.
"Requirement of Law" means, as to any Person, any
law (statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a Governmental Authority,
in each case applicable to or binding upon the Person or any of
its property or to which the Person or any of its property is
subject.
"Revolving Loan" means a Facility A Loan and/or a
Facility B Loan.
"Revolving Notes" means the Facility A Note and the
Facility B Note.
"Responsible Officer" means the chief financial
officer or the treasurer of the Company.
"S&P" means Standard & Poor's Ratings Group, a
Division of McGraw-Hill, Inc., a New York corporation.
"SEC" means the Securities and Exchange Commission,
or any Governmental Authority succeeding to any of its
principal functions.
"Senior Subordinated Debt" means the subordinated
debt of the Company evidenced by the Subordinated Notes
pursuant to the NBD Indenture.
"Significant Subsidiary" means (a) Arizona, (b) San
Juan, (c) any other Material Subsidiary which becomes a
Subsidiary after execution of this Agreement and is designated
by the Majority Banks as a Significant Subsidiary, or (d) any
other Subsidiary in existence as of the execution of this
Agreement whose asset size materially increases above its asset
size as of the date of execution of this Agreement, if such
Subsidiary is designated as a Significant Subsidiary by the
Majority Banks.
"Solvent" means, as to any Person at any time, that
(a) the fair value of all of the property of such Person is
greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such
value is established and liabilities evaluated for purposes of
Section 101(32) of the Bankruptcy Code; (b) the present fair
saleable value of all of the property of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute
and matured; (c) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature;
and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a
transaction, for which such Person's property would constitute
unreasonably small capital.
"Subordinated Notes" means the NBD Subordinated
Notes issued under the NBD Indenture.
"Subsidiary" of a Person means any corporation,
association, partnership, joint venture or other business
entity of which more than 50% of the voting stock or other
equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by
the Person, or one or more of the Subsidiaries of the Person,
or a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Company.
"Surety Instruments" means all letters of credit
(including standby), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
"Swap Contract" means any agreement (including any
master agreement and any agreement, whether or not in writing,
relating to any single transaction) that is an interest rate
swap agreement, basis swap, forward rate agreement, commodity
swap, commodity option, commodity forward contracts, equity or
equity index swap or option, bond option, interest rate option,
forward foreign exchange agreement, rate cap, collar or floor
agreement, currency swap agreement, cross-currency rate swap
agreement, swap option, currency option or any other, similar
agreement (including any option to enter into any of the
foregoing).
"Taxes" means any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of
each Bank and the Agent, such taxes (including income taxes or
franchise taxes) as are imposed on or measured by each Bank's
net income by the jurisdiction (or any political subdivision
thereof) under the laws of which such Bank or the Agent, as the
case may be, is organized or maintains a lending office.
"Unfunded Pension Liability" means the excess of a
Plan's benefit liabilities under Section 4001(a)(16) of ERISA,
over the current value of that Plan's assets, determined in
accordance with the assumptions used for funding the Pension
Plan pursuant to Section 412 of the Code for the applicable
plan year.
"United States" and "U.S." each means the United
States of America.
"Wholly-Owned Subsidiary" means any corporation in
which (other than directors' qualifying shares required by law)
100% of the capital stock of each class having ordinary voting
power at the time as of which any determination is being made,
is owned, beneficially and of record, by the Company, or by one
or more of the other Wholly-Owned Subsidiaries, or both.
1.02 Other Interpretive Provisions. The meanings of
defined terms are equally applicable to the singular and plural
forms of the defined terms. Unless otherwise specified or the
context clearly requires otherwise, the words "hereof",
"herein", "hereunder" and similar words refer to this Agreement
as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit
references are to this Agreement. The term "documents"
includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however
evidenced. The term "including" is not limiting and means
"including without limitation." In the computation of periods
of time from a specified date to a later specified date, the
word "from" means "from and including"; the words "to" and
"until" each mean "to but excluding", and the word "through"
means "to and including." Unless otherwise expressly provided
herein, (i) references to agreements (including this Agreement)
and other contractual instruments shall be deemed to include
all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as
including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or
interpreting the statute or regulation. The captions and
headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.
This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the
same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in
accordance with their terms. This Agreement and the other Loan
Documents are the result of negotiations among and have been
reviewed by counsel to the Agent, the Company and the other
parties, and are the products of all parties. Accordingly,
they shall not be construed against the Banks or the Agent
merely because of the Agent's or Banks' involvement in their
preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires,
all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP, consistently
applied. References to "consolidated", when it precedes any
accounting term, means such term as it would apply to the
Company and its Subsidiaries on a consolidated basis,
determined in accordance with GAAP.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments.
(a) The Facility A Revolving Credit. Each Bank
severally agrees, on the terms and conditions set forth herein,
to make Loans to the Company (each such loan, a "Facility A
Revolving Loan") from time to time on any Business Day during
the period from the Closing Date to the Facility A Termination
Date, in an aggregate amount not to exceed at any time
outstanding, the amount set forth on Schedule 2.01(a) (such
amount, as the same may be reduced under Section 2.05 or as a
result of one or more assignments under Section 11.08, the
Bank's "Facility A Commitment"). Within the limits of each
Bank's Facility A Commitment, and subject to the other terms
and conditions of this Agreement, the Company may borrow under
this Subsection 2.01(a), prepay under Section 2.06 and reborrow
under this Subsection 2.01(a).
(b) The Facility B Revolving Credit. Each Bank
severally agrees, on the terms and conditions set forth herein,
to make Loans to the Company (each such loan, a "Facility B
Revolving Loan") from time to time on any Business Day during
the period from the Closing Date to the Facility B Termination
Date, in an aggregate amount not to exceed at any time
outstanding, the lesser of the following (such amount, as the
same may be reduced under Section 2.05 or as a result of one or
more assignments under Section 11.08, the Bank's "Facility B
Commitment"): (i) the Bank's Pro Rata Share of the current
Borrowing Base and (ii) the amount set forth on Schedule
2.01(b); provided, however, that the Effective Amount of all
Facility B Revolving Loans, and the Effective Amount of all L/C
Obligations, shall not at any time exceed the combined Facility
B Commitments. Within the limits of each Bank's Facility B
Commitment, and subject to the other terms and conditions of
this Agreement, the Company may borrow under this Subsection
2.01(b), prepay under Section 2.06 and reborrow under this
Subsection 2.01(b).
2.02 Certain Pricing Terms. The Applicable Margin and
the Commitment Fee shall be equal to the specified percent per
annum set forth in Schedule 2.02.
2.03 Procedure for Borrowing.
(a) Each Borrowing of Revolving Loans shall be made
upon the Company's irrevocable written notice delivered to the
Agent in the form of a Notice of Borrowing (which notice must
be received by the Agent prior to 9:00 a.m. (San Francisco,
California time) (i) three Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Loans; and (ii)
one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Loans, specifying: (A) the amount of the
Borrowing, which shall be in an aggregate minimum amount of
$2,000,000 or any multiple of $1,000,000 in excess thereof; (B)
the requested Borrowing Date, which shall be a Business Day;
(C) the Interest Rate Type of Loans comprising the Borrowing;
and (D) the duration of the Interest Period applicable to such
Loans included in such notice. If the Notice of Borrowing
fails to specify the duration of the Interest Period for any
Borrowing comprised of Offshore Rate Loans, such Interest
Period shall be three months.
(b) The Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such
Bank's Pro Rata Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata
Share of each Borrowing available to the Agent for the account
of the Company at the Agent's Payment Office by 11:00 a.m. (San
Francisco, California time) on the Borrowing Date requested by
the Company in funds immediately available to the Agent. The
proceeds of all such Loans will then be made available to the
Company by the Agent by wire transfer in accordance with
written instructions provided to the Agent by the Company of
like funds as received by the Agent.
(d) After giving effect to any Borrowing, there may
not be more than seven (7) different Interest Periods in
effect.
2.04 Conversion and Continuation Elections.
(a) The Company may, upon irrevocable written notice
to the Agent in accordance with Subsection 2.04(b): (i) elect,
as of any Business Day, in the case of Base Rate Loans, or as
of the last day of the applicable Interest Period, in the case
of Offshore Rate Loans, to convert any such Loans (or any part
thereof in an amount not less than $2,000,000, or that is in an
integral multiple of $1,000,000 in excess thereof) into Loans
of any other Interest Rate Type; or (ii) elect as of the last
day of the applicable Interest Period, to continue any
Revolving Loans having Interest Periods expiring on such day
(or any part thereof in an amount not less than $2,000,000, or
that is in an integral multiple of $1,000,000 in excess
thereof); provided, that if at any time the aggregate amount of
Offshore Rate Loans in respect of any Borrowing is reduced, by
payment, prepayment, or conversion of part thereof to be less
than $2,000,000, such Offshore Rate Loans shall automatically
convert into Base Rate Loans, and on and after such date the
right of the Company to continue such Loans as, and convert
such Loans into, Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of
Conversion/ Continuation to be received by the Agent not later
than 9:00 a.m. (San Francisco, California time) at least (i)
three Business Days in advance of the Conversion/Continuation
Date, if the Loans are to be converted into or continued as
Offshore Rate Loans; and (ii) one Business Day in advance of
the Conversion/Continuation Date, if the Loans are to be
converted into Base Rate Loans, specifying: (A) the proposed
Conversion/ Continuation Date; (B) the aggregate amount of
Loans to be converted or renewed; (C) the Interest Rate Type of
Loans resulting from the proposed conversion or continuation;
and (D) other than in the case of conversions into Base Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Company has failed to
select timely a new Interest Period to be applicable to
Offshore Rate Loans, or if any Default or Event of Default then
exists, the Company shall be deemed to have elected to convert
such Offshore Rate Loans into Base Rate Loans effective as of
the expiration date of such Interest Period.
(d) The Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no
timely notice is provided by the Company, the Agent will
promptly notify each Bank of the details of any automatic
conversion. All conversions and continuations shall be made
ratably according to the respective outstanding principal
amounts of the Loans with respect to which the notice was given
held by each Bank.
(e) Unless the Majority Banks otherwise agree,
during the existence of a Default or Event of Default, the
Company may not elect to have a Loan converted into or
continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or
continuation of Loans, there may not be more than seven (7)
different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments.
The Company may, upon not less than five Business Days' prior
notice to the Agent, terminate the Commitments, or permanently
reduce the Commitments by an aggregate minimum amount of
$2,000,000 or any multiple of $1,000,000 in excess thereof;
unless, after giving effect thereto and to any prepayments of
Loans made on the effective date thereof, (a) the Effective
Amount of all Facility A Revolving Loans exceed the amount of
the combined Facility A Revolving Commitment, then in effect,
or (b) the Effective Amount of all Facility B Revolving Loans
and L/C Obligations together would exceed the amount of the
combined Facility B Revolving Commitments then in effect. Once
reduced in accordance with this Section, the Commitments may
not be increased. Any reduction of the Commitments shall be
applied to each Bank according to its Pro Rata Share. All
accrued commitment, letter of credit and fronting fees to, but
not including, the effective date of any reduction or
termination of Commitments, shall be paid on the effective date
of such reduction or termination.
2.06 Optional Prepayments. Subject to Section 4.04, the
Company may, at any time or from time to time, upon irrevocable
notice to the Agent, not less than three (3) Business Days, for
Offshore Rate Loans and one (1) Business Day for Base Rate
Loans, ratably as to each Bank, prepay Loans in whole or in
part, in minimum amounts of $2,000,000 or any multiple of
$1,000,000 in excess thereof. Such notice of prepayment shall
specify the date and amount of such prepayment and the Interest
Rate Type(s) of Loans to be prepaid. The Agent will promptly
notify each Bank of its receipt of any such notice, and of such
Bank's Pro Rata Share of such prepayment. If such notice is
given by the Company, the Company shall make such prepayment
and the payment amount specified in such notice shall be due
and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and
any amounts required pursuant to Section 4.04.
2.07 Borrowing Base Determinations, Mandatory Prepayments
of Loans.
(a) The Borrowing Base shall be determined monthly
on the last day of each month until the Facility B Termination
Date and shall be equal to the sum of (i) eighty percent (80%)
of Eligible Refinery Hydrocarbon Inventory (except for Refined
Products at the Company's and its Subsidiaries' service
stations and travel centers), plus (ii) fifty percent (50%) of
Eligible Refinery Hydrocarbon Inventory as Refined Products at
the Company's and its Subsidiaries' service stations and travel
centers, plus (iii) ninety percent (90%) of Eligible Accounts
Receivable from Preferred Account Obligors plus (iv)
eighty-five percent (85%) of Eligible Accounts Receivable from
Account Obligors other than Preferred Eligible Account
Obligors.
(b) If on any date the Effective Amount of all
Facility B Revolving Loans and the Effective Amount of all L/C
Obligations exceed the combined Facility B Commitments, the
Company shall, and without notice or demand, prepay the
outstanding principal amount of the Facility B Revolving Loans
by an amount equal to the applicable excess ("Mandatory
Prepayment"). Subject to Section 4.04, if on any date after
giving effect to any Mandatory Prepayment made on such date
pursuant to the preceding sentence the Effective Amount of all
Facility B Revolving Loans then outstanding plus the Effective
Amount of all L/C Obligations exceeds the combined Facility B
Commitments, the Company shall immediately Cash Collateralize
on such date the outstanding Letters of Credit in an amount
equal to the excess of the maximum amount that the L/C
Obligations exceed the Facility B Commitment.
2.08 Repayment.
(a) The Facility A Revolving Credit. The Company
shall repay to the Banks the aggregate principal amount of
Facility A Loans on the Facility A Termination Date.
(b) The Facility B Revolving Credit. The Company
shall repay to the Banks the aggregate principal amount of
Facility B Loans outstanding on the Facility B Termination
Date.
(c) Interest.
(i) Each Revolving Loan shall bear
interest on the outstanding principal amount thereof from the
applicable Borrowing Date at a rate per annum equal to the
lesser of (a) Offshore Rate or the Base Rate, as the case may
be (and subject to the Company's right to convert to other
Interest Rate Types of Loans under Section 2.04), plus the
Applicable Margin, or (b) the maximum rate permitted by
applicable usury laws now or hereafter enacted.
(ii) Interest on each Revolving Loan
shall be paid in arrears on each Interest Payment Date.
Interest shall also be paid on the date of any prepayment of
Loans under Section 2.06 or 2.07 for the portion of the Loans
so prepaid and upon payment (including prepayment) in full
thereof and, during the existence of any Event of Default,
interest shall be paid on demand of the Agent at the request or
with the consent of the Majority Banks.
(iii) Notwithstanding subsection (a) of
this Section, while any Event of Default exists or after
acceleration, the Company shall pay interest (after as well as
before entry of judgment thereon to the extent permitted by
law) on the principal amount of all outstanding Loans, at a
rate per annum equal to the lesser of (x) the Highest Lawful
Rate and (y) the Base Rate plus two percent (2%).
2.09 Fees. In addition to certain fees described in
Section 3.08:
(a) Arrangement, Agency Fees. The Company shall pay
an arrangement fee to the Arranger for the Arranger's own
account, and shall pay an agency fee to the Agent for the
Agent's own account, as required by the letter agreement ("Fee
Letter") between the Company and the Arranger and Agent dated
September 11, 1995.
(b) Commitment Fees. The Company shall pay to the
Agent for the account of each Bank a commitment fee on the
average daily unused portion of such Bank's Commitment,
computed on a quarterly basis in arrears on the last Business
Day of each calendar quarter based upon the daily utilization
for that quarter as calculated by the Agent, equal to the
percent per annum set forth in Schedule 2.02. For purposes of
calculating utilization under this subsection, the Commitments
shall be deemed used to the extent of the Effective Amount of
Revolving Loans then outstanding, plus the Effective Amount of
L/C Obligations then outstanding. Such commitment fee shall
accrue from the Closing Date to the Revolving Termination Date
and shall be due and payable quarterly in arrears on the last
Business Day of each quarter commencing on December 31, 1995
through the Revolving Termination Date, with the final payment
to be made on the Revolving Termination Date; provided that, in
connection with any reduction or termination of Commitments
under Section 2.05 or Section 2.07, the accrued commitment fee
calculated for the period ending on such date shall also be
paid on the date of such reduction or termination, with the
following quarterly payment being calculated on the basis of
the period from such reduction or termination date to such
quarterly payment date. The commitment fees provided in this
subsection shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or
more conditions in Article V are not met.
2.10 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans
when the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed. All other computations
of fees and interest shall be made on the basis of a 360-day
year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year).
Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof
to the last day thereof.
(b) Each determination of an interest rate by the
Agent shall be conclusive and binding on the Company and the
Banks in the absence of manifest error.
2.11 Payments by the Company.
(a) All payments to be made by the Company shall be
made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the
Company shall be made to the Agent for the account of the Banks
at the Agent's Payment Office, and shall be made in dollars and
in immediately available funds, no later than 11:00 a.m. (San
Francisco, California time) on the date specified herein. The
Agent will promptly distribute to each Bank its Pro Rata Share
(or other applicable share as expressly provided herein) of
such payment in like funds as received. Any payment received
by the Agent later than 11:00 a.m. (San Francisco, California
time) shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue
to accrue.
(b) Subject to the provisions set forth in the
definition of "Interest Period" herein, whenever any payment is
due on a day other than a Business Day, such payment shall be
made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the
Company prior to the date on which any payment is due to the
Banks that the Company will not make such payment in full as
and when required, the Agent may assume that the Company has
made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be
so required), in reliance upon such assumption, distribute to
each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent the Company has not made
such payment in full to the Agent, each Bank shall repay to the
Agent on demand such amount distributed to such Bank, together
with interest thereon at the Federal Funds Rate for each day
from the date such amount is distributed to such Bank until the
date repaid.
2.12 Payments by the Banks to the Agent.
(a) Unless the Agent receives notice from a Bank on
or prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least one Business Day prior to the
date of such Borrowing, that such Bank will not make available
as and when required hereunder to the Agent for the account of
the Company the amount of that Bank's Pro Rata Share of the
Borrowing, the Agent may assume that each Bank has made such
amount available to the Agent in immediately available funds on
the Borrowing Date and the Agent may (but shall not be so
required), in reliance upon such assumption, make available to
the Company on such date a corresponding amount. If and to the
extent any Bank shall not have made its full amount available
to the Agent in immediately available funds and the Agent in
such circumstances has made available to the Company such
amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Agent,
together with interest at the Federal Funds Rate for each day
during such period. A notice of the Agent submitted to any
Bank with respect to amounts owing under this subsection (a)
shall be conclusive, absent manifest error. If such amount is
so made available, such payment to the Agent shall constitute
such Bank's Loan on the date of Borrowing for all purposes of
this Agreement. If such amount is not made available to the
Agent on the Business Day following the Borrowing Date, the
Agent will notify the Company of such failure to fund and, upon
demand by the Agent, the Company shall pay such amount to the
Agent for the Agent's account, together with interest thereon
for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any
Borrowing Date shall not relieve any other Bank of any
obligation hereunder to make a Loan on such Borrowing Date, but
no Bank shall be responsible for the failure of any other Bank
to make the Loan to be made by such other Bank on any Borrowing
Date.
2.13 Sharing of Payments, Etc. If, other than as
expressly provided elsewhere herein, any Bank shall obtain on
account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Agent of such fact, and (b) purchase
from the other Banks such participations in the Loans made by
them as shall be necessary to cause such purchasing Bank to
share the excess payment pro rata with each of them; provided,
however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase
shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable
share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so
recovered from the purchasing Bank) of any interest or other
amount paid or payable by the purchasing Bank in respect of the
total amount so recovered. The Company agrees that any Bank so
purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off, but subject to Section
11.09) with respect to such participation as fully as if such
Bank were the direct creditor of the Company in the amount of
such participation. The Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each
case notify the Banks following any such purchases or
repayments.
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Facility.
(a) On the terms and conditions set forth herein (i)
the Issuing Bank agrees, (A) from time to time on any Business
Day during the period from the Closing Date to the Facility B
Termination Date to issue Letters of Credit for the account of
the Company, and to amend or renew Letters of Credit previously
issued by it, in accordance with Subsections 3.02(c) and
3.02(e), and (B) to honor drafts under the Letters of Credit;
and (ii) the Banks severally agree to participate in Letters of
Credit Issued for the account of the Company; provided, that
the Issuing Bank shall not be obligated to Issue, and no Bank
shall be obligated to participate in, any Letter of Credit if
as of the date of Issuance of such Letter of Credit (the
"Issuance Date") the Effective Amount of all L/C Obligations
plus the Effective Amount of all Facility B Revolving Loans
exceeds the combined Facility B Commitments. Within the
foregoing limits, and subject to the other terms and conditions
hereof, the Company's ability to obtain Letters of Credit shall
be fully revolving, and, accordingly, the Company may, during
the foregoing period, obtain Letters of Credit to replace
Letters of Credit which have expired or which have been drawn
upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue
any Letter of Credit if: (i) any order, judgment or decree of
any Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain the Issuing Bank from Issuing
such Letter of Credit, or any Requirement of Law applicable to
the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit, or request
that the Issuing Bank refrain from, the Issuance of letters of
credit generally or such Letter of Credit in particular or
shall impose upon the Issuing Bank with respect to such Letter
of Credit any restriction, reserve or capital requirement (for
which the Issuing Bank is not otherwise compensated hereunder)
not in effect on the Closing Date, or shall impose upon the
Issuing Bank any unreimbursed loss, cost or expense which was
not applicable on the Closing Date and which the Issuing Bank
in good faith deems material to it; (ii) the Issuing Bank has
received written notice from any Bank, the Agent or the
Company, on or prior to the Business Day prior to the requested
date of Issuance of such Letter of Credit, that one or more of
the applicable conditions contained in Article V is not then
satisfied; (iii) the expiry date of any requested Letter of
Credit is (A) more than 360 days after the date of Issuance,
unless the Issuing Bank and the Majority Banks have approved
such expiry date in writing, or (B) after the Facility B
Termination Date, unless all of the Banks have approved such
expiry date in writing; (iv) the expiry date of any requested
Letter of Credit is prior to the maturity date of any financial
obligation to be supported by the requested Letter of Credit;
(v) any requested Letter of Credit does not provide for drafts,
or is not otherwise in form and substance acceptable to the
Issuing Bank, or the Issuance of a Letter of Credit shall
violate any applicable policies of the Issuing Bank; (vi) any
Letter of Credit is for the purpose of supporting the issuance
of any letter of credit by any other Person; or (vii) if such
Letter of Credit is issued to support workmen's compensation
liabilities and the face amount is more than $1,000,000.
3.02 Issuance, Amendment and Renewal of Letters of
Credit.
(a) Each Letter of Credit shall be issued two (2)
Business Days after receipt by the Issuing Bank (if received by
the Issuing Bank no later than 10:00 a.m. Chicago time) of an
irrevocable written request from the Company (with a copy sent
by the Company to the Agent) or such shorter time as the
Issuing Bank may agree in a particular instance in its sole
discretion. Each such request for issuance of a Letter of
Credit shall be by facsimile, confirmed immediately in an
original writing, in the form of an L/C Application, and shall
specify in form and detail satisfactory to the Issuing Bank
such matters as the Issuing Bank may require.
(b) At least two Business Days prior to the Issuance
of any Letter of Credit, the Issuing Bank will confirm with the
Agent (by telephone or in writing) that the Agent has received
a copy of the L/C Application or L/C Amendment Application from
the Company and, if the Agent has not received such copy, the
Issuing Bank will provide the Agent with a copy thereof.
Unless the Issuing Bank has received notice on or before the
Business Day immediately preceding the date the Issuing Bank is
to issue a requested Letter of Credit from the Agent (A)
directing the Issuing Bank not to issue such Letter of Credit
because such issuance is not then permitted under Subsection
3.01(b); or (B) that one or more conditions specified in
Article V are not then satisfied; then, subject to the terms
and conditions hereof, the Issuing Bank shall, on the requested
date, issue a Letter of Credit for the account of the Company
in accordance with the Issuing Bank's usual and customary
business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Facility B Termination Date, the
Issuing Bank will, upon the written request of the Company
received by the Issuing Bank (with a copy sent by the Company
to the Agent) at or before 10:00 a.m. Chicago Time at least two
(2) Business Days (or such shorter time as the Issuing Bank may
agree in a particular instance in its sole discretion), amend
any Letter of Credit issued by it. Each such request for
amendment of a Letter of Credit shall be made by facsimile,
confirmed immediately in an original writing, and made in such
form as the Issuing Bank may require. The Issuing Bank shall
be under no obligation to amend any Letter of Credit if: (A)
the Issuing Bank would have no obligation at such time to issue
such Letter of Credit in its amended form under the terms of
this Agreement; or (B) the beneficiary of any such Letter of
Credit does not accept the proposed amendment to the Letter of
Credit.
(d) Upon receipt of notice from the Issuing Bank,
the Agent will promptly notify the Banks of the Issuance of a
Letter of Credit and any amendment thereto.
(e) If any outstanding Letter of Credit shall
provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from the Issuing Bank that
such Letter of Credit shall not be renewed, the Issuing Bank
shall be permitted to allow such Letter of Credit to renew, and
the Company and the Banks hereby authorize such renewal. The
Issuing Bank shall not be obligated to allow such Letter of
Credit to renew if the Issuing Bank would have no obligation at
such time to issue or amend such Letter of Credit under the
terms of this Agreement.
(f) The Issuing Bank may, at its election (or as
required by the Agent at the direction of the Majority Banks),
deliver any notices of termination or other communications to
any Letter of Credit beneficiary, and take any other action as
necessary or appropriate, at any time and from time to time, in
order to cause the expiry date of such Letter of Credit to be a
date not later than the Facility B Termination Date.
(g) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter
of Credit).
(h) The Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of
Credit, or amendment to or renewal of a Letter of Credit, to an
advising bank or a beneficiary, a true and complete copy of
each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
3.03 Existing Bank of America Letters of Credit, Risk
Participations, Drawings and Reimbursements.
(a) On and after the Closing Date, the Existing BofA
Letters of Credit shall be deemed for all purposes, including
for purposes of the fees to be collected pursuant to
Subsections 3.08(a) and 3.08(c), and reimbursement of costs and
expenses to the extent provided herein, Letters of Credit
outstanding under this Agreement and entitled to the benefits
of this Agreement and the other Loan Documents, and shall be
governed by the applications and agreements pertaining thereto
and by this Agreement. Each Bank shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from
the Issuing Bank on the Closing Date a participation in each
such Letter of Credit and each drawing thereunder in an amount
equal to the product of (i) such Bank's Pro Rata Share times
(ii) the maximum amount available to be drawn under such Letter
of Credit and the amount of such drawing, respectively. For
purposes of Subsection 2.01(b) and Subsection 2.09(b), the
Existing BofA Letters of Credit shall be deemed to utilize pro
rata the Facility B Commitment of each Bank.
(b) Immediately upon the Issuance of each Letter of
Credit, each Bank shall be deemed to, and hereby irrevocably
and unconditionally agrees to, purchase from the Issuing Bank a
participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) the Pro
Rata Share of such Bank, times (ii) the maximum amount
available to be drawn under such Letter of Credit and the
amount of such drawing, respectively. For purposes of
Subsection 2.01(b), each Issuance of a Letter of Credit shall
be deemed to utilize the Facility B Commitment of each Bank by
an amount equal to the amount of such participation.
(c) In the event of any request for a drawing under
a Letter of Credit by the beneficiary thereof, the Issuing Bank
will promptly notify the Company. The Company shall reimburse
the Issuing Bank prior to 10:00 a.m. (Chicago, Illinois time),
on each date that any amount is paid by the Issuing Bank under
any Letter of Credit (each such date, an "Honor Date"), in an
amount equal to the amount so paid by the Issuing Bank. In the
event the Company fails to reimburse the Issuing Bank for the
full amount of any drawing under any Letter of Credit by 10:00
a.m. (Chicago, Illinois time) on the Honor Date, the Issuing
Bank will promptly notify the Agent and the Agent will promptly
notify each Bank thereof, and the Company shall be deemed to
have requested that Facility B Base Rate Loans be made by the
Banks to be disbursed on the Honor Date under such Letter of
Credit, subject to the amount of the unutilized portion of the
Facility B Commitment and subject to the conditions set forth
in Section 5.02. Any notice given by the Issuing Bank or the
Agent pursuant to this Subsection 3.03(c) may be oral if
immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation shall
not affect the conclusiveness or binding effect of such notice.
(d) Each Bank shall upon any notice pursuant to
Subsection 3.03(c) make available to the Agent for the account
of the relevant Issuing Bank an amount in Dollars and in
immediately available funds equal to its Pro Rata Share of the
amount of the drawing, whereupon the participating Banks shall
(subject to Subsection 3.03(e)) each be deemed to have made a
Facility B Revolving Loan consisting of a Base Rate Loan to the
Company in that amount. If any Bank so notified fails to make
available to the Agent for the account of the Issuing Bank the
amount of such Bank's Pro Rata Share of the amount of the
drawing by no later than 12:00 noon (San Francisco, California
time) on the Honor Date, then interest shall accrue on such
Bank's obligation to make such payment, from the Honor Date to
the date such Bank makes such payment, at a rate per annum
equal to the Federal Funds Rate in effect from time to time
during such period. The Agent will promptly give notice to
each Bank of the occurrence of the Honor Date, but failure of
the Agent to give any such notice on the Honor Date or in
sufficient time to enable any Bank to effect such payment on
such date shall not relieve such Bank from its obligations
under this Section 3.03.
(e) With respect to any unreimbursed drawing that is
not converted into Facility B Revolving Loans consisting of
Base Rate Loans to the Company in whole or in part, because of
the Company's failure to satisfy the conditions set forth in
Section 5.02 or for any other reason, the Company shall be
deemed to have incurred from the Issuing Bank an L/C Borrowing
in the amount of such drawing, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear
interest at a rate per annum equal to the Base Rate plus 2% per
annum, and each Bank's payment to the Issuing Bank pursuant to
Subsection 3.03(d) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C
Advance from such Bank in satisfaction of its participation
obligation under this Section 3.03.
(f) Each Bank's obligation in accordance with this
Agreement to make the Facility B Revolving Loans or L/C
Advances, as contemplated by this Section 3.03, as a result of
a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Bank and
shall not be affected by any circumstance, including (i) any
set-off, counterclaim, recoupment, defense or other right which
such Bank may have against the Issuing Bank, the Company or any
other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default, an Event of Default or a Material
Adverse Effect; or (iii) any other circumstance, happening or
event whatsoever, whether or not similar to any of the
foregoing; provided, however, that each Bank's obligation to
make Facility B Revolving Loans under this Section 3.03 is
subject to the conditions set forth in Section 5.02.
3.04 Repayment of Participations.
(a) When the Agent receives (and only if the Agent
receives), for the account of the Issuing Bank, immediately
available funds from the Company (i) in reimbursement of any
payment made by the Issuing Bank under the Letter of Credit
with respect to which any Bank has paid the Agent for the
account of the Issuing Bank for such Bank's participation in
the Letter of Credit pursuant to Section 3.03 or (ii) in
payment of interest thereon, the Agent will pay to each Bank,
in the same funds as those received by the Agent for the
account of the Issuing Bank, the amount of such Bank's Pro Rata
Share of such funds, and the Issuing Bank shall receive the
amount of the Pro Rata Share of such funds of any Bank that did
not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at
any time to return to the Company, or to a trustee, receiver,
liquidator, custodian, or any official in any Insolvency
Proceeding, any portion of the payments made by the Company to
the Agent for the account of the Issuing Bank pursuant to
subsection 3.04(a) in reimbursement of a payment made under the
Letter of Credit or interest or fee thereon, each Bank shall,
on demand of the Agent, forthwith return to the Agent or the
Issuing Bank the amount of its Pro Rata Share of any amounts so
returned by the Agent or the Issuing Bank plus interest thereon
from the date such demand is made to the date such amounts are
returned by such Bank to the Agent or the Issuing Bank, at a
rate per annum equal to the Federal Funds Rate in effect from
time to time.
3.05 Role of the Issuing Bank.
(a) Each Bank and the Company agree that, in paying
any drawing under a Letter of Credit, the Issuing Bank shall
not have any responsibility to obtain any document (other than
any sight draft, certificates and other documents, if any,
expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or
the authority of the Person executing or delivering any such
document.
(b) No Agent-Related Person nor any of the
respective correspondents, participants or assignees of the
Issuing Bank shall be liable to any Bank for: (i) any action
taken or omitted in connection herewith at the request or with
the approval of the Banks (including the Majority Banks, as
applicable); (ii) any action taken or omitted in the absence of
gross negligence or willful misconduct; or (iii) the due
execution, effectiveness, validity or enforceability of any
L/C-Related Document.
(c) The Company hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to
its use of any Letter of Credit; provided, however, that this
assumption is not intended to, and shall not, preclude the
Company's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other
agreement. No Agent-Related Person, nor any of the respective
correspondents, participants or assignees of the Issuing Bank,
shall be liable or responsible for any of the matters described
in clauses (i) through (vii) of Section 3.06; provided,
however, anything in such clauses to the contrary
notwithstanding, that the Company may have a claim against the
Issuing Bank, and the Issuing Bank may be liable to the
Company, to the extent, but only to the extent, of any direct,
as opposed to consequential or exemplary, damages suffered by
the Company which the Company proves were caused by the Issuing
Bank's willful misconduct or gross negligence in failing to pay
under any Letter of Credit after the presentation to it by the
beneficiary of a sight draft, certificate(s) and other
documents, if any, strictly complying with the terms and
conditions of such Letter of Credit. In furtherance and not in
limitation of the foregoing: (i) the Issuing Bank may accept
documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) the Issuing
Bank shall not be responsible for the validity or sufficiency
of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the
Company under this Agreement and any L/C-Related Document to
reimburse the Issuing Bank for a drawing under a Letter of
Credit, and to repay any L/C Borrowing and any drawing under a
Letter of Credit converted into Facility B Revolving Loans,
shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and
each such other L/C-Related Document under all circumstances,
including the following: (i) any lack of validity or
enforceability of this Agreement or any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the
Company in respect of any Letter of Credit or any other
amendment or waiver of or any consent to departure from all or
any of the L/C-Related Documents; (iii) the existence of any
claim, set-off, defense or other right that the Company may
have at any time against any beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing
Bank or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction; (iv) any
draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect; or any loss or delay in
the transmission or otherwise of any document required in order
to make a drawing under any Letter of Credit; (v) any payment
by the Issuing Bank under any Letter of Credit against
presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit; or any payment
made by the Issuing Bank under any Letter of Credit to any
Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to
any beneficiary or any transferee of any Letter of Credit,
including any arising in connection with any Insolvency
Proceeding; (vi) any exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or consent
to departure from any other guarantee, for all or any of the
obligations of the Company in respect of any Letter of Credit;
or (vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including any
other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Company or a guarantor.
3.07 Cash Collateral Pledge. Upon (i) the request of the
Agent, (A) if the Issuing Bank has honored any full or partial
drawing request on any Letter of Credit and such drawing has
resulted in an L/C Borrowing hereunder, or (B) if, as of the
Facility B Termination Date, any Letters of Credit may for any
reason remain outstanding and partially or wholly undrawn, or
(ii) the occurrence of the circumstances described in
Subsection 2.07(b) requiring the Company to Cash Collateralize
Letters of Credit, then, the Company shall immediately Cash
Collateralize the L/C Obligations in an amount equal to the L/C
Obligations.
3.08 Letter of Credit Fees.
(a) The Company shall pay to the Agent for the
account of each of the Banks a letter of credit fee with
respect to the Letters of Credit equal to the per annum fee
specified in Schedule 2.02 multiplied by the average daily
maximum amount available to be drawn of the outstanding Letters
of Credit, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon Letters of
Credit outstanding for that quarter as calculated by the Agent.
Such letter of credit fees shall be due and payable quarterly
in arrears on the last Business Day of each calendar quarter
during which Letters of Credit are outstanding, commencing on
the first such quarterly date to occur after the Closing Date,
through the Facility B Termination Date (or such later date
upon which the outstanding Letters of Credit shall expire),
with the final payment to be made on the Facility B Termination
Date (or such later expiration date).
(b) The Company shall pay to the Agent for the
account of the Issuing Bank a letter of credit fronting fee
(the "Fronting Fee") for each Letter of Credit Issued by the
Issuing Bank equal to .125% per annum of the average daily
maximum amount available to be drawn on the outstanding Letters
of Credit, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon Letters of
Credit outstanding for that quarter.
(c) The Company shall pay to the Issuing Bank from
time to time on demand the normal issuance, presentation,
amendment and other processing fees, and other standard costs
and charges, of the Issuing Bank relating to letters of credit
as from time to time in effect.
3.09 Cash Collateralization.
(a) If any Event of Default shall occur and be
continuing, the Company agrees that it shall on the Business
Day it receives notice from the Agent, acting upon instructions
of the Majority Banks, deposit in an account (the "Cash
Collateral Account") held by the Agent, for the benefit of the
Banks, an amount in cash equal to the Letter of Credit
Obligations as of such date. Such deposit shall be held by the
Agent as collateral for the payment and performance of the
Obligations. The Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such
account. Cash collateral shall be held in a blocked,
non-interest bearing account held by the Agent or any Affiliate
of the Agent upon such terms and in such type of account as
customary at that depository institution. The Company shall
pay any fees charged by such depository institution which fees
are of the type customarily charged by such institution with
respect to such accounts. Moneys in such account shall (i) be
applied by the Agent to the payment of Letter of Credit
Borrowings and interest thereon, (ii) be held for the
satisfaction of the reimbursement obligations of the Company in
respect of Letters of Credit, and (iii) if the maturity of the
Loans has been accelerated, with the consent of the Majority
Banks, be applied to satisfy the Obligations.
(b) As security for the payment of all Obligations,
the Company hereby grants, conveys, assigns, pledges, sets over
and transfers to the Agent, and creates in the Agent's favor a
Lien on, and security interest, in all money, instruments and
securities at any time held in or acquired in connection with
the Cash Collateral Account, together with all proceeds
thereof. At any time and from time to time, upon the Agent's
request, the Company promptly shall execute and deliver any and
all such further instruments and documents as may be necessary,
appropriate or desirable in the Agent's judgment to obtain the
full benefits (including perfection and priority) of the
security interest created or intended to be created by this
Subsection 3.09(b) and of the rights and powers herein granted.
3.10 Uniform Customs and Practice. The Uniform Customs
and Practice for Documentary Credits as published by the
International Chamber of Commerce ("UCP") most recently at the
time of issuance of any Letter of Credit shall (unless
otherwise expressly provided in the Letters of Credit) apply to
the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by the Company to each Bank
or the Agent under this Agreement and any other Loan Document
shall be made free and clear of, and without deduction or
withholding for any Taxes. In addition, the Company shall pay
all Other Taxes.
(b) The Company agrees to indemnify and hold
harmless each Bank and the Agent for the full amount of Taxes
or Other Taxes (including any Taxes or Other Taxes imposed by
any jurisdiction on amounts payable under this Section) paid by
the Bank or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the
Bank or the Agent makes written demand therefor.
(c) If the Company shall be required by law to
deduct or withhold any Taxes or Other Taxes from or in respect
of any sum payable hereunder to any Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings
(including deductions and withholdings applicable to additional
sums payable under this Section) such Bank or the Agent, as the
case may be, receives an amount equal to the sum it would have
received had no such deductions or withholdings been made; (ii)
the Company shall make such deductions and withholdings; (iii)
the Company shall pay the full amount deducted or withheld to
the relevant taxing authority or other authority in accordance
with applicable law; and (iv) the Company shall also pay to
each Bank or the Agent for the account of such Bank, at the
time interest is paid, all additional amounts which the
respective Bank specifies as necessary to preserve the
after-tax yield the Bank would have received if such Taxes or
Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by
the Company of Taxes or Other Taxes, the Company shall furnish
the Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment
satisfactory to the Agent.
(e) If the Company is required to pay additional
amounts to any Bank or the Agent pursuant to subsection (c) of
this Section, then upon written request of the Company such
Bank shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its
Lending Office so as to eliminate any such additional payment
by the Company which may thereafter accrue, if such change in
the judgment of such Bank is not otherwise disadvantageous to
such Bank.
4.02 Illegality.
(a) If any Bank determines that the introduction of
any Requirement of Law, or any change in any Requirement of
Law, or in the interpretation or administration of any
Requirement of Law, has made it unlawful, or that any central
bank or other Governmental Authority has asserted that it is
unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the
Company through the Agent, any obligation of that Bank to make
Offshore Rate Loans shall be suspended until the Bank notifies
the Agent and the Company that the circumstances giving rise to
such determination no longer exist.
(b) If a Bank determines that it is unlawful to
maintain any Offshore Rate Loan, the Company shall, upon its
receipt of notice of such fact and demand from such Bank (with
a copy to the Agent), prepay in full such Offshore Rate Loans
of that Bank then outstanding, together with interest accrued
thereon and amounts required under Section 4.04, either on the
last day of the Interest Period thereof, if the Bank may
lawfully continue to maintain such Offshore Rate Loans to such
day, or immediately, if the Bank may not lawfully continue to
maintain such Offshore Rate Loan. If the Company is required
to so prepay any Offshore Rate Loan, then concurrently with
such prepayment, the Company shall borrow from the affected
Bank, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or
maintain Offshore Rate Loans has been so terminated or
suspended, all Loans which would otherwise be made by the Bank
as Offshore Rate Loans shall be instead Base Rate Loans.
(d) Before giving any notice to the Agent under this
Section, the affected Bank shall designate a different Lending
Office with respect to its Offshore Rate Loans if such
designation will avoid the need for giving such notice or
making such demand and will not, in the judgment of the Bank,
be illegal or otherwise disadvantageous to the Bank.
4.03 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i)
the introduction of or any change (other than any change by way
of imposition of or increase in reserve requirements included
in the calculation of the Offshore Rate) in or in the
interpretation of any law or regulation or (ii) the compliance
by that Bank with any guideline or request from any central
bank or other Governmental Authority (whether or not having the
force of law), there shall be any increase in the cost to such
Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans or participating in Letters of Credit, or,
in the case of the Issuing Bank, any increase in the cost to
the Issuing Bank of agreeing to issue, issuing or maintaining
any Letter of Credit or of agreeing to make or making, funding
or maintaining any unpaid drawing under any Letter of Credit,
then the Company shall be liable for, and shall from time to
time, upon demand (with a copy of such demand to be sent to the
Agent), pay to the Agent for the account of such Bank,
additional amounts as are sufficient to compensate such Bank
for such increased costs.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any
change in any Capital Adequacy Regulation, (iii) any change in
the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or
(iv) compliance by the Bank (or its Lending Office) or any
corporation controlling the Bank with any Capital Adequacy
Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration
such Bank's or such corporation's policies with respect to
capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a
consequence of its Commitments, loans, credits or obligations
under this Agreement, then, upon demand of such Bank to the
Company through the Agent, the Company shall pay to the Bank,
from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
4.04 Funding Losses. The Company shall reimburse each
Bank and hold each Bank harmless from any loss or expense which
the Bank may sustain or incur as a consequence of: (a) the
failure of the Company to make on a timely basis any payment of
principal of any Offshore Rate Loan; (b) the failure of the
Company to borrow, continue or convert a Loan after the Company
has given (or is deemed to have given) a Notice of Borrowing or
a Notice of Conversion/ Continuation (including by reason of
the failure to satisfy any condition precedent thereto); (c)
the failure of the Company to make any prepayment in accordance
with any notice delivered under Section 2.06; (d) the
prepayment (including pursuant to Section 2.07 or 2.08) or
other payment (including after acceleration thereof) of an
Offshore Rate Loan on a day that is not the last day of the
relevant Interest Period; or (e) the automatic conversion under
Section 2.04 of any Offshore Rate Loan to a Base Rate Loan on a
day that is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation
or reemployment of funds obtained by it to maintain its
Offshore Rate Loans or from fees payable to terminate the
deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Banks under
this Section and under Subsection 4.03(a), each Offshore Rate
Loan made by a Bank (and each related reserve, special deposit
or similar requirement) shall be conclusively deemed to have
been funded at the LIBOR used in determining the Offshore Rate
for such Offshore Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable
amount and for a comparable period, whether or not such
Offshore Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Reference Bank
determines that for any reason adequate and reasonable means do
not exist for determining the Offshore Rate for any requested
Interest Period with respect to a proposed Offshore Rate Loan,
or that the Offshore Rate applicable pursuant to Subsection
2.10(a) for any requested Interest Period with respect to a
proposed Offshore Rate Loan does not adequately and fairly
reflect the cost to the Bank of funding such Loan, the Agent
will promptly so notify the Company and each Bank. Thereafter,
the obligation of the Banks to make or maintain Offshore Rate
Loans hereunder shall be suspended until the Agent upon the
instruction of the Majority Banks revokes such notice in
writing. Upon receipt of such notice, the Company may revoke
any Notice of Borrowing or Notice of Conversion/Continuation
then submitted by it. If the Company does not revoke such
Notice, the Banks shall make, convert or continue the Loans, as
proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans
shall be made, converted or continued as Base Rate Loans
instead of Offshore Rate Loans.
4.06 Certificates of Banks. Any Bank claiming
reimbursement or compensation under this Article IV shall
deliver to the Company (with a copy to the Agent) a certificate
setting forth in reasonable detail the amount payable to the
Bank hereunder and such certificate shall be conclusive and
binding on the Company in the absence of manifest error.
4.07 Substitution of Banks. Upon the receipt by the
Company from any Bank (an "Affected Bank") of a claim for
compensation under Section 4.03, the Company may: (i) request
the Affected Bank to use its best efforts to obtain a
replacement bank or financial institution satisfactory to the
Agent to acquire and assume all or a ratable part of all of
such Affected Bank's Loans and Commitment (a "Replacement
Bank"); (ii) request one more of the other Banks to acquire and
assume all or part of such Affected Bank's Loans and Commitment
but none of the Banks shall have any obligation to do so; or
(iii) designate a Replacement Bank satisfactory to Agent. Any
such designation of a Replacement Bank under clause (i) or
(iii) shall be subject to the prior written consent of the
Agent which consent shall not be unreasonably withheld.
4.08 Survival. The agreements and obligations of the
Company in this Article IV shall survive the payment of all
other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The
obligation of each Bank to make its initial Credit Extension
and the obligation of the Issuing Bank to issue the first
Letter of Credit, hereunder is subject to the condition set
forth in Section 5.01A and the condition that the Agent shall
have received on or before the Closing Date all of the
following, in form and substance satisfactory to the Agent and
each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement and Notes. This Agreement, the
Notes, the Guaranties executed by each party thereto, and the
initial Borrowing Base Report;
(b) Regarding the Bloomfield Refinery. (i) A
certificate signed by a Responsible Officer of the Company, in
form and substance reasonably satisfactory to the Agent and
each Bank representing and warranting that (A) under the
Acquisition Agreement, each of the Sellers and San Juan have
satisfied each of their respective Closing Obligations for the
Acquisition or such conditions have been waived, save only for
San Juan's obligation to deliver to Sellers the Preliminary
Amount (as defined in the Purchase Agreement), (B) that San
Juan has delivered by wire transfer to an account held by
Company at BofA sufficient funds to pay the difference between
the Preliminary Amount and the amount requested by the Company
under the Notice of Borrowing for the Facility A Revolving
Loan, and (C) wire instructions indicating where to send the
full Preliminary Amount for the account of the Sellers; and
(ii) verbal confirmation from the Sellers that the Sellers are
ready, willing and able to consummate the Bloomfield
Acquisition upon receipt of the Preliminary Amount;
(c) Certificate Regarding Existing Indebtedness. A
certificate signed by a Responsible Officer of the Company,
certifying that attached thereto is a true and correct copy of
the Prudential Note Agreement and the Indenture;
(d) Resolutions; Incumbency Organization Documents.
(i) Resolutions of the board of directors of the Company and
each Guarantor authorizing the transactions contemplated
hereby, certified as of the Closing Date by the Secretary or an
Assistant Secretary of such Person; (ii) Certificates of the
Secretary or Assistant Secretary of the Company and each
Guarantor certifying the names and true signatures of the
officers or such Person authorized to execute, deliver and
perform, as applicable, this Agreement, the Guaranty, and all
other Loan Documents to be delivered by it hereunder; and (iii)
Articles or certificates of incorporation and the bylaws of the
Company and each Guarantor as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of the such
Person as of the Closing Date;
(e) Good Standing. A good standing certificate for
the Company and each Guarantor from the state of incorporation
and Arizona and New Mexico, evidencing qualification to do
business as a foreign corporation as of a recent date;
(f) Legal Opinions. Copies of (i) An opinion of
Morgan Gust, counsel to the Company and addressed to the Agent
and the Banks, substantially in the form of Exhibit "D"; and
(ii) a favorable opinion of Butler & Binion, L.L.P., special
counsel to the Agent;
(g) Payment of Fees. Evidence of payment by the
Company of all accrued and unpaid fees, costs and expenses owed
pursuant to this Agreement and the Fee Letter to the extent
then due and payable on the Closing Date, together with
Attorney Costs of the Agent to the extent invoiced prior to or
on the Closing Date, plus such additional amounts of Attorney
Costs as shall constitute the Agent's estimate of Attorney
Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter
preclude final settling of accounts between the Company and the
Agent); including any such costs, fees and expenses arising
under or referenced in Sections 2.09 and 11.04;
(h) Certificate (Representations and Warranties,
Etc.). A certificate signed by a Responsible Officer, dated as
of the Closing Date, stating that (i) the representations and
warranties contained in Article VI are true and correct on and
as of such date, as though made on and as of such date; (ii) no
Default or Event of Default exists or would result from the
Credit Extension being made on the Closing Date; (iii) no
litigation is pending or threatened against the Company or any
Subsidiary in which there is a reasonable probability of an
adverse decision which would result in a Material Adverse
Effect; and (iv) there has occurred since June 30, 1995, no
event or circumstance that has resulted or could reasonably be
expected to result in a Material Adverse Effect;
(i) Intercreditor Agreement. The Intercreditor
Agreement in the form required by Exhibit "E" to the Prudential
Note Agreement, duly executed by all parties thereto; and
(j) Other Documents. Such other approvals,
opinions, documents or materials as the Agent or any Bank may
request.
5.01A Closing Date. It is a further condition to the
initial Credit Extension that the Closing Date occur no later
than October 16, 1995.
5.02 Conditions to All Credit Extensions. The obligation
of each Bank to make any Revolving Loan to be made by it
(including its initial Revolving Loan) or to continue or
convert any Revolving Loan under Section 2.04 and the
obligation of the Issuing Bank to Issue any Letter of Credit
(including the initial Letter of Credit) is subject to the
satisfaction of the following conditions precedent on the
relevant Borrowing Date, Conversion/Continuation Date or
Issuance Date:
(a) Notice, Application. The Agent shall have
received (with, in the case of the initial Revolving Loan only,
a copy for each Bank) a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable or in the case of any
Issuance of any Letter of Credit, the Issuing Bank and the
Agent shall have received an L/C Application or L/C Amendment
Application, as required under Section 3.02;
(b) Continuation of Representations and Warranties.
The representations and warranties in Article VI shall be true
and correct on and as of such Borrowing Date or
Conversion/Continuation Date with the same effect as if made on
and as of such Borrowing Date or Conversion/Continuation Date
(except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be
true and correct as of such earlier date); and
(c) No Existing Default. No Default or Event of
Default shall exist or shall result from such Borrowing or
continuation or conversion.
Each Notice of Borrowing, Notice of Conversion/Continuation and
L/C Application or L/C Amendment Application submitted by the
Company hereunder shall constitute a representation and
warranty by the Company hereunder, as of the date of each such
notice and as of each Borrowing Date, Conversion/Continuation
Date, or Issuance Date, as applicable, that the conditions in
Section 5.02 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each
Bank that:
6.01 Corporate Existence and Power. The Company and each
of its Material Subsidiaries: (a) is a corporation duly
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; (b) has the power and
authority and all material governmental licenses,
authorizations, consents and approvals to own its assets, carry
on its business and to execute, deliver, and perform its
obligations under the Loan Documents; (c) is duly qualified as
a foreign corporation and is licensed and in good standing
under the laws of each jurisdiction where its ownership, lease
or operation of property or the conduct of its business
requires such qualification or license; and (d) is in
compliance in all material respects with all Requirements of
Law; except, in each case referred to in clause (d), to the
extent that the failure to do so would not reasonably be
expected to have a Material Adverse Effect.
6.02 Corporate Authorization; No Contravention. The
execution, delivery and performance by the Company and its
Subsidiaries of this Agreement and each other Loan Document to
which such Person is a party, have been duly authorized by all
necessary corporate action, and do not and will not: (a)
contravene the terms of any of that Person's Organization
Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any
document evidencing any Contractual Obligation to which such
Person is a party or any order, injunction, writ or decree of
any Governmental Authority to which such Person or its property
is subject; or (c) violate any Requirement of Law.
6.03 Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or
filing with, any Governmental Authority is necessary or
required in connection with the execution, delivery or
performance by, or enforcement against, the Company or any of
its Subsidiaries of this Agreement or any other Loan Document
to which it is a party.
6.04 Binding Effect. This Agreement and each other Loan
Document to which the Company or any of its Subsidiaries is a
party constitute the legal, valid and binding obligations of
the Company and any of its Subsidiaries to the extent it is a
party thereto, enforceable against such Person in accordance
with their respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
6.05 Litigation. Except as specifically disclosed in
Schedule 6.05, there are no actions, suits, proceedings, claims
or disputes pending, or to the best knowledge of the Company,
threatened or contemplated, at law, in equity, in arbitration
or before any Governmental Authority, against the Company, or
its Subsidiaries or any of their respective properties which:
(i) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby
or thereby; or (ii) if determined adversely to the Company or
its Subsidiaries, would reasonably be expected to have a
Material Adverse Effect. No injunction, writ, temporary
restraining order or any order of any nature has been issued by
any court or other Governmental Authority purporting to enjoin
or restrain the Acquisition, execution, delivery or performance
of this Agreement or any other Loan Document, or directing that
the transactions provided for herein or therein not be
consummated as herein or therein provided.
6.06 No Default. No Default or Event of Default exists
or would be reasonably expected to result from the incurring of
any Obligations by the Company. As of the Closing Date,
neither the Company nor any Material Subsidiary is in default
under or with respect to any Contractual Obligation in any
respect which, individually or together with all such defaults,
would reasonably be expected to have a Material Adverse Effect,
or that would, if such default had occurred after the Closing
Date, create an Event of Default under Subsection 9.01(e).
6.07 ERISA Compliance. Except as specifically disclosed
in Schedule 6.07:
(a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and
other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a
favorable determination letter from the IRS and to the best
knowledge of the Company, nothing has occurred which would
cause the loss of such qualification. The Company and each
ERISA Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, and no application for a
funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect
to any Plan.
(b) There are no pending or, to the best knowledge
of Company, threatened claims, actions or lawsuits, or action
by any Governmental Authority, with respect to any Plan which
has resulted or could reasonably be expected to result in a
Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules
with respect to any Plan which has resulted or would reasonably
be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither the Company nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any
liability under Title IV of ERISA with respect to any Pension
Plan (other than premiums due and not delinquent under Section
4007 of ERISA); (iv) neither the Company nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of
notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to
a Multiemployer Plan; and (v) neither the Company nor any ERISA
Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) or ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds
of the Loans shall be used solely for the purposes set forth in
and permitted by Section 7.13 and Section 8.07. Neither the
Company nor any Subsidiary is generally engaged in the business
of purchasing or selling Margin Stock or extending credit for
the purpose of purchasing or carrying Margin Stock.
6.09 Title to Properties. The Company and each
Subsidiary have good record and marketable title in fee simple
to, or valid leasehold interests in, or other sufficient title
to all real property necessary or used in the ordinary conduct
of their respective businesses, except for such defects in
title as would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. As
of the Closing Date, the property of the Company and its
Subsidiaries is subject to no Liens, other than Permitted
Liens.
6.10 Taxes. The Company and its Subsidiaries have filed
all Federal tax returns and reports required to be filed, and
have paid all Federal taxes, assessments, fees and other
governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable, except
those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided
in accordance with GAAP. The Company and its Subsidiaries have
filed all material state and other material non-Federal tax
returns and reports required to be filed, and have paid all
material state and other material non-Federal taxes,
assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for
which adequate reserves have been provided in accordance with
GAAP, except where failure to do so would not reasonably be
expected to have a Material Adverse Effect. To the Company's
knowledge, there is no proposed tax assessment against the
Company or any Subsidiary that would, if made, reasonably be
expected to have a Material Adverse Effect.
6.11 Financial Condition.
The unaudited consolidated financial statements of
the Company and its Subsidiaries dated June 30, 1995, and the
related consolidated statements of income or operations,
shareholders' equity and cash flows for the fiscal quarter
ended on that date: (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby,
except as otherwise expressly noted therein; (ii) fairly
present the financial condition of the Company and its
Subsidiaries as of the date thereof and results of operations
for the period covered thereby (subject to ordinary, good faith
year-end adjustments); and (iii) except as specifically
disclosed in Schedule 6.11, show all material indebtedness and
other liabilities, direct or contingent, of the Company and its
consolidated Subsidiaries as of the date thereof which are
required to be disclosed pursuant to GAAP, including
liabilities for taxes, material commitments and Contingent
Obligations. Since June 30, 1995, through the Closing Date,
there has been no Material Adverse Effect.
6.12 Environmental Matters. The Company conducts in the
ordinary course of business a review of the effect of existing
Environmental Laws and existing Environmental Claims on its
business, operations and properties, and as a result thereof
the Company has reasonably concluded that, except as
specifically disclosed in Schedule 6.12, such Environmental
Laws and Environmental Claims would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
6.13 Regulated Entities. None of the Company, any Person
controlling the Company, or any Subsidiary, is an "Investment
Company" within the meaning of the Investment Company Act of
1940. The Company is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power
Act, the Interstate Commerce Act, any state public utilities
code, or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
6.14 No Burdensome Restrictions. Neither the Company nor
any Subsidiary is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which would reasonably be
expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, etc.
The Company or its Subsidiaries own or are licensed or
otherwise have the right to use all of the material patents,
trademarks, service marks, trade names, copyrights, contractual
franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses,
without conflict with the rights of any other Person. To the
best knowledge of the Company, no slogan or other advertising
device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by
the Company or any Subsidiary infringes upon any rights held by
any other Person. Except as specifically disclosed in Schedule
6.05, no claim or litigation regarding any of the foregoing is
pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation,
standard or code is pending or, to the knowledge of the
Company, proposed, which, in either case, could reasonably be
expected to have a Material Adverse Effect.
6.16 Subsidiaries. As of the Closing Date, the Company
has no Subsidiaries other than those specifically disclosed in
part (a) of Schedule 6.16 hereto and has no material equity
investments in any other corporation or entity other than those
specifically disclosed in part (b) of Schedule 6.16.
6.17 Insurance. Except as specifically disclosed in
Schedule 6.17, the properties of the Company and its
Subsidiaries are insured with financially sound and reputable
insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses
and owning similar properties in localities where the Company
or such Subsidiary operates.
6.18 Full Disclosure. None of the representations or
warranties made by the Company or any Subsidiary in the Loan
Documents as of the date such representations and warranties
are made or deemed made, and none of the statements contained
in any exhibit, report, written statement or certificate
furnished by or on behalf of the Company or any Subsidiary in
connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of the Company
to the Banks prior to the Closing Date), taken as whole,
contains any untrue statement of a material fact known to the
Company or omits any material fact known to the Company
required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under
which they are made, not misleading as of the time when made or
delivered.
6.19 Solvency. At the Closing Date, the Company and its
Subsidiaries, taken as a whole, and the Company, individually,
and each of the Guarantors individually, is Solvent.
6.20 Bloomfield Acquisition. As of the Closing Date,
all shareholder approvals required for consummation of the
Bloomfield Acquisition have been obtained, all lien releases
and all third party approvals required for consummation of the
Bloomfield Acquisition have been obtained, and all necessary
material consents and approvals of and filings and registration
with, and all other material actions in respect of, all
Governmental Authorities required for consummation of the
Bloomfield Acquisition have been obtained, given, filed or
taken and are in full effect and all waiting periods relating
thereto have expired without, in any such case, any action
being taken by any competent authority which restrains,
prevents or imposes materially adverse conditions upon the
consummation of the Bloomfield Acquisition pursuant to the
Purchase Agreement. The Purchase Agreement has not been
amended in any material respect, except as consented to by the
Banks, as of the Closing Date. Upon the making of the initial
Credit Extension hereunder, the Bloomfield Acquisition will
have been consummated in accordance with the Purchase
Agreement.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder,
or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding,
unless the Majority Banks waive compliance in writing:
7.01 Financial Statements. The Company shall maintain
for itself and each Subsidiary, a system of accounting
established and administered in accordance with GAAP and
deliver to the Agent, with sufficient copies for each Bank:
(a) As soon as available, but not later than 90 days
after the end of each fiscal year a copy of the annual audited
consolidated financial statement of the Company as at the end
of such year and the related consolidated statements of income
or operations, shareholders' equity and cash flows for such
year, setting forth in each case in comparative form the
figures for the previous fiscal year, and the Company's
financial statement shall be accompanied by the opinion of a
nationally recognized independent public accounting firm (the
"Independent Auditor"), which report shall state that such
consolidated financial statements present fairly the financial
position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years; and
(b) As soon as available, but not later than 45 days
after the close of each of the first three quarterly periods
each fiscal year, a copy of the unaudited consolidated balance
sheet of the Company as of the end of such quarter and the
related consolidated statements of income, shareholders' equity
and cash flows for the period commencing on the first day and
ending on the last day of such quarter, and certified by a
Responsible Officer as fairly presenting, in accordance with
GAAP (subject to ordinary, good faith year-end audit
adjustments), the financial position and the results of
operations of the Company.
7.02 Certificates; Other Information. The Company shall
furnish to the Agent, with sufficient copies for each Bank:
(a) As soon as available, but not later than 20 days
after the close of each month until Facility B Termination
Date, a Borrowing Base Report in the form of Exhibit "H"
hereto, certified by a Responsible Officer as fairly presenting
the Eligible Refinery Hydrocarbon Inventory and Eligible
Accounts Receivable as of the last day of the immediately
preceding month;
(b) concurrently with the delivery of the financial
statements referred to in subsections 7.01(a) and (b), a
Compliance Certificate executed by a Responsible Officer;
(c) promptly, copies of all financial statements and
reports that the Company sends to its shareholders, and,
promptly after the filing thereof, copies of all financial
statements and regular, periodical or special reports
(including Forms 10K, 10Q and 8K) that the Company or any
Subsidiary may make to, or file with, the SEC;
(d) promptly, copies of all annual Earnout Payment
reports delivered by San Juan to the Sellers and any written
objections thereto furnished by Sellers to San Juan under the
Purchase Agreement; and
(e) promptly, such additional information regarding
the business, financial or corporate affairs of the Company or
any Subsidiary as the Agent, at the request of any Bank, may
from time to time reasonably request.
7.03 Notices. The Company shall promptly notify the
Agent:
(a) of the occurrence of any Default or Event of
Default, and of the occurrence or existence of any event or
circumstance that would reasonably be expected to become a
Default or Event of Default;
(b) of any matter that has resulted or may
reasonably be expected to result in a Material Adverse Effect,
including (i) breach or non-performance of, or any default
under, a Contractual Obligation of the Company or any
Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between the Company or any Subsidiary
and any Governmental Authority; or (iii) the commencement of,
or any material development in, any litigation or proceeding
affecting the Company or any Subsidiary; including pursuant to
any applicable Environmental Laws;
(c) of the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event
more than 10 days after such event), and deliver to the Agent
and each Bank a copy of any notice with respect to such event
that is filed with a Governmental Authority and any notice
delivered by a Governmental Authority to the Company or any
ERISA Affiliate with respect to such event: (i) an ERISA Event;
(ii) a material increase in the Unfunded Pension Liability of
any Pension Plan; (iii) the adoption of, or the commencement of
contributions to, any Plan subject to Section 412 of the Code
by the Company or any ERISA Affiliate; or (iv) the adoption of
any amendment to a Plan subject to Section 412 of the Code, if
such amendment results in a material increase in contributions
or Unfunded Pension Liability;
(d) of any material change in accounting policies or
financial reporting practices by the Company or any of its
consolidated Subsidiaries; and
(e) of the formation or acquisition of any Material
Subsidiary.
Each notice under this Section shall be accompanied
by a written statement by a Responsible Officer setting forth
details of the occurrence referred to therein, and stating what
action the Company or any affected Subsidiary proposes to take
with respect thereto and at what time. Each notice under
subsection 7.03(a) shall describe with particularity any and
all clauses or provisions of this Agreement or other Loan
Document that have been (or foreseeably will be) breached or
violated.
7.04 Preservation of Corporate Existence, Etc. The
Company and each Material Subsidiary shall:
(a) preserve and maintain in full force and effect
its corporate existence and good standing under the laws of its
state or jurisdiction of incorporation except where the failure
to do so would not reasonably be expected to have a Material
Adverse Effect;
(b) preserve and maintain in full force and effect
all governmental rights, privileges, qualifications, permits,
licenses and franchises necessary or desirable in the normal
conduct of its business except where the failure to do so would
not reasonably be expected to have a Material Adverse Effect;
(c) use reasonable efforts, in the ordinary course
of business, to preserve its business organization and goodwill
except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation
of which could reasonably be expected to have a Material
Adverse Effect.
7.05 Maintenance of Property. The Company and each
Material Subsidiary shall maintain and preserve all its
property which is used or useful in its business in good
working order and condition, ordinary wear and tear excepted
and to use the standard of care typical in the industry in the
operation and maintenance of its facilities except where the
failure to do so would not reasonably be expected to have a
Material Adverse Effect.
7.06 Insurance. The Company and each Guarantor shall,
and shall cause each of their Subsidiaries to, maintain, with
financially sound and reputable independent insurers, insurance
with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in
such amounts as are customarily carried under similar
circumstances by such other Persons except where the failure to
do so would not reasonably be expected to have a Material
Adverse Effect.
7.07 Payment of Obligations. The Company and each
Material Subsidiary shall pay and discharge as the same shall
become due and payable, all their respective obligations and
liabilities, including: (a) all tax liabilities, assessments
and governmental charges or levies upon it or its properties or
assets, unless the same are being contested in good faith by
appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company, such Guarantor
or such Subsidiary; (b) all lawful claims which, if unpaid,
would by law become a Lien upon its property; and (c) all
indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or
agreement evidencing such Indebtedness; except where the
failure to do so would not reasonably be expected to have a
Material Adverse Effect.
7.08 Compliance with Laws. The Company and each
Guarantor shall, and shall cause each of their Subsidiaries to,
comply in all material respects with all Requirements of Law of
any Governmental Authority having jurisdiction over it or its
business (including the Federal Fair Labor Standards Act),
except (x) such as may be contested in good faith or as to
which a bona fide dispute may exist or (y) where the failure to
do so would not reasonably be expected to have a Material
Adverse Effect.
7.09 Compliance with ERISA. The Company shall, and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan
in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law;
(b) cause each Plan which is qualified under Section 401(a) of
the Code to maintain such qualification; and (c) make all
required contributions to any Plan subject to Section 412 of
the Code.
7.10 Inspection of Property and Books and Records. The
Company and each Guarantor shall, and shall cause each of their
Subsidiaries to, maintain proper books of record and account,
in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial
transactions and matters involving the assets and business of
the Company and such Guarantor. The Company and each Guarantor
shall, and shall cause each of their Subsidiaries to, permit,
representatives and independent contractors of the Agent or any
Bank to visit and inspect any of their respective properties,
to examine their respective corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public
accountants, all at the expense of the Company and at such
reasonable times during normal business hours and as often as
may be reasonably desired, upon reasonable advance notice to
the Company; provided, however, when an Event of Default exists
the Agent or any Bank may do any of the foregoing at the
expense of the Company at any time during normal business hours
and without advance notice.
7.11 Environmental Laws. The Company and each Guarantor
shall, and shall cause each of their Subsidiaries to, conduct
its operations and keep and maintain its property in compliance
with all Environmental Laws except where the failure to do so
would not reasonably be expected to have a Material Adverse
Effect.
7.12 New Subsidiary Guarantors. If, at any time after
the date of this Agreement, there exists any Subsidiary
incorporated under the laws of any state in the United States
of America with total assets with a book value of $2,000,000 or
more, then the Company shall cause each such Subsidiary to do
the following: (i) execute and deliver a Guaranty to the Agent
substantially in the form of Exhibit "D" hereto and (ii)
furnish the Agent with a written opinion of counsel for each
such Subsidiary Guarantor in substantially the form set forth
in Exhibit "G"; in each case with such revisions as may be
reasonably requested by the Agent or the Banks.
7.13 Use of Proceeds. The Company shall use the proceeds
of the Facility A Revolving Loan to (a) make a capital
contribution or loan to San Juan to be used to finance the
purchase of assets pursuant to the Bloomfield Acquisition, and
(b) to make capital contributions and loans to the Guarantors
for general corporate purposes, provided, however, that the
Facility A Revolving Loan shall not be used for working capital
expenditures unless all Banks consent. The Company shall use
the proceeds of the Facility B Revolving Loan to make capital
contributions and loans to the Guarantors for working capital
expenditures, and for issuance of standby letters of credit
pursuant to Article III hereof in the ordinary course of
business.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder,
or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding,
unless the Majority Banks waive compliance in writing:
8.01 Limitation on Liens. Each of the Company and
each Guarantor agrees that it shall not, and shall not permit
any of their respective Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist any
Lien upon or with respect to any part of its property, whether
now owned or hereafter acquired, other than the following
("Permitted Liens"):
(a) any Lien existing on property of the Company or
any Subsidiary on the Closing Date and set forth in Schedule
8.01 securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable
without penalty, or to the extent that non-payment thereof is
permitted by Section 7.07;
(d) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar Liens
arising in the ordinary course of business which are not
delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or
sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA)
consisting of pledges or deposits required in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other social security legislation;
(f) Liens on the property of the Company, the
Guarantor or any Subsidiary of such Person securing (i) the
non-delinquent performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, (ii)
contingent obligations on surety and appeal bonds, and (iii)
other non-delinquent obligations of a like nature; in each
case, incurred in the ordinary course of business;
(g) easements, rights-of-way, restrictions, defects
or other exceptions to title and other similar encumbrances
incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in
any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the
businesses of the Company and its Subsidiaries;
(h) Liens arising solely by virtue of any statutory
or common law provision relating to banker's liens, rights of
set-off or similar rights and remedies as to deposit accounts
or other funds maintained with a creditor depository
institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to
restrictions against access by the Company, (ii) the Company
(or applicable Subsidiary) maintains (subject to such right of
set off) dominium and control over such account(s), and (iii)
such deposit account is not intended by the Company, any
Guarantor or any Subsidiary to provide cash collateral to the
depository institution;
(i) Liens on any property acquired or held by the
Company or its Subsidiaries in the ordinary course of business,
securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such
property after the date hereof; provided that (i) any such Lien
attaches to such property concurrently with or within 20 days
after the acquisition thereof, (ii) such Lien attaches solely
to the property so acquired in such transaction, (iii) the
principal amount of the debt secured thereby does not exceed
100% of the cost of such property, and (iv) the principal
amount of the Indebtedness secured by any and all such purchase
money security interests, together with all other Indebtedness
securing Liens permitted under Subsection 8.01(j) below, shall
not exceed $5,000,000 in the aggregate at any time outstanding;
and
(j) Any Liens not otherwise described in Subsection
8.01(a) through (h) above, provided that the Indebtedness and
other obligations secured by such Liens, together with all
other Indebtedness securing Liens permitted under Subsection
8.01(i), shall not at any time exceed $5,000,000 in the
aggregate at any time outstanding.
8.02 Disposition of Assets. The Company and the
Guarantors shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) (collectively,
"Dispositions") any property (including accounts and notes
receivable, with or without recourse) or enter into any
agreement to do any of the foregoing, except:
(a) Dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business;
(b) The sale of equipment to the extent that such
equipment is exchanged for credit against the purchase price of
similar replacement equipment, or the proceeds of such sale are
reasonably promptly applied to the purchase price of such
replacement equipment;
(c) Dispositions of assets by the Company or any
Subsidiary to the Company or any Subsidiary;
(d) Dispositions permitted pursuant to Section 8.03;
(e) Dispositions of Exploration and Production
Assets by the Company or any Subsidiary, which are made for
fair market value; provided, that (i) at the time of any
disposition, no Event of Default shall exist or shall result
from such disposition, (ii) the aggregate sales price from such
disposition shall be paid principally in cash, and (iii) to the
extent net proceeds from such Dispositions exceed $2 million in
the aggregate in any fiscal year, such net proceeds must be
used either (x) by the Company or a Subsidiary within six (6)
months from the date of such Disposition to acquire assets used
in a Permitted Business or (y) by the Company to repay the
Loans or the Loan and the Prudential Notes pro rata in
proportion to the principal amount of the Loans and the
Prudential Notes then outstanding; and such prepayment of the
Loans shall result in a corresponding permanent reduction in
the Commitments first to reduce the Facility A Commitment and
the remainder, if any, to reduce the Facility B Commitment as
provided in Section 2.05 and Section 2.07(b); and
(f) Dispositions of assets (other than Dispositions
of Exploration and Production Assets, the net proceeds of which
were used for the purposes specified in Subsection
8.02(e)(iii)) not otherwise permitted hereunder which are made
for fair market value, provided, that (i) at the time of any
such Disposition, no Event of Default shall exist or shall
result from such Disposition, (ii) with respect to Dispositions
of such assets by the Company and its Subsidiaries in any
fiscal year, the aggregate book value of such assets shall not
exceed in any fiscal year the aggregate amount of $5,000,000.
8.03 Consolidations and Mergers. The Company and the
Material Subsidiaries shall not merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all
or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except:
(a) The Company may merge with any Person not
otherwise permitted under Subsection 8.03(b) below, provided
that there is no Change in Control as a result of the merger
and the surviving Person continues to meet all financial
covenants herein for the Company and agrees to be bound by the
terms of the Agreement and assumes in writing all Obligations;
(b) any Subsidiary may merge with the Company,
provided that the Company shall be the continuing or surviving
corporation, or with any one or more Subsidiaries, provided
that if any transaction shall be between a Subsidiary and a
Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation; and
(c) any Subsidiary may sell all or substantially all
of its assets (upon voluntary liquidation or otherwise), to the
Company or a Wholly-Owned Subsidiary.
8.04 Loans and Investments. The Company and each of the
Guarantors agrees that it shall not purchase or acquire, or
permit any of their respective Subsidiaries to purchase or
acquire, or make any commitment therefor, any capital stock,
equity interest, or any obligations or other securities of, or
any interest in, any Person, or make or commit to make any
Acquisitions, or make or commit to make any advance, loan,
extension of credit or capital contribution to or any other
investment in, any Person including any Affiliate of the
Company, except for:
(a) investments in Cash Equivalents;
(b) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease
of goods or services in the ordinary course of business;
(c) extensions of credit by the Company to any of
its Wholly-Owned Subsidiaries or by any of its Wholly-Owned
Subsidiaries to the Company or another of its Wholly-Owned
Subsidiaries;
(d) investments incurred in order to consummate
Acquisitions, provided that (i) such Acquisitions are
undertaken in accordance with all applicable Requirements of
Law; (ii) the prior, effective written consent or approval to
such Acquisition of the board of directors or equivalent
governing body of the acquiree is obtained; and (iii) no
Default or Event of Default shall have occurred either prior to
or subsequent to such Acquisition; and
(e) investments by the Company and its Subsidiaries
not otherwise permitted in Subsections 8.04(a) through (d),
which do not exceed $2.5 million in the aggregate at any time
outstanding.
8.05 Limitation on Subsidiary Indebtedness. Neither the
Guarantors nor any other Subsidiary of the Company or any
Guarantor shall create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this
Agreement;
(b) Indebtedness consisting of Contingent
Obligations permitted pursuant to Section 8.08; and
(c) Indebtedness existing on the Closing Date and
set forth in Schedule 8.05.
8.06 Transactions with Affiliates. The Company and each
of the Guarantors agrees that it shall not, and shall not
permit any of their respective Subsidiaries to, enter into any
transaction with or make any payment or transfer to any
Affiliate of the Company, except in the ordinary course of
business and upon fair and reasonable terms no less favorable
to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an
Affiliate of the Company or such Subsidiary.
8.07 Use of Proceeds.
(a) The Company shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds
or any Letter of Credit, directly or indirectly, (i) to
purchase or carry Margin Stock, (ii) to repay or otherwise
refinance indebtedness of the Company or others incurred to
purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to
acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act.
(b) The Company shall not, directly or indirectly,
use any portion of the Loan proceeds or any Letter of Credit
(i) knowingly to purchase Ineligible Securities from the
Arranger during any period in which the Arranger makes a market
in such Ineligible Securities, (ii) knowingly to purchase
during the underwriting or placement period Ineligible
Securities being underwritten or privately placed by the
Arranger, or (iii) to make payments of principal or interest on
Ineligible Securities underwritten or privately placed by the
Arranger and issued by or for the benefit of the Company or any
Affiliate of the Company. The Arranger is a registered
broker-dealer and permitted to underwrite and deal in certain
Ineligible Securities; and "Ineligible Securities" means
securities which may not be underwritten or dealt in by member
banks of the Federal Reserve System under Section 16 of the
Banking Act of 1933 (12 U.S.C. ' 24, Seventh), as amended.
8.08 Contingent Obligations. Each of the Company and
each Guarantor agrees that it shall not, and shall not permit
any of their respective Subsidiaries to, create, incur, assume
or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) Swap Contracts entered into in the ordinary
course of business;
(c) guarantees by the Company or any Subsidiary
guaranteeing obligations (other than obligations for money
borrowed) of any Consolidated Subsidiary in the ordinary course
of business and guarantees by any Guarantor guaranteeing
obligations of the Company provided that such obligations are
permitted under this Agreement;
(d) obligations under the Earnout (as defined in the
Purchase Agreement) and the Company's obligations pursuant to
the Guarantee and Agreement executed by the Company pursuant to
the Purchase Agreement;
(e) Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in
Schedule 8.08;
(f) obligations under bid bonds, performance bonds
and fidelity bonds issued for the account of the Company or its
Subsidiaries, obligations to indemnify or make whole any surety
and similar agreements incurred in the ordinary course of
business;
(g) this Agreement and the Guaranties.
8.09 Restricted Payments. Each of the Company and each
Guarantor agrees that it shall not, and shall not permit any of
their respective Subsidiaries to purchase, redeem or otherwise
acquire for value any shares of its capital stock or any
warrants, rights or options to acquire such shares, now or
hereafter outstanding (collectively "Restricted Payments");
provided that immediately prior to and after giving effect to
any of the following described payments, there exists no
Default or Event of Default, the Company and any Subsidiary
may:
(a) any Subsidiary may declare and make Restricted
Payments to the Company or any Wholly-Owned Subsidiary;
(b) purchase, redeem or otherwise acquire shares of
its common stock or warrants or options to acquire any such
shares with the proceeds received from the substantially
concurrent issue of new shares of its common stock; and
(c) purchase, redeem or otherwise acquire shares of
its capital stock or warrants, rights or options to acquire any
such shares for cash solely out of net income of the Company
and its Subsidiaries to the extent approved by resolution of
its Board of Director's passed on or before July 31, 1995.
8.10 Subsidiary Dividends. Each of the Company and each
Guarantor agrees that it will not, and it will not permit any
of their Subsidiaries to, be a party to or enter into any
agreement, instrument or other document which prohibits or
restricts in any way, or to otherwise, directly or indirectly,
create or cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any Subsidiary of
the Company to (i) pay dividends or make any other
distributions in respect of its capital stock or any other
equity interest or participation in any Subsidiary or pay or
repay any Indebtedness owed to the Company or any Subsidiary,
(ii) make loans or advances to the Company or (iii) transfer
any of its properties or assets to the Company or any
Subsidiary (subject to the rights of any holder of a Lien on
any such properties or assets which Lien is a Permitted Lien).
8.11 Senior Subordinated Notes. The Company shall not,
and shall not permit any Subsidiary to: (i) amend, modify or
change, or consent or agree to any amendment, modification or
change to, any of the terms of the NBD Bank Indenture, the NBD
Subordinated Notes or the Guarantees executed in connection
therewith, other than (A) any such amendment or modification
which would extend the maturity or reduce the amount of any
payment of principal thereof or which would reduce the rate or
extend the date of payment of interest thereon, (B) amendments
pursuant to Section 9.01(1) and (2) of the NBD Indenture and
(C) such other amendments and modifications acceptable to the
Majority Banks; or (ii) make any payments to the holders of the
Subordinated Notes or to any trustee acting under the
Indentures which is prohibited by the Indentures or (iii) make
any prepayment or redeem in whole or in part the Subordinated
Notes.
8.12 Minimum Consolidated Net Worth. From and after the
Closing Date, the Company will maintain at all times
Consolidated Net Worth in an amount not less than the sum of
(i) $95,000,000, plus (ii) 50% of Consolidated Net Income
computed on a cumulative basis for the period beginning June
30, 1995 and ending on the date of determination (provided that
no negative adjustment will be made in the event that
Consolidated Net Income is a deficit figure for such period),
plus (iii) 100% of the aggregate amount of the net assets (cash
or otherwise) received by the Company from the issuance of any
class of capital stock after June 30, 1995, less (iv) any
allowance for non-cash write-downs, provided that such
allowance on a cumulative basis shall not exceed $10,000,000.
8.13 Fixed Charge Coverage Ratio. The Company shall not
permit (as of the end of any fiscal quarter) the ratio of (i)
Consolidated EBITDA less Non-Discretionary Capital Expenditures
to (ii) Consolidated Interest Expense for any period of four
consecutive fiscal quarters to be less than 2.5 to 1.0.
8.14 Capitalization Ratio. From and after the Closing
Date the Company shall not permit the Capitalization Ratio to
be greater than 65% through June 30, 1997, and thereafter no
greater than 62.5%.
8.15 ERISA. The Company shall not, and shall not suffer
or permit any of its ERISA Affiliates to: (a) engage in a
prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has
resulted or could reasonably expected to result in liability of
the Company in an aggregate amount which could have a Material
Adverse Effect; or (b) engage in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.
8.16 Change in Business. The Company shall not, and
shall not permit any Subsidiary to, engage in any business or
activity other than the Principal Business.
8.17 Accounting Changes. The Company shall not, and
shall not suffer or permit any Subsidiary to, make any
significant change in accounting treatment or reporting
practices, except as required by GAAP, or change the fiscal
year of the Company or of any Subsidiary.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall
constitute an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when
and as required to be paid herein, any amount of principal of
any Loan, or (ii) within two (2) Business Days after the same
becomes due, any L/C Obligation or any interest, fee or other
amount payable hereunder or under any other Loan Document; or
(b) Representation or Warranty. Any representation
or warranty by the Company or any Subsidiary made or deemed
made herein, in any other Loan Document, or which is contained
in any certificate, document or financial or other statement by
the Company, any Subsidiary, or any Responsible Officer,
furnished at any time under this Agreement, or in or under any
other Loan Document, is incorrect in any material respect on or
as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform
or observe any term, covenant or agreement contained in any of
Section 7.03(a) or in Article VIII except for such Liens under
Section 8.01 other than arising by consensual action of the
Company or any of its Subsidiaries; or
(d) Other Defaults. The Company or any Subsidiary
fails to perform or observe any other term or covenant
contained in this Agreement or any other Loan Document, and
such default shall continue unremedied for a period of 30 days
after the earlier of (i) the date upon which a Responsible
Officer knew or reasonably should have known of such default or
(ii) the date upon which written notice thereof is given to the
Company by the Agent or any Bank; or
(e) Cross-Default. The Company or any Subsidiary
(i) fails to make any payment in respect of any Indebtedness or
Contingent Obligation having an aggregate principal amount
(including undrawn committed or available amounts and including
amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than $3,000,000 when due (whether
by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the
relevant document on the date of such failure; or (ii) fails to
perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Contingent
Obligation, if the effect of such failure, event or condition
is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its
stated maturity, or such Contingent Obligation to become
payable or cash collateral in respect thereof to be demanded;
or (iii) any Indebtedness or Contingent Obligations of the
Company or any Subsidiary in excess of $3,000,000 shall be
declared due and payable prior to its stated maturity or cash
collateral is demanded in respect of such Contingent
Obligations; or
(f) Insolvency; Voluntary Proceedings. The Company
or any Subsidiary (i) generally fails to pay, or admits in
writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) commences any Insolvency Proceeding
with respect to itself; or (iii) takes any action to effectuate
or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company
or any Subsidiary, or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied
against all or a substantial part of the Company's or any
Subsidiary's properties, and any such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be released,
vacated or fully bonded within 60 days after commencement,
filing or levy; (ii) the Company or any Subsidiary admits the
material allegations of a petition against it in any Insolvency
Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii)
the Company or any Subsidiary acquiesces in the appointment of
a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar
Person for itself or a substantial portion of its property or
business; or
(h) ERISA. (i) An ERISA Event shall occur with
respect to a Pension Plan or Multiemployer Plan which has
resulted or could reasonably be expected to result in liability
of the Company or a Subsidiary under Title IV of ERISA to the
Pension Plan, Multiemployer Plan or the PBGC in an aggregate
amount in excess of $3,000,000 and such amount is not paid when
due; or (ii) the aggregate amount of Unfunded Pension Liability
among all Pension Plans is in an aggregate amount which would
reasonably be expected to cause a Material Adverse Effect; or
(i) Monetary Judgments. One or more
non-interlocutory judgments, non-interlocutory orders, decrees
or arbitration awards is entered against the Company or any
Subsidiary involving in the aggregate a liability (to the
extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) as to any single
or related series of transactions, incidents or conditions, of
$3,000,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of 30 days
after the entry thereof; or
(j) Change of Control. There occurs any Change of
Control; or
(k) Loss of Permit. Any Governmental Authority
revokes or fails to renew any material license, permit or
franchise of the Company or any Material Subsidiary, or the
Company or any Material Subsidiary for any reason loses any
material license, permit or franchise, or the Company or any
Material Subsidiary suffers the imposition of any restraining
order, escrow, suspension or impound of funds in connection
with any proceeding (judicial or administrative) with respect
to any material license, permit or franchise; or
(l) Adverse Change. There occurs a Material Adverse
Effect; or
(m) Guaranty Default. A Guaranty is for any reason
partially (including with respect to future advances) or wholly
revoked or invalidated, or otherwise ceases to be in full force
and effect, or such Guarantor or any other Person contests in
any manner the validity or enforceability thereof or denies
that it has any further liability or obligation thereunder; or
any event described at subsections (f) or (g) of this Section
occurs with respect to such Guarantor; or
(n) Invalidity of Subordination Provisions. The
subordination provisions of the Indenture or Subordinated Notes
or any agreement or instrument governing the Senior
Subordinated Debt is for any reason revoked or invalidated, or
otherwise cease to be in full force and effect, NBD Bank,
National Association, as Trustee any successor trustee thereto
or any other Person contests in any manner the validity or
enforceability thereof or denies that it has any further
liability or obligation thereunder, or the Indebtedness
hereunder is for any reason subordinated or does not have the
priority contemplated by this Agreement or the Indenture or
such subordination provisions; or
(o) Prepayment of Subordinated Notes. If the
Company or any Subsidiary is required for any reason to prepay,
redeem or purchase in whole or in part any of the Subordinated
Notes during the term of this Agreement.
9.02 Remedies. If any Event of Default occurs and is
continuing, the Agent shall, at the request of, or may, with
the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make
Loans and any obligation of the Issuing Bank to Issue Letters
of Credit to be terminated, whereupon such Commitments shall be
terminated;
(b) declare an amount equal to the maximum aggregate
amount that is or at any time thereafter may become available
for drawing under any outstanding Letters of Credit (whether or
not any beneficiary shall have presented, or shall be entitled
at such time to present, the drafts or other documents required
to draw under such Letters of Credit) to be immediately due and
payable, and declare the unpaid principal amount of all
outstanding Loans, all interest accrued and unpaid thereon, and
all other amounts owing or payable hereunder or under any other
Loan Document to be immediately due and payable, without
presentment, demand, protest, notice of intention to
accelerate, notice of acceleration or any other notice of any
kind, all of which are hereby expressly waived by the Company;
(c) require cash collateral as set forth in Section
3.09; and
(d) exercise on behalf of itself and the Banks all
rights and remedies available to it and the Banks under the
Loan Documents or applicable law;
provided, however, that upon the occurrence of any event
specified in subsection (f) or (g) of Section 8.01 (in the case
of clause (i) of subsection (g) upon the expiration of the
60-day period mentioned therein), the obligation of each Bank
to make Loans and any obligation of the Issuing Bank to Issue
Letters of Credit shall automatically terminate and the unpaid
principal amount of all outstanding Loans and all interest and
other amounts as aforesaid shall automatically become due and
payable and (y) cash collateral as set forth in Section 3.09
shall automatically be due and payable, in each case without
further act of the Agent, the Issuing Bank or any Bank and
without presentment, demand, protest, notice of intention to
accelerate, notice of acceleration or any other notice of any
kind, all of which are hereby expressly waived by the Company.
9.03 Rights Not Exclusive. The rights provided for in
this Agreement and the other Loan Documents are cumulative and
are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other
instrument, document or agreement now existing or hereafter
arising.
ARTICLE X
THE AGENT
10.01 Appointment and Authorization.
(a) Each Bank hereby irrevocably (subject to Section
10.09) appoints, designates and authorizes the Agent to take
such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the
Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or
be deemed to have any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or
any other Loan Document or otherwise exist against the Agent.
(b) The Issuing Bank shall act on behalf of the
Banks with respect to any Letters of Credit Issued by it and
the documents associated therewith until such time and except
for so long as the Agent may agree at the request of the
Majority Banks to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have
all of the benefits and immunities (i) provided to the Agent in
this Article X with respect to any acts taken or omissions
suffered by the Issuing Bank in connection with Letters of
Credit Issued by it or proposed to be Issued by it and the
application and agreements for letters of credit pertaining to
the Letters of Credit as fully as if the term "Agent", as used
in this Article X, included the Issuing Bank with respect to
such acts or omissions, and (ii) as additionally provided in
this Agreement with respect to the Issuing Bank.
10.02 Delegation of Duties. The Agent may execute any of
its duties under this Agreement or any other Loan Document by
or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining
to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that
it selects with reasonable care.
10.03 Liability of Agent. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to
be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to
any of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of
the Company, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or the validity,
effectiveness (other than such Agent-Related Person's own due
execution and delivery), genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or
for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder.
No Agent-Related Person shall be under any obligation to any
Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
10.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal
counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless
it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests,
it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such
action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent
of the Majority Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of
the Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 5.01, each Bank that has made
available to the Agent its Pro Rata Share of the initial Credit
Extension or subsequent Credit Extension, as the case may be,
shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter either sent
by the Agent to such Bank for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or
approved by or acceptable or satisfactory to the Bank as a
condition precedent to such initial Credit Extension or
subsequent Credit Extension, as applicable.
10.05 Notice of Default. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to defaults in the
payment of principal, interest and fees required to be paid to
the Agent for the account of the Banks, unless the Agent shall
have received written notice from a Bank or the Company
referring to this Agreement, describing such Default or Event
of Default and stating that such notice is a "notice of
default". The Agent will notify the Banks of its receipt of
any such notice. Subject to Subsection 10.04(a), the Agent
shall take such action with respect to such Default or Event of
Default as may be requested by the Majority Banks in accordance
with Article IX; provided, however, that unless and until the
Agent has received any such request, the Agent may (but shall
not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default
as it shall deem advisable or in the best interest of the
Banks.
10.06 Credit Decision. Each Bank acknowledges that none
of the Agent-Related Persons has made any representation or
warranty to it, and that no act by any Agent-Related Person
hereafter taken, including any review of the affairs of the
Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation
into the business, prospects, operations, property, financial
and other condition and creditworthiness of the Company and its
Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own
decision to enter into this Agreement and to extend credit to
the Company hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and
to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the
Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the
Agent, the Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information
concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the
Company which may come into the possession of any of the
Agent-Related Persons.
10.07 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify
upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Company and without limiting
the obligation of the Company to do so), pro rata, each
Agent-Related Person from and against any and all Indemnified
Liabilities INCLUDING SUCH INDEMNIFIED LIABILITIES AS MAY ARISE
OR BE CAUSED BY THE NEGLIGENCE, SOLE, JOINT, CONCURRENT,
COMPARATIVE OR OTHERWISE OF SUCH AGENT-RELATED PERSONS;
provided, however, that no Bank shall be liable for the payment
to the Agent-Related Persons of any portion of such Indemnified
Liabilities to the extent the same arise from such Person's
gross negligence or willful misconduct. Without limitation of
the foregoing, each Bank shall reimburse the Agent upon demand
for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Agent in connection
with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this
Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of
the Company. The undertaking in this Section shall survive the
payment of all Obligations hereunder and the resignation or
replacement of the Agent.
10.08 Agent in Individual Capacity. BofA and its
Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in
and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though BofA were not the
Agent or the Issuing Bank hereunder and without notice to or
consent of the Banks. The Banks acknowledge that, pursuant to
such activities, BofA or its Affiliates may receive information
regarding the Company or its Affiliates (including information
that may be subject to confidentiality obligations in favor of
the Company or such Subsidiary) and acknowledge that the
Agent-Related Persons shall be under no obligation to provide
such information to them. With respect to its Loans, BofA
shall have the same rights and powers under this Agreement as
any other Bank and may exercise the same as though it were not
the Agent.
10.09 Successor Agent. The Agent may, and at the request
of the Majority Banks shall, resign as Agent upon 30 days'
notice to the Banks. If the Agent resigns under this
Agreement, the Majority Banks shall appoint from among the
Banks a successor agent for the Banks. If no successor agent
is appointed prior to the effective date of the resignation of
the Agent, the Agent may appoint, after consulting with the
Banks, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall
mean such successor agent and the retiring Agent's appointment,
powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions
of this Article X and Sections 11.04 and 11.05 shall inure to
its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement. If no successor
agent has accepted appointment as Agent by the date which is 30
days following a retiring Agent's notice of resignation, the
retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties
of the Agent hereunder until such time, if any, as the Majority
Banks appoint a successor agent as provided for above.
Notwithstanding the foregoing, however, for so long as Bank of
America Illinois or BofA (referred to interchangeably as "Bank
of America" in this sentence) is the Issuing Bank, then Bank of
America may not be removed as the Agent at the request of the
Majority Banks unless Bank of America shall also simultaneously
be replaced as "Issuing Bank" hereunder pursuant to
documentation in form and substance reasonably satisfactory to
Bank of America.
10.10 Withholding Tax.
(a) If any Bank is a "foreign corporation,
partnership or trust" within the meaning of the Code and such
Bank claims exemption from, or a reduction of, U.S. withholding
tax under Sections 1441 or 1442 of the Code, such Bank agrees
with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or
a reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W-8 before the
payment of any interest in the first calendar year and before
the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;
(ii) if such Bank claims that interest paid
under this Agreement is exempt from United States withholding
tax because it is effectively connected with a United States
trade or business of such Bank, two properly completed and
executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in
each succeeding taxable year of such Bank during which interest
may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be
required under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Bank claims exemption from, or reduction
of, withholding tax under a United States tax treaty by
providing IRS Form 1001 and such Bank sells, assigns, grants a
participation in, or otherwise transfers all or part of the
Obligations of the Company to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to
such Bank. To the extent of such percentage amount, the Agent
will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United
States withholding tax by filing IRS Form 4224 with the Agent
sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such
Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any
interest payment to such Bank an amount equivalent to the
applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent,
then the Agent may withhold from any interest payment to such
Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority
of the United States or other jurisdiction asserts a claim that
the Agent did not properly withhold tax from amounts paid to or
for the account of any Bank (because the appropriate form was
not delivered, was not properly executed, or because such Bank
failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall indemnify
the Agent fully for all amounts paid, directly or indirectly,
by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction
on the amounts payable to the Agent under this Section,
together with all costs and expenses (including Attorney
Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the
resignation or replacement of the Agent.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of
any provision of this Agreement or any other Loan Document, and
no consent with respect to any departure by the Company or any
applicable Subsidiary therefrom, shall be effective unless the
same shall be in writing and signed by the Majority Banks (or
by the Agent at the written request of the Majority Banks) and
the Company and acknowledged by the Agent, and then any such
waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given;
provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Banks and the
Company and acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank
(or reinstate any Commitment terminated pursuant to Section
9.02;
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of
principal, interest, fees or other amounts due to the Banks (or
any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or (subject to clause (iii)
below) any fees or other amounts payable hereunder or under any
other Loan Document;
(d) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Loans which is
required for the Banks or any of them to take any action
hereunder; or
(e) amend this Section, or Section 2.13 or any
provision herein providing for consent or other action by all
Banks;
and, provided further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the Issuing Bank in
addition to the Majority Banks or all the Banks, as the case
may be, affect the rights or duties of the Issuing Bank under
this Agreement or any L/C-Related Document relating to any
Letter of Credit Issued or to be Issued by it, (ii) no
amendment, waiver or consent shall, unless in writing and
signed by the Agent in addition to the Majority Banks or all
the Banks, as the case may be, affect the rights or duties of
the Agent under this Agreement or any other Loan Document, and
(iii) the Fee Letters may be amended, or rights or privileges
thereunder waived, only in a writing executed by the parties
thereto.
11.02 Notices.
(a) All notices, requests and other communications
shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that
any matter transmitted by the Company by facsimile (i) shall be
immediately confirmed by a telephone call to the recipient at
the number specified on Schedule 11.02, and (ii) shall be
followed promptly by delivery of a hard copy original thereof)
and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 11.02; or, as directed
to the Company or the Agent, to such other address as shall be
designated by such party in a written notice to the other
parties, and as directed to any other party, at such other
address as shall be designated by such party in a written
notice to the Company and the Agent.
(b) All such notices, requests and communications
shall, when transmitted by overnight delivery, or faxed, be
effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively,
or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery;
except that notices pursuant to Article II, III or X shall not
be effective until actually received by the Agent, and notices
pursuant to Article III to the Issuing Bank shall not be
effective until actually received by the Issuing Bank at the
address specified for the "Issuing Bank" on the applicable
signature page hereof.
(c) Any agreement of the Agent and the Banks herein
to receive certain notices by telephone or facsimile is solely
for the convenience and at the request of the Company. The
Agent and the Banks shall be entitled to rely on the authority
of any Person purporting to be a Person authorized by the
Company to give such notice and the Agent and the Banks shall
not have any liability to the Company or other Person on
account of any action taken or not taken by the Agent or the
Banks in reliance upon such telephonic or facsimile notice.
The obligation of the Company to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent
by any failure by the Agent and the Banks to receive written
confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Banks of a confirmation which is
at variance with the terms understood by the Agent and the
Banks to be contained in the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Agent
or any Bank, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege.
11.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated
hereby are consummated, pay or reimburse the Agent, and the
Issuing Bank within five Business Days after demand (subject to
subsection 5.01(g)) for all reasonable costs and expenses
incurred by the Agent and the Issuing Bank in connection with
the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated),
this Agreement, any Loan Document and any other documents
prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and
thereby, including Attorney Costs incurred by the Agent and the
Issuing Bank with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and
each Bank within five Business Days after demand (subject to
subsection 5.01(g)) for all costs and expenses (including
Attorney Costs) incurred by each of them in connection with the
enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan
Document during the existence of an Event of Default or after
acceleration of the Loans (including in connection with any
"workout" or restructuring regarding the Loans, and including
in any Insolvency Proceeding or appellate proceeding).
11.05 Indemnity. Whether or not the transactions
contemplated hereby are consummated, the Company shall
indemnify and hold the Agent-Related Persons, and each Bank and
each of their respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses and disbursements (including
Attorney Costs) of any kind or nature whatsoever which may at
any time (including at any time following repayment of the
Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of the Agent or
replacement of any Bank) be imposed on, incurred by or
asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by
or referred to herein, or the transactions contemplated hereby,
or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to
any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement or the Loans or Letters of Credit
or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities") WHETHER OR NOT
SUCH INDEMNIFIED LIABILITIES ARISE OUT OF OR AS A RESULT OF ANY
INDEMNIFIED PARTIES NEGLIGENCE IN WHOLE OR IN PART, INCLUDING,
WITHOUT LIMITATION, THOSE CLAIMS WHICH RESULT FROM THE SOLE,
JOINT, CONCURRENT OR COMPARATIVE NEGLIGENCE OF THE INDEMNIFIED
PARTY, OR ANY ONE OR MORE OF THEM; provided, that the Company
shall have no obligation hereunder to any Indemnified Person
with respect to Indemnified Liabilities to the extent same
arise from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
11.06 Payments Set Aside. To the extent that the Company
makes a payment to the Agent or the Banks, or the Agent or the
Banks exercise their right of set-off, and such payment or the
proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered
into by the Agent or such Bank in its discretion) to be repaid
to a trustee, receiver or any other party, in connection with
any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such
set-off had not occurred, and (b) each Bank severally agrees to
pay to the Agent upon demand its pro rata share of any amount
so recovered from or repaid by the Agent.
11.07 Successors and Assigns. Except for all provisions
in Section 11.08, the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that the
Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of the Agent and each Bank.
11.08 Assignments, Participations, etc.
(a) Any Bank (including the Issuing Bank) may, with
the prior written consent of the Company (at all times other
than during the existence of an Event of Default) which consent
of the Company shall not be unreasonably withheld and written
consent of the Agent, at any time assign and delegate to one or
more Eligible Assignees (provided that no written consent of
the Company or the Agent shall be required in connection with
any assignment and delegation by the Bank to an Eligible
Assignee that is an Affiliate of such Bank) (each an
"Assignee") all, or any ratable part of all, of the Loans, the
Commitments, the L/C Obligations and the other rights and
obligations of such Bank hereunder, in a minimum amount of
$5,000,000; provided, however, that the Company and the Agent
may continue to deal solely and directly with such Bank in
connection with the interest so assigned to an Assignee until
(i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to
the Assignee, shall have been given to the Company and the
Agent by such Bank and the Assignee; (ii) such Bank and its
Assignee shall have delivered to the Company and the Agent an
Assignment and Acceptance in the form of Exhibit "E"
("Assignment and Acceptance") together with any Note or Notes
subject to such assignment and (iii) the assignor Bank or
Assignee has paid to the Agent a processing fee in the amount
of $3,500.00.
(b) From and after the date that the Agent notifies
the assignor Bank that it has received an executed Assignment
and Acceptance and payment of the above-referenced processing
fee, (i) the Assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Bank under the Loan
Documents, and (ii) the assignor Bank shall, to the extent that
rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five Business Days after its receipt of
notice by the Agent that it has received an executed Assignment
and Acceptance and payment of the processing fee, (and provided
that it consents to such assignment in accordance with
Subsection 11.08(a)) the Company shall execute and deliver to
the Agent, new Notes evidencing such Assignee's assigned Loans
and Commitment and, if the assignor Bank has retained a portion
of its Loans and its Commitment, replacement Notes in the
principal amount of the Loans retained by the assignor Bank
(such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's
making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the
Commitments arising therefrom. The Commitment allocated to each
Assignee shall reduce such Commitments of the assigning Bank
pro tanto.
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company
(a "Participant") participating interests in any Loans, the
Commitment of that Bank and the other interests of that Bank
(the "originating Bank") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Bank's
obligations under this Agreement shall remain unchanged, the
originating Bank shall remain a Bank for all purposes hereof
and the other Loan Documents to which such originating Bank is
a party, and the Participant may not become a Bank for purposes
hereof or for any other of the Loan Documents, (ii) the
originating Bank shall remain solely responsible for the
performance of such obligations, (iii) the Company, the Issuing
Bank and the Agent shall continue to deal solely and directly
with the originating Bank in connection with the originating
Bank's rights and obligations under this Agreement and the
other Loan Documents, and (iv) no Bank shall transfer or grant
any participating interest under which the Participant has
rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document,
except to the extent such amendment, consent or waiver would
require unanimous consent of the Banks as described in the
first proviso to Section 11.01. In the case of any such
participation, the Participant shall not have any rights under
this Agreement, or any of the other Loan Documents (the
Participant's rights against the granting Bank in respect of
such participation being those set forth in the agreement
creating or evidencing such participation with such Bank), and
all amounts payable by the Company hereunder shall be
determined as if such Bank had not sold such participation;
except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of
set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount
of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the
confidentiality of all information identified as "confidential"
or "secret" by the Company and provided to it by the Company
or any of its Subsidiaries, or by the Agent on such Company's
or Subsidiary's behalf, under or in connection with this
Agreement or any other Loan Document, and neither it nor any of
its Affiliates shall use any such information other than in
connection with or in enforcement of this Agreement and the
other Loan Documents; except to the extent such information (i)
was or becomes generally available to the public other than as
a result of disclosure by the Bank, or (ii) was or becomes
available on a non-confidential basis from a source other than
the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank;
provided, however, that any Bank may disclose such information
(A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in
connection with an examination of such Bank by any such
authority; (B) pursuant to subpoena or other court process; (C)
when required to do so in accordance with the provisions of any
applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to
which the Agent, any Bank or their respective Affiliates may be
party; (E) to the extent reasonably required in connection with
the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Affiliate of such Bank, or to
any Participant or Assignee, actual or potential, provided that
such Affiliate, Participant or Assignee agrees to keep such
information confidential to the same extent required of the
Banks hereunder, and (H) as to any Bank, as expressly permitted
under the terms of any other document or agreement regarding
confidentiality to which the Company is party or is deemed
party with such Bank.
(f) Notwithstanding any other provision in this
Agreement, any Bank may at any time create a security interest
in, or pledge, all or any portion of its rights under and
interest in this Agreement and the Notes held by it in favor of
any Federal Reserve Bank in accordance with Regulation A of the
FRB or U.S. Treasury Regulation 31 CFR '203.14, and such
Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
11.09 Set-off. In addition to any rights and remedies of
the Banks provided by law, if an Event of Default exists or the
Loans have been accelerated, each Bank is authorized at any
time and from time to time, without prior notice to the
Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional
or final) at any time held by, and other indebtedness at any
time owing by, such Bank to or for the credit or the account of
the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the
Agent or such Bank shall have made demand under this Agreement
or any Loan Document and although such Obligations may be
contingent or unmatured. Each Bank agrees promptly to notify
the Company and the Agent after any such set-off and
application made by such Bank; provided, however, that the
failure to give such notice shall not affect the validity of
such set-off and application.
11.10 Interest. (a) It is the intention of the parties
hereto to comply with applicable usury laws; accordingly,
notwithstanding any provision to the contrary in this
Agreement, the Notes or in any of the other Loan Documents
securing the payment hereof or otherwise relating hereto, in no
event shall this Agreement, the Notes or such other Loan
Documents require the payment or permit the payment, taking,
reserving, receiving, collection, or charging of any sums
constituting interest under applicable laws, if any, which
exceed the maximum amount permitted by such laws. If any such
excess interest is called for, contracted for, charged, taken,
reserved, or received in connection with the Loans evidenced by
the Notes or in any of the Loan Documents securing the payment
thereof or otherwise relating thereto, or in any communication
by the Agents or the Banks or any other person to any Borrower
or any other person, or in the event all or part of the
principal or interest thereof shall be prepaid or accelerated,
so that under any of such circumstances or under any other
circumstance whatsoever the amount of interest contracted for,
charged, taken, reserved, or received on the amount of
principal actually outstanding from time to time under the
Notes shall exceed the maximum amount of interest permitted by
applicable usury laws, then in any such event it is agreed as
follows: (i) the provisions of this paragraph shall govern and
control, (ii) neither any Borrower nor any other person or
entity now or hereafter liable for the payment of the Notes
shall be obligated to pay the amount of such interest to the
extent such interest is in excess of the maximum amount of
interest permitted by applicable usury laws, (iii) any such
excess which is or has been received notwithstanding this
paragraph shall be credited against the then unpaid principal
balance of the Notes or, if the Notes have been or would be
paid in full, refunded to the applicable Borrower, and (iv) the
provisions of this Agreement, the Notes and the other Loan
Documents securing the payment hereof and otherwise relating
hereto, and any communication to any Borrower, shall
immediately be deemed reformed and such excess interest
reduced, without the necessity of executing any other document,
to the maximum lawful rate allowed under applicable laws as now
or hereafter construed by courts having jurisdiction hereof or
thereof. Without limiting the foregoing, all calculations of
the rate of the interest contracted for, charged, taken,
reserved, or received in connection with the Notes or this
Agreement which are made for the purpose of determining whether
such rate exceeds the maximum lawful rate shall be made to the
extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of
the Loans, including all prior and subsequent renewals and
extensions, all interest at any time contracted for, charged,
taken, reserved, or received. The terms of this paragraph
shall be deemed to be incorporated in every document and
communication relating to the Notes, the Loans or any other
Loan Document.
(b) Tex. Rev. Civ. Stat. Ann art. 5069 Ch. 15 (which
regulates certain revolving loan accounts and revolving
tri-party accounts) shall not apply to any Loans.
(c) To the extent that the interest rate laws of the
State of Texas are applicable to the Loans, the applicable
interest rate ceiling is the indicated (weekly) ceiling
determined in accordance with Article 5069-1.04(a)(1) of the
Texas Revised Civil Statutes, as amended.
11.11 Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Guarantors may have
under applicable law, the Company agrees that in the event a
payment shall be made by any Guarantor under a Guaranty in
respect of a Loan to the Company, the Company shall indemnify
such Guarantor for the full amount of such payment and such
Guarantor shall be subrogated to the rights of the person to
whom such payment shall have been made to the extent of such
payment subject to the provisions of the Guaranty executed by
such Guarantor. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Guarantors under
this Section 11.11 and all other rights of indemnity,
contribution or subrogation under applicable law or otherwise
shall be fully subordinated to the indefeasible payment in full
of the Obligations, and no payments may be made in respect of
such rights of indemnity, contribution or subrogation until all
the Obligations have been paid in full, all Commitments have
expired and all Letters of Credit have expired. No failure on
the part of a Borrower to make the payments required by this
Section (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and
liabilities of any Guarantor with respect to any Guaranty, and
each Guarantor shall remain liable for the full amount of the
obligation of such Guarantor under each such Guaranty in
accordance therewith.
11.12 Automatic Debits of Fees. With respect to any
commitment fee, arrangement fee, letter of credit fee or other
fee, or any other cost or expense (including Attorney Costs)
due and payable to the Agent, the Issuing Bank, BofA or the
Arranger under the Loan Documents, the Company hereby
irrevocably authorizes BofA, after giving reasonable prior
notice to the Company, to debit any deposit account of the
Company with BofA in an amount such that the aggregate amount
debited from all such deposit accounts does not exceed such fee
or other cost or expense. If there are insufficient funds in
such deposit accounts to cover the amount of the fee or other
cost or expense then due, such debits will be reversed (in
whole or in part, in BofA's sole discretion) and such amount
not debited shall be deemed to be unpaid. No such debit under
this Section shall be deemed a set-off.
11.13 Notification of Addresses, Lending Offices, Etc.
Each Bank shall notify the Agent in writing of any changes in
the address to which notices to the Bank should be directed, of
addresses of any Lending Office, of payment instructions in
respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably
request.
11.14 Counterparts. This Agreement may be executed in
any number of separate counterparts, each of which, when so
executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but
one and the same instrument.
11.15 Severability. The illegality or unenforceability
of any provision of this Agreement or any instrument or
agreement required hereunder shall not in any way affect or
impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement
required hereunder.
11.16 No Third Parties Benefitted. This Agreement is
made and entered into for the sole protection and legal benefit
of the Company, the Banks, the Agent and the Agent-Related
Persons, and their permitted successors and assigns, and no
other Person shall be a direct or indirect legal beneficiary
of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan
Documents.
11.17 Governing Law.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
TEXAS AND APPLICABLE FEDERAL LAW; AND THE AGENT AND THE BANKS
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) THE COMPANY IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SCHEDULE 11.02.
SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
11.18 Waiver of Jury Trial. THE COMPANY, THE BANKS AND
THE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED
PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE
BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF
THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.19 Entire Agreement. This Agreement, together with
the other Loan Documents, embodies the entire agreement and
understanding among the Company, the Banks and the Agent, and
supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
THIS WRITTEN LOAN AGREEMENT, TOGETHER WITH THE OTHER
WRITTEN LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH,
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in Houston, Texas
by their proper and duly authorized officers as of the day and
year first above written.
GIANT INDUSTRIES, INC., as Borrower
By: /s/ A. WAYNE DAVENPORT
-----------------------------------------
Name: A. Wayne Davenport
---------------------------------------
Title: Vice President
--------------------------------------
GIANT INDUSTRIES ARIZONA, INC., as Guarantor
By: /s/ A. WAYNE DAVENPORT
-----------------------------------------
Name: A. Wayne Davenport
---------------------------------------
Title: Vice President
--------------------------------------
GIANT EXPLORATION & PRODUCTION COMPANY, as
Guarantor
By: /s/ A. WAYNE DAVENPORT
-----------------------------------------
Name: A. Wayne Davenport
---------------------------------------
Title: Vice President
--------------------------------------
GIANT FOUR CORNERS, INC., as Guarantor
By: /s/ A. WAYNE DAVENPORT
-----------------------------------------
Name: A. Wayne Davenport
---------------------------------------
Title: Vice President
--------------------------------------
SAN JUAN REFINING COMPANY, as Guarantor
By: /s/ A. WAYNE DAVENPORT
-----------------------------------------
Name: A. Wayne Davenport
---------------------------------------
Title: Vice President
--------------------------------------
CINIZA PRODUCTION COMPANY, as Guarantor
By: /s/ A. WAYNE DAVENPORT
-----------------------------------------
Name: A. Wayne Davenport
---------------------------------------
Title: Vice President
--------------------------------------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Agent
By: /s/ FRANK H. WOO
-----------------------------------------
Name: Frank H. Woo
---------------------------------------
Title: Vice President
--------------------------------------
BANK OF AMERICA ILLINOIS, as a
Bank and as Issuing Bank
By: /s/ C. PAIGE DIMAGGIO
_________________________________________
C. Paige DiMaggio
Vice President
<PAGE>
<PAGE>
SCHEDULE 1.01
PREFERRED ACCOUNT OBLIGORS
Amoco Corporation
BP Oil Company
Chevron USA Inc.
Conoco Inc.
Exxon Company USA
Koch Industries Inc.
Mobil Oil Corporation
Shell Oil Company
Texaco Trading & Transportation Inc.
Texaco USA Inc.
<PAGE>
<PAGE>
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
Pro Rata
Bank Commitment Share
- ------------------------ --------------------------------
Bank of America Illinois Facility A: $30,000,000 100%
Facility B: $40,000,000 100%
TOTAL $70,000,000 100%
<PAGE>
<PAGE>
SCHEDULE 2.02
Pricing Chart
(Expressed in basis points per annum)
Pricing Level Level I Level II Level III
- ------------- ------- -------- ---------
Offshore Rate Margin 75.0 112.5 137.5
Base Rate Margin 0 0 0
Letter of Credit Fee 62.5 100.0 125.0
Commitment Fee 27.5 32.5 42.5
Level I shall apply if the Company's Index Debt Rating is BBB-
or better by S & P or Baa3 or better by Moody's. Level II
shall apply if the Company's Index Debt Rating is BB- or better
(but less than BBB-) by S & P or Ba3 or better (but less than
Baa3) by Moody's. Level III shall apply if the Company's Index
Debt Rating is lower than BB- by S & P and lower than Ba3 by
Moody's. Each adjustment of the Applicable Margin, the Letter
of Credit Fees and Commitment Fee shall be made by the Agent
and shall be effective as of the date the changed rating is
effective (the "Adjustment Date"). The Agent shall not be
deemed to have notice of any change in the Index Debt Rating
unless it receives notice from the Company or a Bank of such
rating. Such adjusted rate shall be effective as of the
Adjustment Date, except that with respect to all Loans made
prior to the Adjustment Date, the adjusted Applicable Margin
shall apply as of the first day of the Interest Period next
following the Adjustment Date.
<PAGE>
<PAGE>
SCHEDULE 3.03
EXISTING BANK OF AMERICA
LETTERS OF CREDIT
Letters of Credit Issued by Bank of America National Trust and
Savings Association
Outstanding
L/C No. Amount
------- -----------
1. 0221968 $ 216,900.00
2. 0221969 6,000.00
3. 0221970 48,500.00
4. 0221971 250,000.00
5. 0221973 140,000.00
6. 0222419 28,000.00
7. 0222564 400,000.00
8. LASB #225605 85,000.00
-------------
Total: $1,174,400.00
=============
Letter of Credit Issued by Bank of America Illinois.
Outstanding
L/C No. Amount
------- -----------
1. C7262813 $15,300,000.00
<PAGE>
<PAGE>
SCHEDULE 6.05
This Schedule 6.05 hereby incorporates by reference all
actions, suits, proceedings, claims or disputes pending,
threatened or contemplated against the Company, or any
subsidiary, or any of their respective properties,
contained in any Forms 10-K for the year ended December
31, 1994 or Forms 10-Q for the quarters ended March 30,
1995 and June 30, 1995 filed by the Company with the
Securities and Exchange Commission.
<PAGE>
<PAGE>
SCHEDULE 6.07
ERISA COMPLIANCE AS OF SEPTEMBER 30, 1995
Exceptions - None
<PAGE>
<PAGE>
SCHEDULE 6.11
MATERIAL INDEBTEDNESS AND OTHER LIABILITIES
DIRECT OR CONTINGENT
NOT SPECIFICALLY DISCLOSED IN ANNUAL 10K
None
<PAGE>
<PAGE>
SCHEDULE 6.12
1. Environmental matters identified in Giant's
Form 10-K for the year ended December 31, 1994 and Form
10-Q for the quarters ended March 30, 1995 and June 30,
1995 filings with the United States Securities and
Exchange Commission.
2. As has been disclosed to the
Bank, contamination is present in the soil and
groundwater
at the Bloomfield Refinery (as used herein, the term
"Bloomfield Refinery" includes property related to
refinery operations that is owned by Bloomfield Refining
Company ("BRC") and/or by Gary-Williams Energy
Corporation ("GWEC")). Contamination originating at the
refinery goes past the boundaries of the refinery.
Bloomfield Refining Company ("BRC") is in the process of
requesting approval from the United States Environmental
Protection Agency ("EPA") to implement a corrective
measures program to address certain refinery
contamination in accordance with a 1992 agreement
between
EPA and BRC. Giant (as used herein, the term "Giant"
means Giant Industries, Inc. and any company affiliated
with Giant, both individually and collectively) will
assume part or all of BRC's obligations under this
agreement. Additionally, private parties, EPA, and
other
governmental entities may assert claims against Giant
after the purchase of the refinery for property damage,
personal injury, and other damages allegedly arising out
of contamination that originated at the refinery.
3. BRC and GWEC have identified environmental
matters relating to assets to be purchased by Giant in a
writing, dated August 8, 1995, captioned "Environmental
Disclosure." This document was provided to Giant in
connection with the Purchase and Sale Agreement between
BRC, GWEC and Giant.
<PAGE>
<PAGE>
SCHEDULE 6.16(a)
GIANT INDUSTRIES, INC.
& AFFILIATES CORPORATE STRUCTURE
Giant Industries, Inc.
(a Delaware corporation)
Giant Exploration & Production Company
(formerly Hixon Development Company)
(a Texas corporation)
Giant Industries Arizona, Inc.
(formerly Giant Industries, Inc.)
(an Arizona corporation)
Ciniza Production Company
(a New Mexico corporation)
Giant Stop-N-Go of New Mexico, Inc.
(a New Mexico corporation)
Giant Four Corners, Inc.
(an Arizona corporation)
Giant Mid-Continent, Inc.
(an Arizona corporation)
San Juan Refining Company
(a New Mexico corporation)<PAGE>
<PAGE>
SCHEDULE 6.16(b)
The Company and its Subsidiaries invest in several
minor oil and gas partnerships, drilling ventures and
similar arrangements in the ordinary course of business.
<PAGE>
<PAGE>
SCHEDULE 6.17
UNINSURED PROPERTIES OF THE COMPANY
AND ITS SUBSIDIARIES
None<PAGE>
<PAGE>
SCHEDULE 8.01
LIENS REMAINING AS OF
SEPTEMBER 30, 1995
Metlife Capital Corporation - Seven Service Stations
Metlife Capital Corporation - Corporate Airplane
Prudential Insurance Company
of America and Pruco Life
Insurance Company - Covenant to secure note
equally
Miscellaneous Liens,
including capitalized leases
on trucks and trailers with
an aggregate value not
exceeding $1,500,000 - Various
<PAGE>
<PAGE>
SCHEDULE 8.05
SCHEDULE OF
EXISTING INDEBTEDNESS
AS OF SEPTEMBER 30, 1995
Prudential 8,750,000
Met Life 3,768,927
Sandia 1,945,053
C. Acridge 1,299,433
Miscellaneous 500,000 (estimate)
-----------
TOTAL $16,263,413
===========
<PAGE>
<PAGE>
SCHEDULE 8.08
This Schedule hereby incorporates by reference all
Contingent Obligations pending, threatened or
contemplated against the Company, or any subsidiary, or
any of their respective properties, contained in Forms
10-K for the year ended December 31, 1994 or Forms 10-Q
for the quarters ended March 30, 1995 and June 30, 1995
filed by the Company with the Securities and Exchange
Commission.
In addition to those items disclosed above, the
following is a list of certain Contingent Obligations.
Giant Industries, Inc., as Issuer, and all
Subsidiaries, as Guarantors, of the $100,000,000 9.75%
Senior Subordinated Notes Due 2003, Indenture dated as
of November 29, 1993.
Giant Industries Arizona, Inc. as Borrower, Giant
Industries, Inc. and Subsidiaries as Guarantors of the
$20,000,000, 10.91% Senior Notes Due March 31, 1999,
Note Agreement dated as of September 30, 1993, with The
Prudential Insurance Company of America and Pruco Life
Insurance Company.
Giant Industries Arizona, Inc. as Buyer and New
Bank of New England N.A., Den Norske Bank,
Kansallis-Osake-Pankki, and Portales Energy Company,
Inc. as sellers of the Portales Ethanol Facility pursuant to
the Purchase and Sale Agreement Dated May 7, 1991.
Within 90 days following the end of each twelve-month
period (an "Operating Year") commencing with the Closing
Date and ending with the Operating Year ending five
years from the Closing Date, the Sellers shall be entitled to
receive a payment ("Contingent Payment") equal to the
EBIT Percentage for such Operating Year, provided that
in no event shall the Contingent Payment exceed the sum of
$900,000 per Operating Year.
<PAGE>
<PAGE>
SCHEDULE 11.02
OFFSHORE AND DOMESTIC LENDING OFFICES,
ADDRESSES FOR NOTICES
GIANT INDUSTRIES, INC.
Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
Telephone: (602) 585-8888
Facsimile: (602) 585-8893
GUARANTORS
Giant Industries Arizona, Inc.
Giant Four Corners, Inc.
Ciniza Production Company
San Juan Refining Company
Giant Exploration & Production Company
c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
Telephone: (602) 585-8888
Facsimile: (602) 585-8893
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
Agent's Payment office:
Bank of America-San Francisco
F/O: Agency Mgmt. Svcs. 5596
ABA No.: 1210-0035-8
Acct. No.: 12334-14782
Ref: Giant Industries, Inc.
Bank of America National Trust
and Savings Association
Global Agency #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Frank H. Woo
Telephone: (415) 622-6614
Facsimile: (415) 622-4894
BANK OF AMERICA ILLINOIS,
as a Bank
Address of Lending Offices:
Domestic and Eurodollar Lending Office:
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Ida Rubens
Telephone: (312) 828-5239
Facsimile: (312) 987-5614
Address for Notices (other than Borrowing
Notices and Notices of Conversion/
Continuation):
Bank of America Illinois
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Ida Rubens
Telephone: (312) 828-5239
Facsimile: (312) 987-5614
With a copy to:
Paula Mitchell
Bank of America
Three Allen Center
333 Clay Street, Suite 4550
Houston, Texas 77002-4103
Telephone: (713) 651-4880
Facsimile: (713) 651-4841
BANK OF AMERICA ILLINOIS,
as Issuing Bank
Address for Notices:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Ida Rubens
Telephone: (312) 828-5239
Facsimile: (312) 987-5614
With a copy to:
Paula Mitchell
Bank of America
Three Allen Center
333 Clay Street, Suite 4550
Houston, Texas 77002-4103
Telephone: (713) 651-4880
Facsimile: (713) 651-4841
<PAGE>
<PAGE>
EXHIBIT "A"
FORM OF NOTICE OF BORROWING
Date:__________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent (the "Agent") for the Banks (as herein defined)
from time to time party to the Credit Agreement, dated
as of October 4, 1995 (as the same may be amended, modified
or restated from time to time, the "Credit Agreement"),
among GIANT INDUSTRIES, INC., a Delaware corporation
("Company"), the Guarantors (as defined in the Credit
Agreement) party thereto, the several financial
institutions from time to time party thereto (the
"Banks"), the Agent and BANK OF AMERICA ILLINOIS, as
letter of credit issuing bank and a Bank.
Ladies and Gentlemen:
The undersigned GIANT INDUSTRIES, INC. (the
"Company") hereby refers to the Credit Agreement and
hereby gives you notice irrevocably, pursuant to Section
2,03 of the Credit Agreement, of the Borrowing(s)
specified below:
A. FACILITY A REVOLVING LOAN:
1. Aggregate Total Amount: $__________
2. Revolving Loan advance date: _________, 199_.
3. Requested Loan Type and applicable Dollar
amount:
RATE SELECTION
(a) Base Rate Loan for $__________.
(b) Offshore Rate Loan with Interest Period of:
(i) one month for $__________
(ii) two months for $__________
(iii) three months for $__________
(iv) six months for $__________
B. FACILITY B REVOLVING LOAN:
1. Aggregate Total Amount: $__________
2. Revolving Loan advance date: _________, 199_.
3. Requested Loan Type and applicable Dollar
amount:
RATE SELECTION
(a) Base Rate Loan for $__________.
(b) Offshore Rate Loan with Interest Period of:
(i) one month for $__________
(ii) two months for $__________
(iii) three months for $__________
(iv) six months for $__________
C. The Borrowing(s) herein requested are to be received
in immediately available funds on _________,
____________, 199_, in the following account:
Bank Name:________________________
ABA Number:_______________________
Account Title:____________________
Account Number:___________________
The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true
on the date of the proposed Borrowing(s), before and
after giving effect thereto and to the application of
the proceeds therefrom:
(a) the representations and warranties of the
undersigned contained in Article VI of the Credit
Agreement are true and correct in all material respects
as though made on and as of the date hereof and the date
of the proposed Borrowing(s) (except such
representations and warranties which expressly refer to
an earlier date, which are true and correct in all
material respects as of such earlier date); and
(b) no Default or Event of Default has
occurred and is continuing, or would result from such
proposed Borrowing(s); and
(c) the aggregate outstanding principal
amount of all Loans does not exceed the Commitments; and
(d) the aggregate outstanding principal
amount of all Facility A Revolving Loans does not exceed
the Facility A Commitment; and
(e) the aggregate outstanding principal
amount of all Facility B Revolving Loans does not exceed the
Facility B Commitment.
The Company agrees that if prior to the time of the
making of the Loans requested hereby any matter
certified to by it will not be true and correct at such
time as if then made, it will immediately so notify the Agent.
CLOSING DATE ONLY:
The proceeds of the Revolving Loan(s) which are
the subject of this Notice of Borrowing will be used for
_______________________________________].
Capitalized terms used herein without definition
have the meanings assigned to them in the Credit
Agreement.
GIANT INDUSTRIES, INC.
By:_______________________
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT "B"
FORM OF NOTICE OF
CONVERSION/CONTINUATION
Date:_______________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent (the "Agent") for the Banks (as herein defined)
from time to time party to the Credit Agreement, dated
as of October 4, 1995 (as the same may be amended, modified
or restated from time to time, the "Credit Agreement"),
among GIANT INDUSTRIES, INC., a Delaware corporation
("Company"), the Guarantors (as defined in the Credit
Agreement) party thereto, the several financial
institutions from time to time party thereto (the
"Banks"), the Agent and BANK OF AMERICA ILLINOIS, as
letter of credit issuing bank and a Bank.
Ladies and Gentlemen:
The undersigned GIANT INDUSTRIES, INC. (the
"Company") hereby refers to the Credit Agreement and
hereby gives you notice irrevocably, pursuant to Section
2.04 of the Credit Agreement, of the conversion or
continuation of the Loan specified below:
A. FACILITY A REVOLVING LOAN:
1. Loan to be converted or continued:
(1) Amount: $__________
(2) Loan Date: __________, 199__
(3) Existing Loan Type: CHECK APPLICABLE BLANK
(a) Base Rate _______
(b) Offshore Rate with an
Interest Period of:
(i) one month _______
(ii) two months _______
(iii) three months _______
(iv) six months _______
(4) Date Loan matures: ___________, 199__
2. Proposed conversion or continuation date:
__________, 199__ (the "Continuation/Conversion
Date").
3. Loan described in (A) above is to be converted or
continued as follows:
(1) Amount: $__________
(2) Loan Date: __________, 199__
(3) Requested Loan Type and applicable Dollar
amount:
(a) Base Rate for $____________
(b) Offshore Rate with an Interest Period of:
(i) one month _______
(ii) two months _______
(iii) three months _______
(iv) six months _______
(B) FACILITY B REVOLVING LOAN:
1. Loan to be converted or continued:
(1) Amount: $__________
(2) Loan Date:____________, 199__
(3) Existing Loan Type: CHECK APPLICABLE BLANK
(a) Base Rate _______
(b) Offshore Rate with an
Interest Period of:
(i) one month _______
(ii) two months _______
(iii) three months _______
(iv) six months _______
(4) Date Loan matures: ___________, 199__
2. Proposed conversion or continuation date: _________,
199___ (the "Continuation/Conversion Date").
3. Loan described in (A) above is to be converted or
continued as follows:
(a) Base Rate for $____________
(b) Offshore Rate with an Interest Period of:
(i) one month _______
(ii) two months _______
(iii) three months _______
(iv) six months _______
The undersigned hereby certifies that the following
statements are true on the date hereof, and will be true
on the Conversion/Continuation Date, before and after
giving effect to the Conversion/Continuation Date of the
Loans as herein specified:
(a) the representations and warranties of the
undersigned contained in Article VI of the Credit
Agreement are true and correct in all material respects
as though made on and as of the date hereof and the
Continuation/Conversion Date (except such
representations and warranties which expressly refer to
an earlier date, which are true and correct in all
material respects as of such earlier date); and
(b) no Default or Event of Default has
occurred and is continuing, or would result from such
Conversion/Continuation; and
(c) the aggregate outstanding principal
amount of all Loans does not exceed the Commitments; and
(d) the aggregate outstanding principal
amount of all Facility A Revolving Loans does not exceed the
Facility A Commitment; and
(e) the aggregate outstanding principal
amount of all Facility B Revolving Loans does not exceed the
Facility B Commitment.
The Company agrees that if prior to the time of the
conversion or continuation of the Loan requested hereby
any matter certified to by it will not be true and
correct at such time as if then made, it will
immediately so notify the Agent.
Capitalized terms used herein without definition
have the meanings assigned to them in the Credit
Agreement.
GIANT INDUSTRIES, INC.
By:_______________________
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT "C"
COMPLIANCE CERTIFICATE
The undersigned authorized officer of GIANT
INDUSTRIES, INC. ("Company"), delivers this Certificate
pursuant to the Credit Agreement dated as of October 4,
1995 (as the same may be amended, modified or restated
from time to time, the "Credit Agreement"), among Bank
of America National Trust and Savings Association as Agent,
(the "Agent") the several financial institutions from
time to time party thereto (the "Banks"), the Company,
and the Guarantors. The undersigned hereby certifies
to the Agent and the Banks as follows:
1. A review of the activities of the Company and
its Subsidiaries during the period from _________, 199__
to _________, 199__ the "Subject Period") has been made
to obtain the information necessary to execute and
deliver this Certificate.
2. To the best of the undersigned's knowledge,
information and belief, except as described in
Attachment 2 attached hereto: (a) as of the date heres&
no Default or Event of Default exists under the Credit
Agreement; and (b) as of the date hereof, the Company and
its Subsidiaries are in compliance with the financial
covenants contained in the Credit Agreement as set forth
in Attachment 1 attached hereto.
Capitalized terms used herein without definition
have the meanings assigned to them in the Credit
Agreement.
EXECUTED AND DELIVERED as of _________, 199__.
GIANT INDUSTRIES, INC.
_____________________________
Authorized Officer
<PAGE>
<PAGE>
ATTACHMENT 1
GIANT INDUSTRIES, INC. & SUBSIDIARIES
CALCULATION OF FINANCIAL COVENANTS AND RATIOS
AS OF _____________, 199__ (THE "DETERMINATION DATE")
1. MINIMUM NET WORTH (SECTION 8.12 of the Credit
Agreement)
(a) Net Income, calculated from the period
beginning after June 30, 1995, and ending
on the Determination Date (provided no
negative adjustment will be made in the
event Consolidated Net Income is a deficit
for such period), is: $__________
$___________
(b) 50% of the amount in (a) is: $___________
(c) 100% Net Proceeds received from the
issuance of any capital stock or other
equity interest by the Company or any of
its Consolidated Subsidiaries after June
30, 1995 is: $___________
(d) Plus $95,000,000 $95,000,000
(e) Subtotal (the sum of 2(b) plus 2(c) plus
2(d)) is: $___________
(f) Less Allowance for non-cash write-downs
(not to exceed a cumulative amount of
$10,000,000): $___________
(g) Minimum Net Worth (the balance of 2(e)
minus 2(f)) $___________
Net Worth: $___________
2. Fixed Charge Coverage Ratio (Section 8.13 of the
Credit Agreement)
(a) Consolidated EBITDA for the four fiscal
quarters ending on the Determination Date:
$___________
(b) Less Non-Discretionary Capital
Expenditures: $___________
(c) Subtotal (the balance of 2(a) minus 2(b)
is): $___________
(d) Consolidated Interest Expense for the
four fiscal quarters ending on the
Determination Date: $___________
(e) The ratio of 3(c) to 3(d) is: ___:1.00
Fixed Charge Coverage Ratio required by Section
8.13 of the Credit Agreement, is not less than
2.5 to 1.00.
3. Capitalization Ratio (Section 8.14 of the Credit
Agreement)
(a) Consolidated Funded Indebtedness is:
$___________
(b) Consolidated Total Capitalization is:
$___________
(c) The percentage of 1(a) to 1(b) is:
________%
Capitalization Ratio required by Section 8.14 of the
Credit Agreement is not more than 65% through June
30, 1997 or 62.5%, thereafter.
4. Borrowing Base Certificate: attached
Capitalized terms used herein without definition have
the meanings assigned to them in the Credit Agreement.
EXECUTED AND DELIVERED as of __________, 199___.
GIANT INDUSTRIES, INC.
_____________________________
Authorized Officer
<PAGE>
<PAGE>
ATTACHMENT 2
EXCEPTIONS TO
COMPLIANCE CERTIFICATE
<PAGE>
<PAGE>
EXHIBIT "D"
OPINION OF COUNSEL
SUBSTANTIVE ISSUES TO BE ADDRESSED
IN OPINION(S) OF COUNSEL TO
GIANT INDUSTRIES, INC. AND AFFILIATED ENTITIES
1. Each of the Company, the Guarantors and each
of their Subsidiaries (a) is a corporation duly
organized, validly existing and in good standing under
the laws of the respective jurisdiction of its
incorporation and (b) is duly qualified and licensed to
do business and in good standing in each of the other
respective jurisdictions wherein the ownership, lease or
operation of property or the conduct of business
requires such qualification or licensing.
2. Each of the Company, the Guarantors and each
other Subsidiary or Affiliate, if any, party to any of
the Loan Documents has all requisite corporate,
partnership or other power and authority, as applicable,
to execute, deliver and perform its obligations under
the Agreement and the other Loan Documents applicable to
it.
3. The execution, delivery and performance by each
of the Company, the Guarantors and each other
Subsidiary or Affiliate, if any, party to any of the
Loan Documents of the Agreement and each of the other
Loan Documents to which it is a party have been duly
authorized by all necessary corporate action, and each
of the Agreement and the other Loan Documents has been
duly executed and delivered by the Company, the
Guarantors and each other Subsidiary party to any of
the Loan Documents, as applicable.
4. The execution, delivery and performance by each
of the Company, the Guarantors and each other
Subsidiary party to any of the Loan Documents do not and
will not (a) breach or constitute a default under (i)
their respective charter, articles or certificate of
incorporation or bylaws, (ii) any decree, injunction,
order, writ or other action of any Governmental
Authority applicable to them or their respective assets,
or (iii) the Prudential Note Agreement or the notes or
any other documents executed in connection therewith,
the NBD Indenture or the notes or any other documents
executed in connection therewith, or any other material
Contractual Obligation to which any of them is a party
or by which any of their respective properties may be
bound, (b) result in or require the creation of any Lien
upon or with respect to any of their respective assets,
or (c) violate any Requirement of Law.
5. No consent, approval, exemption, waiver,
license or authorization from, or action by or filing
with, any Governmental Authority is or will be required
in connection with the (a) due execution, delivery or
performance by, or enforcement against, the Company, the
Guarantors and each other Subsidiary party to any of
the Loan Documents, of the Agreement or any of the other
Loan Documents, and (b) the Bloomfield Acquisition,
except such as have been obtained or completed. The
Bloomfield Acquisition is in compliance with all
applicable laws and regulations.
6. Each of the Agreement and the other Loan
Documents to which the Company is a party is the legal,
valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except
as such enforcement may be limited by bankruptcy,
insolvency or other laws governing the enforcement of
creditors' rights generally or by equitable principles
relating to enforceability.
7. Each of the Agreement and the other Loan
Documents to which any of the Guarantors is a party is
the legal, valid and binding obligation of each such
Guarantor, enforceable against such Guarantor in
accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency or other laws
governing the enforcement of creditors' rights generally
or by equitable principles relating to enforceability.
8. Each of the Agreement and the other Loan
Documents to which any other Subsidiary is a party is
the legal, valid and binding obligation of each such
Subsidiary, enforceable against such Subsidiary in
accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency or other
laws governing the enforcement of creditors' rights
generally or by equitable principles relating to
enforceability.
9. There is no pending or, to our knowledge,
threatened action, suit, claim, dispute or proceeding in
arbitration or before any Governmental Authority against
any of the Company, the Guarantors or any other
Subsidiary thereof or any of their respective assets or
with respect to any Plan (a) which purports to affect or
pertain to the Agreement or any other Loan Document, or
any of the transactions referenced therein or
contemplated thereby, or (b) if determined adversely,
could reasonably be expected to have a Material Adverse
Effect.
10. There are no outstanding judgments against any
one or more of the Company, the Guarantors or any other
Subsidiary thereof, and, to our knowledge, no
injunction, writ, temporary restraining order or order
or restraint of any nature has been issued by any court
or other Governmental Authority purporting to enjoin or
restrain the consummation of the Bloomfield Acquisition,
the execution, delivery or performance of the Agreement
or any other Loan Document, or directing that the
transactions referenced therein or contemplated thereby
not be consummated as therein provided or contemplated.
11. Neither the consent of the shareholders of any
of the Company, the Guarantors and each other
Subsidiary party to any of the Loan Documents, nor the
consent of any holder of any Indebtedness of any thereof
is or will be required as a condition to the validity or
enforceability of the Agreement or any of the other Loan
Documents or the consummation of the Bloomfield
Acquisition, except such as have been obtained.
12. The transaction contemplated by the Agreement
and the other Loan Documents is not usurious under
applicable law.
13. The consummation of the transactions
contemplated by the Agreement and the other Loan
Documents will not violate Regulation G,
T, U or X of the FRB.
14. The choice of law provisions set forth in
the Agreement and the other Loan Documents wherein the
parties agree that the laws of the State of Texas shall
govern and control the terms of the Agreement and the
other Loan Documents (except as otherwise specifically
provided therein) is a valid, effective and enforceable
choice of law under the laws of the State of Arizona and
would be upheld and enforced by the courts of the State of
Arizona and by Federal courts sitting and applying the laws
of the State of Arizona.
15. None of the Company or the Guarantors is a
"holding company," a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company," as
such terms are defined in the Public Utility Holding Company
Act of 1935, as amended.
16. None of the Company or the Guarantors is an
"investment company" or a company "controlled" by an
"investment company" within the meaning of the
Investment Company Act of 1940, as amended.
17. Neither the Company nor any of its
Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power
Act, the Interstate Commerce Act, any state public utility
code, or any other Federal or state statute or
regulation limiting, in any such case, its ability to incur
Indebtedness.
We acknowledge that the Agents and the Banks are
relying on the opinions expressed herein in extending
any credit under the Agreement and the other Loan Documents
and hereby consent to reliance by the Agents and the Banks
now or hereafter parties to the Agreement on the opinions
expressed herein.
<PAGE>
<PAGE>
EXHIBIT "E"
ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this
"Agreement") dated as of ________, 199__, is made
between __________________ (the "Assignor") and
___________________ (the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain
Credit Agreement, dated as of October 4, 1995 (as the
same may be amended, modified or restated from time to
time, the "Credit Agreement"), among GIANT INDUSTRIES,
INC., a Delaware corporation ("Company"), the Guarantors
(as defined in the Credit Agreement) party thereto, the
several financial institutions from time to time party
thereto (the "Banks"), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent (the "Agent") for the
Banks from time to time party to the Credit Agreement,
and BANK OF AMERICA ILLINOIS, as letter of credit
issuing bank and a Bank (terms defined in the Credit
Agreement are used herein with the same meaning);
WHEREAS, as provided in the Credit Agreement, the
Banks have committed to extend credit to the Company in
an aggregate amount not to exceed SEVENTY MILLION AND
NO/100 DOLLARS ($70,000,000.00); and
WHEREAS, the Assignor wishes to assign to the
Assignee part of the rights and obligations of the
Assignor under the Credit Agreement in respect of its
Commitment, together with a corresponding portion of
each of its outstanding Loans and its Pro Rata Share of
the outstanding L/C Obligations, in a total amount equal
to ____________________ Dollars (U.S.$_________) (the
"Assigned Amount") on the terms listed on Annex I hereto
and subject to the conditions set forth herein and in
the Credit Agreement, and the Assignee wishes to accept
assignment of such rights and to assume such obligations
from the Assignor on such terms and subject to such
conditions;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties
hereto agree as follows:
1. Assignment and Assumption.
(a) Before giving effect to this Agreement,
Assignor's (a) Commitment is $_________, (b) aggregate
principle amount of its outstanding Loans is $_________,
(c) aggregate principal amount of its outstanding L/L
Obligation is $__________ and (d) Pro Rata Share is
____%. With effect on and after the Effective Date (as
defined in Section 4 hereof), the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby
purchases and assumes from the Assignor, the Assigned
Amount, which shall be equal to ____ percent (___%) (the
"Assignee's Percentage Share") of all of the Assignor's
rights and obligations under the Credit Agreement,
including, without limitation, the Assignee's Percentage
Share of the Assignor's (i) Commitment, and (ii)
outstanding Loans and L/C Obligations. After giving
effect to this Agreement on the Effective Date, the
Commitment, outstanding Loans and L/C Obligations, and
Pro Rata Share of Assignor and Assignee, respectively,
are set forth as follows:
Outstanding
Outstanding L/C Pro Rata
Loans Obligations Share Commitment
----------- ----------- -------- ----------
Assignor $__________ $__________ _______% $________
Assignee $__________ $__________ _______% $________
The assignment set forth in this Section l(a)
shall be without recourse to, or representation or
warranty (except as expressly provided in this
Agreement) by, the Assignor.
(b) With effect on and after the Effective Date,
the Assignee shall be a party to the Credit Agreement,
shall become a "Bank" for all purposes as therein
defined and contemplated, and shall succeed to all of
the rights and be obligated to perform all of the
obligations of a Bank under the Credit Agreement with a
Commitment in the amount and with the Pro Rata Share set
forth above for the Assignee. The Assignee agrees that
it is bound by the terms and conditions set forth in the
Credit Agreement as if it were an original signatory
thereto, and that it will perform in accordance with
their terms all of the obligations which by the terms of
the Credit Agreement are required to be performed by it
as a Bank. It is the intent of the parties hereto that
(i) the Commitment of the Assignor shall, as of the
Effective Date, be reduced by the Assignee's Percentage
Share and (ii) the Assignor shall relinquish its rights
and be released from its obligations under the Credit
Agreement to the extent such obligations have been
assumed by the Assignee.
2. Payments.
(a) As consideration for the sale, assignment
and transfer contemplated in Section 1 hereof, the
Assignee shall pay to the Assignor on the Effective Date
in immediately available funds an amount equal to
$____________ Dollars ($_______), representing the
Assignee's Percentage Share of the principal amount of
all Loans previously made, and currently owned, by the
Assignor under the Credit Agreement and outstanding on
the Effective Date. The difference between the Assigned
Amount and the amount paid to Assignor under this
Section 2(a) represents the amount of outstanding L/C
Obligations assumed by Assignee pursuant to the terms
hereof as of the Effective Date.
(b) The Assignee further agrees to pay to the
Agent a processing or transfer fee in the amount of
$3,500.00.
(c) To the extent payment to be made by the
Assignee pursuant to Section 2(a) hereof is not made when
due, the Assignor shall be entitled to recover such
amount together with interest thereon at the Federal
Funds Rate per annum accruing from the date such amounts
were due.
together with interest thereon at the Federal Funds Rate
per annum accruing from the date such amounts were due.
3. Reallocation of Payments. Any interest,
commissions, fees and other payments accrued to but
excluding the Effective Date with respect to the
Assignor's Commitment Percentage of the Loans and L/C
Obligations, shall be for the account of the Assignor.
Any interest, fees and other payments accrued on and
after the Effective Date with respect to the Assigned
Amount shall be for the account of the Assignee. Each
of the Assignor and the Assignee agree that it will hold
in trust for the other party any interest, commissions,
fees and other amounts which it may receive to which the
other party is entitled pursuant to the preceding
sentence and pay to the other party any such amounts
which it may receive promptly upon receipt. The
Assigner's and the Assignee's obligations to make the
payments referred to in this Section 3 are
non-assignable.
4. Effective Date. Notices; Notes.
(a) The effective date for this Agreement
shall be ______________ (the "Effective Date"); provided
that the following conditions precedent
have been satisfied on or before the Effective Date:
(i) this Agreement shall be executed and
delivered by the Assignor and the Assignee;
(ii) the consent of the Company and the
Agent shall have been duly obtained in the form set
forth on Annex II hereof, and shall be in full force and
effect as of the Effective Date;
(iii) the Assignee shall pay to the
Assignor all amounts due to the Assignor under this
Agreement; and
(iv) the processing or transfer fee
referred to in Section 2(b) shall have been paid to the
Agent.
(b) Promptly following the execution of this
Agreement, the Assignor shall deliver to the Agent for
acceptance by the Agent, the notices, agreements or
other documents as may be required under the Credit
Agreement.
(c) Promptly following payment by the Assignee
of the consideration as provided in Section 2 hereof,
the Assignor shall deliver its promissory note(s) to the
Agent and shall request that new notes be issued to the
Assignor and the Assignee dated the Effective Date to
properly reflect the respective amounts of the Loans and
L/C Obligations held by each party.
[5. Agent [INCLUDE ONLY IF ASSIGNOR IS AGENT].
(a) The Assignee hereby appoints and
authorizes the Assignor to take such action as Agent on
its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Agent by the Banks
pursuant to the terms of the Credit Agreement.
(b) The Assignee shall assume no duties or
obligations held by the Assignor in its capacity as
Agent under the Credit Agreement-]
6. Representations and Warranties.
(a) The Assigner represents and warrants that
(i) 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 lien, security interest or other
adverse claim; (ii) it is duly organized and existing
and it has the full power and authority to take, and has
taken, all action necessary to execute and deliver this
Agreement and any other documents required or permitted
to be executed or delivered by it in connection with
this Agreement and to fulfill its obligations hereunder,
(iii) no notices to, or consents, authorizations or
approvals of, any person are required (other than any
already given or obtained) for its due execution,
delivery and performance of this Agreement, and apart
from any agreements or undertaking or filings required
by the Credit Agreement, no further action by, or notice
to, or filing with, any person is required of it for
such execution, delivery or performance; and (iv) this
Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligations of
the Assignor, enforceable against the Assignor in
accordance with the terms hereof, except subject, as to
enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application
relating to or affecting creditors' rights and to
general equitable principles.
(b) The Assignor 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 the
execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished
pursuant thereto. The Assigner makes no representation
or warranty in connection with, and assumes no
responsibility with respect to, the solvency, financial
condition or statements of the Company or any guarantor
or the performance or observance by the Company or any
guarantor of any of its respective obligations under the
Credit Agreement or any other instrument or document
furnished in connection therewith.
(c) The Assignee represents and warrants that
(i) it is duly organized and existing and it has full
power and authority to take, and has taken, all action
necessary to execute and deliver this Agreement and any
other documents required or permitted to be executed or
delivered by it in connection with this Agreement, and
to fulfill its obligations hereunder; (ii) no notices
to, or consents, authorizations or approvals of, any
person are required (other than any already given or
obtained) for its due execution, delivery and
performance of this Agreement; and apart from any
agreements or undertaking or filings required by the
Credit Agreement, no further action by, or notice to, or
filing with, any person is required of it for such
execution, delivery or performance; (iii) this Agreement
has been duly executed and delivered by it and
constitutes the legal, valid and binding obligations of
the Assignee, enforceable against the Assignee in
accordance with the terms hereof, except subject, as to
enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application
relating to or affecting creditors' rights and to
general equitable principles; (iv) it is eligible under
the Credit Agreement to be an assignee in accordance
with the terms hereof; and (v) that it has received a
copy of the Credit Agreement and the exhibits and
schedules thereto, and has received (or waived the
requirement that it receive) copies of each of the
documents which were required to be delivered under the
Credit Agreement as a condition to the making of the
Loans thereunder.
7. Further Assurances. The Assigner and the
Assignee each hereby agree to execute and deliver such
other instruments, and take such other action, as either
party may reasonably request in connection with the
transactions contemplated by this Agreement, including,
without limitation, the delivery of any notices or other
documents or instruments to the Company, the Agent or
any guarantor which may be required in connection with
the assignment and assumption contemplated hereby.
8. Indemnity. The Assignee agrees to indemnity
and hold harmless the Assignor against any and all
losses, costs, expenses (including, without limitation,
reasonable attorneys' fees and the allocated costs and
expenses for in-house counsel) and liabilities incurred
by the Assignor in connection with or arising in any
manner from the nonperformance by the Assignee of any
obligation assumed by the Assignee under this Agreement.
9. Miscellaneous.
(a) Any amendment or waiver of any provision
of this Agreement shall be in writing signed by the
parties hereto. No failure or delay by either party
hereto in exercising any right, power or privilege
hereunder shall operate as a waiver thereof and any
waiver of any breach of the provisions of this Agreement
shall be without prejudice to any rights with respect to
any other or further breach hereof
(b) All payments made hereunder shall be made
without any set-off or counterclaim.
(c) All communications among the parties or
notices in connection herewith shall be in writing and
mailed, hand-delivered or transmitted by facsimile as
follows: (i) if to the Assigner or the Assignee, at
their respective addresses or facsimile numbers set
forth on the signature pages hereof and (ii) if to the
Company, the Agent or any guarantor, at their respective
addresses or facsimile numbers set forth in the Credit
Agreement or to such other address or facsimile number
as shall be designated in a written notice given in
accordance with the Credit Agreement. All such
communications and notices shall be effective upon
receipt. The Assignee specifies as its Domestic and
Offshore landing Office(s) the offices set forth beneath
its name on the signature pages hereof
(d) The Assignor and the Assignee shall each
pay its own costs and expenses incurred in connection
with the negotiation, preparation, execution and
performance of this Agreement.
(e) The representations and warranties made
herein shall survive the consummation of the
transactions contemplated hereby.
(f) Subject to the terms of the Credit
Agreement, this Agreement shall be binding upon and
inure to the benefit of the Assignor and the Assignee
and their respective successors and assigns; however that
no party shall assign its rights hereunder without the
prior written consent of the other party and the Company
and any purported assignment, absent such consents,
shall be void. The preceding sentence shall not limit
or enhance the right of the Assignee to assign or
participate all or part of the Assignee's Percentage
Share and the Assigned Amount and any outstanding Loans
and L/C Obligations attributable thereto in accordance
with the Credit Agreement.
(g) This Agreement may be executed in any
number of counterparts and all of such counterparts
taken together shall be deemed to constitute one and the
same instrument.
(h) This Agreement shall be governed by and
construed in accordance with the law of the State of
Texas (without regard to principles of conflicts of
law). The Assignor and the Assignee each irrevocably
submits to the non-exclusive jurisdiction of any Texas
State or Federal court sitting in the Southern District
of Texas over any suit, action or proceeding arising out
of or relating to this Agreement or the Credit Agreement
and irrevocably agrees that all claims in respect of
such action or proceeding may be heard and determined in
such Texas State or Federal court. Each party to this
Agreement hereby irrevocably waives, to the fullest
extent it may effectively do so, the defense of an
inconvenient forum to the maintenance of such action or
proceeding.
(i) This Agreement and any agreement, document
or instrument attached hereto or referred to herein
integrate all the terms and conditions mentioned herein
or incidental hereto, and together with the Credit
Agreement constitutes the entire agreement and
understanding between the parties hereto and supersedes
any and all prior agreements and understandings related
to the subject matter hereof In the event of any
conflict between the terms, conditions and provisions of
this Agreement and the Credit Agreement, the terms,
conditions and provisions of the Credit Agreement shall
prevail.
(j) In the event of any inconsistency between
the provisions of this Agreement and Annex I hereto,
this Agreement shall control. Headings are for
reference only and are to be ignored in interpreting
this Agreement.
(k) The illegality or unenforceability of any
provision of this Agreement or any instrument or
agreement required hereunder shall not in any way affect
or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument
or agreement required hereunder.
IN WITNESS WHEREOF, the Assigner and the Assignee
have caused this Agreement to be executed and delivered
by their duly authorized officers as of the date first
above written.
______________________________
By____________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
Facsimile No.:________________
- ASSIGNOR -
By____________________________
Name:
Title:
Address for Notices:
______________________________
______________________________
______________________________
Facsimile No.:________________
Domestic Lending Office
______________________________
______________________________
______________________________
______________________________
Offshore Lending Office
______________________________
______________________________
______________________________
______________________________<PAGE>
<PAGE>
ANNEX I
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Company:
2. Date of Credit Agreement:__________, 1995
3. Assignor:
4. Assignee:
5. Date of Assignment Agreement:
6. Effective Date:
7. Fees paid by Assignee to Assignor:
8. Interest paid by Assignee to Assignor:
(i) Base Rate Loan
(ii) Offshore Rate Loan
9. Payment Instructions:
Assignor:
Assignee:
10. Assignee's Notice
Instructions:
11. Other Information
<PAGE>
<PAGE>
ANNEX II
TO
FORM OF NOTICE OF ASSIGNMENT AND ACCEPTANCE
_________, 199__
Bank of America National Trust
and Savings Association, as
Agent
Agency Management Services #5506
1455 Market Street, Twelfth Floor
San Francisco, California 94103
Giant Industries, Inc.
______________________
______________________
Attention:____________
Dear Sirs:
We refer to the Credit Agreement dated as of October
1995 (the "Credit Agreement") among GIANT INDUSTRIES,
INC., a Delaware corporation ("Company"), the Guarantors
(as defined in the Credit Agreement) parties thereto, the
several financial institutions from time to time party
thereto (the "Banks"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent (the "Agent") for the Banks
(as herein defined) from time to time party to the Credit
Agreement, and BANK OF AMERICA ILLINOIS, as letter of
credit issuing bank and a Bank. Terms defined in the
Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request the
consent of the Company to, the assignment by ___________
(the "Assignor") to _____________________________ (the
"Assignee") of __% of the right, title and interest of the
Assignor in and to the Credit Agreement (including without
limitation the right, title and interest of the Assignor
in and to the Commitment of the Assignor and all
outstanding Loans made by and L/C Obligations of the
Assignor). Before giving effect to such assignment the
Assigner's (a) Commitment is $________, (b) Commitment
Percentage is ______%, (c) aggregate principal amount of
its outstanding Loans is $_________, and (d) the aggregate
principal amount of its outstanding L/C Obligations is
$____________. After giving effect to such assignment,
the Assignor's and Assignee's respective Loans, L/C
Obligations, Commitment and Commitment Percentage are
as follows:
Outstanding
Outstanding L/C Commitment
Loans Obligations Percentage Commitment
----------- ----------- ---------- ----------
Assignor $__________ $__________ _______% $________
Assignee $__________ $__________ _______% $________
2. The Assignee agrees that upon
receiving the consent of the Company and the
Agent to such assignment and from and after
the effective date of the Assignment, the
Assignee will be bound by the terms of the
Credit Agreement, with respect to the interest
in the Credit Agreement assigned to it as
specified above, as fully and to the same
extent as if the Assignee were the Bank
originally holding such interest in the Credit
Agreement.
3. The following administrative details
apply to the Assignee:
(A) Offshore Lending Office:
Assignee:________________________
Address:_________________________
_________________________
_________________________
Attention:_______________________
Telephone:(___)__________________
Facsimile:(___)__________________
(B) Domestic Lending Office:
Assignee:________________________
Address:_________________________
_________________________
_________________________
Attention:_______________________
Telephone:(___)__________________
Facsimile:(___)__________________
(C) Notice Address:
Assignee:________________________
Address:_________________________
_________________________
_________________________
Attention:_______________________
Telephone:(___)__________________
Facsimile:(___)__________________
(D) Payment Instructions:
Account No.:_____________________
At:_____________________
_____________________
_____________________
Reference:_______________________
Attention:_______________________
4. Without limiting the generality of Paragraph
2 hereinabove, the tax forms to be delivered by the
Assignee pursuant to Section 4.01 of the Credit
Agreement, if any, will be promptly provided in
compliance therewith.
IN WITNESS WHEREOF, the Assignor and the Assignee
have caused this Assignment and Acceptance to be
executed by their respective duly authorized officials,
officers or agents as of the date first above mentioned.
Very truly yours,
[Name of Assignor]
By_____________________
Name:
Title:
[Name of Assignee]
By_____________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent, hereby grants its consent
to the foregoing instrument:
By______________________________
Name:
Title:
GIANT INDUSTRIES, INC.
hereby grants its consent
to the foregoing assignment:
By______________________________
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT "F-1"
BANK OF AMERICA ILLINOIS
FACILITY A REVOLVING NOTE
$30,000,000 October 4, 1995
FOR VALUE RECEIVED, the undersigned, GIANT
INDUSTRIES, INC., a Delaware corporation (the
"Borrower"), promises to pay to the order of BANK OF
AMERICA ILLINOIS (the "Bank"), for the account of its
Lending Office, the principal amount of THIRTY MILLION
AND NO/100 DOLLARS ($30,000,000.00) or the aggregate
unpaid principal amount of all Facility A Revolving
Loans made by the Bank to the Borrower pursuant to
Section 2.01(a) of the Credit Agreement hereinafter
referred to, whichever is less, in immediately available
funds at BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, AGENCY MANAGEMENT SERVICES,
#5596, 1455 Market Street, Twelfth Floor, San Francisco,
California 94103, at the times and in the amounts as set
forth in the Credit Agreement. The Borrower promises to
pay interest on the unpaid principal balance of the
Facility A Revolving Loans, from time to time
outstanding, at the rates and on the dates set forth in
the Credit Agreement. The aggregate unpaid principal
amount of all Facility A Revolving Loans shall be due
and payable on the Facility A Termination Date.
This note is one of the notes issued pursuant to
and entitled to the benefits of that certain Credit
Agreement, dated as of October 4, 1995 (as the same
may be amended, modified or restated from time to time,
the "Credit Agreement"), among Borrower, the Guarantors
(as defined in the Credit Agreement) party thereto, the
several financial institutions from time to time party
thereto (the "Banks'), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION as Agent for the Banks, and BANK
OF AMERICA ILLINOIS as letter of credit issuing bank
and a Bank. All captioned terms used but not defined
herein shall have the meaning assigned to them in the
Credit Agreement. Reference is made to the Credit
Agreement for, inter alia, provisions for the prepayment
hereof the acceleration of the maturity hereof and to
the effect that no provision of the Credit Agreement or
this Facility A Revolving Note shall require the payment
or permit the charging or collection of interest in an
amount in excess of the highest non-usurious amount
permitted by applicable law.
It is contemplated that by reason of prepayments
hereon prior to the Facility A Termination Date, there
may be times when no indebtedness is owing hereunder
prior to such date, but notwithstanding such occurrence
this note shall be in full force and effect as to the
Facility A Revolving Loans made pursuant to the Credit
Agreement subsequent to each such occurrence.
All Facility A Revolving Loans made by the Bank
pursuant to the Credit Agreement and all payments of the
principal thereof shall be endorsed by the holder of
this Facility A Revolving Note on the schedule annexed
hereto (including any additional pages such holder may
add to such schedule), which endorsement shall
constitute prima facie evidence of the accuracy of the
information so endorsed; provided, however, that the
failure of the holder of this Facility A Revolving Note
to insert any date or amount or other information on
such schedule shall not in any manner affect the
obligation of the Borrower to repay any Facility A
Revolving Loans in accordance with the terms of the
Credit Agreement.
The Borrower and any and all sureties, guarantors
and endorsers of this Facility A Revolving Note and all
other parties now or hereafter liable hereon, severally
waive, except as otherwise provided in the Credit
Agreement, grace, demand, presentment for payment,
protest, notice of any kind (including, but not limited
to, notice of dishonor, notice of protest, notice of
intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any
party hereto, and agree (i) to all extensions and
partial payments, with or without notice, before or
after maturity, (ii) to any substitution, exchange or
release of any security now or hereafter given for this
Facility A Revolving Note, (iii) to the release of any
party primarily or secondarily liable hereon, and (iv)
that it will not be necessary for the Bank, in order to
enforce payment of this Facility A Revolving Note, to
first institute or exhaust the Bank's remedies against
the Borrower or any other party liable therefor or
against any security for this Facility A Revolving Note.
This Facility A Revolving Note may not be changed,
modified or terminated orally, but only by an agreement
in writing signed by the party charged. If any term or
provision of this Facility A Revolving Note shall be
held invalid, illegal or unenforceable, the validity of
all other terms and provisions herein shall in no way be
affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS
FACILITY A REVOLVING NOTE, THE BORROWER WAIVES THE RIGHT
TO A TRIAL BY JURY AND THE DEFENSES OF FORUM NON
CONVENIENCE AND IMPROPER VENUE. THIS FACILITY A REVOLVING
NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS AND SHALL BE BINDING UPON
THE SUCCESSORS AND ASSIGNS OF THE BORROWER AND INURE TO
THE BENEFIT OF THE BANK AND ITS SUCCESSORS AND ASSIGNS
(INCLUDING PARTICIPANT'S) IN ACCORDANCE WITH THE TERMS
OF THE CREDIT AGREEMENT.
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Facility A Revolving Note on the date
first above written.
GIANT INDUSTRIES, INC.
By______________________
Name:
Title:<PAGE>
<PAGE>
GRID SCHEDULE
Attached to and made part of the Facility A Revolving
Note, dated October 4, 1995, issued pursuant to that
certain Credit Agreement, dated as of October 4, 1995,
among GIANT INDUSTRIES, INC., a Delaware corporation, the
Guarantors party thereto, the several financial
institutions from time to time party thereto (the
"Banks"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as Agent for the Banks from time to time to
the Credit Agreement, and BANK OF AMERICA ILLINOIS as
letter of credit issuing bank and a Bank.
Date of Loan:
Principal Amount of Loan:
Type of Loan(1):
Interest Rate:
Interest Paid
Maturity Date:
Amount of Principal Paid or Prepaid or Converted:
Unpaid Principal Balance (Balance continued):
Name of Person Making Notation:
(1) The type of loan may be represented by either "B" for
Base Rate Loans or "O" for Offshore Rate Loans.<PAGE>
<PAGE>
EXHIBIT "F-2"
BANK OF AMERICA ILLINOIS
FACILITY B REVOLVING NOTE
$40,000,000 October 4, 1995
FOR VALUE RECEIVED, the undersigned, GIANT INDUSTRIES,
INC., a Delaware corporation (the "Borrower), promises to
pay to the order of BANK OF AMERICA ILLINOIS (the "Bank"),
for the account of its Lending Office, the principal
amount of FORTY MILLION AND No/100 DOLLARS ($40,000,000.00)
or the aggregate unpaid principal amount of all Facility
B Revolving Loans made by the Bank to the Borrower
pursuant to Section 2,01(b) of the Credit Agreement
hereinafter referred to, whichever is less, in immediately
available funds at BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AGENCY MANAGEMENT SERVICES,
#5596, 1455 Market Street, Twelfth Floor, San Francisco,
California 94103, at the times and in the amounts as set
forth in the Credit Agreement. The Borrower promises to
pay interest on the unpaid principal balance of the
Facility B Revolving Loans, from time to time outstanding,
at the rates and on the dates set forth in the Credit
Agreement. The aggregate unpaid principal amount of all
Facility B Revolving Loans shall be due and payable on the
Facility B Termination Date.
This note is one of the notes issued pursuant to and
entitled to the benefits of that certain Credit Agreement,
dated as of October 4, 1995 (as the same may be amended,
modified or restated from time to time, the "Credit
Agreement"), among Borrower, the Guarantors (as defined in
the Credit Agreement) party thereto, the several financial
institutions from time to time party thereto (the
'Banks'), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as Agent for the Banks, and BANK OF AMERICA
ILLINOIS as letter of credit issuing bank and a Bank. AU
capitalized terms used but not defined herein shall have
the meaning assigned to them in the Credit Agreement.
Reference is made to the Credit Agreement for, inter alia,
provisions for the prepayment hereof the acceleration of
the maturity heres& and to the effect that no provision of
the Credit Agreement or this Facility B Revolving Note shall
require the payment or permit the charging or collection
of interest in an amount in excess of the highest
non-usurious amount permitted by applicable law.
It is contemplated that by reason of prepayments
hereon prior to the Facility B Termination Date, there may
be times when no indebtedness is owing hereunder prior to
such date, but notwithstanding such occurrence this note
shall be in full force and effect as to the Facility B
Revolving Loans made pursuant to the Credit Agreement
subsequent to each such occurrence.
All Facility B Revolving Loans made by the Bank
pursuant to the Credit Agreement and all payments of the
principal thereof shall be endorsed by the holder of this
Facility B Revolving Note on the schedule annexed hereto
(including any additional pages such holder may add to
such schedule), which endorsement shall constitute prima
facie evidence of the accuracy of the information so endorsed;
provided, however, that the failure of the holder of this
Facility B Revolving Note to insert any date or amount or
other information on such schedule shall not in any manner
affect the obligation of the Borrower to repay any
Facility B Revolving Loans in accordance with the terms of
the Credit Agreement.
The Borrower and any and all sureties, guarantors and
endorsers of this Facility B Revolving Note and all other
parties now or hereafter liable hereon, severally waive,
except as otherwise provided in the Credit Agreement,
grace, demand, presentment for payment, protest, notice of
any kind (including, but not limited to, notice of
dishonor, notice of protest, notice of intention to
accelerate and notice of acceleration) and diligence in
collecting and bringing suit against any party hereto, and
agree (i) to all extensions and partial payments, with or
without notice, before or after maturity, (ii) to any
substitution, exchange or release of any security now or
hereafter given for this Facility B Revolving Note, (iii)
to the release of any party primarily or secondarily
liable hereon, and (iv) that it will not be necessary for
the Bank, in order to enforce payment of this Facility B
Revolving Note, to first institute or exhaust the Bank's
remedies against the Borrower or any other party Liable
therefor or against any security for this Facility B
Revolving Note.
This Facility B Revolving Note may not be changed,
modified or terminated orally, but only by an agreement in
writing signed by the party charged. If any term or
provision of this Facility B Revolving Note shall be held
invalid, illegal or unenforceable, the validity of all
other terms and provisions herein shall in no way be
affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS
FACILITY B REVOLVING NOTE, THE BORROWER WAIVES THE RIGHT TO
A TRIAL BY JURY AND THE DEFENSES OF FORUM NON CONVENIENS
AND IMPROPER VENUE. THIS FACILITY B REVOLVING NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS AND SHALL BE BINDING UPON THE SUCCESSORS
AND ASSIGNS OF THE BORROWER AND INURE TO THE BENEFIT OF
THE BANK AND ITS SUCCESSORS AND ASSIGNS (INCLUDING
PARTICIPANTS) IN ACCORDANCE WITH THE TERMS OF THE CREDIT
AGREEMENT.
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Facility B Revolving Note on the date
first above written.
GIANT INDUSTRIES, INC.
By______________________
Name:
Title:<PAGE>
<PAGE>
GRID SCHEDULE
Attached to and made part of the Facility B Revolving
Note, dated October 4, 1995, issued pursuant to that
certain Credit Agreement, dated as of October 4, 1995,
among GIANT INDUSTRIES, INC., a Delaware corporation, the
Guarantors party thereto, the several financial
institutions from time to time party thereto (the
"Banks"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION as Agent for the Banks from time to time to
the Credit Agreement, and BANK OF AMERICA ILLINOIS as
letter of credit issuing bank and a Bank.
Date of Loan:
Principal Amount of Loan:
Type of Loan(1):
Interest Rate:
Interest Paid
Maturity Date:
Amount of Principal Paid or Prepaid or Converted:
Unpaid Principal Balance (Balance continued):
Name of Person Making Notation:
(1) The type of loan may be represented by either "B" for
Base Rate Loans or "O" for Offshore Rate Loans.
<PAGE>
<PAGE>
EXHIBIT "G"
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") by _______,
a __________ corporation (the "Guarantor"), is effective
as of October 4, 1995, and is in favor of each of the
Banks (herein defined) from time to time parties to the
Credit Agreement(herein defined) and in favor of BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (together
with its successors and assigns herein called the
"Agent"), as the Agent for and on behalf of the financial
institutions (the "Banks") now or hereafter party to that
certain Credit Agreement (as the same may be amended,
modified or restated from time to time and at any time,
the "Credit Agreement") among GIANT INDUSTRIES, INC., a
Delaware corporation (the "Company"), the Guarantors (as
defined in the Credit Agreement) party thereto, the
Banks, the Agent and BANK OF AMERICA ILLINOIS as letter
of credit issuing bank and a Bank. All capitalized terms
used but not defined herein shall have the meaning
assigned to them in the Credit Agreement.
WITNESSETH:
WHEREAS, pursuant to the terms of the Credit
Agreement, the Banks have agreed to make certain
Loans to the Company;
WHEREAS, the obligation of the Banks to make the
Loans is conditioned upon, among other things, the
execution and delivery by the Guarantor of this
Guaranty;
WHEREAS, the Guarantor is a wholly-owned subsidiary
of the Company and the Guarantor and the Company are
engaged in related businesses and the Guarantor shall
derive substantial direct and indirect economic benefit
from the Loans;
NOW, THEREFORE, (i) in consideration of the premises
and to induce the Banks to enter into the Credit
Agreement and to make the Loans, (ii) at the special
insistence and request of the Agent and the Banks, and
(iii) for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
Guarantor, for the benefit of the Agent and the Banks,
hereby agrees as follows:
Section 1. Defined Terms, Unless otherwise defined
herein, terms defined in the Credit Agreement are used
herein as therein defined.
Section 2. Guaranty. The Guarantor hereby,
unconditionally and irrevocably, guarantees the prompt
performance and payment in full in Dollars by the Company
when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations of the Company, and the
Guarantor further agrees to pay all costs, fees and
expenses (including, without limitation, counsel fees,
and the allocated cost of in-house counsel) incurred by
the Agent or any Bank in enforcing any rights under this
Guaranty.
Section 3. Guaranty Absolute.
(a) The obligations of the Guarantor hereunder
are those of a primary obligor, and not merely a surety,
and are independent of the Obligations. A separate
action or actions may be brought against the Guarantor
whether or not an action is brought against the Company,
any other guarantor or other obligor in respect of the
Obligations or whether the Company, any other guarantor
or any other obligor in respect of the Obligations are
joined in any such action or actions.
(b) The Guarantor guarantees that the
Obligations will be paid and performed strictly in
accordance with the terms of the Credit Agreement and the
other Loan Documents regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Agent or
the Banks with respect thereto. Guarantor agrees that its
guarantee constitutes a guarantee of payment when due and
not of collection. The liability of the Guarantor under
this Guaranty shall be absolute and unconditional
irrespective of:
(i) any lack of genuineness, validity,
legality or enforceability of the Credit Agreement, any
other Loan Document or any other document, agreement or
instrument relating thereto or any assignment or transfer
of any thereof;
(ii) any change in the time, manner or
place of payment of, or in any other term of, all or any
of the Obligations (including, without limitation, the
possible extension of the Facility A Termination Date,
Facility B Termination Date and increase of the amount of
the Commitments all on the terms and conditions set forth
in the Credit Agreement), or any waiver, indulgence,
compromise, renewal, extension, amendment, modification
of, or addition, consent, supplement to, or consent to
departure from, or any other action or inaction under or
in respect of, the Credit Agreement or any other Loan
Document or any document, instrument or agreement
relating to the Obligations or any other instrument or
agreement referred to therein or any assignment or
transfer of any thereof;
(iii) any release or partial release of any
other guarantor or other obligor in respect of the
Obligations;
(iv) any exchange, release or
non-perfection of any collateral for all or any of the
Obligations, or any release, or amendment or waiver of,
or consent to departure from, any guaranty or security,
for all or any of the Obligations;
(v) any furnishing of any additional
security for any of the Obligations;
(vi) the liquidation, bankruptcy,
insolvency or reorganization of the Company, any other
guarantor or other obligor in respect of the Obligations
or any action taken with respect to this Guaranty by any
trustee or receiver, or by any court, in any such
proceeding;
(vii) any modification or termination
of any Intercreditor or subordination agreement pursuant
to which the claims of other creditors of the Company or
the Guarantor are subordinated to those of the Banks; or
(viii) any other circumstance which might
otherwise constitute a defense available to, or a legal
or equitable discharge of, the Company or the Guarantor.
(c) This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any
time payment or performance of the Obligations, or any
part thereof, is, upon the insolvency, bankruptcy or
reorganization of the Company or the Guarantor or
otherwise pursuant to applicable law, rescinded or
reduced in amount or must otherwise be restored or
returned by the Agent or any Bank, all as though such
payment or performance had not been made.
(d) If an event permitting the acceleration of
any of the Obligations shall at any time have occurred
and be continuing and such acceleration shall at such
time be prevented by reason of the pendency against the
Company of a case or proceeding under any bankruptcy or
insolvency law, the Guarantor agrees that, for purposes
of this Guaranty and its obligations hereunder, the
Obligations shall be deemed to have been accelerated and
the Guarantor shall forthwith pay such Obligations
(including, without limitation, interest which but for
the filing of a petition in bankruptcy with respect to
the Company, would accrue on such Obligations), and the
other obligations hereunder, without any further notice
or demand.
Section 4. Waivers. To the extent permitted by
applicable law, the Guarantor hereby waives promptness,
diligence, notice of intention to accelerate, notice of
acceleration, notice of acceptance and any and all other
notices with respect to any of the Obligations and this
Guaranty and any requirement that the Agent or any Bank
protect, secure, perfect or insure any security interest
in or any Lien on any property subject thereto or exhaust
any right or take any action against the Company, any
other guarantor or any other Person or any collateral or
security or to any balance of any deposit accounts or
credit on the books of any Bank in favor of the Company
or the Guarantor. Guarantor expressly waives each and
every right to which it may be entitled by virtue of the
suretyship law of the State of Texas including without
limitation any rights it may have pursuant to Rule 31,
Texas Rules of Civil Procedure, Section 17.001, Civil
Practice and Remedies Code and Chapter 34 of the Texas
Business and Commerce Code.
Section 5. Subrogation.
(a) The Guarantor will not exercise any rights
of subrogation, reimbursement and contribution,
contractual statutory or otherwise, which it may acquire
by way of subrogation under this Guaranty, by any payment
hereunder or otherwise, until all of the Obligations of
the Company have been paid, all Commitments have
terminated and all Letters of Credit have expired.
(b) If, in the exercise of any of its rights
and remedies, the Agent or any Bank shall forfeit any of
its rights or remedies, including its right to enter a
deficiency judgment against the Company or any other
Person, whether because of any applicable laws pertaining
to "election of remedies" or the like, the Guarantor
hereby consents to such action by the Agent or such Bank
and waives any claim based upon such action, even if such
action by the Agent or such Bank shall result in a full
or partial loss of any rights of subrogation which the
Guarantor might otherwise have had but for such action by
the Agent or such Bank. Any election of remedies which
results in the denial or impairment of the right of the
Agent or such Bank to seek a deficiency judgment against
the Company shall not impair the Guarantor's obligation
to pay the full amount of the Obligations. In the event
the Agent or any Bank shall bid at any foreclosure or
trustee's sale or at any private sale permitted by law or
under the Loan Documents, the Agent or such Bank may bid
all or less than the amount of the Obligations and the
amount of such bid need not be paid by the Agent or such
Bank but shall be credited against the Obligations. The
amount of the successful bid at any such sale, whether
the Agent or such Bank or any other party is the
successful bidder, shall be conclusively deemed to be the
fair market value of the collateral and the difference
between such bid amount and the remaining balance of the
Obligations shall be conclusively deemed to be the amount
of the Obligations guaranteed under this Guaranty,
notwithstanding that any present or future law or court
decision or ruling may have the effect of reducing the
amount of any deficiency claim to which the Agent or any
Bank might otherwise be entitled but for such bidding at
any such sale.
Section 6. Representations and Warranties.
(a) General. The Guarantor represents and
warrants to the Agent and the Banks as of the date hereof
that all of the representations and warranties contained
in Article VI of the Credit Agreement are true and
correct with respect to the Guarantor to the extent such
representations and warranties refer to (a) Subsidiaries
of the Company, and such representations and warranties
are hereby incorporated by reference.
(b) Full Disclosure, The Guarantor represents
and warrants that none of the representations or
warranties made by the Guarantor or any of its
Subsidiaries in the Loan Documents as of the date such
representations and warranties are made or deemed made,
and none of the statements contained in any exhibit,
report, written statement or certificate furnished by or
on behalf of the Guarantor or any of its Subsidiaries in
connection with the Loan Documents (including the
offering and disclosure materials delivered by or on
behalf of the Guarantor to the Banks prior to the Closing
Date), taken as a whole, contains any untrue statement of
a material fact known to the Guarantor or omits any
material fact known to the Guarantor required to be
stated therein or necessary to make the statements made
therein, in light of the circumstances under which they
are made, not misleading as of the time when made or
delivered.
(c) Benefit to Guarantor. The Guarantor
represents and warrants that the Guarantor has determined
that its liability and obligation under this Guaranty
will substantially benefit it directly, and its board of
directors has made that determination. The Company, the
Guarantor and the other Subsidiaries of the Company are
mutually dependent on each other in the conduct of their
respective businesses and do business together as an
integrated business enterprise. The maintenance and
improvement of the Company's financial condition is vital
to sustaining the Guarantor's business and the
transactions contemplated in the Credit Agreement produce
distinct and identifiable financial and economic direct
and indirect benefits to the Guarantor.
The representations and warranties set forth in this
Section 6 shall survive the execution and delivery of
this Guaranty.
Section 7. Further Assurances.
(a) As long as any of the Obligations remain
outstanding and the Commitments have not expired, the
Guarantor shall, unless the Majority Banks waive
compliance in writing, comply with all the covenants
related to the Guarantor contained in the Credit
Agreement.
(b) The Guarantor agrees that at any time and
from time to time, at the expense of the Guarantor, the
Guarantor will promptly execute and deliver all further
instruments and documents, and take all further action,
that may be necessary or desirable, or that the Agent may
reasonably request, to enable the Agent to protect and to
exercise and enforce its rights and remedies hereunder.
Section 8. Application of Payments. Any payment
received by the Agent from the Guarantor (or from any
Bank pursuant to Section 13 below), shall be applied by
the Agent as follows:
First, to the payment of costs and expenses of
collection and all expenses (including, without
limitation, any legal fees and disbursements and the
allocated cost of in-house counsel), liabilities and
advances made or incurred by the Agent in connection
therewith;
Next, to the Banks pro rata based on the then
outstanding amount of the Obligations owed to each in
payment in full of the Obligations; and
Finally, after payment in full of all
Obligations and the termination of the Commitments,
the payment to the Guarantor, or its successors and
assigns, or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such
proceeds.
Section 9. Decisions Relating to Exercise of
Remedies. Notwithstanding anything in this Guaranty to
the contrary, the Agent may exercise, and at the request
of the Majority Banks shall exercise or refrain from
exercising, all rights and remedies provided for herein
and provided by law.
Section 10. No Waiver. No failure on the part of
the Agent or any Bank to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 11. Amendments, Etc, No amendment or waiver
of any provision of this Guaranty, nor consent to any
departure by the Guarantor herefrom, shall in any event
be effective unless the same shall be in writing and
signed, in the case of amendments, by the Guarantor and
by the Agent and, in the case of consent or waivers, by
the Agent and then such amendment, waiver or consent
shall be effective only in the specific instance and for
the specific purpose for which made or given.
Section 12. Notices. All notices, requests and
other communications provided for hereunder shall be in
writing and given to Agent as provided in Section 11,02
of the Credit Agreement. All communications and notices
hereunder to Guarantor shall be given to or, at such
other address as shall be designated by
Guarantor in a written notice to the Agent.
Section 13. Right to Set-off.
(a) Upon the occurrence and during the
continuance of any Event of Default under the Credit
Agreement, each Bank is hereby authorized at any time and
from time to time, to the fullest extent permitted by
law, to set-off and apply any and all deposits (general
or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by
such Bank to or for the credit or the account of the
Guarantor against any and all of the Obligations,
irrespective of whether or not such Bank shall have made
any demand under this Guaranty and although such
Obligations may be contingent and unmatured. Each Bank
which sets-off pursuant to this Section 13(a) shall give
prompt notice to the Guarantor following the occurrence
thereof; provided that the failure to give such notice
shall not affect the validity of the set-off.
(b) Any payment obtained pursuant to Section
13(a) above (or in any other manner directly from the
Guarantor) by any Bank shall be remitted to the Agent and
distributed among the Banks in accordance with the
provisions of Section 8 above.
Section 14. Continuing Guaranty. This Guaranty
is a continuing guaranty and shall (a) remain in full
force and effect until payment in full (after the
termination of the Commitments) of the Obligations and
all other amounts payable under this Guaranty; (b) be
binding upon the Guarantor, its successors and assigns;
and (c) inure to the benefit of the Agent, the Banks and
their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause
(c), any Bank may assign or otherwise transfer its rights
and obligations under the Credit Agreement to any other
Person or entity, and such other Person or entity shall
thereupon become vested with all the benefits in respect
thereof granted to the Bank herein or otherwise, au as
provided in, and to the extent set forth in, Sections
11,07 and 11.08 of the Credit Agreement.
Section 15. Subordination of the Credit Parties'
Obligations to the Guarantor. The Guarantor hereby
expressly covenants and agrees for the benefit of the
Agent and the Banks that all obligations and liabilities
of the Company, the Other Guarantors (as defined in
Section 17 of this Guaranty) and each of their respective
Subsidiaries to the Guarantor of whatsoever description
(including, without limitation, all intercompany
receivables of the Guarantor from the Company, other
Guarantors and Subsidiaries) shall be subordinated and
junior in right of payment to the Obligations. Following
the occurrence of an Event of Default, any indebtedness
of the Company, Other Guarantors and their Subsidiaries
to the Guarantor shall, if the Agent shall so request, be
collected and received by the Guarantor as trustee for
the Agent and the Banks and paid over to the Agent and
the Banks on account of the Obligations but without
reducing or affecting in any manner the liability of the
Guarantor under this Guaranty.
Section 16. Financial Reporting. Guarantor shall
furnish to the Agent all such financial statements and
other information relating to the financial condition,
properties and affairs of Guarantor as any Bank, acting
through the Agent, may from time to time reasonably
request.
Section 17. Other Guarantors. Guarantor acknowledges
that other Subsidiaries of the Company (collectively, the
"Other Guarantors") have guaranteed the payment and
performance of the Obligations pursuant to other guaranty
agreements executed in connection with the Credit
Agreement (the "Other Guaranty Agreements"), and to the
extent Guarantor is required to satisfy all or any part
of the Obligations pursuant to the terms of this
Guaranty, Guarantor shall have and be entitled to rights
of contribution against the Other Guarantors. The
Guarantor agrees that in the event a payment shall be
made by any Other Guarantor under any Other Guaranty
Agreement, the Other Guarantor (the "Claiming Guarantor")
shall have and be entitled to rights of contribution
against the Guarantor pursuant to and in accordance with
applicable law. In the event the Guarantor makes any
such payment to a Claiming Guarantor, the Guarantor shall
be subrogated to the rights of such Claiming Guarantor to
the extent of such payment. Notwithstanding any
provision of this Guaranty to the contrary, all rights of
the Other Guarantors under this Section and all other
rights of indemnity, contribution or subrogation under
applicable law or otherwise shall be fully subordinated
to the indefeasible payment in full of the Obligations,
and no payment may be made in respect of such rights of
indemnity, contribution or subrogation until all of the
Obligations have been paid in full, all Commitments have
expired and all Letters of Credit have expired. No
failure on the part of the Guarantor or any Other
Guarantor to make the payments required by this Section
(or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and
liabilities of the Guarantor or any Other Guarantor with
respect to any Guaranty, and the Guarantor and each Other
Guarantor shall remain liable for the frill amount of the
obligations under the guaranty agreement executed by it.
This Section 12 is intended only to confirm the relative
rights of the Guarantor and all Other Guarantors, and
nothing set forth in this sentence is intended to or
shall impair the obligations of the Guarantor and Other
Guarantors, jointly and severally, to pay to the Agent
and the Banks, or any one or more of them, as the case
may be, the Obligations as and when the same shall become
due and payable in accordance with the terms of this
Guaranty.
Section 18. Severability. If for any reason any
provision or provisions hereof are determined to be
invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect
those portions of this Guaranty which are valid.
Section 19. Taxes.
(a) Any and all payments by the Guarantor to
each Bank or the Agent under this Guaranty and any other
Loan Document shall be made free and clear of, and
without deduction or withholding for, any Taxes. In
addition, the Guarantor shall pay all Other Taxes.
(b) The Guarantor agrees to indemnity and hold
harmless each Bank and the Agent for the full amount of
Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this
Section) paid by the Bank or the Agent and any liability
(including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly
or legally asserted. Payment under this indemnification
shall be made within 30 days after the date the Bank or
the Agent makes written demand therefor.
(c) If the Guarantor shall be required by law to
deduct or withhold any Taxes or Other Taxes from or in
respect of any sum payable hereunder to any Bank or the
Agent, then: (i) the sum payable shall be increased as
necessary so that after remaining all required deductions
and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section)
such Bank or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no
such deductions or withholdings been made; (ii) the
Guarantor shall make such deductions and withholdings;
(iii) the Guarantor shall pay the full amount deducted or
withheld to the relevant taxing authority or other
authority in accordance with applicable law; and (iv) the
Guarantor shall also pay to each Bank or the Agent for
the account of such Bank, at the time interest is paid,
all additional reasonable amounts which the respective
Bank specifies as necessary to preserve the after-tax
yield the Bank would have received if such Taxes or Other
Taxes had not been imposed.
(d) Within 30 days after the date of any payment
by the Guarantor of Taxes or Other Taxes, the Guarantor
shall furnish the Agent the original or a certified copy
of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the
SECTION 20. GOVERNING LAW AND JURISDICTION.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
]LAWS); PROVIDED THAT THE AGENT AND THE BANKS SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF TEXAS, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MARING OF COPIES THEREOF BY REGISTERED
OR CERTIFIED MAIL POSTAGE PREPAID, TO ALL AT ITS ADDRESS
SET FORTH IN SCHEDULE 11,02 OF THE CREDIT AGREEMENT, SUCH
SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR ANY
BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. THE
GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY TEXAS LAW.
(c) THE GUARANTOR IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY AC-NON
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
GUARANTY OR ANY DOCUMENT RELATED HERETO.
SECTION 21. WAIVER OF JURY TRIAL. THE GUARANTOR
WAIVES ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF AC-NON BASED UPON OR ARISING OUT OF OR RELATED
TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER with RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. THE GUARANTOR AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE GUARANTOR
FURTHER AGREES THAT ITS RIGHT TO A BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABLE OF THIS GUARANTY OR
THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
SECTION 22. ENTIRE AGREEMENT. THIS WRITTEN GUARANTY
AND THE INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION
HEREWITH, REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the Guarantor has caused this
Guaranty to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above
written.
___________________________
By:________________________
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT "H"
FORM OF BORROWING BASE REPORT
DELIVERED PURSUANT TO SECTION 7.01(c)
OF THE CREDIT AGREEMENT
BORROWING BASE REPORT
Calendar Month Ended ________, 199__
The undersigned authorized officer of GIANT
INDUSTRIES, INC., a Delaware corporation (the "Company"),
delivers this Certificate pursuant to Section 7.01(c) of
the Credit Agreement dated as of October 4, 1995 (the
"Credit Agreement"), among Bank of America National Trust
and Savings Association, as Agent (the "Agent"), Bank of
America Illinois as a Bank and as a Letter of Credit
Issuing Bank, the several financial institutions from
time to time party thereto (the "Banks"),
the Company and the Guarantors named therein.
Capitalized terms used herein without definition have
the meanings assigned to them in the Credit Agreement.
The undersigned hereby certifies to the Agent
and the Banks as follows:
1. The undersigned hereby certifies that, to the
best of his knowledge (a) Annex I hereto is a true and
accurate calculation of the Borrowing Base as at the end
of the calendar month ended ___________, 199___,
determined in accordance with the requirements of the
Credit Agreement, and (b) Annex 2 hereto is a correct
description of the aging of all Eligible Account
Receivables as at the end of the calendar month ended
____________, 199__.
2. All Eligible Refinery Hydrocarbon Inventory
covered by this Certificate has been produced in
compliance with all applicable laws, including, without
limitation, the minimum wage and overtime requirement of
the Fair Labor Standards Act of 1938, as amended.
EXECUTED AND DELIVERED as of October __, 1995.
GIANT INDUSTRIES, INC.
Authorized Officer
<PAGE>
<PAGE>
ANNEX I
GIANT INDUSTRIES, INC.
BORROWING BASE CERTIFICATE
CALENDAR MONTH
ENDED ___________, 1995
Borrowing Base Calculation:
A. Eligible Accounts Receivables (Annex 1a) $______
B. Eligible Refinery Hydrocarbon Inventory $______
[Annex 1b]
C. Borrowing Base (Sum of A&B) $______
Lesser of Borrowing Base or $45,000,000 $______
Less Outstanding at Month End:
Aggregate Facility B Loans $______
Aggregate L/C Obligations $______
Total $______
Net Availability at Month End: $______
<PAGE>
<PAGE>
ANNEX 1(a)
GIANT INDUSTRIES, INC.
DETAIL OF ELIGIBLE ACCOUNTS RECEIVABLE, FIFO BASIS
______________, 199___
A B
Preferred Account Other Account
Obligors Obligors
1. Service Stations:
A. Trade _______ _______
B. Other _______ _______
C. Giant Travel Center _______ _______
1. Trade _______ _______
2. Other _______ _______
D. Total ______ _____
2. Refinery;
A. Trade _______ _______
B. Raw Material Supply _______ _______
C. Product Supply _______ _______
D. Portales Plant _______ _______
E. Total ______ _____
3. Eligible Accounts Receivable
A. Total Accounts $______ $_____
Receivables
B. Advance Rate x .90 x .85
C. Sub Total per Obligor $______ $_____
Type (AxB)
D. Total Eligible Accounts $_____
Receivables (Sum of
Column A and B)
<PAGE>
<PAGE>
ANNEX 1(b)
GIANT INDUSTRIES, INC.
INVENTORY DETAIL
_______________, 199__
Bloomfield Ciniza Portales
Bbls Bbls Bbls
Albuquerque Other Total
Terminal Bbls Bbls
$/Bbl $
FEED STOCK:
Crude Oil
Field Tanks/Terminals
Pipeline Linefill
Tex New Mex Pipeline
Exchange and Other Common Carriers
Refinery Crude
(Less B.S.& W.)
(Less Slop)
NGL's
Natural Gasoline
Isobutane
Normal Butane
Other
MTBE
Ethanol
Subtotal
INTERMEDIATE PRODUCTS:
Isomerate
Cat Feed
Gasoline Components
Naptha
Subtotal
REFINED PRODUCTS
Leaded Regular
Unleaded Regular
Unleaded Premium
Propane
JP-8
Jet-A
Diesel
Residual Fuel Oil
Other:
Portales Ethanol
Gasolines
Service Station
Stop-N-Go
Four Corners
Travel Center
Subtotal
Inventory Total<PAGE>
<PAGE>
ANNEX 1(b)
GIANT INDUSTRIES, INC.
INVENTORY DETAIL
_______________, 199__
Borrowing Base Calculation:
Gross
Inventory Advance Advance
Product Line Amount Rate Amount
Feedstock 80.00%
Intermediate
Products 80.00%
Refined Products
(Excluding SS
and TC) 80.00%
Service Stations
and Travel Center 50.00%
Total
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in
Registration Statement No. 33-35357 of Giant Industries,
Inc. on Form S-8 of our reports on the Bloomfield Refining
Company's financial statements dated October 13, 1995
appearing in the Current Report on Form 8-K of Giant
Industries, Inc. for the date October 4, 1995.
Arthur Andersen LLP
Denver, Colorado
October 13, 1995
