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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period _______ to _______.
Commission File Number: 1-10398
GIANT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 86-0642718
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendments to this
Form 10-K. [X]
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements
for the past 90 days.
Yes [X] No [ ]
As of February 26, 1999, 10,838,767 shares of the registrant's
Common Stock, $.01 par value, were outstanding and the aggregate
market value of the voting stock held by non-affiliates of the
registrant was approximately $47,161,000 based on the New York Stock
Exchange closing price on February 26, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Parts of the following documents are incorporated by reference
in Part III of this Form 10-K Report:
Proxy Statement for Registrant's 1999 Annual Meeting of
Stockholders - Items 10, 11, 12, and 13.
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PART I
ITEMS 1. AND 2. BUSINESS AND PROPERTIES.
GENERAL
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997
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The primary factors affecting the results of the Company's
1998 operations as compared to its 1997 operations were (i) a
decline in refinery margins, partially related to (a) a sharp
decline in crude oil and finished product prices resulting
from, among other things, a decline in worldwide demand for
crude oil and finished products, and (b) non-cash charges for
reductions in the carrying value of inventories; (ii) the
acquisition of ninety-six service station/convenience stores
and related assets in May 1997 from Thriftway Marketing Corp.
and affiliates (the "Thriftway Assets"), the June 1997
acquisition of independent industrial/commercial petroleum
products distributor Phoenix Fuel Co., Inc. ("Phoenix Fuel",
and collectively with the Thriftway Assets, the "1997
Acquisitions"), the acquisition of seven service
station/convenience stores and related assets in February 1998
from DeGuelle Oil Company and DeGuelle Enterprises (the
"DeGuelle Assets") and, in June and July 1998, the acquisition
of thirty-two service station/convenience stores and related
assets and the lease of one other service station/convenience
store from Kaibab Industries, Inc. (the "Kaibab Assets", and
collectively with the DeGuelle Assets, the "1998
Acquisitions"); (iii) increased interest costs related to the
issuance of $150.0 million of 9% Senior Subordinated Notes (the
"9% Notes") in August 1997, to partially finance the 1997 and
1998 Acquisitions; (iv) increased operating costs, including
depreciation and amortization, and selling, general and
administrative expenses ("SG&A") primarily related to the above
acquisitions and planning for future growth; (v) a decrease in
refinery sourced sales volumes due in part to a major
maintenance turnaround at the Ciniza refinery in the second
quarter of 1998; and (vi) a write-off of costs incurred in
connection with the termination of a proposed merger with Holly
Corporation that had been approved by the Company's Board of
Directors on April 14, 1998.
EARNINGS (LOSS) BEFORE INCOME TAXES
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For the year ended December 31, 1998, the Company incurred
a loss before income taxes of $3.7 million, a decrease of
approximately $28.8 million from earnings before income taxes
of $25.1 million for the year ended December 31, 1997. The
decrease is primarily due to (i) a 24% decline in refinery
margins; (ii) a 40% increase in interest costs; (iii) a 21%
increase in operating expenses, including depreciation and
amortization; (iv) a 31% increase in administrative expenses,
including a write-off of approximately $1.4 million of costs
incurred in connection with the terminated merger with Holly
Corporation; and (v) a decrease in refinery sourced sales
volumes for approximately 3%. These items were offset in part
by contributions from the 1997 and 1998 Acquisitions and a
reduction in 1997 pretax earnings for a $1.2 million loss
incurred in connection with the sale of the Company's ethanol
processing plant.
REVENUES
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Revenues for the year ended December 31, 1998 were $642.5
million, a decrease of approximately $14.8 million or 2% from
$657.3 million in the comparable 1997 period. The decrease is
primarily due to a 27% decline in refinery weighted average
selling prices and a 3% decrease in refinery sourced finished
product sales volumes. These decreases were offset in part by
increased revenues attributable to the 1997 and 1998
Acquisitions and an 11% increase in merchandise sales for
retail operations other than those associated with the
Acquisitions.
For the year ended December 31, 1998, volumes of refined
products sold through the Company's retail units increased
approximately 45% from 1997 levels primarily due to the
acquisition of the Thriftway, Kaibab and DeGuelle Assets. In
addition, the volumes of finished product sold from the
Company's other retail operations increased approximately 8%.
This increase was largely due to a 28% increase in the volumes
of finished product sold from the Company's travel center, due
in large part to improved marketing programs put in place
during 1997, and a 3% increase in finished product volumes sold
from the Company's other retail service station/convenience
stores.
COST OF PRODUCTS SOLD
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For the year ended December 31, 1998, cost of products
sold decreased $22.1 million or 5% to $465.6 million from
$487.7 million in the corresponding 1997 period. The decrease
is primarily due to a 31% decline in average crude oil costs
and a 3% decrease in refinery sourced finished product sales
volumes. These decreases in costs were offset in part by
increases in costs related to the 1997 and 1998 Acquisitions.
In addition, 1998 cost of products sold increased by
approximately $8.5 million as a result of a reduction in the
carrying value of inventories related to a decline in crude oil
and refined product prices. Cost of products sold in 1997 was
higher by approximately $2.9 million as a result of similar
reductions in inventory carrying values.
OPERATING EXPENSES
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Operating expenses for the year ended December 31, 1998
were $102.5 million, an increase of approximately $17.3 million
or 20% from $85.2 million for the year ended December 31, 1997.
Substantially all of the increase is due to the 1997 and 1998
Acquisitions, including increased administrative and support
costs related to expanded retail operations. For the Company's
other operations, 1998 operating costs were relatively
comparable to those experienced in 1997.
DEPRECIATION AND AMORTIZATION
- -----------------------------
For the year ended December 31, 1998, depreciation and
amortization increased approximately $5.2 million or 22% to
$29.2 million from $24.0 million in the same 1998 period.
Approximately 61% of the increase is due to the 1997 and 1997
Acquisitions. The remainder of the increase is primarily
related to construction, remodeling and upgrades in retail,
refining and transportation operations; and the amortization of
1997 Bloomfield refinery turnaround costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
SG&A expenses for the year ended December 31, 1998 were
$25.3 million (including approximately $1.4 million for the
write-off of merger costs), an increase of approximately $6.0
million or 31% from $19.3 million in the corresponding 1997
period. Approximately 7% of the increase is due to SG&A
associated with the operations of Phoenix Fuel. The remainder
of the increase is primarily the result of higher 1998 payroll
and related costs, and higher 1998 outside services and other
costs, both in large part due to the 1997 and 1998 Acquisitions
and planning for future growth. These increases were partially
offset by a $1.4 million decrease in management incentive bonus
expense in the 1998 period due to the Company incurring a net
loss for the year.
WRITE-OFF OF MERGER COSTS
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On April 14, 1998, the Board of Directors of the Company
approved an Agreement and Plan of Merger (the "Merger
Agreement") whereby Holly Corporation ("Holly") would be merged
with and into Giant (the "Merger"). The Merger was subject to
various conditions stated in the Merger Agreement. On September
1, 1998, Giant and Holly mutually agreed to terminate the
proposed Merger after considering various factors, including
the inability of the companies to reach a satisfactory
resolution of concerns expressed by the Federal Trade
Commission relative to the possible impact of the Merger on
portions of the market served by the companies and uncertainty
caused by a lawsuit filed against Holly by Longhorn Partners
Pipeline, L.P. For the year, the Company has written off
approximately $1.4 million of costs incurred in connection with
the proposed Merger. These costs were primarily for fees paid
to investment bankers, attorneys, accountants and regulatory
agencies, and printing and distribution costs related to
documents delivered to shareholders.
INTEREST EXPENSE (INCOME)
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For the year ended December 31, 1998, interest expense
increased approximately $7.3 million or 40% to $25.4 million
from $18.1 million in the comparable 1997 period. The increase
is primarily due to additional interest expense related to the
9% Notes. This increase was partially offset by a reduction in
1998 interest expense due to lower direct borrowings from and
interest rates related to the Company's credit facilities.
For the year ended December 31, 1998, interest and
investment income decreased approximately $0.3 million or 14%
to $1.8 million from $2.1 million. The decrease is primarily
due to the use of some of the proceeds from the issuance of the
9% Notes, which had been invested in short-term instruments,
for the 1998 Acquisitions. The effects of fluctuations in
interest rates applicable to invested funds were nominal.
INCOME TAXES
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The benefit for income taxes for the year ended December
31, 1998, and the provision for income taxes for the year ended
December 31, 1997, resulted in an effective benefit rate of
approximately 40% for the year ended December 31, 1998, and an
effective tax rate of approximately 39% for the comparable 1997
period.
OUTLOOK
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This Outlook section and other parts of this Management's
Discussion and Analysis ("MD&A") contain forward-looking
information and involve risks and uncertainties that could
significantly impact expected results. Certain important
factors that in some cases have affected, and in the future
could affect, the Company's results of operations, and that
could cause such future results of operations to differ are
described in the "Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995 at the end of this
MD&A.
The Company anticipates improvements in refining margins
for 1999 as compared to 1998. Additionally, the Company plans
to implement programs to reduce operating costs and to increase
purchasing power. The Company also intends to focus on
increasing its retail operations through construction and
acquisition, expanding upon its marketing alliance with Conoco
and implementing the Company's new Mustang branding strategy.
Further, the Company intends to implement a new jobber/open
dealer program that the Company believes is unique to the
industry and to continue to improve the integration of, and to
develop synergies related to, the 1997 and 1998 Acquisitions.
The Company will also continue to seek additional opportunities
to expand refinery capacity through acquisition and selected
refinery projects. The Company's future results of operations
are primarily dependent on producing or purchasing, and selling
sufficient quantities of refined products at margins sufficient
to cover fixed and variable expenses.
COMPARISON OF THE YEARS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
- ---------------------------------------------------------------------
The primary factors affecting the results of the Company's
1997 continuing operations as compared to its 1996 continuing
operations were the acquisition of the Thriftway Assets and
Phoenix Fuel near the end of May 1997, higher interest costs
related to the financing of the 1997 Acquisitions, including
the issuance of the 9% Notes in August 1997, increased refinery
margins and higher operating and SG&A costs.
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
- -------------------------------------------------------
Earnings from continuing operations before income taxes
were $25.1 million for the year ended December 31, 1997, a
decrease of approximately $3.1 million from $28.2 million for
the year ended December 31, 1996. The decrease was primarily
due to increased SG&A and operating costs for operations other
than the 1997 Acquisitions, including a 20% increase in
depreciation and amortization costs, a 5% increase in other
operating costs and a 10% increase in SG&A costs. These
increases in costs were offset in part by a pretax earnings
contribution of approximately $8.0 million from the 1997
Acquisitions. Earnings were also impacted by a 3% increase in
average yearly refinery margins, in spite of reduced margins
early in the year resulting from a decline in West Coast
product prices. Refinery sourced sales volumes remained
relatively flat even though production was curtailed at both of
the Company's refineries during the year due to a scheduled
major, every four-year, maintenance turnaround at the Company's
Bloomfield refinery, and minor scheduled maintenance
turnarounds on the reformer and isomerization units at the
Ciniza refinery. In addition, the Company sold its ethanol
processing plant in the fourth quarter of 1997, incurring a
pretax loss of approximately $1.2 million on the disposition.
REVENUES
- --------
Revenues for the year ended December 31, 1997 increased
approximately $158.1 million or 32% to $657.3 million from
$499.2 million in the comparable 1996 period. The increase was
primarily due to the 1997 Acquisitions, offset in part by a 3%
decline in refinery weighted average selling prices.
The volumes of refined products sold through the Company's
retail units increased approximately 37% from 1996 levels
primarily due to the acquisition of the ninety-six retail
service station/convenience stores, offset in part by a 1%
decline in the volumes of finished product sold from the
Company's other retail operations. The decline reflected a 2%
decrease in the volumes of finished product sold from the
Company's other service station/convenience stores, due
primarily to increased competitive pressures, and a 6% increase
in volumes sold from the Company's travel center, due in large
part to improved marketing programs put in place during 1997.
COST OF PRODUCTS SOLD
- ---------------------
For the year ended December 31, 1997, cost of products
sold increased $125.8 million or 35% to $487.7 million from
$361.9 million in the corresponding 1996 period. The increase
is primarily due to the 1997 Acquisitions, offset in part by a
6% decline in average crude oil costs. In addition, the
liquidation of certain lower cost crude oil LIFO inventory
layers in 1996 reduced 1996 cost of products sold by
approximately $2.8 million. There were no similar liquidations
in 1997.
OPERATING EXPENSES
- ------------------
For the year ended December 31, 1997, operating expenses
increased approximately $20.9 million or 32% to $85.2 million
from $64.3 million for the year ended December 31, 1996.
Approximately 85% of the increase was due to the 1997
Acquisitions. For the Company's other operations, 1997 costs
increased because of increased retail advertising costs, higher
payroll and related costs, higher refinery purchased fuel and
materials costs and higher retail operating bonuses. These
increases were offset in part by a reduction in refinery
utility costs.
DEPRECIATION AND AMORTIZATION
- -----------------------------
For the year ended December 31, 1997, depreciation and
amortization increased approximately $6.3 million or 36% to
$24.0 million from $17.7 million in the same 1996 period.
Approximately 43% of the increase was due to the 1997
Acquisitions. The remaining increases were primarily related to
other retail acquisitions and construction, remodeling and
upgrades in retail and refinery operations, along with the
amortization of 1997 and 1996 refinery turnaround costs.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
For the year ended December 31, 1997, selling, general and
administrative expenses increased approximately $3.7 million or
23% to $19.3 million from $15.6 million in the corresponding
1996 period. Approximately 56% of the increase was due to the
selling, general and administrative activities of Phoenix Fuel.
The remaining increases were primarily the result of higher
payroll and related costs, due in part to acquisition activity
and planning for future growth. In addition, the comparisons
were affected by higher 1996 expenses relating to accruals for
incentive bonus plans and severance tax assessments.
INTEREST EXPENSE (INCOME)
- -------------------------
For the year ended December 31, 1997, interest expense
increased approximately $5.8 million or 47% to $18.1 million
from $12.3 million in the comparable 1996 period. The increase
was primarily due to an increase in interest expense because of
additional long-term debt related to the 1997 Acquisitions,
including the issuance of the 9% Notes in August 1997. The
increase was offset in part by a reduction in interest expense
related to the payment of approximately $32.0 million of
long-term debt in 1996 from operating cash flow and the
proceeds from the sale of the Company's oil and gas operations.
The average interest rate for the 1997 period is slightly
higher due to capital lease transactions related to the
acquisition of the Thriftway Assets and the issuance of the 9%
Notes.
For the year ended December 31, 1997, interest and
investment income increased approximately $1.3 million or
176.7% to $2.1 million from $0.8 million in the comparable 1996
period. The increase was primarily due to an increase in excess
funds available for investment, resulting from the issuance of
the 9% Notes in August 1997. The effects of fluctuations in
interest rates applicable to invested funds were nominal.
INCOME TAXES
- ------------
Income taxes for the years ended December 31, 1997 and
1996 resulted in effective tax rates of approximately 39% for
each period.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW FROM OPERATIONS
- -------------------------
Operating cash flows for the year ended December 31, 1998,
decreased compared to the year ended December 31, 1997,
primarily as the result of a decline in net earnings. The
decline, however, was offset in part by an increase in cash
flows related to operating assets and liabilities in each
period. Net cash provided by operating activities totaled $26.9
million for the year ended December 31, 1998, compared to $31.3
million for the comparable 1997 period.
WORKING CAPITAL
- ---------------
Working capital at December 31, 1998 consisted of current
assets of $171.7 million and current liabilities of $80.6
million, or a current ratio of 2.13:1. At December 31, 1997,
the current ratio was 2.17:1 with current assets of $207.1
million and current liabilities of $95.4 million.
Current assets have decreased since December 31, 1997,
primarily due to a decrease in cash and cash equivalents,
receivables and inventories. Accounts receivable have decreased
primarily as the result of a decline in the selling price of
finished products. Inventories have decreased primarily due to
a decline in crude oil and refined product prices. In addition,
the volume of finished product stored at the Company's
refineries and at terminal locations has declined. These
decreases were offset in part by an increase in the volume of
retail finished product and merchandise inventories, resulting
primarily from the recent service station/convenience store
acquisitions. Current liabilities have decreased due to a
decrease in accounts payable and accrued expenses. Accounts
payable have decreased primarily as a result of a decline in
the cost of crude oil and other raw materials. Accrued expenses
have decreased primarily due to a reduction in the amount
accrued for contingency payments related to the acquisition of
the Bloomfield refinery, reduced accruals for management
incentive and other bonuses, and no accrual for a 1998 ESOP
contribution.
CAPITAL EXPENDITURES AND RESOURCES
- ----------------------------------
Net cash used in investing activities for the purchase of
property, plant and equipment and other assets, excluding
business acquisitions, totaled approximately $60.3 million for
the year ended December 31, 1998. Expenditures included amounts
for the Ciniza refinery second quarter turnaround, refinery and
transportation equipment and facility upgrades, capacity
enhancement projects for the refineries, the start of
construction of a finished products terminal, which the Company
anticipates will be completed in the second quarter of 1999
(the "Terminal"), construction of various new retail units,
acquisition of land for future retail units, rebranding and
reimaging various retail units to further the Conoco marketing
alliance and to establish the Mustang brand, and continuing
retail equipment and system upgrades.
On February 10, 1998, the Company completed the purchase
of the DeGuelle Assets for $9.75 million. Included in the
purchase were seven service station/convenience stores, two
cardlock commercial fleet fueling facilities, a gasoline and
diesel storage bulk plant and related transportation equipment.
All of the facilities are located in southwestern Colorado and
are supplied by the Company's refineries. For the year ended
December 31, 1997, prior to the purchase by the Company, these
operations had sales of approximately 10.0 million gallons of
gasoline and diesel fuel in addition to 35,000 gallons of
lubricants.
The Ciniza refinery began a major, every four-year,
maintenance turnaround in mid-April 1998 that was completed in
early June 1998, approximately twenty days beyond the
anticipated completion date. The delay in returning to normal
operations was due to a number of factors, including but not
limited to, unexpected mechanical repairs encountered, problems
related to a key contractor and a number of startup problems.
During this turnaround, the major operating units at the
refinery were inspected and necessary repairs and maintenance
performed. In addition to the repair and maintenance
procedures, certain other procedures were performed that are
expected to increase reformer capacity from 6,700 bbls per day
to 7,300 bbls per day. The expansion of the reformer increases
the Company's ability to produce high-value products, provides
flexibility in gasoline conversion and increases the refinery's
capability to process condensate.
In June and July 1998, the Company completed the
acquisition of the Kaibab Assets for approximately $28.4
million. The assets acquired included thirty-two service
station/convenience stores, equipment, fuel truck/transports
and undeveloped real estate. In addition, one other unit was
leased under an operating lease arrangement for a period of two
years. The retail units, located throughout Arizona, include
fifteen in the greater Phoenix area and eleven in the Tucson
market, with the balance located primarily in southern and
eastern Arizona. These units had sales of approximately 70.0
million gallons of refined petroleum products for the fiscal
year ended September 30, 1997. Goodwill of approximately $4.6
million was recorded in connection with the acquisition of the
Kaibab Assets.
On December 31, 1998, the Company, through two of its
wholly-owned subsidiaries, Giant Industries Arizona, Inc. and
Giant Four Corners, Inc., and Franchise Finance Corporation of
America ("FFCA"), completed a sale-leaseback transaction. Under
the terms of the Sale and Lease Agreement (the "Agreement"),
FFCA purchased eighty-three service station/convenience stores
from the Company for approximately $51.8 million, including six
of the seven DeGuelle Asset units and twenty-six of the Kaibab
Asset units, with the remainder having been acquired as part of
the acquisition of the Thriftway Assets in 1997. The Company in
turn leased the eighty-three service station/convenience stores
back from FFCA under an operating lease arrangement with an
initial term of fifteen years and three separate options to
continue the lease for successive periods of five years.
Initial annual rental payments under the lease agreement are
approximately $5.1 million and will be adjusted upward by six
percent on the second anniversary of the Agreement and every
second anniversary thereafter, on a compounded basis, during
the initial lease term and any extension thereof. The Company
has a right of first refusal to acquire the leased assets upon
an offer to purchase the assets by a third party. Net proceeds
to the Company, after expenses, were approximately $50.1
million. The Company recorded a gain of approximately $4.0
million on the sale of the assets. This gain has been deferred
and will be amortized over the initial lease period of fifteen
years.
In accordance with the Indentures supporting the Company's
9% Notes and the $100.0 million of 9 3/4% senior subordinated
notes, issued by the Company in 1993 and due 2003 (the "9 3/4%
Notes," and collectively with the 9% Notes, the "Notes"), the
Company must either use the net proceeds from the FFCA
transaction to make a permanent reduction in senior
indebtedness (as defined in the respective Indentures), or make
an investment in capital assets used in the Company's principal
business (as defined in the respective Indentures). The Company
has 360 days in which to use the net proceeds for such a
purpose under the terms of the Indenture supporting the 9%
Notes, and has 270 days under the terms of the Indenture
supporting of 9 3/4% Notes. In each case, upon completion of
the specified period, if all of the net proceeds have not been
used for such a purpose, the Company may be obligated, under
certain circumstances, to repurchase the respective senior
subordinated notes with the unused portion. The Company
anticipates that it will use the net proceeds from the FFCA
transaction to invest in capital assets or to reduce senior
indebtedness before the applicable periods expire.
The Company has budgeted approximately $37.6 million for
capital expenditures in 1999, excluding any potential
acquisitions. Of this amount, approximately $12.3 million is
budgeted for non-discretionary projects that are required by
law or regulation or to maintain the physical integrity of
existing assets. These expenditures are primarily for
operational and environmental projects at the refineries. The
remaining budget of $25.3 million is for discretionary projects
to sustain or enhance the current level of operations, increase
earnings associated with existing or new business and to expand
operations. The primary projects in this latter category
include the completion of the Terminal, construction or rebuild
of retail units, completion of the Mustang/Conoco rebranding
and reimaging project, retail site acquisitions, upgrades to
existing retail units, capacity enhancement projects at the
refineries, and facility and equipment upgrades at the
refineries, transportation operations and administrative
operations. In addition to these budgeted amounts, the Company
could incur an additional contingent payment related to the
acquisition of the Bloomfield refinery, in accordance with the
Bloomfield refinery acquisition agreement, if certain criteria
are met. For 1998, the Company incurred a contingent payment
obligation of approximately $2.0 million which will be paid in
1999. This amount has been accrued and allocated to the
appropriate assets and will be amortized over their remaining
estimated useful lives.
The amount of these capital projects that are actually
undertaken in 1999 will depend on, among other things,
identifying and consummating acceptable acquisitions, general
business conditions and results of operations.
The Company continues to investigate other strategic
acquisitions as well as capital improvements to its existing
facilities. The Company is also actively pursuing the possible
sale or exchange of non-strategic or underperforming assets.
Much of the capital currently planned to be spent by the
Company for environmental compliance is integrally related to
operations or to operationally required projects.
The Company does not specifically identify capital
expenditures related to such projects on the basis of whether
they are for environmental as opposed to economic purposes.
With respect to capital expenditures budgeted primarily to
satisfy environmental regulations, the Company estimates that
approximately $3.7 million, $0.5 million and $0.7 million was
spent in 1998, 1997 and 1996, respectively, and that $2.6
million is expected to be spent in 1999. With respect to the
Company's operating expenses for environmental compliance,
while records are not kept specifically identifying or
allocating such expenditures, management believes that the
Company incurs significant operating expense for such purposes.
Changes in the tax laws, changes in federal and state
clean air and clean fuel requirements and other changes in
environmental laws and regulations may increase future capital
and operating expenditure levels.
Working capital, including that necessary for capital
expenditures and debt service, will be funded through cash
generated from operating activities, existing cash balances
and, if necessary, future borrowings. Future liquidity, both
short and long-term, will continue to be primarily dependent on
producing or purchasing, and selling sufficient quantities of
refined products at margins sufficient to cover fixed and
variable expenses.
CAPITAL STRUCTURE
- -----------------
At December 31, 1998 and 1997, the Company's long-term
debt was 68.9% and 67.4% of total capital, respectively. The
Company's net debt (long-term debt less cash and cash
equivalents) to total capitalization percentages were 64.0% and
59.1% at December 31, 1998 and 1997, respectively.
The Company's capital structure includes the Notes. The
Indentures supporting the Notes contain covenants that, among
other things, restrict the ability of the Company and its
subsidiaries to create liens, incur or guarantee debt, pay
dividends, repurchase shares of the Company's common stock,
sell certain assets or subsidiary stock, engage in certain
mergers, engage in certain transactions with affiliates or
alter the Company's current line of business. In addition,
subject to certain conditions, the Company is obligated to
offer to purchase a portion of the Notes at a price equal to
100% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase, with the net cash
proceeds of certain sales or other dispositions of assets. Upon
a change of control, the Company would be required to offer to
purchase all of the Notes at 101% of the principal amount
thereof, plus accrued interest, if any, to the date of
purchase.
At December 31, 1998, the terms of the Indenture
supporting the 9 3/4% Notes restricted the amount of money the
Company could borrow. This amount is the greater of $40.0
million or the amount determined under a borrowing base
calculation tied to eligible accounts receivable and
inventories as defined in the Indenture. At December 31, 1998,
this amount was approximately $73.5 million. In addition, the
Company is not able to make any restricted payments as defined
in the Indenture as long as the terms of the Indenture are not
met. This includes the payment of dividends and the repurchase
of shares of the Company's common stock.
Repayment of the Notes is jointly and severally guaranteed
on an unconditional basis by the Company's direct and indirect
wholly-owned subsidiaries, subject to a limitation designed to
ensure that such guarantees do not constitute a fraudulent
conveyance. Except as otherwise allowed in the Indentures
pursuant to which the Notes were issued, there are no
restrictions on the ability of such subsidiaries to transfer
funds to the Company in the form of cash dividends, loans or
advances. General provisions of applicable state law, however,
may limit the ability of any subsidiary to pay dividends or
make distributions to the Company in certain circumstances.
Separate financial statements of the Company's
subsidiaries are not included herein because the aggregate
assets, liabilities, earnings, and equity of the subsidiaries
are substantially equivalent to the assets, liabilities,
earnings, and equity of the Company on a consolidated basis;
the subsidiaries are jointly and severally liable for the
repayment of the Notes; and the separate financial statements
and other disclosures concerning the subsidiaries are not
deemed material to investors.
On December 23, 1998, the Company entered into a $65.0
million secured Credit Agreement (the "Credit Agreement") due
December 23, 2001, with Bank of America National Trust and
Savings Association, Union Bank of California, N.A. and Bank
One, Arizona, N.A. This Credit Agreement, a revolving loan
agreement, is primarily a working capital and letter of credit
facility and is secured by eligible accounts receivable and
inventories as defined in the Credit Agreement. In addition,
the Company is able to borrow up to $9.0 million to exercise
its purchase rights in connection with the Thriftway Assets
that are currently subject to capital lease obligations, and up
to $10.0 million for other acquisitions as defined in the
Credit Agreement. The availability of funds under this facility
is the lesser of (i) $65.0 million, or (ii) the amount
determined under a borrowing base calculation tied to the
eligible accounts receivable and inventories. At December 31,
1998, the availability of funds under the Credit Agreement was
approximately $49.0 million. There were $24.0 million of direct
borrowings outstanding under this facility at December 31,
1998, and there were approximately $12.8 million of irrevocable
letters of credit outstanding, primarily to secure purchases of
raw materials. At March 1, 1999, no direct borrowings were
outstanding and approximately $12.8 million of irrevocable
letters of credit were outstanding.
The interest rate applicable to the Credit Agreement is
tied to various short-term indices. At December 31, 1998, this
rate was approximately 6.5% per annum. The Company is required
to pay a quarterly commitment fee ranging from 0.325% to 0.500%
per annum of the unused amount of the facility. The exact rate
depends on meeting certain conditions in the Credit Agreement.
The Credit Agreement contains certain covenants and
restrictions which require the Company to, among other things,
maintain a minimum consolidated net worth, a minimum interest
coverage ratio and a maximum capitalization ratio. It also
places limits on investments, dispositions of assets,
prepayments of senior subordinated debt, guarantees, liens and
restricted payments. At December 31, 1998, the Company was in
compliance with the Credit Agreement covenants and was not
aware of any noncompliance with the other terms of the Credit
Agreement. The Credit Agreement is guaranteed by all of the
Company's direct and indirect wholly-owned subsidiaries.
In connection with the acquisition of the Thriftway Assets
in May 1997, the Company recorded approximately $22.9 million
of capital lease obligations with an interest rate of 11.3%.
During the year ended December 31, 1998, the Company purchased
fifty-four of the sixty-four service station/convenience stores
subject to these capital lease obligations for approximately
$14.7 million, thereby reducing long-term debt. As a result,
interest expense will be reduced by approximately $1.7 million
per year or $138,000 per month.
The Company's Board of Directors has authorized the
repurchase of 2.5 million shares of the Company's common stock.
Purchases may be made from time to time as conditions permit.
Shares may be repurchased through privately-negotiated
transactions, block share purchases and open market
transactions. During the year ended December 31, 1998, the
Company repurchased 154,500 shares at a cost of approximately
$1.9 million or $12.30 per share. In October 1998, upon
determination that the Company was unable to make restricted
payments as defined in the Indenture supporting the 9 3/4%
Notes, which is applicable to the repurchase of shares of the
Company's common stock, the Company suspended further purchases
under the program. From the inception of the stock repurchase
program, the Company has repurchased approximately 1.4 million
shares for approximately $14.5 million, resulting in a weighted
average cost of $10.41 per share.
Repurchased shares are available for a number of corporate
purposes. The number of shares actually repurchased will be
dependent upon market conditions and existing debt covenants,
and there is no guarantee as to the exact number of shares to
be repurchased by the Company. The Company may discontinue the
program at any time without notice. The Company has currently
suspended the acquisition of shares of its common stock under
this program due to the restriction noted above.
For the year ended December 31, 1998, the Company's Board
of Directors declared cash dividends on common stock totaling
$0.15 per share. Future dividends, if any, are subject to the
results of the Company's operations, existing debt covenants
and declaration by the Company's Board of Directors. As long as
the Company is unable to make restricted payments, as noted
above, it will not be able to declare dividends.
OTHER
- -----
The Company is exposed to various market risks, including
changes in certain commodity prices and interest rates. To
manage the volatility relating to these natural business
exposures, the Company periodically uses commodity futures and
options contracts to reduce price volatility, to fix margins in
its refining and marketing operations and to protect against
price declines associated with its crude oil and finished
products inventories. The potential loss from a hypothetical
10% adverse change in commodity prices on open commodity
futures and options at December 31, 1998 would not materially
affect the Company's consolidated financial condition and
results of operations.
Additionally, the Company has a $65,000,000 Credit
Agreement that is floating-rate debt tied to various short-term
indices. As a result, the Company's annual interest costs
associated with this debt will fluctuate. At December 31, 1998,
the amount of borrowings under this Credit Agreement were
$24,000,000. The potential loss from a hypothetical 10% adverse
change in the floating interest rate would not have a material
affect on the Company's consolidated financial condition and
results of operations.
Federal, state and local laws and regulations relating to
health and the environment affect nearly all of the operations
of the Company. As is the case with other companies engaged in
similar industries, the Company faces significant exposure from
actual or potential claims and lawsuits involving environmental
matters. These matters include soil and water contamination,
air pollution and personal injuries or property damage
allegedly caused by substances manufactured, handled, used,
released or disposed of by the Company. Future expenditures
related to health and environmental matters cannot be
reasonably quantified in many circumstances for various
reasons, including the speculative nature of remediation and
cleanup cost estimates and methods, imprecise and conflicting
data regarding the hazardous nature of various types of
substances, the number of other potentially responsible parties
involved, various defenses which may be available to the
Company and changing environmental laws and interpretations of
environmental laws.
Rules and regulations implementing federal, state and
local laws relating to health and the environment will continue
to affect the operations of the Company. The Company cannot
predict what health or environmental legislation or regulations
will be enacted or become effective in the future or how
existing or future laws or regulations will be administered or
enforced with respect to products or activities of the Company.
Compliance with more stringent laws or regulations, as well as
more vigorous enforcement policies of the regulatory agencies,
could have an adverse effect on the financial position and the
results of operations of the Company and could require
substantial expenditures by the Company for the installation
and operation of refinery equipment, pollution control systems
and other equipment not currently possessed by the Company.
The Company, and several other entities, have received a
notice of intent to file suit from the New Mexico Office of the
Natural Resources Trustee (the "ONRT") for the recovery of
$260.0 million in alleged damages to natural resources,
including alleged damages to ground water, surface water and
soil. The notice relates to the South Valley Superfund site in
Albuquerque, New Mexico. The site allegedly includes
contamination that originated from a GE Aircraft Engines/U.S.
Air Force facility, as well as contamination that allegedly
originated from a petroleum products terminal that was acquired
by the Company in 1995 (the "Albuquerque Terminal").
Potentially responsible party liability is joint and several,
such that a responsible party may be liable for all natural
resources damages at a site even though it was responsible for
only a small part of such damages. At the time of purchase by
the Company, Texaco Refining and Marketing Inc. ("Texaco")
agreed to defend, indemnity, reimburse and hold the Company
harmless from and against all claims and damages arising from,
or caused by, pre-closing contamination. Texaco has
acknowledged its obligation under this agreement, subject to
any evidence that the ONRT intends to assess damages for any
releases resulting from the Company's operations. The Company
believes that any natural resources damages associated with the
South Valley Superfund site relate to releases that predate the
Company's acquisition of the Albuquerque Terminal and,
accordingly, does not believe that it needs to record a
liability in connection with this matter.
In May 1991, the Environmental Protection Agency ("EPA")
notified the Company that it may be a potentially responsible
party for the release, or threatened release, of hazardous
substances, pollutants or contaminants at the Lee Acres
Landfill (the "Landfill"), adjacent to the Company's inactive
Farmington refinery. This refinery was operated until 1982.
Although a final plan of action for the Landfill has not yet
been adopted by the Bureau of Land Management (the "BLM"), the
owner of the Landfill, BLM developed a proposed plan of action
in 1997, which it projected would cost approximately $3.9
million to implement. This cost projection is based on certain
assumptions which may or may not prove to be correct and is
contingent on confirmation that the remedial actions, once
implemented, are adequately addressing Landfill contamination.
For example, if assumptions regarding groundwater mobility and
contamination levels are incorrect, BLM is proposing to take
additional remedial actions with an estimated cost of
approximately $1.8 million.
In 1989, a consultant to the Company estimated, based on
various assumptions, that the Company's share of potential
liability could be approximately $1.2 million. This figure was
based upon estimated Landfill remediation costs significantly
higher than those being proposed by BLM. The figure was also
based on the consultant's evaluation of such factors as
available clean-up technology, BLM's involvement at the site
and the number of other entities that may have had involvement
at the site, but did not include an analysis of all of the
Company's potential legal defenses and arguments, including
possible setoff rights.
Potentially responsible party liability is joint and
several, such that a responsible party may be liable for all of
the clean-up costs at a site even though the party was
responsible for only a small part of such costs. Although it is
possible that the Company may ultimately incur liability for
clean-up costs associated with the Landfill, a reasonable
estimate of the amount of this liability, if any, cannot be
made at this time because, among other reasons, the final site
remedy has not been selected, a number of entities had
involvement at the site, allocation of responsibility among
potentially responsible parties has not yet been made, and
potentially-applicable factual and legal issues have not been
resolved. Based on current information, the Company does not
believe that it needs to record a liability in relation to
BLM's proposed plan.
The Company is undertaking an investigation into potential
lead contamination at a 5.5 acre site that the Company owns in
Bloomfield, New Mexico. The investigation arises out of the
removal of a 55,000 barrel crude oil storage tank by a
contractor. Although it is possible that the Company may
ultimately incur liability for lead clean-up costs, a
reasonable estimate of the amount of the Company's liability,
if any, cannot be made at this time because all
potentially-applicable factual and legal issues have not been
resolved, including whether there is lead at the site in
amounts exceeding applicable remediation levels and whether
remediation costs, if any, can be recovered from third parties.
The Company has an environmental liability accrual of
approximately $2.7 million. Approximately $0.8 million relates
to ongoing environmental projects, including the remediation of
a hydrocarbon plume that appears to extend no more than 1,800
feet south of the inactive Farmington refinery and hydrocarbon
contamination on and adjacent to 5.5 acres the Company owns in
Bloomfield, New Mexico. The remaining $1.9 million relates to
an originally estimated liability of approximately $2.3
million, recorded in the second quarter of 1996, for certain
environmental obligations assumed in the acquisition of the
Bloomfield refinery. That amount was recorded as an adjustment
to the purchase price and allocated to the assets acquired.
This environmental accrual is recorded in the current and
long-term sections of the Company's Consolidated Balance
Sheets.
The Company is subject to audit on an ongoing basis of the
various taxes that it pays to federal, state, local and tribal
agencies. These audits may result in assessments or refunds
along with interest and penalties. In some cases the
jurisdictional basis of the taxing authority is in dispute and
is the subject of litigation or administrative appeals. The
Company has received several tax notifications and assessments
from the Navajo Tribe relating to Company operations outside
the boundaries of the Navajo Indian Reservation in an area of
disputed jurisdiction, including a $1.8 million severance tax
assessment issued in November 1991 in connection with crude oil
removed from properties located within this area. The Company
has invoked its appeal rights with the Tribe's Tax Commission
in connection with this assessment and intends to oppose the
assessment. In November 1998, the Company received a notice of
proposed assessment from the Navajo Tribe for an additional
$2.1 million involving severance tax issues similar to those
raised in connection with the $1.8 million assessment. The
Company has responded to the notice of proposed assessment and
intends to oppose any final assessment issued by the Navajo
Tribe in connection with the area of disputed jurisdiction.
Although it is probable that the Company will incur liability
in connection with tax notifications and assessments from the
Navajo Tribe relating to the area of disputed jurisdiction, it
is not possible to reasonably estimate the amount of any
obligation for such taxes at this time because the Navajo
Tribe's authority to impose taxes throughout this area has not
been legally established and all potentially-applicable factual
issues have not been resolved. The Company has accrued a
liability for assessments that it has received from the Navajo
Tribe for substantially less than the amount of the
assessments. It is possible that the Company's assessments will
have to be litigated by the Company before final resolution. In
addition, the Company may receive further tax assessments. The
Company may potentially be able to request reimbursement from
third party oil lease interest owners in connection with any
severance tax amounts ultimately paid by the Company that
relate to purchases from them.
On April 14, 1998, the Board of Directors of the Company
approved an Agreement and Plan of Merger (the "Merger
Agreement") whereby Holly Corporation ("Holly") would be merged
with and into Giant (the "Merger"). The Merger was subject to
various conditions stated in the Merger Agreement. On September
1, 1998, Giant and Holly mutually agreed to terminate the
proposed Merger after considering various factors, including
the inability of the companies to reach a satisfactory
resolution of concerns expressed by the Federal Trade
Commission relative to the possible impact of the Merger on
portions of the market served by the companies and uncertainty
caused by a lawsuit filed against Holly by Longhorn Partners
Pipeline, L.P.
The Company believes that because of recent low crude oil
prices there has been a reduction in field maintenance work and
drilling activity in the Four Corners area, which has resulted
in a decline in local crude oil production. Based upon history
and discussions with local producers, the Company believes that
production will increase when crude oil prices recover. In the
past, the Company was able to supplement local crude oil
supplies and process up to 1,500 bbls per day of Alaska North
Slope crude oil ("ANS") through its gathering systems
interconnection with the ARCO and Texas-New Mexico common
carrier pipeline systems. The Company understands that the ARCO
Pipeline mainline, which was used to transport ANS to the Four
Corners area, has been sold and is in the process of being
converted to a natural gas pipeline. The Company did not
purchase any ANS in 1998 and does not expect the loss of this
supply source to have a material impact on the Company. Based
on projections of local supply availability from the field,
which takes into account current low crude oil prices, the
Company believes that its refining feedstock needs could exceed
the supply of crude oil and other feedstocks that will be
available from local sources until crude oil prices recover.
The Company believes that any shortfall in local supply can be
supplied from other sources and transported to the Four Corners
area by pipeline or other transportation means, which could
result in higher acquisition costs. There is no assurance that
current or projected levels of supply will be maintained. Any
significant long-term interruption in crude oil supply, due to
prices or other factors, or any significant long-term
interruption of crude oil transportation systems, would have an
adverse effect on the Company's operations.
The Company continues to evaluate supplemental crude oil
supply alternatives for its refineries on both a short-term and
long-term basis.
The Company is aware of a number of actions, proposals or
industry discussions regarding product pipeline projects that
could impact portions of its marketing areas. One of these
projects is the sale and possible conversion and extension of
the existing Texas-New Mexico crude oil pipeline to transport
refined products from West Texas to New Mexico and ultimately
to Salt Lake City, Utah. Separately, an existing natural gas
liquids ("NGL") pipeline is in the process of being converted
to a refined products pipeline that will be capable of
delivering finished product from Southeastern New Mexico to the
Albuquerque and Four Corners areas. This conversion is
reportedly scheduled for completion in 1999. In addition,
various proposals or actions have been announced to increase
the supply of pipeline-supplied products to El Paso, Texas,
which is connected by pipeline to the Albuquerque area to the
north. The completion of some or all of these projects would
result in increased competition by increasing the amount of
refined products available in the Albuquerque, Four Corners and
other areas, as well as allowing additional competitors
improved access to these areas.
The Company does not presently manufacture gasolines that
satisfy Arizona cleaner burning gasoline ("CBG")
specifications. The specifications are currently applicable to
gasolines sold or used in Maricopa County and a portion of
Yavapai County, and are expected to become effective in Pinal
County by 2001. The Company operates approximately 20 service
stations in these areas, and also conducts wholesale marketing
operations there. The Company currently does not intend to make
the changes necessary to produce CBG because the capital costs
associated with manufacturing large quantities of such
gasolines would be significant in amounts not yet determined by
the Company. The Company has the ability to purchase or
exchange for these gasolines to supply its operations in the
CBG areas, including Pinal County. It is possible that
additional legislation or regulations affecting motor fuel
specifications may be adopted that would impact geographic
areas in which the Company markets its products.
In 1997, the Company outlined a program for Year 2000
("Y2K") compliance. The Y2K issue is the result of certain
computer systems using a two-digit format rather than four
digits to define the applicable year. Such computer systems
will be unable to properly interpret dates beyond the year
1999, which could lead to system failure or miscalculations
causing disruptions of operations. The Company has identified
three major areas determined to be critical for successful Y2K
compliance: (1) financial and information system applications,
(2) manufacturing and process applications, including embedded
chips, and (3) business relationships.
The Company has hired an outside consultant to act as its
Year 2000 project manager. This consultant is directing the
Company's efforts in identifying and resolving Y2K issues
pursuant to a five-phase program for Year 2000 compliance. The
five phases are as follows:
(1) Awareness Phase. This phase included the development
of a Project Management Plan ("PMP") to make the Company aware
of the Y2K problem, identify potential Y2K issues in all areas
of the Company and develop a plan of action to resolve these
issues. This phase was completed in July 1998.
(2) Assessment Phase. Completed in October 1998, this
phase included generating a complete inventory of all software,
hardware, processing equipment and embedded chips throughout
the entire organization and identifying those items that were
Y2K compliant and those that were not.
(3) Renovation (Remedy) Phase. In this phase, strategies
have been and will be developed for each item inventoried
during the assessment phase to determine whether remedial
action is required and, if so, whether the item should be
eliminated, replaced, or updated. This phase will also include
the determination of priorities and scheduling, including
contingency plans for all critical items. Although originally
scheduled for completion by February 1999, the Company now
believes completion of this phase will be in March 1999.
(4) Validation (Testing) Phase. In this phase, a test plan
is developed and implemented to validate the remedies selected
in the previous phase. Although originally scheduled for
completion by March 1999, the Company now believes that this
phase will be completed in April 1999.
(5) Implementation Phase. This phase involves the use of
the Y2K compliant inventory, development and implementation of
additional plans to avoid Y2K problems and the development and
finalizing of contingency plans. Although originally scheduled
for completion by April 1999, the Company now believes
completion of this phase will be in June 1999.
At the present time, approximately 1,500 items have been
inventoried consisting of software, hardware, processing
equipment and embedded chips. Of these inventoried items, 74%
are Y2K compliant, 20% are not compliant and fall into the
renovation phase, and 6% are of unknown status or are still
being evaluated. The Company believes that none of the items
with unknown status and none of those items that are still
being evaluated, are critical to the operations of the
Company's business. All software, hardware, processing
equipment and embedded chips are being prioritized based on
critical business functions and the most critical will be
scheduled for validation testing and implementation first.
In the financial and information system area, the
Company's core financial systems are not Y2K compliant, and the
Company has begun a program of remediation and replacement
utilizing an outside consultant as well as internal staff. The
Company had previously indicated that it would be replacing its
core financial systems at a cost of approximately $2.5 million.
The Company has, however, reevaluated that strategy and
determined that renovating the current system provides the
least amount of risk in achieving compliance by April 1999. In
addition to its core financial systems, certain subsidiary
financial systems and other information systems will require
replacement or renovation. The Company had previously
identified the potential for approximately 4,000 man-hours of
work to bring these financial and information systems into
compliance at a cost of approximately $0.8 million. During the
assessment phase, it was determined that the remediation of the
Company's financial and information systems could be
accomplished for significantly less than was originally
estimated due to the development of a program methodology that
simplified the modification of computer software code.
Utilizing both internal staff and outside consultants, the
remediation and replacement program for the core financial
systems is well under way and is on target to meet the April
1999 deadline. To date, 50% of the targeted core financial and
other related applications have been renovated, 10% are being
replaced and 40% are in the process of being renovated. The
Company believes that all critical issues have been identified
in the financial and information system area, and that
resources are available to bring these systems into compliance
by the scheduled completion date.
In the manufacturing and process area, the Company has
completed an inventory of the software and hardware at all
locations (including embedded chips, such as process
controllers and chromatographs) and remediation is currently in
process. In this area, 85% percent of the processes are
compliant, 10% are being renovated and 5% have been scheduled
for renovation. The Company believes that all critical issues
have been identified in the manufacturing and process area and
that resources are available to bring these systems into
compliance. Although originally scheduled for completion by
April 1999, the Company now believes completion of this phase
will be in June 1999.
In the business relationship area, the Company continues
to correspond with its business partners in order to identify
and resolve Y2K issues that may have an impact on operations.
The Company has sent compliance questionnaires to over 1,400
business partners, 230 of which have been determined to be
critical. The Company continues to follow up with those who
have not responded. The critical business partners identified
by the Company include, among others, utilities, pipeline
companies, terminals, crude oil and other raw material
suppliers, certain key customers, financial institutions,
insurance companies and employee benefit plan administrators.
To date, the Company has received 395 responses to its
compliance questionnaires representing approximately 30% of all
questionnaires sent. The Company has received responses from
25% of those business partners identified as being critical.
The Company has not identified any significant problems
relating to the responses it has received and analyzed to date.
Remediation of the Y2K items identified by the Company is
being accomplished using both internal and external manpower.
The Company estimates that the total cost of the Y2K project
will be between $600,000 and $800,000. Through December 31,
1998, the Company had expended approximately $300,000. The
Company expects to fund its Y2K expenditures from operating
cash flows and short-term borrowings if necessary. The total
cost associated with required modifications to become Year 2000
compliant is not expected to be significant to the Company's
financial position or results of operations.
Contingency plans are in the process of being prepared for
all of the Company's critical business processes in order to
minimize any disruptions in these operations, allowing the
Company to continue to function on January 1, 2000 and beyond.
These plans are being developed to mitigate both internal risks
as well as potential risks in the chain of the Company's
suppliers and customers. The Company believes that the
contingency planning process will be an ongoing one which will
require modifications as the Company obtains additional
information from its remediation and testing phases and about
the status of third party Y2K readiness. Contingency plans are
in various stages of completion. The Company will continue
developing these plans over the next three months for all of
its business units as it completes the renovation, validation
and implementation phases of its Y2K compliance project.
The Company continues to assess its most reasonably likely
worst case Y2K scenario. It is the Company's belief that the
greatest potential risk from the Y2K issue could be the
inability of principal suppliers to be Y2K ready. This could
result in delays in product deliveries from such suppliers and
disruption of the distribution channel, including oil
pipelines, transportation vendors and the Company's own
distribution centers. Another significant potential risk is the
general failure of systems and necessary infrastructure such as
electricity supply. Contingency plans will be developed to
address these scenarios.
The Company believes that completed and planned
modifications and replacements of its internal systems and
equipment will allow it to be Y2K compliant in a timely manner.
Due to the widespread nature of potential Y2K issues, however,
there can be no assurance that all of the Company's Y2K issues
will be identified and resolved in a timely manner, or that
contingency plans will mitigate the effects of any
noncompliance. In addition, there can be no assurance that
third parties upon which the Company relies will be Y2K
compliant in a timely manner or that the third parties'
contingency plans will mitigate the effects of any
noncompliance. Any significant long-term disruptions to the
Company's business caused by noncompliance could have a
material adverse effect on the Company's financial position and
results of operations.
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: This report contains
forward-looking statements that involve risks and
uncertainties, including but not limited to economic,
competitive and governmental factors affecting the Company's
operations, markets, products, services and prices; the
anticipated improvement of the Company's refining margins in
1999; the effects of programs to reduce operating expenses and
increase purchasing power on the Company's operating results;
the continued impact of the Conoco marketing alliance; the
impact of the Company's new Mustang branding strategy and its
new jobber/open dealer program; the impact of the mandated use
of gasolines satisfying governmentally mandated specifications
on the Company's operations; the availability of
indemnification from third parties; the expansion of the
Company's refining and retail operations through acquisition
and construction; the completion of capital projects identified
in the 1999 capital budget; the adequacy of the Company's
environmental and tax reserves; the Company's ability to
recover tax payments from third parties; the adequacy and cost
of raw material supplies; the potential effects of various
pipeline projects as they relate to the Company's market area
and future profitability; the estimated cost of and ability of
the Company or third parties on which it relies to become Y2K
compliant; risks associated with certain covenants relating to
its 9 3/4% Notes and other risks detailed from time to time in
the Company's filings with the Securities and Exchange
Commission.
<PAGE>
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The information required by this item is incorporated herein by
reference to the section entitled "Other" in the Company's Management's
Discussion and Analysis of Financial Condition and Results of Operations
in Part II, Item 7.
<PAGE>
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Giant Industries, Inc.
Scottsdale, Arizona
We have audited the accompanying consolidated balance
sheets of Giant Industries, Inc. and subsidiaries (the
"Company") as of December 31, 1998 and 1997, and the related
consolidated statements of earnings (loss), stockholders'
equity and cash flows for each of the three years in the period
ended December 31, 1998. 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, such consolidated financial statements
present fairly, in all material respects, the financial
position of the Company as of December 31, 1998 and 1997, and
the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 4, 1999
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
---------------------
1998 1997
--------- ---------
(In thousands, except
share and per share data)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 55,697 $ 82,592
Receivables:
Trade, less allowance for doubtful accounts of $460 and $464.... 39,050 47,548
Income tax refunds.............................................. 417 248
Other........................................................... 10,728 9,274
--------- ---------
50,195 57,070
--------- ---------
Inventories........................................................ 51,349 57,598
Prepaid expenses and other......................................... 7,860 7,016
Deferred income taxes.............................................. 6,625 2,800
--------- ---------
Total current assets............................................ 171,726 207,076
--------- ---------
Property, plant and equipment........................................ 439,940 402,600
Less accumulated depreciation and amortization..................... (138,008) (120,773)
--------- ---------
301,932 281,827
--------- ---------
Goodwill, less accumulated amortization of $2,140 and $1,341......... 22,902 18,363
Other assets......................................................... 29,225 28,105
--------- ---------
$ 525,785 $ 535,371
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.................................. $ 1,200 $ 562
Accounts payable................................................... 42,903 55,546
Accrued expenses................................................... 36,519 39,243
--------- ---------
Total current liabilities....................................... 80,622 95,351
--------- ---------
Long-term debt, net of current portion............................... 282,484 275,557
Deferred income taxes................................................ 26,793 25,887
Other liabilities and deferred income................................ 8,184 5,109
Commitments and contingencies (Notes 17 and 18)
Stockholders' equity:
Preferred stock, par value $.01 per share,
10,000,000 shares authorized, none issued
Common stock, par value $.01 per share, 50,000,000
shares authorized, 12,232,367 shares issued...................... 122 122
Additional paid-in capital......................................... 72,699 72,699
Retained earnings.................................................. 69,391 73,256
--------- ---------
142,212 146,077
Less common stock in treasury - at cost,
1,393,600 and 1,239,100 shares................................... (14,510) (12,610)
--------- ---------
127,702 133,467
--------- ---------
$ 525,785 $ 535,371
========= =========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
Year Ended December 31,
-----------------------------------------
1998 1997 1996
----------- ----------- -----------
(In thousands, except per share data)
<S> <C> <C> <C>
Net revenues....................................... $ 642,504 $ 657,278 $ 499,184
Cost of products sold.............................. 465,605 487,748 361,864
----------- ----------- -----------
Gross margin....................................... 176,899 169,530 137,320
Operating expenses................................. 102,538 85,177 64,315
Depreciation and amortization...................... 29,166 23,991 17,673
Selling, general and administrative expenses....... 25,288 19,256 15,602
----------- ----------- -----------
Operating income................................... 19,907 41,106 39,730
Interest expense................................... (25,464) (18,139) (12,318)
Interest and investment income..................... 1,831 2,133 771
----------- ----------- -----------
Earnings (loss) from continuing operations
before income taxes.............................. (3,726) 25,100 28,183
Provision (benefit) for income taxes............... (1,509) 9,806 11,132
----------- ----------- -----------
Earnings (loss) from continuing operations......... (2,217) 15,294 17,051
Discontinued operations:
Loss on disposal of oil and gas
operations (net of taxes)...................... (13)
----------- ----------- -----------
Net earnings (loss)................................ $ (2,217) $ 15,294 $ 17,038
=========== =========== ===========
Earnings (loss) per common share - basic:
Continuing operations............................ $ (0.20) $ 1.38 $ 1.52
Discontinued operations..........................
----------- ----------- -----------
Net earnings (loss).............................. $ (0.20) $ 1.38 $ 1.52
=========== =========== ===========
Earnings (loss) per common share
- assuming dilution:
Continuing operations............................ $ (0.20) $ 1.37 $ 1.50
Discontinued operations..........................
----------- ----------- -----------
Net earnings (loss).............................. $ (0.20) $ 1.37 $ 1.50
=========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Unearned
compen-
Common stock sation Total
---------------- Additional related to Treasury stock stock-
Shares Par paid-in Retained restricted ------------------- holders'
issued value capital earnings stock Shares Cost equity
---------- ----- ---------- -------- ---------- --------- --------- --------
(In thousands, except number of shares)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1996....... 12,188,629 $122 $72,389 $45,373 $ (151) 939,500 $ (8,001) $109,732
Purchase of treasury stock...... 184,000 (2,784) (2,784)
Stock options exercised......... 32,750 216 216
Compensation related to
restricted stock awards....... 12 151 163
Restricted stock award
fractional shares
redeemed/canceled............. (12)
Dividends declared
- $0.20 per share............. (2,241) (2,241)
Net earnings.................... 17,038 17,038
---------- ---- ------- ------- ------ --------- -------- --------
Balances, December 31, 1996..... 12,221,367 122 72,617 60,170 1,123,500 (10,785) 122,124
Purchase of treasury stock...... 115,600 (1,825) (1,825)
Stock options exercised......... 11,000 82 82
Dividends declared
- $0.20 per share............. (2,208) (2,208)
Net earnings.................... 15,294 15,294
---------- ---- ------- ------- ------ --------- -------- --------
Balances, December 31, 1997..... 12,232,367 122 72,699 73,256 1,239,100 (12,610) 133,467
Purchase of treasury stock...... 154,500 (1,900) (1,900)
Dividends declared
- $0.15 per share............. (1,648) (1,648)
Net loss........................ (2,217) (2,217)
---------- ---- ------- ------- ------ --------- -------- --------
Balances, December 31, 1998..... 12,232,367 $122 $72,699 $69,391 $ 1,393,600 $(14,510) $127,702
========== ==== ======= ======= ====== ========= ======== ========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
--------------------------------
1998 1997 1996
-------- -------- --------
(In thousands)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)........................................... $ (2,217) $ 15,294 $ 17,038
Adjustments to reconcile net earnings (loss) to
net cash provided by continuing operating activities:
Loss from discontinued operations.......................... 13
Depreciation and amortization.............................. 29,166 23,991 17,673
Deferred income taxes...................................... (2,920) 5,681 6,514
Restricted stock award compensation........................ 163
Other...................................................... 445 (1,756) 543
Changes in operating assets and liabilities:
Decrease (increase) in receivables....................... 7,028 (7,876) (6,718)
Decrease (increase) in inventories....................... 5,811 (13,494) 4,355
(Increase) decrease in prepaid expenses and other........ (867) (156) 647
(Decrease) increase in accounts payable.................. (12,596) 2,784 1,644
Increase in accrued expenses............................. 3,042 6,824 883
-------- -------- --------
Net cash provided by continuing operating activities............ 26,892 31,292 42,755
-------- -------- --------
Cash flows from investing activities:
Acquisition of businesses, net of cash received............... (38,205) (47,168)
Purchases of property, plant and equipment and other assets... (60,320) (35,752) (27,468)
Refinery acquisition contingent payment....................... (7,243) (6,910)
Proceeds from sale-leaseback transaction...................... 50,124
Proceeds from sale of property, plant and
equipment and other assets.................................. 3,816 4,606 4,587
Investment in note receivable................................. (5,000)
Proceeds from sale of discontinued operations................. 24,106
Net cash used by discontinued operations...................... (3,831)
-------- -------- --------
Net cash used by investing activities........................... (56,828) (85,224) (2,606)
-------- -------- --------
Cash flows from financing activities:
Proceeds of long-term debt.................................... 46,000 283,100 10,000
Payments of long-term debt.................................... (38,435) (151,924) (42,218)
Purchase of treasury stock.................................... (1,900) (1,825) (2,784)
Deferred financing costs...................................... (425) (3,319)
Payment of dividends.......................................... (2,199) (2,218) (2,284)
Proceeds from exercise of stock options....................... 82 216
-------- -------- --------
Net cash provided (used) by financing activities................ 3,041 123,896 (37,070)
-------- -------- --------
Net (decrease) increase in cash and cash equivalents............ (26,895) 69,964 3,079
Cash and cash equivalents:
Beginning of year............................................. 82,592 12,628 9,549
-------- -------- --------
End of year................................................... $ 55,697 $ 82,592 $ 12,628
======== ======== ========
</TABLE>
Significant Noncash Investing and Financing Activities. During
1998, approximately $2,039,000 was incurred as a contingent payment
related to the 1995 acquisition of the Bloomfield refinery. During
1997, the Company exchanged an office building and a truck
maintenance shop with net book values totaling approximately
$1,300,000 and recorded $22,904,000 for capital leases as part of
the acquisition of the Thriftway Assets. In addition, approximately
$7,243,000 was incurred as a contingent payment related to the
acquisition of the Bloomfield refinery. During 1996, the Company
accrued $2,250,000 for estimated preacquisition environmental
liabilities assumed and $6,910,000 was incurred as a contingent
payment, both related to the acquisition of the Bloomfield
refinery.
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<PAGE>
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING
POLICIES:
ORGANIZATION
Giant Industries, Inc. ("Giant" or the "Company") is
organized through two wholly-owned subsidiaries, Giant
Industries Arizona, Inc. ("Giant Arizona") and Giant Exploration
and Production Company ("Giant E&P"). Giant Arizona, along with
a number of its wholly-owned subsidiaries, is engaged in the
refining and marketing business. In addition, through its
wholly-owned subsidiary Phoenix Fuel Co., Inc. ("Phoenix Fuel"),
Giant Arizona operates an independent industrial/commercial
petroleum products distribution operation. Substantially all of
the oil and gas assets of Giant E&P were sold in August 1996.
DESCRIPTION OF BUSINESS
The Company operates primarily as an independent refiner
and marketer of petroleum products. The Company's principal
business is the refining of crude oil into petroleum products
which are sold through branded retail outlets as well as through
distributors, industrial/commercial accounts and major oil
companies. The Company is the largest refiner and marketer of
petroleum products in the Four Corners area of the southwestern
United States where New Mexico, Arizona, Colorado and Utah
adjoin. The Company has two operating refineries in New Mexico.
The Ciniza refinery, with a crude oil throughput capacity of
20,800 barrels per day ("bpd") and a total capacity including
natural gas liquids of 26,000 bpd, is located near Gallup, New
Mexico. In October 1995, the Company acquired the Bloomfield
refinery, with a crude oil throughput capacity of 18,000 bpd and
a total capacity including natural gas liquids of 18,600 bpd,
located in Bloomfield, New Mexico.
At December 31, 1998, the Company owned and/or operated 166
retail service station/convenience stores and a travel center.
These operations sell gasoline, diesel fuel and merchandise to
the general public.
In addition, through Phoenix Fuel, the largest independent
petroleum products distributor in the state of Arizona, the
Company distributes gasoline, diesel fuel and various lubricants
to industrial and commercial accounts.
(See Notes 2 and 3 for further discussion of operations and
recent acquisitions and dispositions.)
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts
of Giant and all of its subsidiaries. All significant
intercompany accounts and transactions have been eliminated.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these
estimates.
NET REVENUES
Revenues are recognized from sales when product ownership
is transferred to the customer. Excise and other similar taxes
are excluded from net revenues.
STATEMENTS OF CASH FLOWS
All highly liquid instruments with an original maturity of
three months or less are considered to be cash equivalents.
FUTURES AND OPTION CONTRACTS
The Company periodically enters into futures or option
contracts to hedge its exposure to price fluctuations on crude
oil and refined products. Gains and losses on hedge contracts
are deferred and reported as a component of the related
transaction. For the purposes of the Statement of Cash Flows,
hedging transactions are considered to be operating activities.
INTEREST RATE SWAPS
In the past, interest rate management techniques such as
swaps and caps were entered into in order to effectively manage
and reduce net interest expense. Net settlements on swap
transactions are reported as an adjustment to net interest
expense over the life of the associated debt instruments. These
debt instruments were repaid in 1996, and the remaining net
settlement proceeds were recorded as an adjustment to interest
expense.
CONCENTRATION OF CREDIT RISK
Credit risk with respect to customer receivables is
concentrated in a small geographic area in which the Company
operates and relates primarily to customers in the oil and gas
industry. To minimize this risk, the Company performs ongoing
credit evaluations of its customers' financial position and
requires collateral, such as letters of credit, in certain
circumstances.
INVENTORIES
Inventories are stated at the lower of cost or market.
Costs for crude oil and refined products produced by the
refineries, and the lubricants, refined products and other
merchandise of Phoenix Fuel, are determined by the last-in,
first-out ("LIFO") method. Costs for exchange and terminal
refined products and shop supplies are determined by the
first-in, first-out ("FIFO") method. Costs for merchandise
inventories at retail locations are determined by the retail
inventory method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost and are
depreciated on the straight-line method over their respective
estimated useful lives. The estimated useful lives for the
various categories of property, plant and equipment are:
Buildings and improvements 7-30 years
Machinery and equipment 7-24 years
Pipelines 30 years
Furniture and fixtures 2-15 years
Vehicles 3-7 years
Routine maintenance, repairs and replacement costs are
charged against earnings as incurred. Turnaround costs, which
consist of complete shutdown and inspection of significant units
of the refineries at intervals of two or more years for
necessary repairs and replacements, are deferred and amortized
over the period until the next expected shutdown which generally
ranges from twenty-four to forty-eight months depending on the
type of shutdown and the unit involved. Expenditures which
materially increase values, expand capacities or extend useful
lives are capitalized. Interest expense is capitalized as part
of the cost of constructing major facilities and equipment.
GOODWILL
Goodwill is carried at cost less accumulated amortization.
Goodwill is amortized on the straight-line method over the
periods of expected benefit ranging from fifteen to thirty
years.
LONG-LIVED ASSETS
In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 121, the Company reviews the carrying
values of its long-lived assets and identifiable intangibles for
possible impairment whenever events or changes in circumstances
indicate that the carrying amount of assets to be held and used
may not be recoverable. For assets to be disposed of, the
Company reports long-lived assets and certain identifiable
intangibles at the lower of carrying amount or fair value less
cost to sell.
TREASURY STOCK
The Company's Board of Directors has authorized the
repurchase of up to 2,500,000 shares of the Company's common
stock. These purchases may be made from time to time as
conditions permit. Shares may be repurchased through
privately-negotiated transactions, block share purchases and
open market transactions. Through the end of 1998, the Company
had repurchased 1,393,600 shares at a cost of approximately
$14,510,000. These shares are being treated as treasury shares.
At December 31, 1998, the Company was unable to repurchase
additional shares of common stock under this program due to
restrictions under the Indenture supporting its 9 3/4% senior
subordinated notes.
ENVIRONMENTAL EXPENDITURES
Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past
operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable
and the costs can be reasonably estimated. Environmental
liabilities are not discounted to their present value and are
recorded without consideration of potential recoveries from
third parties. Subsequent adjustments to estimates, which may be
significant, may be made as more refined information becomes
available or as circumstances change. (See Note 18.)
INCOME TAXES
The provision for income taxes is based on earnings
reported in the financial statements. Deferred income taxes are
provided to reflect temporary differences between the basis of
assets and liabilities for financial reporting purposes and
income tax purposes, as well as the effects of tax credits.
EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per share are calculated in accordance with
the Financial Accounting Standards Board ("FASB") SFAS No. 128,
"Earnings Per Share". Basic earnings (loss) per common share is
computed on the weighted average number of shares of common
stock outstanding during each period. Earnings (loss) per common
share assuming dilution is computed on the weighted average
number of shares of common stock outstanding plus additional
shares representing the exercise of outstanding common stock
options using the treasury stock method, unless such calculation
is antidilutive. (See Note 5.)
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which will be
effective for Giant's financial statements as of January 1,
2000. SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. It requires that entities record all
derivatives as either assets or liabilities, measured at fair
value, with any change in fair value recognized in earnings or
in other comprehensive income, depending on the use of the
derivative and whether it qualifies for hedge accounting. If
certain conditions are met, a derivative may be specifically
designated as (a) a hedge of the exposure to changes in the fair
value of a recognized asset or liability or an unrecognized firm
commitment, (b) a hedge of the exposure to variable cash flows
of a forecasted transaction, or (c) a hedge of the foreign
currency exposure of a net investment in a foreign operation, an
unrecognized firm commitment, an available-for-sale security, or
a foreign-currency- denominated forecasted transaction.
Under this Statement, an entity that elects to apply hedge
accounting is required to establish at the inception of the
hedge the method it will use for assessing the effectiveness of
the hedging derivative and the measurement approach for
determining the ineffective aspect of the hedge. Those methods
must be consistent with the entity's approach to managing risk.
The Company has not completed evaluating the effects this
Statement will have on its financial reporting and disclosures.
In June 1997, the FASB issued SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information", which
is effective for fiscal 1998. This Statement establishes
standards for the way that public enterprises report information
about operating segments in annual and interim financial
statements. It also establishes standards for disclosures about
products and services, geographic areas and major customers. The
Company has implemented this Statement and the required
disclosures are made in Note 2.
In June 1997, the FASB also issued SFAS No. 130, "Reporting
Comprehensive Income", which became effective in fiscal 1998.
SFAS No. 130 requires that an enterprise (a) classify items of
other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and
additional capital in the equity section of a statement of
financial position. The Company has adopted this statement, but
has no items of other comprehensive income for the periods
presented in these financial statements.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1997 and
1996 financial statements and notes to conform to the statement
classifications used in 1998.
<PAGE>
<PAGE>
NOTE 2--COMPANY OPERATIONS:
In 1997, the FASB issued Statement No. 131, "Disclosures
about Segments of an Enterprise and Related Information", which
the Company implemented effective December 31, 1998. This
Statement establishes new standards for defining the Company's
segments and disclosing information about them. It requires that
the segments be based on management's internal organizational
decision-making structure.
The Company is organized into three operating segments
based on manufacturing and marketing criteria. These segments
are the Refining Group, the Retail Group and Phoenix Fuel. A
description of each segment and principal products and
operations are as follows:
-- Refining Group: The Refining Group consists of the
Company's two refineries, its fleet of crude oil and finished
product truck transports, its crude oil pipeline gathering
operations and its finished product terminaling operations. The
Company's two refineries manufacture various grades of gasoline,
diesel fuel, jet fuel and other products from crude oil, other
feedstocks and blending components. These products are sold
through company-operated retail facilities, independent
wholesalers and retailers, industrial/commercial accounts and
sales and exchanges with major oil companies. Crude oil, other
feedstocks and blending components are purchased from third
party suppliers.
-- Retail Group: The Retail Group consists of service
station/convenience stores and one travel center. These
operations sell various grades of gasoline, diesel fuel, general
merchandise and food products to the general public through
retail locations. The petroleum fuels sold by the Retail Group
are supplied by the Refining Group, which either manufactures
these refined products or acquires them through exchange
arrangements, third party purchases, or from Phoenix Fuel.
General merchandise and food products are obtained from third
party suppliers.
-- Phoenix Fuel: Phoenix Fuel is an industrial/commercial
petroleum fuels and lubricants distribution operation, which
includes a number of bulk distribution plants, an unattended
fleet fueling ("cardlock") operation and a fleet of finished
product truck transports. The petroleum fuels and lubricants
sold are primarily obtained from third party suppliers and to a
lesser extent from the Refining Group.
Operations that are not included in any of the three
segments are included in the category "Other" and consist
primarily of corporate office operations, including selling,
general and administrative expenses of $24,412,000, $17,863,000
and $16,125,000 for 1998, 1997 and 1996, respectively.
Operating income for each segment consists of net revenues
less cost of products sold, operating expenses, depreciation and
amortization and the segment's selling, general and
administrative expenses. The sales between segments are made at
market prices. Cost of products sold reflect current costs
adjusted for LIFO and lower of cost or market inventory
adjustments.
The total assets of each segment consist primarily of net
property, plant and equipment, inventories, accounts receivable
and other assets directly associated with the segment's
operations. Included in the total assets of the corporate office
operations are a majority of the Company's cash and cash
equivalents, various accounts receivable, net property, plant
and equipment and other long-term assets.
Disclosures regarding the Company's reportable segments
under SFAS No. 131 with reconciliations to consolidated totals
are presented on the following page.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SEGMENT DISCLOSURES:
As of and for the Year Ended December 31, 1998 (In thousands)
-----------------------------------------------------------------
Refining Retail Phoenix Reconciling
Group Group Fuel Other Items Consolidated
-------- -------- -------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Customer net revenues............... $181,033 $271,775 $189,168 $ 528 $642,504
Intersegment net revenues........... 131,599 1,876 7,343 $(140,818)
-------- -------- -------- -------- --------- --------
Total net revenues.................. $312,632 $273,651 $196,511 $ 528 $(140,818) $642,504
-------- -------- -------- -------- --------- --------
Operating income.................... $ 24,994 $ 14,017 $ 4,780 $(23,884) $ 19,907
Interest expense.................... (25,464)
Interest income..................... 1,831
--------
Loss from continuing
operations before income taxes..... $ (3,726)
--------
Depreciation and amortization....... $ 14,305 $ 9,298 $ 1,976 $ 3,587 $ 29,166
Total assets........................ $241,898 $123,086 $ 64,315 $ 96,486 $525,785
Capital expenditures................ $ 40,763 $ 16,325 $ 2,180 $ 934 $ 60,202
</TABLE>
<TABLE>
<CAPTION>
As of and for The Year Ended December 31, 1997 (In thousands)
-----------------------------------------------------------------
Refining Retail Phoenix Reconciling
Group Group Fuel Other Items Consolidated
-------- -------- -------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Customer net revenues............... $309,940 $214,864 $132,047 $ 427 $657,278
Intersegment net revenues........... 118,748 1,994 4,496 $(125,238)
-------- -------- -------- -------- --------- --------
Total net revenues.................. $428,688 $216,858 $136,543 $ 427 $(125,238) $657,278
-------- -------- -------- -------- --------- --------
Operating income.................... $ 47,873 $ 7,155 $ 3,514 $(17,436) $ 41,106
Interest expense.................... (18,139)
Interest income..................... 2,133
--------
Earnings from continuing
operations before income taxes..... $ 25,100
--------
Depreciation and amortization....... $ 13,740 $ 6,494 $ 935 $ 2,822 $ 23,991
Total assets........................ $229,663 $128,200 $ 65,227 $112,281 $535,371
Capital expenditures................ $ 19,366 $ 11,790 $ 1,696 $ 2,343 $ 35,195
</TABLE>
<TABLE>
<CAPTION>
As of and for The Year Ended December 31, 1996 (In thousands)
-----------------------------------------------------------------
Refining Retail Phoenix Reconciling
Group Group Fuel Other Items Consolidated
-------- -------- -------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Customer net revenues............... $339,479 $159,332 $ 373 $499,184
Intersegment net revenues........... 97,933 1,456 $ (99,389)
-------- -------- -------- -------- --------- --------
Total net revenues.................. $437,412 $160,788 $ 373 $ (99,389) $499,184
-------- -------- -------- -------- --------- --------
Operating income.................... $ 51,835 $ 3,647 $(15,752) $ 39,730
Interest expense.................... (12,318)
Interest income..................... 771
--------
Earnings from continuing
operations before income taxes..... $ 28,183
--------
Depreciation and amortization....... $ 11,690 $ 4,215 $ 1,768 $ 17,673
Capital expenditures................ $ 12,354 $ 14,018 $ 704 $ 27,076
The Company had no customers whose revenues exceeded 10% of consolidated net revenues.
</TABLE>
<PAGE>
<PAGE>
NOTE 3--ACQUISITIONS AND DISPOSITIONS:
In February 1998, the Company purchased seven service
station/convenience stores, two cardlock commercial fleet fueling
facilities, a gasoline and diesel storage bulk plant and related
transportation equipment from DeGuelle Oil Company and DeGuelle
Enterprises (the "DeGuelle Assets") for $9,750,000. All of the
facilities are located in southwestern Colorado and are supplied
by the Company's refineries. For the fiscal year ended December
31, 1997, prior to the purchase by the Company, these operations
had sales of approximately 10,000,000 gallons of gasoline and
diesel fuel in addition to 35,000 gallons of lubricants.
In April 1998, the Board of Directors of the Company
approved an Agreement and Plan of Merger (the "Merger Agreement")
whereby Holly Corporation ("Holly") would be merged with and into
Giant (the "Merger"). The Merger was subject to various
conditions stated in the Merger Agreement. On September 1, 1998,
Giant and Holly mutually agreed to terminate the proposed Merger
after considering various factors, including the inability of the
companies to reach a satisfactory resolution of concerns
expressed by the Federal Trade Commission relative to the
possible impact of the Merger on portions of the market served by
the companies and uncertainty caused by a lawsuit filed against
Holly by Longhorn Partners Pipeline, L.P. For the year ended
December 31, 1998, the Company wrote off approximately $1,400,000
of costs incurred in connection with the proposed Merger. These
costs were primarily for fees paid to investment bankers,
attorneys, accountants and regulatory agencies, and printing and
distribution costs related to documents delivered to
shareholders.
In July 1998, the Company completed the acquisition of
thirty-two service station/convenience stores, equipment, fuel
truck/transports, and undeveloped real estate from Kaibab
Industries, Inc. (the "Kaibab Assets") for approximately
$28,400,000. The retail units, located throughout Arizona,
include fifteen in the greater Phoenix area and eleven in the
Tucson market, with the balance located primarily in southern and
eastern Arizona. These units had sales of approximately
70,000,000 gallons of refined petroleum products for the fiscal
year ended September 30, 1997.
In May 1997, the Company completed the acquisition of
ninety-six retail service station/convenience stores, seven
additional retail locations for future development, certain
petroleum transportation and maintenance assets, options to
acquire service station/convenience stores and other related
assets (the "Thriftway Assets"). The assets were acquired from
Thriftway Marketing Corp. and Clayton Investment Company and from
entities related to such sellers (collectively, "Thriftway").
Thirty-two of the Thriftway service station/convenience
stores, as well as the seven retail locations for future
development, the transportation and maintenance assets, the
options to acquire service station/convenience stores and other
related assets were purchased for approximately $19,100,000 in
cash and for an office building and a truck maintenance shop with
net book values totaling approximately $1,300,000. The remaining
sixty-four service station/convenience stores and related assets
were leased for a period of ten years with options to purchase
them during the ten year period for approximately $22,904,000.
The lease obligations were accounted for as capital leases.
During 1998, the Company purchased fifty-four of these retail
service station/convenience stores for approximately $14,669,000.
The remaining 10 stores continue to be leased under the original
terms, and the Company intends to purchase them pursuant to the
options to purchase during the remaining lease period for
approximately $8,235,000.
The service station/convenience stores acquired from
Thriftway are retail outlets that sell various grades of
gasoline, diesel fuel and merchandise to the general public and
are located in New Mexico, Arizona, Colorado and Utah, in or
adjacent to the Company's primary market area.
The Company also entered into a consignment agreement with
Thriftway to supply finished product to sixteen service
station/convenience stores operated by Thriftway which are
located on the Navajo, Ute and Zuni Indian Reservations and has
options to purchase these service station/convenience stores. The
Company has also entered into long-term supply arrangements with
Thriftway to provide gasoline and diesel fuel to other service
stations in the area that will continue to be operated by
Thriftway.
In late 1997, the Company entered into an arrangement to
sell some of the ninety-six units and additional retail locations
acquired or leased from Thriftway. Sixteen of these units and two
of the additional retail locations were sold in early 1998 for
approximately $1,700,000.
In June 1997, the Company purchased all of the issued and
outstanding common stock of Phoenix Fuel from J. W. Wilhoit, as
Trustee of the Wilhoit Trust Agreement dated December 26, 1974
and other related entities for approximately $30,000,000 in cash.
Phoenix Fuel is an independent industrial/commercial
petroleum products distributor with wholesale and cardlock fuel
sales. Products sold include gasoline, diesel fuel, burner fuel,
jet fuel, aviation fuel and kerosene. In addition, Phoenix Fuel
distributes oil and lubricants such as motor oil, hydraulic oil,
gear oil, cutting oil and grease.
At December 31, 1998, Phoenix Fuel had eight bulk petroleum
distribution plants, twenty-one cardlock fueling operations, a
lubricant storage and distribution facility and operated a fleet
of thirty-four finished product truck transports. These assets
and related operations are located throughout the state of
Arizona.
All of the acquisitions have been accounted for using the
purchase method. Accordingly, the Company's purchase price has
been allocated to acquired assets and assumed liabilities based
on estimated fair values. Results of operations of the acquired
businesses from their respective dates of acquisition have been
included in the Company's Consolidated Statements of Earnings
(Loss) for the years ended December 31, 1998 and 1997. The
Company recorded goodwill of approximately $17,000,000 for the
acquisition of Phoenix Fuel, $4,600,000 for the acquisition of
the Kaibab Assets and $1,700,000 for the acquisition of the
Thriftway Assets. The Company is amortizing goodwill related to
the Phoenix Fuel acquisition over 30 years and goodwill related
to the Kaibab and Thriftway Assets over 15 years.
The Thriftway and Phoenix Fuel acquisitions were funded
under the Company's unsecured credit agreement, as amended, with
a group of banks. This facility was replaced in 1998 with a
secured credit agreement. The amounts borrowed were subsequently
repaid with the issuance of $150,000,000 of 9% senior
subordinated notes (the "9% Notes") in August 1997. The proceeds
of the 9% Notes were also used for the DeGuelle and Kaibab
acquisitions and the purchase of the assets related to the
Thriftway capital lease obligations.
The following unaudited pro forma information for the years
ended December 31, 1998 and 1997 combine the historical financial
information for the Company, the Kaibab Assets, the DeGuelle
Assets, the Thriftway Assets and Phoenix Fuel assuming these
acquisitions were consummated at the beginning of the periods
presented, as well as the sale of the 9% Notes and the
application of the proceeds as described in Note 10, assuming
such transaction had occurred at the beginning of the periods.
The unaudited pro forma information includes the results of
operations of the Company, the Kaibab Assets, the DeGuelle
Assets, the Thriftway Assets and Phoenix Fuel, along with
adjustments which give effect to events that are directly
attributable to the transactions and which are expected to have a
continuing impact.
<TABLE>
<CAPTION>
Pro Forma
(Unaudited, In thousands,
except per share data)
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Net revenues....................................................... $668,506 $904,229
Earnings (loss) from continuing operations before income taxes..... $ (2,163) $ 26,759
Net earnings (loss)................................................ $ (1,279) $ 16,298
Net earnings (loss) per common share - basic....................... $ (0.12) $ 1.47
Net earnings (loss) per common share - assuming dilution........... $ (0.12) $ 1.46
</TABLE>
This unaudited pro forma financial information does not
purport to represent the results of operations that actually
would have resulted had the purchases occurred on the date
specified, nor should it be taken as indicative of the future
results of operations.
In December 1998, the Company and Franchise Finance
Corporation of America ("FFCA") completed a sale-leaseback
transaction. Under the terms of the Sale and Lease Agreement (the
"Agreement"), FFCA purchased eighty-three service
station/convenience stores from the Company for approximately
$51,800,000, including six of the seven DeGuelle Asset units and
twenty-six of the Kaibab Asset units, with the remainder having
been acquired as part of the acquisition of the Thriftway Assets.
The Company in turn leased the eighty-three service
station/convenience stores back from FFCA under an operating
lease arrangement with an initial term of fifteen years and three
separate options to continue the lease for successive periods of
five years. Initial annual rental payments under the lease
agreement are approximately $5,100,000 and will be adjusted
upward by six percent on the second anniversary of the Agreement
and every second anniversary thereafter, on a compounded basis,
during the initial lease term and any extension thereof. The
Company has a right of first refusal to acquire the leased assets
upon an offer to purchase the assets by a third party. Net
proceeds to the Company, after expenses, were approximately
$50,100,000. The Company recorded a gain of approximately
$4,000,000 on the sale of the assets. This gain has been deferred
and will be amortized over the initial lease period of fifteen
years. The deferred gain is included in "Other Liabilities and
Deferred Income" in the Company's Consolidated Balance Sheet at
December 31, 1998.
In accordance with the Indentures supporting the Company's
9% Notes and $100,000,000 of 9 3/4% senior subordinated notes
(the "9 3/4% Notes", and collectively with the 9% Notes, the
"Notes"), the Company must either use the net proceeds from the
FFCA transaction to make a permanent reduction in senior
indebtedness (as defined in the respective Indentures), or make
an investment in capital assets used in the Company's principal
business (as defined in the respective Indentures). The Company
has 360 days in which to use the net proceeds for such a purpose
under the terms of the Indenture supporting the 9% Notes, and has
270 days under the terms of the Indenture supporting the 9 3/4%
Notes. In each case, upon completion of the specified period, if
all of the net proceeds have not been used for such a purpose,
the Company may be obligated, under certain circumstances, to
repurchase the respective Notes with the unused portion. The
Company anticipates that it will use the net proceeds from the
FFCA transaction to invest in capital assets or to reduce senior
indebtedness before the applicable periods expire.
In December 1997, the Company completed the sale of its
ethanol processing plant in Portales, New Mexico for $4,000,000
in cash. The Company incurred a pretax loss of approximately
$1,200,000 on the disposition. In 1997 and 1996, the Company
incurred expenses of approximately $307,000 and $468,000,
respectively, to maintain this facility in addition to
approximately $606,000 and $683,000, respectively, in
depreciation.
In October 1995, the Company completed the purchase of the
Bloomfield refinery along with related pipeline and
transportation assets for $55,000,000 from Gary-Williams Energy
Co. and its wholly-owned subsidiary, Bloomfield Refining Company
("BRC"). The purchase agreement provides for potential contingent
payments to be made to BRC over approximately six years from the
acquisition date, not to exceed a present value of $25,000,000,
should certain criteria be met. These contingent payments are
considered to be additional purchase price and will be allocated
to the assets acquired in the same proportions as the original
purchase price was allocated, not to exceed the estimated current
replacement cost, and amortized over the estimated remaining life
of the assets. At December 31, 1998, 1997 and 1996, the Company
had accrued $2,039,000, $7,243,000, and $6,910,000, respectively,
under this arrangement relating to 1998, 1997 and 1996
operations. In addition, the Company accrued $2,250,000 in 1996
relating to certain environmental obligations assumed in the
purchase, which amount was also considered to be additional
purchase price.
<PAGE>
<PAGE>
NOTE 4--DISCONTINUED OPERATIONS:
In August 1996, the Company completed the sale of
substantially all of its oil and gas assets for $25,500,000. The
transaction was structured so that the Company retained only the
oil and gas properties that would generate future coal seam gas
tax credits under Section 29 of the Internal Revenue Code. As the
reserves related to these properties are produced by the buyer,
the tax credits generated are realized by the Company and can be
used to offset taxable income.
<PAGE>
<PAGE>
NOTE 5--EARNINGS PER SHARE:
As discussed in Note 1, the following is a reconciliation of
the numerators and denominators of the basic and diluted per
share computations for earnings (loss) from continuing operations
as required by SFAS No. 128:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------------------------------
1998 1997 1996
-------------------------------- -------------------------------- --------------------------------
Per Per Per
Loss Shares Share Earnings Shares Share Earnings Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earnings (loss) per common
share - basic
Earnings (loss) from
continuing operations $(2,217,000) 10,950,991 $(0.20) $15,294,000 11,050,853 $1.38 $17,051,000 11,220,380 $1.52
Effect of dilutive
stock options * 124,041 115,964
----------- ---------- ------ ----------- ---------- ----- ---------- ---------- -----
Earnings (loss) per common
share - assuming dilution
Earnings (loss) from
continuing operations $(2,217,000) 10,950,991 $(0.20) $15,294,000 11,174,894 $1.37 $17,051,000 11,336,344 $1.50
=========== ========== ====== =========== ========== ===== ========== ========== =====
</TABLE>
*The additional shares would be antidilutive due to the net loss.
There were no transactions subsequent to December 31, 1998,
that if the transactions had occurred before December 31, 1998,
would materially change the number of common shares or potential
common shares outstanding as of December 31, 1998.
<PAGE>
<PAGE>
NOTE 6 NOTE RECEIVABLE:
During the year ended December 31, 1998, the Company loaned
$5,000,000 to its Chairman and Chief Executive Officer. The
Company's initial loan in the amount of $4,000,000 was
subsequently increased by $1,000,000. The loan is evidenced by an
unsecured promissory note bearing interest at prime plus 2% on
$4,000,000 from September 17, 1998 through December 22, 1998, and
prime plus 3% on $5,000,000 thereafter. An initial interest
payment was paid on February 28, 1999 for interest due through
December 31, 1998. Subsequent interest is due and payable
semi-annually on each June 30 and December 31 of each year until
February 28, 2001, at which time all outstanding principal and
interest is fully due and payable. This loan is included in
"Other Assets" in the Company's Consolidated Balance Sheet at
December 31, 1998.
<PAGE>
<PAGE>
NOTE 7--INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31,
-------------------
1998 1997
------- -------
(In thousands)
<S> <C> <C>
First-in, first-out ("FIFO") method:
Crude oil.............................. $ 8,419 $12,736
Refined products....................... 17,956 25,562
Refinery and shop supplies............. 9,648 7,530
Merchandise............................ 4,568 4,640
Retail method:
Merchandise............................ 7,460 5,840
------- -------
Subtotal............................ 48,051 56,308
Adjustment for last-in,
first-out ("LIFO") method.............. 14,758 4,220
Allowance for lower of cost or market.... (11,460) (2,930)
------- -------
Total............................... $51,349 $57,598
======= =======
</TABLE>
The portion of inventories valued on a LIFO basis totaled
$30,423,000 and $37,714,000 at December 31, 1998 and 1997,
respectively. The following data will facilitate comparison with
the operating results of companies using the FIFO method of
inventory valuation.
If inventories had been determined using the FIFO method at
December 31, 1998, 1997 and 1996, net earnings and basic earnings
per share for the years ended December 31, 1998, 1997 and 1996
would have been (lower) higher by $(777,000) and $(0.07),
$(3,705,000) and $(0.34), and $2,883,000 and $0.26, respectively.
<PAGE>
<PAGE>
NOTE 8--PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost, consist of the
following:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1997
--------- ---------
(In thousands)
<S> <C> <C>
Land and improvements......................... $ 28,321 $ 29,354
Buildings and improvements.................... 92,701 96,817
Machinery and equipment....................... 246,615 203,726
Pipelines..................................... 10,088 9,789
Furniture and fixtures........................ 23,108 28,658
Vehicles...................................... 10,160 10,620
Construction in progress...................... 28,947 23,636
--------- ---------
Subtotal.................................. 439,940 402,600
Accumulated depreciation and amortization..... (138,008) (120,773)
--------- ---------
Total..................................... $ 301,932 $ 281,827
========= =========
</TABLE>
<PAGE>
<PAGE>
NOTE 9--ACCRUED EXPENSES:
Accrued expenses are comprised of the following:
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1997
------- -------
(In thousands)
<S> <C> <C>
Excise taxes......................................... $12,264 $ 9,926
Bloomfield refinery acquisition contingent payment... 2,039 7,243
Payroll and related costs............................ 6,082 5,240
Bonus, profit sharing and retirement plans........... 2,725 2,880
Interest............................................. 6,364 6,223
Other................................................ 7,045 7,731
------- -------
Total $36,519 $39,243
======= =======
</TABLE>
<PAGE>
<PAGE>
NOTE 10--LONG-TERM DEBT:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1997
-------- --------
(In thousands)
<S> <C> <C>
9% senior subordinated notes, due 2007,
interest payable semi-annually........................ $150,000 $150,000
9 3/4% senior subordinated notes, due
2003, interest payable semi-annually.................. 100,000 100,000
Secured credit agreement, due 2001, floating
interest rate, interest payable quarterly............. 24,000
Capital lease obligations, 11.3%, due through
2007, interest payable monthly........................ 8,235 22,904
Notes payable to others, collateralized by
real estate, 9 3/4%, due 1999,
interest payable monthly.............................. 950 1,193
Other................................................... 499 2,022
-------- --------
Subtotal............................................ 283,684 276,119
Less current portion.................................... (1,200) (562)
-------- --------
Total............................................... $282,484 $275,557
======== ========
</TABLE>
During August 1997, the Company issued the 9% Notes. The net
proceeds of the 9% Notes, after deducting expenses and initial
purchasers discounts, were approximately $146,800,000.
Approximately $73,600,000 of the proceeds were used to repay
outstanding indebtedness. The remaining proceeds of approximately
$73,200,000 were used for the purchase of service
station/convenience stores subject to capital lease obligations,
for the acquisition of the Kaibab and DeGuelle Assets, and for
general corporate purposes. Interest on the 9% Notes is payable
semi-annually on March 1 and September 1, commencing March 1,
1998.
Repayment of the Notes is jointly and severally guaranteed
on an unconditional basis by the Company's direct and indirect
wholly-owned subsidiaries, subject to a limitation designed to
ensure that such guarantees do not constitute a fraudulent
conveyance. Except as otherwise allowed in the Indenture pursuant
to which the Notes were issued, there are no restrictions on the
ability of such subsidiaries to transfer funds to the Company in
the form of cash dividends, loans or advances. General provisions
of applicable state law, however, may limit the ability of any
subsidiary to pay dividends or make distributions to the Company
in certain circumstances.
Separate financial statements of the Company's subsidiaries
are not included herein because the aggregate assets,
liabilities, earnings and equity of the subsidiaries are
substantially equivalent to the assets, liabilities, earnings and
equity of the Company on a consolidated basis; the subsidiaries
are jointly and severally liable for repayment of the Notes; and
the separate financial statements and other disclosures
concerning the subsidiaries are not deemed material to investors.
The Indentures supporting the Notes contain restrictive
covenants that, among other things, restrict the ability of the
Company and its subsidiaries to create liens, to incur or
guarantee debt, to pay dividends, to repurchase shares of the
Company's common stock, to sell certain assets or subsidiary
stock, to engage in certain mergers, to engage in certain
transactions with affiliates or to alter the Company's current
line of business. At December 31, 1998, the Company was in
compliance with the covenants relating to the 9% Notes, but was
not in compliance with the covenants relating to the 9 3/4%
Notes. At December 31, 1998, the terms of the Indenture
supporting the 9 3/4% Notes restricted the amount of money the
Company could borrow. This amount is the greater of $40,000,000
or the amount determined under a borrowing base calculation tied
to eligible accounts receivable and inventories as defined in the
Indenture. At December 31, 1998, this amount was approximately
$73,500,000. In addition, the Company is not able to make any
restricted payments as defined in the Indenture as long as the
terms of the Indenture are not met. This includes the payment of
dividends and the repurchase of shares of the Company's common
stock. In addition, subject to certain conditions, the Company is
obligated to offer to purchase a portion of the Notes at a price
equal to 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase, with the net
cash proceeds of certain sales or other dispositions of assets.
Upon a change of control, the Company would be required to offer
to purchase all of the Notes at 101% of the principal amount
thereof, plus accrued interest, if any, to the date of purchase.
At December 31, 1998, retained earnings available for dividends
under the most restrictive terms of the Indentures was
approximately $8,626,000.
On December 23, 1998, the Company entered into a $65,000,000
secured Credit Agreement (the "Credit Agreement") due December
23, 2001, with Bank of America National Trust and Savings
Association, Union Bank of California, N.A. and Bank One,
Arizona, N.A. This Credit Agreement, a revolving loan agreement,
is primarily a working capital and letter of credit facility and
is secured by eligible accounts receivable and inventories as
defined in the Credit Agreement. In addition, the Company is able
to borrow up to $9,000,000 to exercise its purchase rights in
connection with the Thriftway Assets that are currently subject
to capital lease obligations, and up to $10,000,000 for other
acquisitions as defined in the Credit Agreement. The availability
of funds under this facility is the lesser of (i) $65,000,000, or
(ii) the amount determined under a borrowing base calculation
tied to the eligible accounts receivable and inventories. At
December 31, 1998, the availability of funds under the Credit
Agreement was approximately $49,000,000. There were $24,000,000
of direct borrowings outstanding under this facility at December
31, 1998, and there were approximately $12,800,000 of irrevocable
letters of credit outstanding, primarily to secure purchases of
raw materials. At March 1, 1999, no direct borrowings were
outstanding and approximately $12,800,000 of irrevocable letters
of credit were outstanding.
The interest rate applicable to the Credit Agreement is tied
to various short-term indices. At December 31, 1998, this rate
was approximately 6.5% per annum. The Company is required to pay
a quarterly commitment fee ranging from 0.325% to 0.500% per
annum of the unused amount of the facility. The exact rate
depends on meeting certain conditions in the Credit Agreement.
The Credit Agreement contains certain covenants and
restrictions which require the Company to, among other things,
maintain a minimum consolidated net worth, a minimum interest
coverage ratio, and a maximum capitalization ratio. It also
places limits on investments, dispositions of assets, prepayments
of senior subordinated debt, guarantees, liens and restricted
payments. At December 31, 1998, the Company was in compliance
with the Credit Agreement covenants and was not aware of any
noncompliance with the other terms of the Credit Agreement. The
Credit Agreement is guaranteed by all of the Company's direct and
indirect wholly-owned subsidiaries.
In 1997, as part of the acquisition of the Thriftway Assets,
the Company leased sixty-four service stations/convenience stores
for a period of ten years with options to purchase the assets
during the ten year period for approximately $22,904,000. During
1998, the Company purchased fifty-four of these retail service
station/convenience stores for approximately $14,669,000. The
remaining ten stores continue to be leased under the original
terms and the Company intends to purchase them pursuant to
options to purchase during the remaining lease period for
approximately $8,235,000. The remaining lease obligations of
$8,235,000 are being accounted for as capital leases and require
annual lease payments of approximately $931,000, all of which are
recorded as interest expense. Assets associated with these lease
obligations of approximately $7,576,000 are included in property,
plant and equipment. Accumulated depreciation as of December 31,
1998 of $1,056,000 is related to these assets. Assets of
$659,000, primarily liquor licenses, are included in other
assets.
Aggregate annual maturities of long-term debt as of December
31, 1998 are: 1999 - $1,200,000; 2000 - $24,116,000; 2001 -
$63,000; 2002 - $25,000; 2003 - $100,028,000; and all years
thereafter - $158,252,000.
<PAGE>
<PAGE>
NOTE 11--FINANCIAL INSTRUMENTS AND HEDGING ACTIVITY:
The following disclosure of the estimated fair value of
financial instruments is made in accordance with the requirements
of SFAS No. 107, "Disclosures about Fair Value of Financial
Instruments" and SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments."
The estimated fair value amounts have been determined by the
Company using available market information and valuation
methodologies described below. Considerable judgment is required,
however, in interpreting market data to develop the estimates of
fair value. Accordingly, the estimates presented herein may not
be indicative of the amounts that the Company could realize in a
current market exchange. The use of different market assumptions
or valuation methodologies may have a material effect on the
estimated fair value amounts.
The carrying amounts and estimated fair values of the
Company's financial instruments are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------------
1998 1997
-------------------- --------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
-------- ---------- -------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Balance Sheet--Financial
Instruments:
Fixed rate long-term debt... $251,449 $231,778 $253,180 $256,536
</TABLE>
The carrying values of cash and cash equivalents,
receivables, accounts payable and accrued expenses approximate
fair values due to the short-term maturities of these
instruments. Variable rate long-term debt instruments are
estimated to approximate fair values as rates are tied to
short-term indices.
The Company also has a long-term note receivable with a
related party which, due to its recent issuance, has a carrying
value that approximates fair value.
FIXED RATE LONG-TERM DEBT
The fair value of fixed rate long-term debt was determined
using quoted market prices, where applicable, or estimated by
discounting future cash flows using rates estimated to be
currently available for debt of similar terms and remaining
maturities.
HEDGING ACTIVITIES
From time to time, the Company enters into futures and
options contracts to reduce price volatility, to fix margins in
its refining and marketing operations and to protect against
price declines for inventory volumes. These contracts permit
settlement by delivery of commodities and, therefore, are not
financial instruments as defined by SFAS No. 105. The Company
uses these contracts in its hedging activities.
At December 31, 1998, the Company's hedging activities
included open futures contracts maturing in 1999 covering 78,000
barrels of heating oil. In addition, the Company had outstanding
options covering 700,000 barrels of crude oil. These options
expired with a realized premium of $177,000 in January 1999. At
December 31, 1997, the Company's hedging activities included open
futures contracts maturing in 1998 covering 42,000 barrels of
crude oil and 36,000 barrels of heating oil. The futures and
options contracts generally qualify as hedges and any gains or
losses resulting from market changes are substantially offset by
losses or gains on the Company's hedging contracts. Gains and
losses on hedging contracts are deferred and reported as a
component of the related transaction. Gains and losses from
market changes on contracts not qualifying for hedge accounting
are recognized in operations. Net deferred losses for the
Company's petroleum hedging activities were approximately
$159,000 and $199,000 at December 31, 1998 and 1997,
respectively.
The Company is exposed to loss in the event of
nonperformance by the other parties to these contracts. The
Company does not anticipate, however, nonperformance by the
counterparties.
<PAGE>
<PAGE>
NOTE 12--INCOME TAXES:
The provision (benefit) for income taxes is comprised of
the following:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1998 1997 1996
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Current: Federal................. $ 1,406 $ 3,367 $ 3,712
State................... 5 758 906
Deferred: Federal................. (2,787) 4,689 5,471
State................... (133) 992 1,043
------- ------- -------
$(1,509) $ 9,806 $11,132
======= ======= =======
</TABLE>
Income taxes paid in 1998, 1997 and 1996 were $1,468,000,
$2,785,000 and $8,909,000, respectively.
A reconciliation of the difference between the provision
(benefit) for income taxes and income taxes at the statutory
U.S. federal income tax rate is as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1998 1997 1996
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Income taxes at the statutory
U.S. federal income tax rate..... $(1,304) $ 8,785 $ 9,864
Increase (decrease) in taxes
resulting from:
State taxes, net............... (135) 1,191 1,346
General business credits, net.. (182) (100)
Other, net..................... 112 (70) (78)
------- ------- -------
$(1,509) $ 9,806 $11,132
======= ======= =======
</TABLE>
<PAGE>
<PAGE>
Deferred income taxes are provided to reflect temporary
differences in the basis of net assets for income tax and
financial reporting purposes, as well as available tax credit
carryforwards. The tax effected temporary differences and credit
carryforwards which comprise deferred taxes are as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
------------------------------ -------------------------------
Assets Liabilities Total Assets Liabilities Total
------- ----------- -------- ------- ------------ --------
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C>
Nondeductible accruals for
uncollectible receivables..... $ 111 $ 111 $ 128 $ 128
Insurance accruals.............. 915 915 555 555
Insurance settlements........... 273 273 189 189
Other reserves.................. 611 611 546 546
Inventory costs capitalized
for income tax purposes....... 246 246 198 198
Nondeductible accrual for
lower of cost or market
adjustment to inventory....... 4,469 4,469 1,184 1,184
------- -------- -------- ------- -------- --------
Total current............... 6,625 6,625 2,800 2,800
------- -------- -------- ------- -------- --------
Other nondeductible accruals.... 382 $ (388) (6) 428 $ (281) 147
Accelerated plant costs......... (944) (944) (1,348) (1,348)
Operating lease................. (783) (783) (863) (863)
Accelerated depreciation........ (33,806) (33,806) (30,465) (30,465)
Other........................... (1,601) (1,601) 14 (1,658) (1,644)
Tax credit carryforwards........ 10,347 10,347 8,286 8,286
------- -------- -------- ------- -------- --------
Total noncurrent............ 10,729 (37,522) (26,793) 8,728 (34,615) (25,887)
------- -------- -------- ------- -------- --------
Total....................... $17,354 $(37,522) $(20,168) $11,528 $(34,615) $(23,087)
======= ======== ======== ======= ======== ========
</TABLE>
At December 31, 1998, the Company had a minimum tax credit
carryforward of approximately $6,992,000 available to offset
future income taxes payable to the extent regular income taxes
payable exceeds alternative minimum taxes payable. Minimum tax
credits can be carried forward indefinitely. At December 31,
1998, the Company also had approximately $56,000 in state net
operating loss carryforwards available.
At December 31, 1998, the Company had approximately
$3,299,000 of general business credits available to offset
future regular taxes payable. Pursuant to Federal income tax
law, these carryover credits must be used before any minimum tax
credit carryforward can be used. Of the total general business
credits available, $432,000 will expire in 2008, $1,344,000 will
expire in 2009, $1,154,000 will expire in 2010, $98,000 will
expire in 2011, $89,000 will expire in 2012 and $182,000 will
expire in 2013.
<PAGE>
<PAGE>
NOTE 13--EMPLOYEE STOCK OWNERSHIP PLAN:
The Company and its subsidiaries have an Employee Stock
Ownership Plan ("ESOP") which is a noncontributory defined
contribution plan established primarily to acquire shares of the
Company's common stock for the benefit of all eligible
employees. At December 31, 1998 and 1997, the ESOP's assets
included 1,149,739 and 1,222,150 shares of the Company's common
stock, respectively. All of these shares have been allocated to
the participants. In addition to investments in the Company's
common stock, the ESOP is invested in a balanced mutual fund.
Contributions to the ESOP are made at the discretion of the
Company's Board of Directors. The Company made contributions of
$0, $536,000, and $450,000 to the ESOP for 1998, 1997 and 1996,
respectively. Allocations to participant accounts are made on a
formula based on the ratio that each participant's compensation,
during the Plan year, bears to the compensation of all such
participants. The Company treats all ESOP shares as outstanding
for earnings per share purposes.
In the first quarter of 1999, the Company made
contributions totaling $3,000,000 to the ESOP for the fiscal
year ending December 31, 1999. These contributions were made to,
among other things, provide an incentive for employees to focus
on achieving the Company's strategic goals for 1999. Allocation
of this amount to participants' accounts will be made as of
December 31, 1999.
<PAGE>
<PAGE>
NOTE 14--401(k) PLAN:
The Company has a 401(k) retirement plan for its employees.
During 1998, eligible employees could make contributions to the
plan, on a pretax basis, equal to a maximum of 12% of their
annual compensation. The Company will match the employee's
contributions at a rate of 50% up to a maximum of 6% of the
employee's annual compensation. For the years ended December 31,
1998, 1997, and 1996, the Company expensed $1,300,000, $930,000,
and $800,000, respectively, for matching contributions under
this plan. For 1999, the maximum contribution that eligible
employees can make to the plan was increased to 15% of their
annual compensation. The Company's matching contribution
remained unchanged.
<PAGE>
<PAGE>
NOTE 15--STOCK INCENTIVE PLANS:
At a Special Meeting of Stockholders held on June 26, 1998,
the stockholders of the Company approved the Giant Industries,
Inc. 1998 Stock Incentive Plan (the "1998 Plan"). Under the 1998
Plan, shares of the Company's common stock are authorized to be
issued to deserving employees in the form of options,
appreciation rights, restricted shares, performance shares or
performance units, all as defined in the 1998 Plan. Appreciation
rights, performance shares and performance units may be settled
in cash, common shares of the Company or any combination
thereof.
The total number of shares available for grant under the
1998 Plan during 1998 was 440,000 shares. Thereafter, commencing
January 1, 1999 and continuing through the term of the plan, 2%
of the total number of common shares outstanding as of the first
day of each calendar year are available for grant, subject to a
400,000 share annual limitation on the number of common shares
available for the grant of options that are intended to qualify
as "incentive stock options" under Section 422 of the Internal
Revenue Code. Common shares available for grant in any
particular calendar year which are not, in fact, granted in such
year cannot be added to the common shares available for grant in
any subsequent calendar year. Through December 31, 1998, no
grants had been made under the 1998 Plan.
The 1998 Plan provides that all grants are subject to
restrictions, conditions and terms more specifically described
in the 1998 Plan, including, but not limited to, the exercise
price for stock options and appreciation rights and time vesting
requirements for all awards. In general, the 1998 Plan provides
that grants of stock options and appreciation rights must expire
no more than 10 years from the date of grant. In addition, all
grants under the 1998 Plan are subject to forfeiture under
certain circumstances, and all unvested awards may vest
immediately under various circumstances defined in the 1998
Plan.
Under the Company's 1989 Stock Incentive Plan (the "1989
Plan"), 500,000 shares of the Company's common stock were
authorized to be issued to deserving employees in the form of
options and/or restricted stock. At December 31, 1998, there
were no shares available for future grants under the 1989 Plan.
All of the options or restricted stock grants under the
1989 plan are subject to forfeiture under certain circumstances.
The options and restricted stock generally vest 14% to 33%
annually beginning one year after the date of grant. All options
were granted at or above fair market value at the date of grant
and expire on the tenth anniversary of the grant date. All
unvested awards under the 1989 Plan may vest immediately under
various circumstances defined in the 1989 Plan.
<PAGE>
<PAGE>
The following summarizes stock option transactions under
the 1989 Plan:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
Options outstanding at SHARES PRICE
- ---------------------- -------- --------
<S> <C> <C>
January 1, 1996 306,357 $8.14
Exercised............................ (32,750) 6.61
Forfeited............................ (6,600) 6.39
-------
December 31, 1996...................... 267,007 8.37
Exercised............................ (11,000) 7.52
-------
December 31, 1997...................... 256,007 8.40
Granted.............................. 177,401 9.34
Forfeited............................ (2,000) 5.25
-------
December 31, 1998...................... 431,408 $8.80
=======
Options exercisable at December 31:
1998................................. 254,007 $8.43
1997................................. 256,007 8.40
1996................................. 256,573 8.44
</TABLE>
The following summarizes information about stock options
outstanding under the 1989 Plan at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------- ---------------------
WEIGHTED
WEIGHTED AVERAGE WEIGHTED
AVERAGE REMAINING AVERAGE
EXERCISE NUMBER CONTRACTUAL NUMBER EXERCISE
PRICE OUTSTANDING LIFE EXERCISABLE PRICE
-------- ----------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ 8.96 108,857 0.5 Years 108,857 $ 8.96
10.50 5,000 1.6 Years 5,000 10.50
10.63 26,000 2.2 Years 26,000 10.63
5.25 27,400 3.3 Years 27,400 5.25
7.75 76,750 4.3 Years 76,750 7.75
9.81 10,000 5.2 Years 10,000 9.81
9.34 177,401 9.6 Years
------- -------
$ 8.80 431,408 5.3 Years 254,007 $ 8.43
======= =======
</TABLE>
In October 1995, the FASB issued SFAS No. 123 "Accounting
for Stock Based Compensation." The Company has determined that it
will not change to the fair value method prescribed in the
Statement and will continue to use Accounting Principles Board
Opinion No. 25 for measurement and recognition of employee stock
based compensation.
The Company has adopted the disclosure-only provisions of
SFAS No. 123. If the Company had elected to recognize
compensation costs based on the fair value at the date of grant
for awards granted in 1998, consistent with the provisions of
SFAS No. 123, the Company's net loss and loss per share for the
year ended December 31, 1998, would have increased by less than
$33,000 and $0.005 per share.
The pro forma effects of applying SFAS No. 123 in this
disclosure are not indicative of future amounts.
The estimated weighted average fair values of options
granted during 1998 were $5.40 per share, and were estimated
using the Black-Scholes option-pricing model. The risk-free
interest rate applied for 1998 was 6%. The following assumptions
were used in the model: (i) expected dividend yield of 1.2%, (ii)
expected volatility rate of 38%, and (iii) expected lives ranging
from 4 years to 10 years.
<PAGE>
<PAGE>
NOTE 16 PHANTOM STOCK PLAN:
On December 11, 1997, the Board of Directors of the Company
adopted the Giant Industries, Inc. 1998 Phantom Stock Plan (the
"Phantom Stock Plan") to become effective on January 30, 1998.
Under the Phantom Stock Plan, a total of 250,000 Phantom Stock
units were authorized for issuance to deserving employees. Each
Phantom Stock unit is equivalent to one share of the Company's
common stock.
Upon exercise of each Phantom Stock unit, the recipient is
entitled to receive an amount equal in value to the sum of: (i)
the excess of the fair market value of one share of stock over
the exercise price per share specified in the Phantom Stock
award, and (ii) all dividends attributable to one share of stock
during the period from grant until exercise, which sum is
multiplied by the number of shares in respect to which the
Phantom Stock unit is being exercised. The amount received may be
paid in cash, common stock of the Company, or any combination
thereof.
In 1998, a total of 100,000 Phantom Stock units were granted
to two employees of the Company. A grant of 25,000 units to each
individual was made at an exercise price of $12.00 per unit and a
separate grant of 25,000 units to each individual was made at
$18.50 per unit.
At December 31, 1998, the ending stock price was lower than
the exercise price for all outstanding grants.
At December 31, 1998, 30,000 Phantom Stock units had vested
and were exercisable. The remaining units vest in varying
amounts, and at various times, through December 31, 2001.
All grants of Phantom Stock units expire on the tenth
anniversary of the date of grant and are subject to forfeiture
under certain circumstances. All unvested awards under the
Phantom Stock Plan may vest immediately under various
circumstances defined in the Phantom Stock Plan.
<PAGE>
<PAGE>
NOTE 17--INTEREST, OPERATING LEASES AND RENT EXPENSE:
Interest paid and capitalized for 1998 was $25,358,000 and
$373,000, for 1997 was $13,075,000 and $333,000 and for 1996 was
$12,804,000 and $43,000, respectively.
As discussed in Note 3, on December 31, 1998, the Company
and FFCA completed a sale-leaseback transaction. Under the terms
of the Agreement, FFCA purchased eighty-three service
station/convenience stores from the Company for approximately
$51,800,000. The Company in turn leased the eighty-three service
station/convenience stores back from FFCA under an operating
lease arrangement with an initial term of fifteen years and three
separate options to continue the lease for successive periods of
five years. Initial annual rental payments under the lease
agreement are approximately $5,100,000 and will be adjusted
upward by six percent on the second anniversary of the Agreement
and every second anniversary thereafter, on a compounded basis,
during the initial lease term and any extension thereof. The
Company has a right of first refusal to acquire the leased assets
upon an offer to purchase the assets by a third party.
The Company is committed to annual minimum rentals under
noncancelable operating leases that have initial or remaining
lease terms in excess of one year as of December 31, 1998 as
follows:
<TABLE>
<CAPTION>
Land, building, machinery
and equipment leases
-------------------------
(In thousands)
<S> <C>
1999................................. $ 8,810
2000................................. 8,415
2001................................. 7,787
2002................................. 6,950
2003................................. 6,444
2004-2013............................ 67,931
--------
Total minimum payments required.... $106,337
========
</TABLE>
Total rent expense was $5,624,000, $3,354,000 and
$1,930,000 for 1998, 1997 and 1996, respectively.
<PAGE>
<PAGE>
NOTE 18--COMMITMENTS AND CONTINGENCIES:
Various legal actions, claims, assessments and other
contingencies arising in the normal course of the Company's
business, including those matters described below, are pending
against the Company and certain of its subsidiaries. Certain of
these matters involve or may involve significant claims for
compensatory, punitive or other damages. These matters are
subject to many uncertainties, and it is possible that some of
these matters could be ultimately decided, resolved or settled
adversely. The Company has recorded accruals for losses related
to those matters that it considers to be probable and that can be
reasonably estimated. Although the ultimate amount of liability
at December 31, 1998, which may result from these matters is not
ascertainable, the Company believes that any amounts exceeding
the Company's recorded accruals should not materially affect the
Company's financial condition. It is possible that the ultimate
resolution of these matters could result in a material adverse
effect on the Company's results of operations for a particular
reporting period.
Federal, state and local laws and regulations relating to
health and the environment affect nearly all of the operations of
the Company. As is the case with all companies engaged in similar
industries, the Company faces significant exposure from actual or
potential claims and lawsuits involving environmental matters.
These matters include soil and water contamination, air pollution
and personal injuries or property damage allegedly caused by
substances manufactured, handled, used, released or disposed of
by the Company. Future expenditures related to health and
environmental matters cannot be reasonably quantified in many
circumstances for various reasons, including the speculative
nature of remediation and clean-up cost estimates and methods,
imprecise and conflicting data regarding the hazardous nature of
various types of substances, the number of other potentially
responsible parties involved, various defenses which may be
available to the Company and changing environmental laws and
interpretations of environmental laws.
The Company, and several other entities, have received a
notice of intent to file suit from the New Mexico Office of the
Natural Resources Trustee (the "ONRT") for the recovery of
$260,000,000 in alleged damages to natural resources, including
alleged damages to ground water, surface water and soil. The
notice relates to the South Valley Superfund site in Albuquerque,
New Mexico. The site allegedly includes contamination that
originated from a GE Aircraft Engines/U.S. Air Force facility, as
well as contamination that allegedly originated from a petroleum
products terminal that was acquired by the Company in 1995 (the
"Albuquerque Terminal"). Potentially responsible party liability
is joint and several, such that a responsible party may be liable
for all natural resources damages at a site even though it was
responsible for only a small part of such damages. At the time of
purchase by the Company, Texaco Refining and Marketing Inc.
("Texaco") agreed to defend, indemnify, reimburse and hold the
Company harmless from and against all claims and damages arising
from, or caused by, pre-closing contamination. Texaco has
acknowledged its obligation under this agreement, subject to any
evidence that the ONRT intends to assess damages for any releases
resulting from the Company's operations. The Company believes
that any natural resources damages associated with the South
Valley Superfund site relate to releases that predate the
Company's acquisition of the Albuquerque Terminal and,
accordingly, does not believe that it needs to record a liability
in connection with this matter.
In May 1991, the Environmental Protection Agency ("EPA")
notified the Company that it may be a potentially responsible
party for the release, or threatened release, of hazardous
substances, pollutants or contaminants at the Lee Acres Landfill
(the "Landfill"), adjacent to the Company's inactive Farmington
refinery. This refinery was operated until 1982. Although a final
plan of action for the Landfill has not yet been adopted by the
Bureau of Land Management (the "BLM"), the owner of the Landfill,
BLM developed a proposed plan of action in 1997, which it
projected would cost approximately $3,900,000 to implement. This
cost projection is based on certain assumptions which may or may
not prove to be correct and is contingent on confirmation that
the remedial actions, once implemented, are adequately addressing
Landfill contamination. For example, if assumptions regarding
groundwater mobility and contamination levels are incorrect, BLM
is proposing to take additional remedial actions with an
estimated cost of approximately $1,800,000.
In 1989, a consultant to the Company estimated, based on
various assumptions, that the Company's share of potential
liability could be approximately $1,200,000. This figure was
based upon estimated Landfill remediation costs significantly
higher than those being proposed by BLM. The figure was also
based on the consultant's evaluation of such factors as available
clean-up technology, BLM's involvement at the site and the number
of other entities that may have had involvement at the site, but
did not include an analysis of all of the Company's potential
legal defenses and arguments, including possible setoff rights.
Potentially responsible party liability is joint and
several, such that a responsible party may be liable for all of
the clean-up costs at a site even though the party was
responsible for only a small part of such costs. Although it is
possible that the Company may ultimately incur liability for
clean-up costs associated with the Landfill, a reasonable
estimate of the amount of this liability, if any, cannot be made
at this time because, among other reasons, the final site remedy
has not been selected, a number of entities had involvement at
the site, allocation of responsibility among potentially
responsible parties has not yet been made, and
potentially-applicable factual and legal issues have not been
resolved. Based on current information, the Company does not
believe that it needs to record a liability in relation to BLM's
proposed plan.
The Company is undertaking an investigation into potential
lead contamination at a 5.5 acre site that the Company owns in
Bloomfield, New Mexico. The investigation arises out of the
removal of a 55,000 barrel crude oil storage tank by a
contractor. Although it is possible that the Company may
ultimately incur liability for lead clean-up costs, a reasonable
estimate of the amount of the Company's liability, if any, cannot
be made at this time because all potentially-applicable factual
and legal issues have not been resolved, including whether there
is lead at the site in amounts exceeding applicable remediation
levels and whether remediation costs, if any, can be recovered
from third parties.
The Company has an environmental liability accrual of
approximately $2,700,000. Approximately $800,000 relates to
ongoing environmental projects, including the remediation of a
hydrocarbon plume that appears to extend no more than 1,800 feet
south of the inactive Farmington refinery and hydrocarbon
contamination on and adjacent to 5.5 acres the Company owns in
Bloomfield, New Mexico. The remaining $1,900,000 relates to an
originally estimated liability of approximately $2,300,000,
recorded in the second quarter of 1996, for certain environmental
obligations assumed in the acquisition of the Bloomfield
refinery. That amount was recorded as an adjustment to the
purchase price and allocated to the assets acquired. The
environmental accrual is recorded in the current and long-term
sections of the Company's Consolidated Balance Sheets.
The Company is subject to audit on an ongoing basis of the
various taxes that it pays to federal, state, local and tribal
agencies. These audits may result in assessments or refunds along
with interest and penalties. In some cases the jurisdictional
basis of the taxing authority is in dispute and is the subject of
litigation or administrative appeals. The Company has received
several tax notifications and assessments from the Navajo Tribe
relating to Company operations outside the boundaries of the
Navajo Indian Reservation in an area of disputed jurisdiction,
including a $1,800,000 severance tax assessment issued in
November 1991 in connection with crude oil removed from
properties located within this area. The Company has invoked its
appeal rights with the Tribe's Tax Commission in connection with
this assessment and intends to oppose the assessment. In November
1998, the Company received a notice of proposed assessment from
the Navajo Tribe for an additional $2,100,000 involving severance
tax issues similar to those raised in connection with the
$1,800,000 assessment. The Company has responded to the notice of
proposed assessment and intends to oppose any final assessment
issued by the Navajo Tribe in connection with the area of
disputed jurisdiction. Although it is probable that the Company
will incur liability in connection with tax notifications and
assessments from the Navajo Tribe relating to the area of
disputed jurisdiction, it is not possible to reasonably estimate
the amount of any obligation for such taxes at this time because
the Navajo Tribe's authority to impose taxes throughout this area
has not been legally established and all potentially-applicable
factual issues have not been resolved. The Company has accrued a
liability for assessments that it has received from the Navajo
Tribe for substantially less than the amount of the assessments.
It is possible that the Company's assessments will have to be
litigated by the Company before final resolution. In addition,
the Company may receive further tax assessments. The Company may
potentially be able to request reimbursement from third party oil
lease interest owners in connection with any severance tax
amounts ultimately paid by the Company that relate to purchases
from them.
<PAGE>
<PAGE>
NOTE 19--QUARTERLY FINANCIAL INFORMATION (UNAUDITED):
<TABLE>
<CAPTION>
Year Ended December 31, 1998
-------------------------------------------
Quarter
-------------------------------------------
First(1) Second(1) Third(1) Fourth(1)
-------- --------- -------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Continuing Operations:
Net revenues................................................ $145,716 $157,014 $167,461 $172,313
Cost of products sold....................................... 105,752 112,748 119,139 127,966
-------- -------- -------- --------
Gross margin................................................ 39,964 44,266 48,322 44,347
-------- -------- -------- --------
Operating expenses.......................................... 24,893 24,261 26,424 26,960
Depreciation and amortization............................... 6,789 6,774 7,664 7,939
Selling, general and administrative expenses................ 5,815 6,237 7,485(2) 5,751(2)
Net earnings (loss)......................................... (1,682) 759 421 (1,715)
Net earnings (loss) per common share - basic................ $ (0.15) $ 0.07 $ 0.04 $ (0.16)
Net earnings (loss) per common share - assuming dilution.... $ (0.15) $ 0.07 $ 0.04 $ (0.16)
Dividends declared per common share......................... $ 0.05 $ 0.05 $ 0.05
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
------------------------------------------
Quarter
------------------------------------------
First Second(1) Third(1) Fourth(1)
------- --------- -------- ---------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Continuing Operations:
Net revenues................................................ $116,138 $154,123 $197,358 $189,659
Cost of products sold....................................... 86,588 112,057 146,333 142,770
-------- -------- -------- --------
Gross margin................................................ 29,550 42,066 51,025 46,889
-------- -------- -------- --------
Operating expenses.......................................... 15,822 18,307 25,037 26,011
Depreciation and amortization............................... 5,005 5,566 6,834 6,586
Selling, general and administrative expenses................ 4,448 5,360 3,474 5,974
Net earnings................................................ 1,124 5,675 6,596 1,899
Net earnings per common share - basic....................... $ 0.10 $ 0.51 $ 0.60 $ 0.17
Net earnings per common share - assuming dilution........... $ 0.10 $ 0.51 $ 0.59 $ 0.17
Dividends declared per common share......................... $ 0.05 $ 0.05 $ 0.05 $ 0.05
</TABLE>
(1) The results of operations of the Acquisitions are included
from the date of purchase. (See Note 3.)
(2) Selling, general and administrative expenses include costs
associated with the terminated merger with Holly Corporation
of approximately $1,053,000 and $302,000 in the third and
fourth quarters of 1998, respectively. <PAGE>
<PAGE>
ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
Not applicable.
<PAGE>
<PAGE>
PART III
Certain information required by Part III is omitted from
this Report by virtue of the fact that the Registrant will file
with the Securities and Exchange Commission a definitive proxy
statement relating to the Company's Annual Meeting of
Stockholders to be held May 6, 1999 pursuant to Regulation 14A
(the "Proxy Statement") not later than 120 days after the end of
the fiscal year covered by this Report, and certain information
to be included therein is incorporated herein by reference. The
Company expects to disseminate the Proxy Statement to
stockholders on or about March 29, 1999.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information concerning the Company's directors required
by this Item is incorporated by reference to the information
contained in the Proxy Statement under the caption "Election of
Directors".
The information concerning the Company's executive officers
required by this Item is incorporated by reference to the section
in Part I hereof entitled "Executive Officers of the Registrant",
following Item 4.
The information concerning compliance with Section 16(a) of
the Exchange Act required by this Item is incorporated by
reference to the information contained in the Proxy Statement
under the caption "Section 16(a) Beneficial Ownership Reporting
Compliance".
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by
reference to the information contained in the Proxy Statement
under the captions "Election of Directors", "Executive
Compensation", "Compensation Committee Report on Executive
Compensation" and "Compensation Committee Interlocks and Insider
Participation".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item is incorporated by
reference to the information contained in the Proxy Statement
under the captions "Election of Directors", "Security Ownership
of Management" and "Shares Owned by Certain Shareholders".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by
reference to the information contained in the Proxy Statement
under the captions "Compensation Committee Interlocks and Insider
Participation", "Certain Transactions" and "Indebtedness of
Management".
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) The following financial statements are included
in Item 8:
(i) Independent Auditors' Report
(ii) Consolidated Balance Sheets - December 31, 1998
and 1997
(iii) Consolidated Statements of Earnings (Loss) - Years
ended December 31, 1998, 1997 and 1996
(iv) Consolidated Statements of Stockholders' Equity
- Years ended December 31, 1998, 1997 and 1996
(v) Consolidated Statements of Cash Flows - Years
ended December 31, 1998, 1997 and 1996
(vi) Notes to Consolidated Financial Statements
(2) Financial Statement Schedule. The following
financial statement schedule of Giant Industries, Inc. for the
years ended December 31, 1998, 1997 and 1996 is filed as part of
this Report and should be read in conjunction with the
Consolidated Financial Statements of Giant Industries, Inc.
Independent Auditors' Report on Schedule . . . . . S-1
Schedule II - Valuation and Qualifying Accounts . . S-2
Schedules not listed above have been omitted because
they are not applicable or are not required or because the
information required to be set forth therein is included in the
Consolidated Financial Statements or Notes thereto.
(3) Exhibits. The Exhibits listed on the accompanying
Index to Exhibits immediately following the financial statement
schedule are filed as part of, or incorporated by reference into,
this Report.
Contracts with management and any compensatory plans or
arrangements relating to management are as follows:
Exhibit
No. Description
- ------- -----------
10.6 Giant Industries, Inc., 1998 Phantom Stock Plan.
Incorporated by reference to Exhibit 10.31 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997, File No. 1-10398.
10.7 Giant Industries, Inc. 1998 Stock Incentive Plan.
Incorporated by reference to Appendix H to the Joint Proxy
Statement/Prospectus included in the Company's
Registration Statement on Form S-4 under the Securities
Act of 1933 as filed May 4, 1998, File No. 333-51785.
10.8 1989 Stock Incentive Plan of the Company. Incorporated
by reference to Exhibit 10.1 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1989,
File No. 1-10398.
10.9 Amendment No. 1 dated August 14, 1996, to 1989 Stock
Incentive Plan. Incorporated by reference to Exhibit 10 to
the Company's Report on Form 10-Q for the quarter ended
September 30, 1996, File No. 1-10398.
10.10 Amended 1988 Restricted Stock Plan of Registrant.
Incorporated by reference to Exhibit 10.3 to Form S-1.
10.11 1989 Stock Option Plan of the Company. Incorporated by
reference to Exhibit 10.4 to Form S-1.
10.16 ESOP Substitute Excess Deferred Compensation Benefit
Plan. Incorporated by reference to Exhibit 10.8 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1992, File No. 1-10398.
10.17 Giant Industries, Inc. and Affiliated Companies 401(k)
Plan. Incorporated by reference to Exhibit 10.46 to
Amendment No. 2 to the Form S-3 Registration Statement
under the Securities Act of 1933 as filed November 12,
1993, File No. 33-69252.
10.18 First Amendment of the Giant Industries, Inc. and
Affiliated Companies 401(k) Plan, dated October 17, 1996.
Incorporated by reference to Exhibit 10.30 to the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, File No. 1-10398.
10.19 Second Amendment to the Giant Industries, Inc. and
Affiliated Companies 401(k) Plan, dated December 31, 1997.
Incorporated by reference to Exhibit 10.30 to the
Company's Report on Form 10-K for the fiscal year ended
December 31, 1997, File No. 1-10398.
10.20 Third Amendment to the Giant Industries, Inc. and
Affiliated Companies 401(k) Plan effective July 1, 1998,
dated December 10, 1998.
10.21 Fourth Amendment to the Giant Industries, Inc. and
Affiliated Companies 401(k) Plan effective January 1,
1999, dated December 10, 1998.
10.45 Employment Agreement, dated as of December 11, 1997,
between James E. Acridge and the Company. Incorporated
by reference to Exhibit 10.23 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1997, File No. 1-10398.
10.46 Employment Agreement, dated as of December 11, 1997,
between Fredric L. Holliger and the Company. Incorporated
By reference to Exhibit 10.24 to the Company's Report on
Form 10-K for the fiscal year ended December 31, 1997,
File No. 1-10398.
10.47 Employment Agreement, dated as of December 11, 1997,
between Morgan Gust and the Company. Incorporated by
reference to Exhibit 10.25 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997,
File No. 1-10398.
_________________________________
Form S-1--Refers to the Form S-1 Registration Statement
under the Securities Act of 1933 as filed October 16, 1989, File
No. 33-31584.
(b) Reports on Form 8-K. No reports on Form 8-K were filed
by the Company during the fourth quarter of the fiscal year ended
December 31, 1998.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GIANT INDUSTRIES, INC.
By: /s/ James E. Acridge
------------------------------
James E. Acridge
Chairman of the Board, President
and Chief Executive Officer
March 30, 1999
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated.
/s/ James E. Acridge
- ---------------------------------------
James E. Acridge, Chairman of the Board,
President, Chief Executive Officer
and Director
March 30, 1999
/s/ Fredric L. Holliger
- ---------------------------------------
Fredric L. Holliger, Executive Vice President,
Chief Operating Officer and Director.
March 30, 1999
/s/ Mark B. Cox
- ---------------------------------------
Mark B. Cox, Vice President, Treasurer,
Financial Officer and Assistant Secretary
March 30, 1999
/s/ Gary R. Dalke
- ---------------------------------------
Gary R. Dalke, Vice President,
Controller, Accounting Officer and
Assistant Secretary
March 30, 1999
<PAGE>
<PAGE>
/s/ Anthony J. Bernitsky
- ---------------------------------------
Anthony J. Bernitsky, Director
March 30, 1999
/s/ F. Michael Geddes
- ---------------------------------------
F. Michael Geddes, Director
March 30, 1999
/s/ Harry S. Howard, Jr.
- ---------------------------------------
Harry S. Howard, Jr., Director
March 30, 1999
/s/ Richard T. Kalen, Jr.
- ---------------------------------------
Richard T. Kalen, Jr., Director
March 30, 1999
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Giant Industries, Inc.
Scottsdale, Arizona
We have audited the consolidated financial statements of Giant
Industries, Inc. and subsidiaries (the "Company") as of December
31, 1998 and 1997, and for each of the three years in the period
ended December 31, 1998, and have issued our report thereon dated
March 4, 1999; such financial statements and report are included
elsewhere in this Form 10-K. Our audits also included the
consolidated financial statement schedule of the Company listed
in Item 14. This consolidated financial statement schedule is the
responsibility of the Company's management. Our responsibility is
to express an opinion based on our audits. In our opinion, such
consolidated financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set
forth therein.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 4, 1999
S-1
<PAGE>
<PAGE>
<TABLE>
SCHEDULE II
GIANT INDUSTRIES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three years ended December 31, 1998
(In thousands)
<CAPTION>
Charged
Balance at (credited) Balance
beginning to costs at end
of period and expenses Deduction(b) of period
---------- ------------ --------- ---------
<S> <C> <C> <C> <C>
Year ended December 31, 1998:
Allowance for doubtful accounts.... $464 $227 $(231) $460
==== ==== ===== ====
Year ended December 31, 1997:
Allowance for doubtful accounts.... $254 $281 $ (71) $464
==== ==== ===== ====
Year ended December 31, 1996:
Allowance for doubtful accounts.... $424 $(30)(a) $(140) $254
==== ==== ===== ====
(a) Includes an adjustment of $100,000 in 1996 credited to costs and
expenses to revise the Company's estimated Allowance for Doubtful Accounts.
(b) Deductions are specific trade accounts determined to be uncollectible.
S-2
</TABLE>
<PAGE>
<PAGE>
GIANT INDUSTRIES, INC.
ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 1998
INDEX TO EXHIBITS
Definitions:
Form S-1--Refers to the Form S-1 Registration Statement under
the Securities Act of 1933 as filed October 16, 1989, File No.
33-31584.
Amendment No. 2--Refers to the Amendment No. 2 to Form S-1
Registration Statement under the Securities Act of 1933 as filed
November 20, 1989, File No. 33-31584.
Amendment No. 3--Refers to the Amendment No. 3 to Form S-1
Registration Statement under the Securities Act of 1933 as filed
December 12, 1989, File No. 33-31584.
Form S-3--Refers to the Form S-3 Registration Statement under
the Securities Act of 1933 as filed September 22, 1993, File No.
33-69252.
Exhibit No. Description
- ----------- -----------
2.1 Definitive Agreement, dated April 18, 1997, by and between
Giant Four Corners, Inc., as "Buyer", and Thriftway
Marketing Corp. and Clayton Investment Company, collectively,
as "Seller". Incorporated by reference to Exhibit 2.1 to the
Company's Report on Form 8-K for the period May 28, 1997,
File No. 1-10398.
2.2 Stock Purchase Agreement, dated April 30, 1997, by
and among Phoenix Fuel Co., Inc., (the "Company",
J. W. Wilhoit, as Trustee of the Wilhoit Trust
Agreement Dated 12/26/74, Katherine C. Lahowetz,
as Trustee of the Theresa Ann Wilhoit Grantor
Retained Annuity Trust Dated 4/4/97, Katherine C.
Lahowetz, and Katherine C. Lahowetz, as Custodian
for the Benefit of Emily Lahowetz, a minor
(collectively, the "Shareholders") and Giant
Industries Arizona, Inc., (the "Purchaser"). Incorporated
by reference to Exhibit 2.1 to the Company's Report on
Form 8-K for the period June 3, 1997, File No. 1-10398.
3.1 Restated Certificate of Incorporation of Giant Industries,
Inc., a Delaware corporation. Incorporated by reference to
Exhibit 3.1 to Amendment No. 3.
3.2 Bylaws of Giant Industries, Inc., a Delaware corporation.
Incorporated by reference to Exhibit 3.2 to Amendment
No. 3.
3.3 Articles of Incorporation of Giant Exploration & Production
Company, a Texas corporation ("Giant Exploration"), formerly
Hixon Acquisition Corp. Incorporated by reference to Exhibit
2.1, Annex III to Form S-1.
3.4 Bylaws of Giant Exploration. Incorporated by reference to
Exhibit 2.1, Annex IV to Form S-1.
3.5 Articles of Incorporation of Giant Industries Arizona, Inc.,
an Arizona corporation ("Giant Arizona") formerly Giant
Acquisition Corp. Incorporated by reference to Exhibit 2.1,
Annex V to Form S-1.
3.6 Bylaws of Giant Arizona. Incorporated by reference to
Exhibit 2.1, Annex VI to Form S-1.
3.7 Articles of Incorporation of Ciniza Production Company.
Incorporated by reference to Exhibit 3.7 to Form S-3.
3.8 Bylaws of Ciniza Production Company. Incorporated by
reference to Exhibit 3.8 to Form S-3.
3.9 Articles of Incorporation of Giant Stop-N-Go of New Mexico,
Inc. Incorporated by reference to Exhibit 3.9 to Form S-3.
3.10 Bylaws of Giant Stop-N-Go of New Mexico, Inc. Incorporated
by reference to Exhibit 3.10 to Form S-3.
3.11 Articles of Incorporation of Giant Four Corners, Inc.
Incorporated by reference to Exhibit 3.11 to Form S-3.
3.12 Bylaws of Giant Four Corners, Inc. Incorporated by
reference to Exhibit 3.12 to Form S-3.
3.13 Articles of Incorporation of Giant Mid-Continent, Inc.
Incorporated by reference to Exhibit 3.13 to the Company's
Annual Report on Form 10-K for fiscal year ended December 31,
1994, File No. 1-10398.
3.14 Bylaws of Giant Mid-Continent, Inc. Incorporated by
reference to Exhibit 3.14 to the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1994, File No.
1-10398.
3.15 Articles of Incorporation of San Juan Refining Company.
Incorporated by reference to Exhibit 3.15 to the Company's
Annual Report on Form 10-K for fiscal year ended December 31,
1995, File No. 1-10398.
3.16 Bylaws of San Juan Refining Company. Incorporated by
reference to Exhibit 3.16 to the Company's Annual Report on
Form 10-K for fiscal year ended December 31, 1995,
File No. 1-10398.
3.17 Articles of Incorporation of Phoenix Fuel Co., Inc.
Incorporated by reference to Exhibit 3.17 to the
Company's Annual Report on Form 10-K for fiscal year ended
December 31, 1997, File No. 1-10398.
3.18 Amended Bylaws of Phoenix Fuel Co., Inc.
Incorporated by reference to Exhibit 3.18 to the
Company's Annual Report on Form 10-K for fiscal year ended
December 31, 1997, File No. 1-10398.
3.19** Articles of Incorporation of DeGuelle Oil Company.
3.20** Bylaws of DeGuelle Oil Company.
4.1 Indenture, dated as of November 29, 1993 among the Company,
as Issuer, the Subsidiary Guarantors, as guarantors, and
NBD Bank, National Association, as Trustee, relating to
$100,000,000 of 9 3/4% Senior Subordinated Notes due 2003.
Incorporated by reference to Exhibit 4.1 to the Company's
Current Report on Form 8-K dated November 29, 1993, File
No. 1-10398.
4.2 Indenture, dated as of August 26, 1997, among the Company,
as Issuer, the Subsidiary Guarantors, as guarantors, and
The Bank of New York, as Trustee, relating to $150,000,000
of 9% Senior Subordinated Notes due 2007. Incorporated by
reference to Exhibit 4.8 to the Company's Registration
Statement on Form S-4 under the Securities Act of 1933 as
filed October 9, 1997, File No. 333-37561.
10.1** Credit Agreement, dated December 23, 1998, among Giant
Industries, Inc., the Financial Institutions parties
hereto and Bank of America National Trust and Savings
Association, as Administrative Agent and as Letter of
Credit Issuing Bank.
10.2 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.
Incorporated by reference to Exhibit 4.1 to the Company's
Report on Form 8-K for the period October 4, 1995,
File No. 1-10398.
10.3 First Amendment, dated May 15, 1996, to Credit Agreement,
dated October 4, 1995, among Giant Industries, Inc., as
Borrower, Giant Industries Arizona, Inc., Giant Exploration
& Production Company, Giant Four Corners, Inc., San Juan
Refining Company and Ciniza Production Company, as
Guarantors, and Bank of America National Trust and Savings
Association, as Agent, Bank of America Illinois, as issuing
Bank and as a Bank, NBD Bank as a Bank, and Union Bank, as a
Bank. Incorporated by reference to Exhibit 4.2 to the Company's
Report on Form 8-K for the period May 28, 1997, File No. 1-10398.
10.4 Second Amendment, dated May 23, 1997, to Credit Agreement,
dated October 4, 1995, among Giant Industries, Inc., as
Borrower, Giant Industries Arizona, Inc., Giant Exploration
& Production Company, San Juan Refining Company, Giant Four
Corners, Inc. and Ciniza Production Company, as Guarantors,
and Bank of America National Trust and Savings Association,
as Agent, Bank of America Illinois, as issuing Bank and as a
Bank, First National Bank of Chicago (successor to NBD Bank,
by assignment), as a Bank, and Union Bank of California, N.A.
(formerly known as Union Bank), as a Bank. Incorporated by
reference to Exhibit 4.3 to the Company's Report on Form 8-K
for the period May 28, 1997, File No. 1-10398.
10.5 Third Amendment, dated as of August 25, 1997, to Credit
Agreement, dated October 4, 1995, among Giant Industries,
Inc., as Borrower, Giant Industries Arizona, Inc., Giant
Exploration & Production Company, San Juan Refining
Company, Giant Four Corners, Inc., Ciniza Production
Company and Phoenix Fuel Co., Inc., as Guarantors, and
Bank of America National Trust and Savings Association, as
Agent, Bank of America National Trust and Savings
Association (successor to Bank of America Illinois, as
Issuing Bank and as a Bank, The First National Bank of
Chicago (successor to NBD Bank, by assignment), as a
Bank and Union Bank of California, N.A. (formerly known
as Union Bank), as a Bank. Incorporated by reference to
Exhibit 10.1 to the Company's Report on Form 10-Q for the
quarter ended March 31, 1998, File No. 1-10398.
10.6 Giant Industries, Inc., 1998 Phantom Stock Plan. Incorporated
By reference to Exhibit 10.31 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997,
File No. 1-10398.
10.7 Giant Industries, Inc. 1998 Stock Incentive Plan.
Incorporated by reference to Appendix H to the Joint Proxy
Statement/Prospectus included in the Company's Registration
Statement on Form S-4 under the Securities Act of 1933 as
filed May 4, 1998, File No. 333-51785.
10.8 1989 Stock Incentive Plan of the Company. Incorporated by
reference to Exhibit 10.1 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989,
File No. 1-10398.
10.9 Amendment No. 1 dated August 14, 1996, to 1989 Stock
Incentive Plan. Incorporated by reference to Exhibit 10 to
the Company's Report on Form 10-Q for the quarter ended
September 30, 1996, File No. 1-10398.
10.10 Amended 1988 Restricted Stock Plan of the Company.
Incorporated by reference to Exhibit 10.3 Form S-1.
10.11 1989 Stock Option Plan of the Company. Incorporated by
reference to Exhibit 10.4 to Form S-1.
10.12 Employee Stock Ownership Plan and Trust Agreement of the
Company, as amended. Incorporated by reference to Exhibit
10.1 of the Company's Report on Form 10-Q for the quarter
ended September 30, 1994, File No. 1-10398.
10.13 Ninth Amendment of the Employee Stock Ownership Plan and
Trust Agreement of Giant Industries, Inc. And Affiliated
Companies dated October 1, 1996. Incorporated by reference
to Exhibit 10.4 to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996, File
No. 1-10398.
10.14 Tenth Amendment of the Employee Stock Ownership Plan and
Trust Agreement of Giant Industries, Inc. and Affiliated
Companies dated December 15, 1997. Incorporated by
reference to Exhibit 10.5 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, File
No. 1-10398.
10.15** Eleventh Amendment of the Employee Stock Ownership Plan
and Trust Agreement of Giant Industries, Inc. and
Affiliated Companies dated March 24, 1998.
10.16 ESOP Substitute Excess Deferred Compensation Benefit Plan.
Incorporated by reference to Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, File 1-10398.
10.17 Giant Industries, Inc. and Affiliated Companies 401(k) Plan.
Incorporated by reference to Exhibit 10.46 to Amendment No.
2 to the Form S-3 Registration Statement under the Securities
Act of 1933 as filed November 12, 1993, File No. 33-69252.
10.18 First Amendment of the Giant Industries, Inc. and Affiliated
Companies 401(k) Plan, dated October 17, 1996. Incorporated
by reference to Exhibit 10.30 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996,
File No. 1-10398.
10.19 Second Amendment to the Giant Industries, Inc. and Affiliated
Companies 401(k) Plan, dated December 31, 1997. Incorporated
by reference to Exhibit 10.30 to the Company's Report on Form
10-K for the fiscal year ended December 31, 1997, File No.
1-10398.
10.20** Third Amendment to the Giant Industries, Inc. and Affiliated
Companies 401(k) Plan effective July 1, 1998, dated
December 10, 1998.
10.21** Fourth Amendment to the Giant Industries, Inc. and Affiliated
Companies 401(k) Plan effective January 1, 1999, dated
December 10, 1998.
10.22 Purchase Agreement, dated November 29, 1990, between Giant
Arizona and Prime Pinnacle Peak Properties Limited
Partnership. Incorporated by reference to Exhibit 10.16 of
the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-10398.
10.23 Escrow Instructions, dated January 7, 1991, between Prime
Pinnacle Peak Properties Limited Partnership and Giant
Arizona. Incorporated by reference to Exhibit 10.17 of the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, File No. 1-10398.
10.24** Real Estate Purchase Agreement dated October 5, 1997 between
Pinnacle Sonoran Desert Properties, L.L.C. ("Seller") and Giant
Industries Arizona, Inc. ("Purchaser").
10.25** Amendment to Real Estate Purchase Agreement dated October 5,
1997 between Pinnacle Sonoran Desert Properties, L.L.C. ("Seller")
and Giant Industries Arizona, Inc. ("Purchaser") dated October 16,
1997.
10.26** Second Amendment to Real Estate Purchase Agreement dated October 5,
1997 between Pinnacle Sonoran Desert Properties, L.L.C. ("Seller")
and Giant Industries Arizona, Inc. ("Purchaser") dated April 21,
1998.
10.27 Agreement for Leasing of Service Station Site, dated
March 1, 1991, between Giant Arizona and Prime Pinnacle Peak
Properties Limited Partnership. Incorporated by reference
to Exhibit 10.18 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990, File
No. 1-10398.
10.28 First Amendment to Agreement for Leasing of Service Station
Site, dated March 1, 1991, between Giant Arizona and Prime
Pinnacle Peak Properties Limited Partnership. Incorporated
by reference to Exhibit 10.18 to the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1992,
File 1-10398.
10.29** Retail Lease dated July 1, 1998, between Pinnacle Citadel
LLC ("Landlord") and Giant Industries Arizona, Inc. ("Tenant").
10.30** Retail Lease dated July 1, 1998, between Pinnacle Citadel
LLC ("Landlord") and Giant Industries Arizona, Inc. ("Tenant").
10.31** Retail Sublease dated July 1, 1998 between Giant Industries
Arizona, Inc. ("Lessor") and Pinnacle Inn at the Citadel LLC
("Tenant").
10.32** Sale and Lease Agreement dated December 31, 1998, by and
among FFCA Capital Holding Corporation ("Buyer") and Giant
Industries Arizona, Inc. and Giant Four Corners, Inc.
(individually called "Seller" and collectively called "Sellers").
10.33 Aircraft Lease Purchase Agreement, dated as of June 21,
1991, between Metlife Capital Corporation and the Company.
Incorporated by reference to Exhibit 10.1 to the Company's
Report on Form 10-Q for the quarter ended June 30, 1991,
File No. 1-10398.
10.34** Agreement dated September 17, 1998 between James E.
Acridge ("Borrower") and Giant Industries, Inc. ("Lender").
10.35** Promissory Note for $4,000,000 dated September 17, 1998,
from James E. Acridge to Giant Industries, Inc.
10.36** Modification Agreement to Promissory Note for $4,000,000,
dated September 17, 1998, from James E. Acridge to Giant
Industries, Inc., dated December 23, 1998.
10.37** Amended and Restated Promissory Note for $5,000,000
dated December 23, 1998, from James E. Acridge to
Giant Industries, Inc.
10.38 Promissory Note for $600,000, dated December 1, 1988, from
JEA to Metlife Capital Corporation ("Metlife").
Incorporated by reference to Exhibit 10.38 to Form S-1.
10.39 Promissory Note for $825,000, dated December 20, 1988, from
JEA to Metlife. Incorporated by reference to Exhibit 10.39
to Form S-1.
10.40 Promissory Note for $750,000, dated December 28, 1987, from
JEA to Metlife. Incorporated by reference to Exhibit 10.40
to Form S-1.
10.41 Promissory Note for $1,087,500, dated December 30, 1988,
from JEA to Metlife. Incorporated by reference to Exhibit
10.44 to Form S-1.
10.42* Natural Gas Liquids Sales and Purchase Agreement, dated
October 27, 1994, between Meridian Oil Hydrocarbons Inc.
and Giant Refining Company, a division of Giant Industries
Arizona, Inc. Incorporated by reference to Exhibit 10.28 to
the Company's Annual Report on Form 10-K for fiscal year ended
December 31, 1994, File No. 1-10398.
10.43 Registration Rights Agreement, dated as of August 21, 1997,
among the Company, the Initial Purchasers and the Subsidiary
Guarantors. Incorporated by reference to Exhibit 10.31 to the
Company's Registration Statement on Form S-4 under the
Securities Act of 1933 as filed October 9, 1997, File No.
333-37561.
10.44 Purchase Agreement, dated August 21, 1997, among the Company,
the Initial Purchasers and the Subsidiary Guarantors.
Incorporated by reference to Exhibit 10.32 to the Company's
Registration Statement on Form S-4 under the Securities Act
of 1933 as filed October 9, 1997, File No. 333-37561.
10.45 Employment Agreement, dated as of December 11, 1997, between
James E. Acridge and the Company. Incorporated by reference
to Exhibit 10.23 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, File No. 1-10398.
10.46 Employment Agreement, dated as of December 11, 1997, between
Fredric L. Holliger and the Company. Incorporated by reference
to Exhibit 10.24 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, File No. 1-10398.
10.47 Employment Agreement, dated as of December 11, 1997, between
Morgan Gust and the Company. Incorporated by reference to
Exhibit 10.25 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, File No. 1-10398.
10.48 Consulting Agreement, dated January 1, 1990, between the
Company and Kalen and Associates. Incorporated by reference
to Exhibit 10.66 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1990, File
No. 1-10398.
10.49 Consulting Agreement, dated March 12, 1992, between the
Company and Geddes and Company. Incorporated by reference
to Exhibit 10.1 to the Company's Report on Form 10-Q for the
quarter ended June 30, 1992, File No. 1-10398.
18.1 Letter regarding change in accounting principles.
Incorporated by reference to Exhibit 18.1 of the Company's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-10398.
21.1 ** Subsidiaries of the Company.
23.1 ** Consent of Deloitte & Touche LLP to incorporate reports in
previously filed Registration Statement.
27.1 ** Financial Data Schedule for fiscal year ended December 31, 1998.
99.1 ** Information required by Rule 15d-21 under the Securities Act
of 1934 for the year ended December 31, 1998 for the Giant
Industries, Inc. and Affiliated Companies Employee Stock
Ownership Plan.
*Certain information contained in these documents has been afforded
confidential treatment.
**Filed herewith.
EXHIBIT 3.19
ARTICLES OF INCORPORATION
OF
DEGUELLE OIL COMPANY
I, the undersigned natural person of the age of twenty-one
years or more, acting as incorporator of a corporation under the
Colorado Corporation Code, adopt the following Articles of
Incorporation for such corporation:
FIRST: The name of the corporation is DEGUELLE OIL COMPANY.
SECOND: The period of duration is perpetual.
THIRD: The purpose or purposes for which this corporation is
organized are: To own, operate and manage a gasoline and oil
distributorship including, but not by way of limitation, the
ownership and management of all property and equipment incidental
thereto, as well as any other lawful purpose authorized by law.
FOURTH: The aggregate number of shares which the corporation
shall have authority to issue is 50,000 shares having no par
value. There shall be only one class of stock, said class to be
common.
FIFTH: Cumulative voting of shares is not authorized.
SIXTH: There are no provisions limiting or denying to
shareholders the preemptive right to acquire additional or
treasury shares of the corporation.
SEVENTH: The address of the registered office of the
corporation is 26223 Highway 160 South, Durango, Colorado 81301,
and the name of the initial registered agent at such address is
Bob L. DeGuelle.
EIGHTH: The number of directors constituting the initial
Board of Directors of the corporation is four and the names and
addresses of the persons to serve as directors until the first
annual meeting of shareholders or until their successors be
elected and qualify are as follows:
Bob L. DeGuelle
3519 Bennett Street
Durango, CO 81301
Ann R. DeGuelle
3519 Bennett Street
Durango, CO 81301
Robert A. DeGuelle
3519 Bennett Street
Durango, CO 81301
<PAGE>
Ronald B. DeGuelle
Golden West Trailer Park
7520 County Road 203
Durango, CO 81301
The name and address of the incorporator is:
David P. Smith
813 Main Avenue, Suite 308
Durango, CO 81301
NINTH: The Board of Directors shall have the power to make
such prudential by-laws as they may deem necessary and the Board
of Directors shall have the power to amend said by-laws from time
to time as they deem appropriate.
DATED THIS 30th day of April, 1979.
/s/ David P. Smith
-----------------------
David P. Smith
STATE OF COLORADO )
)ss.
COUNTY OF LA PLATA )
I, Wanda England, a notary public, hereby certify that on the
30th day of April, 1979, personally appeared before me David P.
Smith, who, being first duly sworn, declared that he was the
person who signed the foregoing document as incorporator and that
the statements therein contained are true.
IN WITNESS WHEREOF, I have hereunto set my hand seal this
30th day of April, 1979.
My commission expires: 8-24-80.
/s/ Wanda England
-----------------------
Notary Public
EXHIBIT 3.20
BY-LAWS
OF
DEGUELLE OIL COMPANY
ARTICLE I. OFFICES
The principal office of the corporation in the State of
Colorado shall be located in the City of Durango, County of La
Plata. The corporation may have such other offices, either within
or without the State of Colorado, as the Board of Directors may
designate or as the business of the corporation may require from
time to time.
ARTICLE II. SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the
shareholders shall be held on the 1st day in the month of September
in each year, beginning with the year 1979, at the hour of 4
o'clock p.m., for the purpose of electing Directors and for the
transaction of such other business as may come before the meeting.
If the day fixed for the annual meeting shall be a legal holiday in
the State of Colorado, such meeting shall be held on the next
succeeding business day. If the election of Directors shall not be
held on the day designated herein for any annual meeting of the
shareholders, or at any adjournment thereof, the Board of Directors
shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as conveniently may be.
SECTION 2. SPECIAL MEETINGS. Special meetings of the
shareholders for any purpose or purposes, unless otherwise
prescribed by statute, may be called by the President at the
request of the holders of not less than fifty percent of all the
outstanding shares of the corporation entitled to vote at the
meeting.
SECTION 3. PLACE OF MEETING. The Board of Directors may
designate any place, either within or without the State of Colorado
unless otherwise prescribed by statute, as the place of meeting for
any annual meeting or for any special meeting called by the Board
of Directors. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place, either
within or without the State of Colorado, unless otherwise
prescribed by statute, as the place for the holding of such
meeting. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal
office of the corporation in the State of Colorado.
SECTION 4. NOTICE OF MEETING. Written notice stating the
place, day and hour of the meeting and, in case of special meeting,
the purpose or purposes for which the meeting is called, shall
unless otherwise prescribed by statute, be delivered not less than
ten days nor more than thirty days before the date of the meeting,
either personally or by mail, by or at the direction of the
President, or the Secretary, or the persons calling the meeting. If
mailed, such notice shall be deemed to be delivered when deposited
in the United States mail, addressed to the shareholder at his
address as it appears on the stock transfer books of the
corporation, with postage thereon prepaid.
SECTION 5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the corporation
may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, 30 days. If the stock
transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least 30 days
immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as
the record date for any such determination of shareholders, such
date in any case to be not more than 30 days and, in case of a
meeting of shareholders, not less than 30 days prior to the date on
which the particular action, requiring such determination of
shareholders, is to be taken. If the stock transfer books are not
closed and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the
date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record
date for such determination of shareholders. When a determination
of shareholders entitled to vote at any meeting of shareholders has
been made as provided in this section, such determination shall
apply to any adjournment thereof.
SECTION 6. VOTING LISTS. The officer or agent having charge of
the stock transfer books for shares of the corporation shall make a
complete list of the shareholders entitled to vote at each meeting
of shareholders or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares
held by each. Such list shall be produced and kept open at the time
and place of the meeting and subject to the inspection of any
shareholder during the whole time of the meeting for the purposes
thereof.
SECTION 7. QUORUM. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders. If less
than a majority of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the
meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the
meeting as originally noticed. The shareholders present at a duly
organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough shareholders
to leave less than a quorum.
SECTION 8. PROXIES. At all meetings of shareholders, a
shareholder may vote in person or by proxy executed in writing by
shareholder or by his duly authorized attorney in fact. Such proxy
shall be filed with the secretary of the corporation before or at
the time of the meeting. No proxy shall be valid after one month
from the date of its execution, unless otherwise provided in the
proxy.
SECTION 9. VOTING OF SHARES. Subject to the provisions of
Section 12 of this Article II, each outstanding share entitled to
vote shall be entitled to one vote upon each matter submitted to a
vote at a meeting of shareholders. In accordance with the Articles
of Incorporation previously filed for this corporation, cumulative
voting of shares shall not be authorized.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS. Shares
standing in the name of another corporation may be voted by such
officer, agent or proxy as the By-Laws of such corporation may
prescribe, or, in the absence of such provision, as the Board of
Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or
conservator may be voted by him either in person or by proxy,
without a transfer of such shares into his name. Shares standing in
the name of a trustee may be voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may
be voted by such receiver without the transfer thereof into his
name if authority so to do be contained in an appropriate order of
the court by which such receiver was appointed.
A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been transferred into the
name of the pledgee, and thereafter the pledgee shall be entitled
to vote the shares so transferred.
Shares of its own stock belonging to the corporation shall not
be voted, directly or indirectly, at any meeting, and shall not be
counted in determining the total number of outstanding shares at
any given time.
SECTION 11. INFORMAL ACTION BY SHAREHOLDERS. Unless otherwise
provided by law, any action required to be taken at a meeting of
the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be
signed by all of the stockholders entitled to vote with respect to
the subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. The business and affairs of the
corporation shall be managed by its Board of Directors.
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of
directors of the corporation shall be four. Each director shall
hold office until the next annual meeting of shareholders and
until his successor shall have been elected and qualified.
SECTION 3. REGULAR MEETINGS. A regular meeting of the Board
of Directors shall be held without other notice than this By-Law
immediately after, and at the same place as, the annual meeting of
shareholders. The Board of Directors may provide, by resolution,
the time and place for the holding of additional regular meetings
without other notice than such resolution.
SECTION 4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the President or
any two directors. The person or persons authorized to call
special meetings of the Board of Directors may fix the place for
holding any special meeting of the Board of Directors called by
them.
SECTION 5. NOTICE. Notice of any special meeting shall be
given at least ten days previously thereto by written notice
delivered personally or mailed to each director at his business
address, or by telegram. If mailed, such notice shall be deemed to
be delivered when deposited in the United States mail so
addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may
waive notice of any meeting. The attendance of a director at a
meeting shall constitute a waiver of such meeting, except where a
director attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting is not
lawfully called or convened.
SECTION 6. QUORUM. A majority of the number of directors
fixed by Section 2 of this Article III shall constitute a quorum
for the transaction of business at any meeting of the Board of
Directors, but if less than such majority is present at a meeting,
a majority of the directors present may adjourn the meeting from
time to time without further notice.
SECTION 7. MANNER OF ACTING. The act of the majority of the
directors present at a meeting at which a quorum is present shall
be the act of the Board of Directors.
SECTION 8. ACTION WITHOUT A MEETING. Any action that may be
taken by the Board of Directors at a meeting may be taken without
a meeting if a consent in writing, setting forth the action so to
be taken, shall be signed before such action by all of the
Directors.
SECTION 9. VACANCIES. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of
the remaining directors though less than a quorum of the Board of
Directors, unless otherwise provided by law. A director elected to
fill a vacancy shall be elected for the unexpired term of his
predecessor in office. Any directorship to be filled by reason of
an increase in the number of directors may be filled by election
by the Board of Directors for a term of office continuing only
until the next election of Directors by the shareholders.
SECTION 10. COMPENSATION. By resolution of the Board of
Directors, each Director may be paid his expenses, if any, of
attendance at each meeting of the Board of Directors, and may be
paid a stated salary as Director or a fixed sum for attendance at
each meeting of the Board of Directors or both. No such payment
shall preclude any Director from serving the corporation in any
other capacity and receiving compensation therefor.
SECTION 11. PRESUMPTION OF ASSENT. A director of the
corporation who is present at a meeting of the Board of Directors
at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless his dissent shall be
entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the
secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such
right to dissent shall not apply to a Director who voted in favor
of such action.
ARTICLE IV. OFFICERS
SECTION 1. NUMBER. The officers of the corporation shall be a
President, a Vice-President, a Secretary and a Treasurer, each of
whom shall be elected by the Board of Directors. Such other
officers and assistant officers as may be deemed necessary may be
elected or appointed by the Board of Directors.
SECTION 2. ELECTION AND TERM OF OFFICE. The officers of the
corporation to be elected by the Board of Directors shall be
elected annually by the Board of Directors at the first meeting of
the Board of Directors held after each annual meeting of the
shareholders. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his
successor shall have been duly elected and shall have qualified or
until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
SECTION 3. REMOVAL. Any officer or agent may be removed by
the Board of Directors whenever in its judgment, the best
interests of the corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any,
of the person so removed. Election or appointment of an officer or
agent shall not of itself create contract rights.
SECTION 4. VACANCIES. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise, may be
filled by the Board of Directors for the unexpired portion of the
term.
SECTION 5. PRESIDENT. The President shall be the principal
executive officer of the corporation and, subject to the control
of the Board of Directors, shall in general supervise and control
all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the shareholders and of the
Board of Directors. He may sign, with the Secretary or any other
proper officer of the corporation thereunto authorized by the
Board of Directors, certificates for shares of the corporation,
any deeds, mortgages, bonds, contracts, or other instruments which
the Board of Directors has authorized to be executed, except in
cases where the signing and execution thereof shall be expressly
delegated by the Board of Directors or by these By-Laws to some
other officer or agent of the corporation, or shall be required by
law to be otherwise signed or executed; and in general shall
perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from
time to time.
SECTION 6. VICE-PRESIDENT. In the absence of the President or
in the event of his death, inability or refusal to act, the Vice-
President shall perform the duties of the President, and when so
acting, shall have all the powers of and be subject to all the
restrictions upon the President. The Vice-President shall perform
such other duties as from time to time may be assigned to him by
the President or by the Board of Directors.
SECTION 7. SECRETARY. The Secretary shall: (a) keep the
minutes of the proceedings of the shareholders and of the Board of
Directors in one or more books provided for that purpose; (b) see
that all notices are duly given in accordance with the provisions
of these By-Laws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that
the seal of the corporation is affixed to all documents the
execution of which on behalf of the corporation under its seal is
duly authorized; (d) keep a register of the post office address of
each shareholder which shall be furnished to the Secretary by such
shareholder; (e) sign with the President certificates for shares
of the corporation, the issuance of which shall have been
authorized by resolution of the Board of Directors; (f) have
general charge of the stock transfer books of the corporation; and
(g) in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be
assigned to him by the President or by the Board of Directors.
SECTION 8. TREASURER. The Treasurer shall: (a) have charge
and custody of and be responsible for all funds and securities of
the corporation; (b) receive and give receipts for moneys due and
payable to the corporation from any source whatsoever, and deposit
all such moneys in the name of the corporation in such banks,
trust companies or other depositories as shall be selected in
accordance with the provisions of Article V of these By-Laws; and
(c) in general, perform all of the duties incident to the office
of Treasurer and such other duties as from time to time may be
assigned to him by the President or by the Board of Directors. If
required by the Board of Directors, the Treasurer shall give a
bond for the faithful discharge of his duties in such sum and with
such surety or sureties as the Board of Directors shall determine.
SECTION 9. SALARIES. The salaries of the officers shall be
fixed from time to time by the Board of Directors and no officer
shall be prevented from receiving such salary by reason of the
fact that he is also a Director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize
any officer or officers, agent or agents, to enter into any
contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or
confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts or other
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the corporation not
otherwise employed shall be deposited form time to time to the
credit of the corporation in such banks, trust companies or other
depositories as the Board of Directors may elect.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing
shares of the corporation shall be in such form as shall be
determined by the Board of Directors. Such certificates shall be
signed by the President and by the Secretary or by such other
officers authorized by law and by the Board of Directors so to do,
and sealed with the corporate seal. All certificates for shares
shall be consecutively numbered and otherwise identified. The name
and address of the person to whom the shares represented thereby
are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be
cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been
surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued
therefor upon such terms and indemnity to the corporation as the
Board of Directors prescribe.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the
corporation shall be made only on the stock transfer books of the
corporation by the holder of record thereof or by his legal
representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary of the
corporation, and on surrender for cancellation of the certificate
for such shares. The person in whose name shares stand on the
books of the corporation shall be deemed by the corporation to be
the owner thereof for all purposes.
SECTION 3. ENCUMBRANCE OF STOCK. No shareholder shall
encumber any of his stock in the company without first obtaining
written consent to do so from all other shareholders. Any
encumbered stock shall have attached thereto a notice that in the
event of foreclosure and transfer of said stock, the new
stockholder shall be required to offer the stock for sale to the
corporation and to the remaining stockholders under the same terms
and conditions and at the same price as set forth in Section 4
hereof.
SECTION 4. RESTRICTIONS ON SALE OF STOCK. In the event that
any shareholder desires to sell or transfer his shares for a
valuable consideration, such shareholder must first offer said
stock for sale to the corporation and the offer shall be in
writing and delivered to the Board of Directors. Within 20 days
after receipt of the written offer, the Board of Directors shall
call a meeting of the shareholders, at which meeting the stock
shall be offered for sale to the company for the purpose of
retirement of the shares or to place the same in treasury stock.
The corporation may exercise its option to purchase as of the day
of the meeting. Any stock which is offered for sale to the company
and not purchased in accordance with the offer shall then be
offered on a proportionate ownership basis to the remaining
stockholders who desire to purchase said stock upon the same terms
and conditions as set forth in the offer made to the company. In
the event that the stock is not purchased by the company or by the
shareholders, then the shareholder offering the stock for sale
shall be free to sell the same to any third person for the same or
a greater price but not for a lesser price than the price at which
the stock was offered to the corporation and the shareholders.
ARTICLE VII. FISCAL YEAR
The fiscal year of the corporation shall begin and end on
such days as the Board of Directors shall fix by resolution.
ARTICLE VIII. DIVIDENDS
The Board of Directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law and its
Articles of Incorporation.
ARTICLE IX. CORPORATE SEAL
The Board of Directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the
name of the corporation and the state of incorporation and the
words, "Corporate Seal".
ARTICLE X. WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is
required to be given to any shareholder or director of the
corporation under the provisions of these By-Laws or under the
provisions of the Small Business Corporation Act, a waiver thereof
in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice.
ARTICLE XI. AMENDMENTS
These By-Laws may be altered, amended or repealed and new By-
Laws may be adopted by the Board of Directors at any regular or
special meeting of the Board of Directors.
EXHIBIT 10.1
CREDIT AGREEMENT
Dated as of December 23, 1998
among
GIANT INDUSTRIES, INC.,
THE FINANCIAL INSTITUTIONS PARTIES HERETO
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent and as
Letter of Credit Issuing Bank
- - - - - - - - - - - -
Arranged by
NATIONSBANC MONTGOMERY SECURITIES LLC
<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 Loan Accounts
2.03 Procedure for Borrowing
2.04 Conversion and Continuation Elections
2.05 Termination or Reduction of Commitments
(a) Voluntary Termination or Reduction
(b) Additional Provisions
2.06 Optional Prepayments
2.07 Borrowing Base Determinations, Mandatory
Prepayments of Loans
2.08 Repayment
(a) Principal
(b) Interest
2.09 Fees
(a) Arrangement, Agency Fees
(b) Commitment Fees
2.10 Computation of Fees and Interest
2.11 Payments by the Company
2.12 Payments by the Banks to the Administrative Agent
2.13 Sharing of Payments, Etc.
2.14 Security and Guaranty
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
3.09 Cash Collateralization
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
(a) Credit Agreement and Notes, Guaranty, Perfection
Certificate and Initial Borrowing Base Report and
Compliance Certificate
(b) Certificate Regarding Existing Indebtedness
(c) Resolutions; Incumbency Organization Documents
(d) Certificate (Organization, Qualification and
Good Standing)
(e) Legal Opinions
(f) Payment of Fees
(g) Certificate (Representations and Warranties, Etc.)
(h) Termination of the 1995 Giant Credit Facility
(i) Collateral Documents
(j) Other Documents
5.02 Conditions to All Credit Extensions
(a) Notice, Application
(b) Continuation of Representations and Warranties
(c) No Existing Default
(d) No Material Adverse Effect
[(e) No Future Advance Notice
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
6.19 Solvency
6.20 Year 2000
6.21 Labor Relations
6.22 Collateral Documents
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; New Subsidiary
Security Agreements
7.13 Use of Proceeds
7.14 Subordinated Indebtedness
7.15 Year 2000
7.16 Further Assurances
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 Subordinated Notes
8.12 Minimum Consolidated Net Worth
8.13 Minimum Interest Coverage Ratio
8.14 Maximum Capitalization Ratio
8.15 ERISA
8.16 Change in Business
8.17 Accounting Changes
ARTICLE IX EVENTS OF DEFAULT
9.01 Event of Default
(a) Non-Payment
(b) Representation or Warranty
(c) Specific Defaults
(d) Other Defaults
(e) Cross-Default
(f) Insolvency; Voluntary Proceedings
(g) Involuntary Proceedings
(h) ERISA
(i) Monetary Judgments
(j) Change of Control
(k) Loss of Permit
(l) Adverse Change
(m) Guaranty Default
(n) Invalidity of Subordination Provisions
(o) Prepayment of Subordinated Notes
(p) Collateral
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 Administrative Agent
10.04 Reliance by Administrative Agent
10.05 Notice of Default
10.06 Credit Decision
10.07 Indemnification
10.08 Administrative Agent in Individual Capacity
10.09 Successor Administrative Agent
10.10 Withholding Tax
10.11 Collateral Matters
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 Confidentiality
11.10 Set-off
11.11 Interest
11.12 Indemnity and Subrogation
11.13 Automatic Debits of Fees
11.14 Notification of Addresses, Lending Offices, Etc.
11.15 Counterparts
11.16 Severability
11.17 No Third Parties Benefitted
11.18 GOVERNING LAW
11.19 WAIVER OF JURY TRIAL
11.20 Entire Agreement
<PAGE>
SCHEDULES
Schedule 1.01A Acquisition EBITDA
Schedule 1.01B Preferred Eligible Account Obligors
Schedule 2.01 Commitments
Schedule 2.02 Applicable Margins and Risk
Participation and Commitment Fees
Schedule 3.03 Existing Bank of America Letters
of Credit
Schedule 6.11 Undisclosed Liabilities
Schedule 6.16 Subsidiaries and Minority Interests
Schedule 8.01 Permitted Liens
Schedule 8.04 Permitted Loans and Investments
Schedule 8.05 Certain Permitted Indebtedness
Schedule 8.08 Certain 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-1 Form of Legal Opinion of Company's Counsel
Exhibit D-2 Form of Legal Opinion of Company's
Special Counsel
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Note
Exhibit G Form of Guaranty Agreement
Exhibit H Form of Borrowing Base Report
Exhibit I Form of Security Agreement
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of
December 23, 1998, among GIANT INDUSTRIES, INC., a
Delaware corporation (the "Company"), the several
financial institutions from time to time parties to this
Agreement (collectively, the "Banks"; individually, a
"Bank"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as administrative agent for the Banks and
as Letter of Credit Issuing Bank.
WHEREAS, the Company has requested, and the Banks
have agreed to make available to the Company, a Sixty-
Five Million Dollar ($65,000,000.00) 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.
"ADMINISTRATIVE 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.
"ADMINISTRATIVE AGENT'S PAYMENT OFFICE" means
the address for payments set forth on SCHEDULE 11.02
hereto in relation to the Administrative Agent, or such
other address as the Administrative Agent may from time
to time specify.
"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-RELATED PERSONS" means Bank of America
and any successor Administrative 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,
the Arranger) and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and
Affiliates.
"AGREEMENT" means this Credit Agreement.
"ALBUQUERQUE TERMINAL" means the terminal
owned by Giant Mid-Continent, Inc., and operated by
Giant Industries Arizona, Inc., located in or near
Albuquerque, New Mexico.
"APPLICABLE MARGIN" means with respect to Base
Rate Loans and Offshore Rate Loans, respectively, the
specified percent per annum therefor set forth in
SCHEDULE 2.02 corresponding to the applicable pricing
level determined in accordance therewith.
"ARIZONA" means Giant Industries Arizona,
Inc., an Arizona corporation.
"ARRANGER" means NationsBanc Montgomery
Securities, LLC.
"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, including in its capacity
as Issuing Bank; for purposes of clarification only, to
the extent that Bank of America 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.
"BANK OF AMERICA" means Bank of America
National Trust and Savings Association, a national
banking association.
"BANKRUPTCY CODE" means the Federal Bankruptcy
Reform Act of 1978 (11 U.S.C. S.S. 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 Bank of
America in San Francisco, California, as its "reference
rate." (The "reference rate" is a rate set by Bank of
America based upon various factors including Bank of
America'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 Bank of America 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 REFINERY" means the refinery owned
by San Juan Refining Company, and operated by Giant
Industries Arizona, Inc., located in or near Farmington,
New Mexico.
"BNY INDENTURE" means that certain Indenture
dated August 26, 1997, between the Company, as Issuer,
The Bank of New York, as Trustee, and others evidenced
by the BNY Subordinated Notes.
"BNY SUBORDINATED NOTES" means the
$150,000,000 9% Senior Subordinated Notes due 2007
issued by the Company under the BNY Indenture.
"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 Administrative
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 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" means a capital lease as
determined 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 Administrative Agent, for
the benefit of the Administrative 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 Administrative 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" means Ciniza Production Company, a
New Mexico corporation.
"CINIZA REFINERY" means the refinery owned and
operated by Giant Industries Arizona, Inc. located in or
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(f), waived by the Person entitled to
receive such payment).
"CODE" means the Internal Revenue Code of
1986, and regulations promulgated thereunder.
"COLLATERAL" means all property and interests
in property and proceeds thereof now owned or hereafter
acquired by the Company or any Guarantor and their
respective Subsidiaries in or upon which a Lien now or
hereafter exists in favor of the Banks, or the
Administrative Agent on behalf of the Banks, whether
under this Agreement or under any other documents
executed by any such Person and delivered to the
Administrative Agent or the Banks.
"COLLATERAL DOCUMENTS" means, collectively,
(i) the Security Agreement, and all other security
agreements, mortgages, deeds of trust, patent and
trademark assignments, lease assignments, guarantees and
other similar agreements between the Company or any
Subsidiary or any Guarantor and the Banks or the
Administrative Agent for the benefit of the Banks now or
hereafter delivered to the Banks or the Administrative
Agent pursuant to or in connection with the transactions
contemplated hereby, and all financing statements (or
comparable documents now or hereafter filed in
accordance with the Uniform Commercial Code or
comparable law) against the Company or any Subsidiary or
any Guarantor as debtor in favor of the Banks or the
Administrative Agent for the benefit of the Banks as
secured party, and (ii) any amendments, supplements,
modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"COMMITMENT" as to each Bank has the meaning
specified in SECTION 2.01.
"COMMITMENT FEE" has the meaning set forth in
Subsection 2.09(b).
"COMMODITY SWAP" means any commodity swap,
commodity option or commodity forward contract
(including any option to enter into any of the
foregoing).
"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, and (e)
any interest income to the extent not included in the
determination of such Consolidated Net Income for the
relevant period. For purposes hereof, "Consolidated
EBITDA" shall include, for any calculation period that
includes any of the specified fiscal quarters, the
applicable amounts set forth in Schedule 1.01A
(representing EBIDTA attributed to the assets acquired
in the DeGuelle and Kaibab acquisitions for the
specified fiscal quarters).
"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 (other than trade payables incurred
in the ordinary course of business on ordinary terms),
(b) obligations under Capital Leases and other "off-
balance sheet" leases (including Synthetic Leases),
excluding operating leases (other than Synthetic Leases)
incurred in the ordinary course of business, capitalized
as though they all were capital leases, (c) obligations
to redeem or purchase any stock or other equity security
of the Company or a Subsidiary, and (d) any guaranty
obligations in respect of any of the foregoing.
"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 and all imputed
interest with respect to Capital Leases 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 (other than
Commodity Swaps) 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 TANGIBLE NET WORTH" means
Consolidated Net Worth, minus the net book value of all
assets of the Company and its Consolidated Subsidiaries
(after deducting any reserves applicable thereto) which
would be shown as intangible assets on a consolidated
balance sheet of the Company and its Consolidated
Subsidiaries prepared as of such time in accordance with
GAAP.
"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 (including
the Existing Bank of America Letters of Credit).
"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 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 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 RECEIVABLE" 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 Account 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;
(v) all Receivables that are payable by their terms more
than 30 days from the respective invoice dates therefor,
(vi) any Receivable in which the Banks do not have a
valid and perfected first priority security interest
(vii) any Receivable of a Subsidiary with respect to
which any event described in Subsection 9.01(f) or (g)
shall have occurred and be continuing, (viii) Accounts
with respect to which the account debtor is not a Person
resident in the United States; (x) Accounts with respect
to which goods have been placed on consignment,
guaranteed sale or other terms by reason of which the
payment by the account debtor may be conditional; (xi)
accounts not denominated in United States dollars; (xii)
Accounts with respect to which an invoice has not been
sent prior to the date of any Borrowing Base Report in
which such Account is included for purposes of
calculation of the Borrowing Base; and (xiii) Accounts
that are otherwise identified as unsatisfactory to the
Administrative Agent or the Majority Banks using
reasonable business judgment.
"ELIGIBLE ASSIGNEE" means (i) a commercial
bank, insurance company or other institution 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, insurance
company or other institution 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, insurance company
or other institution 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 lending 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 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 (excluding
(a) any and all Feedstocks, Intermediate Products and
Refined Products in which the Banks do not have a valid
and perfected first priority security interest, subject
only to Permitted Liens, (b) any and all Feedstocks,
Intermediate Products and Refined Products located on
leased premises (other than Refined Product at leased
service stations and travel centers operated by the
Company or one of its Subsidiaries), or held by a bailee
or otherwise subject to any third party interest, with
respect to which any landlord's waiver or other third
party agreement requested by Secured Party or the
Majority Banks shall not have been furnished, and (c)
Feedstocks, Intermediate Products and Refined Products
of any Subsidiary with respect to which any event
described in Subsection 9.01 (f) or (g) shall have
occurred and be continuing), owned by the Company and
its Subsidiaries (other than "inactive" Subsidiaries) in
field production tanks, storage tanks and lines
(including line fills but excluding basic sediment and
water and slop oil), stored at the Bloomfield Refinery,
the Ciniza Refinery, the Company's or its Subsidiaries'
bulk plants, service stations and travel centers
(excluding cardlocks), the Albuquerque Terminal, the
Flagstaff Terminal and other Refined Products terminals
owned or leased by the Company or its Subsidiaries, or
at such other locations as may be approved from time to
time by the Majority Banks, provided, however, that such
Feedstocks, Intermediate Products and Refined Products
are not obsolete, unsalable, damaged or otherwise unfit
for sale or further processing in the ordinary course of
business or otherwise unsatisfactory to the
Administrative Agent or the Majority Banks using
reasonable business judgment.
"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,
directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental,
health, and safety.
"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 material 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.
"EXECUTION DATE" means the date specified on
the cover page hereof.
"EXISTING BANK OF AMERICA LETTERS OF CREDIT"
means the letters of credit described in Schedule 3.03.
"EXPLORATION" means Giant Exploration &
Production Company, a Texas corporation.
"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 Administrative 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
Administrative 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 or
Ciniza Refineries.
"FLAGSTAFF TERMINAL" means the terminal
currently under construction in or near Flagstaff,
Arizona, to be owned and operated by Giant Industries
Arizona, Inc.
"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 (a) Giant Industries Arizona, Inc., an Arizona
corporation, Giant Exploration & Production Company, a
Texas corporation, Giant Four Corners, Inc., an Arizona
corporation, Ciniza Production Company, a New Mexico
corporation, San Juan Refining Company, a New Mexico
corporation, DeGuelle Oil Company, a Colorado
corporation, Giant Mid-Continent, Inc., an Arizona
corporation, Giant Stop-N-Go of New Mexico, Inc., a New
Mexico corporation, and Phoenix Fuel Co., Inc., an
Arizona corporation, and (b) 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 Administrative 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."
"HAZARDOUS MATERIALS" means all those
substances that are regulated by, or which may form the
basis of liability under, any Environmental Law,
including any substance identified under any
Environmental Law as a pollutant, contaminant, hazardous
waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"HIGHEST LAWFUL RATE" means, as of a
particular date, the maximum nonusurious interest rate
that may under applicable federal and state 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 and other
"off-balance sheet" leases (including Synthetic Leases),
excluding operating leases (other than Synthetic Leases)
incurred in the ordinary course of business; (g) all net
obligations with respect to Swap Contracts (other than
Commodity Swaps); (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.
"INDENTURES" means the BNY Indenture and the
NBD Indenture.
"INDEPENDENT AUDITOR" has the meaning
specified in Subsection 7.01(a).
"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, 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 an
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 shall extend beyond the
Termination Date.
"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 incorporate the Existing Bank of America
Letters of Credit into this Agreement, or 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 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 Bank of America,
"Issuing Bank" means Bank of America.
"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,
or 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 Revolving Loans under Subsection
3.03(c).
"L/C COMMITMENT" means the commitment of the
Issuing Bank to Issue, and the commitment of the Banks
severally to participate in, Letters of Credit
(including the Existing Bank of America Letters of
Credit) from time to time Issued or outstanding under
Article III, in an aggregate amount not to exceed on any
date the lesser of (a) the amount of $50,000,000 and (b)
the combined Commitments, as the same may be reduced as
a result of a reduction in the Commitments pursuant to
SECTION 2.06; provided that the L/C Commitment is a part
of the combined Commitments, rather than a separate,
independent commitment.
"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 Administrative
Agent.
"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.
"LEVERAGE RATIO" means, as of any date, the
ratio of Consolidated Funded Indebtedness, as of the
last day of the fiscal quarter most recently then ended,
to Consolidated EBITDA, for the four fiscal quarters
most recently then ended.
"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 or L/C Advance.
"LOAN DOCUMENTS" means this Agreement, the
Notes, the Guaranties, the Collateral Documents, the Fee
Letter, the L/C-Related Documents, and all other
documents contemplated hereby and executed in favor of
the Administrative Agent or any Bank.
"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 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, liabilities,
capitalization or financial condition of the Company and
its Subsidiaries taken as a whole; (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 (i) the legality, validity,
binding effect or enforceability against the Company or
any Significant Subsidiary of any Loan Document or (ii)
the perfection or priority of any Lien granted under any
of the Collateral Documents.
"MATERIAL LEASE" means any lease of real or
personal property (other than Capital Leases) as to
which the sum of the rental and other obligations
required to be paid during the relevant period exceeds
$2,500,000.
"MATERIAL RENTS" means, with respect to any
period, the sum of the rental and other obligations
required to be paid during such period by the Company or
any Subsidiary as lessee under all Material Leases.
"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 29, 1993, between the Company, as Issuer,
NBD Bank, National Association (now "NBD Bank"), 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.
"NOTE" means a promissory note executed by the
Company in favor of a Bank pursuant to SECTION 2.02 (b)
or SECTION 11.08(c), in substantially the form of
Exhibit F.
"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 Administrative 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 Administrative 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, for each day
during any Interest Period, with respect
to Offshore Rate Loans, the rate of
interest per annum determined by the
Administrative Agent to be the London
interbank offered rate per annum at which
deposits in Dollars appear on the Telerate
Page 3750 (or any successor page) as of
11:00 a.m. (London time), two (2) Business
Days prior to (and for value on) the
commencement of such Interest Period in an
amount approximately equal to the amount
of the Offshore Rate Loans of the Banks
during such Interest Period and for a
period of time comparable to such Interest
Period, or in the event such offered rate
is not available from the Telerate Page,
then "LIBOR" shall be equal to the rate
per annum determined by the Administrative
Agent to be the average (rounded upwards
to the next higher 1/100 of 1%) of the
respective rates per annum shown on
Reuter's Monitor Money Rates Service
"LIBO" page at which deposits in dollars
are offered in the London Interbank
Eurocurrency Market at or about 11:00 a.m.
(London time) two (2) Business Days prior
to (and for value on) the commencement of
an Interest Period in an amount
approximately equal to the amount of the
Offshore Rate Loans of the Banks during
such Interest Period and for a period of
time comparable to such Interest Period,
and in the event neither such Telerate nor
such Reuter's rate is available from such
Telerate Page or such Reuter's Service,
then "LIBOR" shall be equal to the rate of
interest per annum determined by the
Administrative Agent to be the arithmetic
mean (rounded upward to the next 1/16th of
1%) of the rates of interest per annum at
which dollar deposits for such Interest
Period and in an amount approximately
equal to the amount of the Offshore Rate
Loans of the Banks during such Interest
Period would be offered by the
Administrative Agent's applicable Lending
Office to major banks in the London
eurodollar market at or about 11:00 a.m.
(London time) two (2) 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, court 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, performance, enforcement or registration of,
or otherwise with respect to, this Agreement or any
other Loan Documents, excluding, in the case of each
Bank and the Administrative Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or
measured by each Bank's net income by (i) any
jurisdiction (or any political subdivision thereof)
under the laws of which such Bank or the Administrative
Agent, as the case may be, is organized or maintains a
Lending Office or (ii) any jurisdiction (or political
subdivision thereof) in which such Bank or the
Administrative Agent, as the case may be, is "doing
business" (unless it would not be deemed to be "doing
business" in such jurisdiction absent the transactions
contemplated hereby).
"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, limited liability company, business trust,
joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.
"PHOENIX" means Phoenix Fuel Co., Inc., an
Arizona corporation.
"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's and
S&P respectively or (ii) the account debtor is a major
international oil or other company rated "A2/A" or
better by Moody's 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 1.01B 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.
"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 (other than "inactive"
Subsidiaries), all accounts receivable, whether billed
or unbilled, arising out of the sale of inventory in the
ordinary course of business.
"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,
including without limitation Environmental Laws.
"RESPONSIBLE OFFICER" means the chief
financial officer or the treasurer of the Company.
"REVOLVING LOAN" has the meaning specified in
SECTION 2.01.
"RISK PARTICIPATION FEE" has the meaning set
forth in Subsection 3.08(a).
"S&P" means Standard & Poor's Ratings Group, a
Division of McGraw-Hill, Inc., a New York corporation.
"SAN JUAN" means San Juan Refining Company, a
New Mexico corporation.
"SEC" means the Securities and Exchange
Commission, or any Governmental Authority succeeding to
any of its principal functions.
"SECURITY AGREEMENT" means collectively each
of the Security Agreements substantially in the form of
Exhibit I hereto executed by the Company and each of its
Subsidiaries in favor of the Administrative Agent and
the Banks, as they may be amended, supplemented or
otherwise modified from time to time.
"SIGNIFICANT SUBSIDIARY" means (a) Arizona,
(b) San Juan, (c) Phoenix, or (d) any other Subsidiary
of the Company having total assets at or immediately
prior to the time in question with a book value of
$10,000,000 or more.
"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.
"SPECIFIED SWAP CONTRACTS" means all Swap
Contracts made or entered into at any time, or in effect
at any time, whether directly or indirectly, and whether
as a result of assignment or transfer or otherwise,
between the Company or any Subsidiary of the Company and
any Swap Provider, which Swap Contract is or was
intended by the Company to have been entered into, in
part or entirely, for purposes of mitigating interest
rate or currency exchange risk relating to any
liabilities owed or credit facilities in effect and not
for the purposes of financing, speculation or taking a
"market view" (which intent shall conclusively be deemed
to exist if the Company so represents to the Swap
Provider in writing) and as to which the final scheduled
payment by the Company or its Subsidiary is not later
than the Termination Date.
"SUBORDINATED NOTES" means (i) the NBD
Subordinated Notes issued under the NBD Indenture, (ii)
the BNY Subordinated Notes issued under the BNY
Indenture and (iii) such other notes as may be issued
from time to time by the Company after the Execution
Date which have been subordinated on terms and
conditions satisfactory to the Administrative Agent and
the Majority Banks, in their sole discretion, to all
other Indebtedness of the Company to the Administrative
Agent and the Banks, whether now existing or hereafter
incurred. Notes shall not be considered "Subordinated
Notes" unless and until the Administrative Agent shall
have received copies of the documentation evidencing or
relating to such notes evidencing the terms and conditions
of subordination required by the Administrative Agent and
the Majority Banks.
"SUBSIDIARY" of a Person means any
corporation, association, partnership, limited liability
company, joint venture or other business entity of which
more than 50% of the voting stock, membership interests
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.
"SUPPLEMENTAL GUARANTY" means an agreement, in
substantially the form attached to the Guaranty,
pursuant to which the Person executing the same elects
to become a Guarantor for purposes of the Credit
Agreement and agrees to perform all of the obligations
of a Guarantor under, and to be bound in all respects by
the terms of, the Guaranty, as if said Person were a
signatory party thereto.
"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).
"SWAP PROVIDER" means any Bank or any
Affiliate of any Bank that is at the time of
determination party to a Swap Contract with the Company
or any Subsidiary of the Company.
"SYNTHETIC LEASE" means a financing
arrangement that is treated as a lease for financial
accounting purposes and as a loan for tax purposes. For
the purposes hereof, the FFCA Lease (as defined in
Schedule 8.05) shall be deemed and treated herein as a
"Synthetic Lease," notwithstanding its nature or
treatment for financial accounting, tax or other
purposes.
"TAXES" means any and all present or future
taxes, levies, assessments, imposts, duties, deductions,
fees, withholdings or similar charges, and all
liabilities with respect thereto, excluding, in the case
of each Bank and the Administrative Agent, such taxes
(including income taxes or franchise taxes) as are
imposed on or measured by each Bank's net income by (i)
any jurisdiction (or any political subdivision thereof)
under the laws of which such Bank or the Administrative
Agent, as the case may be, is organized or maintains a
Lending Office or (ii) any jurisdiction (or political
subdivision thereof) in which such Bank or the
Administrative Agent, as the case may be, is "doing
business" (unless it would not be deemed to be "doing
business" in such jurisdiction absent the transactions
contemplated hereby).
"TERMINATION DATE" means the earlier of (a)
December 23, 2001 or (b) the date on which the
Commitments terminate in accordance with the provisions
of this Agreement.
"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.
"YEAR 2000 PROBLEM" means the inability of
computers, as well as embedded microchips in non-
computing devices, to perform properly date-sensitive
functions after December 31, 1999.
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 Administrative 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 Administrative Agent
merely because of the Administrative 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. Each
Bank severally agrees, on the terms and conditions set
forth herein, to make Loans to the Company (each such
loan, a "Revolving Loan") from time to time on any
Business Day during the period from the Closing Date to
the Termination Date, in an aggregate amount not to
exceed at any time outstanding the lesser of the
following: (i) the amount set forth on Schedule 2.01
(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 "Commitment") and (ii) the
Bank's Pro Rata Share of the current Borrowing Base;
provided, however, that, after giving effect to any
Borrowing of Revolving Loans, the Effective Amount of
all outstanding Revolving Loans, together with the
Effective Amount of all L/C Obligations, shall not at
any time exceed the combined Commitments of all of the
Banks. Within the limits of each Bank's Commitment, and
subject to the other terms and conditions of this
Agreement, the Company may borrow under this SECTION
2.01, prepay under SECTION 2.06 and reborrow under this
SECTION 2.01.
2.02 LOAN ACCOUNTS. (a) The Loans made by
each Bank shall be evidenced by one or more loan accounts
or records maintained by such Bank in the ordinary course
of business. The loan accounts or records maintained by
the Administrative Agent and each Bank shall be conclusive
absent manifest error of the amount of the Loans made by
the Banks to the Company and the interest and payments
thereon. Any failure so to record or any error in doing
so shall not, however, limit or otherwise affect the
obligation of the Company hereunder to pay any amount
owing with respect to the Loans.
(b) Upon the request of any Bank made
through the Administrative Agent, the Loans made by such
Bank may be evidenced by one or more Notes, instead of
or in addition to loan accounts. Each such Bank shall
endorse on the schedules annexed to its Note(s) the
date, amount and maturity of each Loan made by it and
the amount of each payment of principal made by the
Company with respect thereto. Each such Bank is
irrevocably authorized by the Company to endorse its
Note(s) and each Bank's record shall be conclusive
absent manifest error; provided, however, that the
failure of a Bank to make, or an error in making, a
notation thereon with respect to any Loan shall not
limit or otherwise affect the obligations of the Company
hereunder or under any such Note to such Bank.
2.03 PROCEDURE FOR BORROWING.
(a) Each Borrowing of Revolving Loans
shall be made upon the Company's irrevocable written
notice delivered to the Administrative Agent in the form
of a Notice of Borrowing (which notice must be received
by the Administrative 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 Administrative 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
Administrative Agent for the account of the Company at
the Administrative 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 Administrative Agent. The proceeds of all such
Loans will then be made available to the Company by the
Administrative Agent by wire transfer in accordance with
written instructions provided to the Administrative
Agent by the Company of like funds as received by the
Administrative 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 Administrative 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
Administrative 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 continued; (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 Administrative 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 Administrative 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 TERMINATION OR REDUCTION OF COMMITMENTS.
(a) Voluntary Termination or Reduction.
The Company may, upon not less than five Business Days'
prior notice to the Administrative Agent, terminate the
Commitments, or permanently reduce the Commitments (and,
correspondingly, as applicable, the L/C Commitment) by
an aggregate minimum amount of $2,000,000.00 or any
multiple of $1,000,000.00 in excess thereof; unless,
after giving effect thereto and to any prepayments of
Loans made on the effective date thereof, (i) the
Effective Amount of all Revolving Loans and L/C
Obligations together would exceed the amount of the
combined Commitments then in effect, or (ii) the
Effective Amount of all L/C Obligations then outstanding
would exceed the amount of the L/C Commitment then in
effect. Once reduced in accordance with this subsection,
the Commitments may not be increased.
(b) ADDITIONAL PROVISIONS. Each reduction
in aggregate Commitments pursuant to paragraph (a) above
shall be applied to each Bank according to its Pro Rata
Share. All accrued Commitment Fees on the amount of the
Commitments so terminated or reduced, Letter of Credit
Fees, and Fronting Fees to, but not including, the
effective date of any reduction or termination of
Commitments, shall be paid by the Company 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
Administrative 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 Administrative
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
Termination Date and shall be equal to the sum of (i)
eighty percent (80%) of Eligible Refinery Hydrocarbon
Inventory (except for Eligible Refinery Hydrocarbon
Inventory at the Company's and its Subsidiaries' service
stations and travel centers), plus (ii) fifty percent
(50%) of Eligible Refinery Hydrocarbon Inventory 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 Eligible Account Obligors other
than Preferred Eligible Account Obligors.
(b) If on any date the Effective Amount of
all Revolving Loans and the Effective Amount of all L/C
Obligations together exceed the Borrowing Base, the
Company shall, without notice or demand, prepay the
outstanding principal amount of the 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 L/C Obligations together exceed
the Borrowing Base, the Company shall immediately Cash
Collateralize on such date the outstanding Letters of
Credit in an amount equal to the amount by which the
Effective Amount of the L/C Obligations exceeds the
Borrowing Base.
2.08 REPAYMENT.
(a) PRINCIPAL. The Company shall repay to
the Banks the aggregate principal amount of Loans
outstanding on the Termination Date.
(b) INTEREST.
(i) Subject to clause (iii)
of this subsection 2.08(b), 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) the
Offshore Rate or the Base Rate, as the
case may be, as selected by the Company or
otherwise applicable to such Revolving
Loan in accordance with the terms and
provisions hereof (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 Highest Lawful Rate.
(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
Administrative Agent at the request or
with the consent of the Majority Banks.
(iii) Notwithstanding clause
(i) of this subsection 2.08(b), 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 per annum rate
equal to the rate set forth in clause (i)
of this subsection 2.08(b) plus two
percent (2%) per annum.
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 Administrative Agent for the Administrative Agent's
own account, as required by the letter agreement ("Fee
Letter") between the Company and the Arranger and
Administrative Agent dated October 27, 1998.
(b) COMMITMENT FEES. The Company
shall pay to the Administrative Agent for
the account of each Bank a commitment fee (the
"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 Administrative Agent, equal
to the percent per annum set forth in Schedule 2.02
corresponding to the applicable pricing level determined
in accordance therewith. 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 Execution Date to
the Termination Date and shall be due and payable
quarterly in arrears on the last Business Day of each
quarter commencing on December 31, 1998 through the
Termination Date, with the final payment to be made on
the Termination Date; provided that, in connection with
any reduction or termination of Commitments under
SECTION 2.05, 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 Fee
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 Bank of
America'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 Administrative 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
Administrative Agent for the account of the Banks at the
Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative Agent may assume that the Company has
made such payment in full to the Administrative Agent on
such date in immediately available funds and the
Administrative 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 Administrative Agent,
each Bank shall repay to the Administrative 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
ADMINISTRATIVE AGENT.
(a) Unless the Administrative Agent
receives notice from a Bank on or prior to the Execution
Date or, with respect to any Borrowing after the
Execution 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
Administrative Agent for the account of the Company the
amount of that Bank's Pro Rata Share of the Borrowing,
the Administrative Agent may assume that each Bank has
made such amount available to the Administrative Agent
in immediately available funds on the Borrowing Date and
the Administrative 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 Administrative
Agent in immediately available funds and the
Administrative 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 Administrative Agent, together
with interest at the Federal Funds Rate for each day
during such period. A notice of the Administrative
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 Administrative 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 Administrative Agent
on the Business Day following the Borrowing Date, the
Administrative Agent will notify the Company of such
failure to fund and, upon demand by the Administrative
Agent, the Company shall pay such amount to the
Administrative Agent for the Administrative 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 Administrative 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 11.10) 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
Administrative 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.
2.14 SECURITY AND GUARANTY. (a) All
obligations of the Company and the Guarantors under this
Agreement, the Notes, the Guaranty and all other Loan
Documents shall be secured, pro rata with the Specified
Swap Contracts, in accordance with the Collateral
Documents. The Company agrees that, at any time upon
the request of the Administrative Agent (acting pursuant
to the instructions of the Majority Banks), it shall,
and shall cause each of its Subsidiaries to, enter into
a cash collateral agreement in form and substance
satisfactory to the Administrative Agent and the
Majority Banks, pursuant to which all proceeds of
accounts and other collateral shall be deposited
directly, and, at the election of the Majority Banks,
all account debtors shall be directed to make payments
directly, to the Administrative Agent, the proceeds
deposited to such account, following receipt of good
funds, to be credited to the Company's general operating
account with the Administrative Agent in the absence of
any Default or Event of Default.
(b) All obligations of the Company under
this Agreement, each of the Notes and all other Loan
Documents shall be unconditionally guaranteed by the
Guarantors pursuant to the Guaranty.
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
Execution Date to the 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"), after giving
effect to such Issuance, (1) the Effective Amount of all
L/C Obligations plus the Effective Amount of all
Revolving Loans would exceed the lesser of (x) the
combined Commitments and (y) the Borrowing Base, or (2)
the Effective Amount of the L/C Obligations would exceed
the L/C Commitment. 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 Execution Date, or shall impose
upon the Issuing Bank any unreimbursed loss, cost or
expense which was not applicable on the Execution 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 Administrative 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 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
Administrative 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 Administrative Agent (by telephone
or in writing) that the Administrative Agent has
received a copy of the L/C Application or L/C Amendment
Application from the Company and, if the Administrative
Agent has not received such copy, the Issuing Bank will
provide the Administrative 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 Administrative 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 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 Administrative 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 Administrative 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 Administrative 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 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 Administrative 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 Execution Date, the
Existing Bank of America 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 Execution 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 SECTION 2.01 and
Subsection 2.09(b), the Existing Bank of America Letters
of Credit shall be deemed to utilize pro rata the
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 SECTION 2.01,
each Issuance of a Letter of Credit shall be deemed to
utilize the 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. (San Francisco, California 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. (San
Francisco, California time) on the Honor Date, the
Issuing Bank will promptly notify the Administrative
Agent and the Administrative Agent will promptly notify
each Bank thereof, and the Company shall be deemed to
have requested that 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 Commitments and subject to the conditions set
forth in Article V. Any notice given by the Issuing
Bank or the Administrative 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
Administrative 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 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 Administrative
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
Administrative Agent will promptly give notice to each
Bank of the occurrence of the Honor Date, but failure of
the Administrative 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 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 Article V 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 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 Revolving Loans
under this SECTION 3.03 is subject to the conditions set
forth in Article V.
3.04 REPAYMENT OF PARTICIPATIONS.
(a) When the Administrative Agent receives
(and only if the Administrative 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 Administrative
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
Administrative Agent will pay to each Bank, in the same
funds as those received by the Administrative 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
Administrative Agent for the account of the Issuing
Bank.
(b) If the Administrative 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
Administrative 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
Administrative Agent, forthwith return to the
Administrative Agent or the Issuing Bank the amount of
its Pro Rata Share of any amounts so returned by the
Administrative 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
Administrative 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 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 Administrative 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 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
Administrative Agent for the account of each of the
Banks a letter of credit fee (the "Risk Participation
Fee") with respect to the Letters of Credit equal to (i)
the percent per annum therefor specified in Schedule
2.02 corresponding to the applicable pricing level
determined in accordance therewith multiplied by (ii)
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 as calculated by the
Administrative Agent. Such Risk Participation Fee 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 Execution
Date, through the Termination Date (or such later date
upon which the outstanding Letters of Credit shall
expire), with the final payment to be made on the
Termination Date (or such later expiration date).
(b) The Company shall pay to the
Administrative 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
Administrative Agent, acting upon instructions of the
Majority Banks, deposit in an account (the "Cash
Collateral Account") held by the Administrative 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 Administrative Agent as
collateral for the payment and performance of the
Obligations. The Administrative 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 Administrative Agent or any Affiliate of the
Administrative 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 Administrative 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 (pro rata with any
obligations to the Swap Providers under Specified Swap
Contracts then due and payable, in accordance with the
Security Agreement).
(b) As security for the payment of all
Obligations, the Company hereby grants, conveys,
assigns, pledges, sets over and transfers to the
Administrative Agent, and creates in the Administrative
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 Administrative 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
Administrative 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 Administrative 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 Administrative 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 Administrative 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
Administrative 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 Administrative 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
Administrative 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
Administrative 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 Administrative Agent the
original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment
satisfactory to the Administrative Agent.
(e) If the Company is required to pay
additional amounts to any Bank or the Administrative
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 Administrative Agent, any obligation
of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Administrative
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 Administrative
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
Administrative 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 Administrative Agent), pay to the Administrative
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 Administrative 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 Administrative Agent 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
2.08(b)(i) for any requested Interest Period with
respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to the Banks of
funding such Loan, the Administrative 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 Administrative 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 Administrative 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 notice of illegality under SECTION
4.02 or a claim for compensation under SECTION 4.03, or
the Company being or becoming liable with respect to
payments hereunder to any Bank (also an "Affected Bank")
for any Taxes pursuant to SECTION 4.01 assessed at a
rate in excess of the rate of any such Taxes for which
it is liable with respect to payments to any other Bank
hereunder, the Company may: (i) request the Affected
Bank to use its best efforts to obtain a replacement
bank or financial institution satisfactory to the
Administrative Agent (a "Replacement Bank") to acquire
and assume all or a ratable part of all of such Affected
Bank's Loans and Commitment, and, if such Affected Bank
or any Affiliate thereof is a Swap Provider, all
specified Swap Contracts of such Affected Bank and its
Affiliates; (ii) request one more of the other Banks to
acquire and assume all or part of such Affected Bank's
Loans and Commitment, and, if such Affected Bank or any
Affiliate thereof is a Swap Provider, all specified Swap
Contracts of such Affected Bank and its Affiliates, but
none of the Banks shall have any obligation to do so; or
(iii) designate a Replacement Bank satisfactory to the
Administrative Agent. Any such designation of a
Replacement Bank under clause (i) or (iii) shall be
subject to the prior written consent of the
Administrative 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 that the Administrative Agent shall
have received on or before the Closing Date all of the
following, in form and substance satisfactory to the
Administrative Agent and each Bank, and in sufficient
copies for each Bank:
(a) CREDIT AGREEMENT, NOTES, GUARANTY,
PERFECTION CERTIFICATE AND INITIAL BORROWING BASE REPORT
AND COMPLIANCE CERTIFICATE. This Agreement, the Notes,
and the Guaranty executed by each party thereto, a
certificate in such form and detail as the
Administrative Agent may require as to matters relating
to the Collateral and perfection of security interests
therein, an initial Borrowing Base Report for the month
ended November 30, 1998 and an initial Compliance
Certificate for the quarter ended September 30, 1998;
(b) CERTIFICATE REGARDING EXISTING INDEBTEDNESS.
A certificate signed by a Responsible Officer of the
Company, certifying as to the Indentures, including in
each case all schedules, exhibits and other attachments
thereto, as then in effect, and as to the Company's
compliance with SECTION 8.11 in respect thereof;
(c) 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 Notes, the Guaranties
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;
(d) CERTIFICATE (ORGANIZATION,
QUALIFICATION AND GOOD STANDING). A certificate signed
by a Responsible Officer, dated as of the Execution
Date, identifying those states in which the ownership,
lease or operation of property or the conduct of its
business requires the Company and each of the
Guarantors, respectively, to be qualified or licensed to
do business as a foreign corporation, and attaching
thereto, with respect to the Company and each of the
Guarantors, respectively, certificates of the Secretary
of State (and/or similar applicable Governmental
Authority) of its state of incorporation or organization
and each such state where it is so required to be
qualified or licensed to do business as a foreign
corporation, certifying as of a recent date each such
Person's existence or qualification, as applicable, and
good standing in each such jurisdictions;
(e) LEGAL OPINIONS. Copies of (i) a
favorable opinion of Kim Bullerdick, Counsel to the
Company, addressed to the Administrative Agent and the
Banks, substantially in the form of Exhibit "D-1"; and
(ii) a favorable opinion of Fennemore Craig, P.C.,
special counsel to the Company, addressed to the
Administrative Agent and the Banks, substantially in the
form of Exhibit D-2;
(f) 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 Administrative Agent to the extent invoiced
prior to or on the Closing Date, plus such additional
amounts of Attorney Costs as shall constitute the
Administrative 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 Administrative Agent); including any
such costs, fees and expenses arising under or
referenced in SECTIONs 2.09 and 11.04;
(g) 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
September 30, 1998, no event or circumstance that has
resulted or would reasonably be expected to result in a
Material Adverse Effect;
(h) TERMINATION OF THE 1995 GIANT CREDIT
FACILITY. Evidence of the termination of the Credit
Agreement dated as of October 4, 1995 among the Company, 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, as administrative
agent, Bank of America Illinois, as a bank and as letter
of credit issuing bank and the other financial
institutions parties thereto, as amended;
(i) COLLATERAL DOCUMENTS. The Collateral
Documents, executed by the Company, in appropriate form
for recording, where necessary, together with:
(i) acknowledgment copies of all UCC-l
financing statements filed, registered or recorded to
perfect the security interests of the
Administrative Agent for the benefit of
the Banks, or other evidence satisfactory
to the Administrative Agent that there has
been filed, registered or recorded all
financing statements and other filings,
registrations and recordings necessary and
advisable to perfect the Liens of the
Administrative Agent for the benefit of
the Banks in accordance with applicable
law;
(ii) written advice relating to
such Lien and judgment searches
as the Administrative Agent shall have
requested, and such termination statements
or other documents as may be necessary to
confirm that the Collateral is subject to
no other Liens in favor of any Persons;
(iii) funds sufficient to pay
any filing or recording tax or fee
in connection with any and all UCC-1
financing statements;
(iv) evidence that the
Administrative Agent has been named as
loss payee under all policies of casualty
insurance pertaining to the Collateral;
(v) such consents, estoppels,
subordination agreements and
other documents and instruments executed
by landlords and other Persons party to
material contracts relating to any
Collateral as to which the Administrative
Agent shall be granted a Lien for the
benefit of the Banks, as requested by the
Administrative Agent or any Bank; and
(vi) evidence that all other
actions necessary or, in the
opinion of the Administrative Agent or the
Banks, desirable to perfect and protect
the first priority Lien created by the
Collateral Documents, and to enhance the
Administrative Agent's ability to preserve
and protect its interests in and access to
the Collateral, have been taken; and
(j) OTHER DOCUMENTS. Such other
approvals, opinions, documents or materials as the
Administrative Agent or any Bank may request.
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
Administrative Agent shall have received a timely
Notice of Borrowing or a timely Notice of
Conversion/Continuation, as applicable, or, in the case
of any Issuance of any Letter of Credit, the Issuing
Bank and the Administrative 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, Issuance Date or Conversion/Continuation Date with
the same effect as if made on and as of such Borrowing
Date, Issuance 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);
(c) NO EXISTING DEFAULT. No Default or
Event of Default shall exist or shall result from such
Borrowing or continuation or conversion;
(d) NO MATERIAL ADVERSE EFFECT. No event
or circumstance shall have occurred that has resulted or
would reasonably be expected to result in a Material
Adverse Effect; and
(e) NO FUTURE ADVANCE NOTICE. Neither the
Administrative Agent nor any Bank shall have received
any notice that any Collateral Document will no longer
secure on a first priority basis future advances or
future Loans to be made or extended under this
Agreement.
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
Administrative 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 (b), (c) and (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 material 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. 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: (a) purport to affect or
pertain to this Agreement or any other Loan Document, or
any of the transactions contemplated hereby or thereby;
or (b) 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 or from the grant
or perfection of the Liens of the Administrative Agent and
the Banks on the Collateral. 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.
(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.
Margin Stock does not constitute more than 25% of the
value of the consolidated assets of the Company and its
Subsidiaries, and the Company does not have any present
intention that Margin Stock will constitute more than
25% of the value of such assets.
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. 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 September 30, 1998, 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 in all material
respects 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)
show all material Indebtedness and other liabilities,
direct or contingent, of the Company and its
consolidated Subsidiaries as of the date thereof,
including liabilities for taxes, material commitments
and Contingent Obligations. Since September 30, 1998,
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 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 any provision of
the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act or any
state public utilities code, or of 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. 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, would reasonably be expected to have a Material
Adverse Effect.
6.16 SUBSIDIARIES. As of the Execution 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. 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 Execution 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. The Company and its Subsidiaries,
taken as a whole, and the Company, individually, and each
of the Guarantors, individually, is Solvent.
6.20 YEAR 2000. The Company reasonably believes
that the Year 2000 Problem, including costs of remediation,
will not result in a Material Adverse Effect. The Company
is developing feasible contingency plans adequately to ensure
uninterrupted and unimpaired business operation in the
event of failure of its own or a third party's systems
or equipment due to the Year 2000 Problem.
6.21 LABOR RELATIONS. There is (i) no significant
unfair labor practice complaint pending against the Company
or any of its Subsidiaries or, to the knowledge of the
Company, threatened against any of them, and no significant
grievance or significant arbitration proceeding arising
out of or under any collective bargaining agreement is
so pending against the Company or any of its
Subsidiaries or, to the knowledge of the Company,
threatened against any of them, (ii) no significant
strike, labor dispute, slowdown or stoppage pending
against the Company or any of its Subsidiaries or, to
the knowledge of the Company, threatened against the
Company or any of its Subsidiaries and (iii) to the
knowledge of the Company, no union representation
question existing with respect to the employees of the
Company or any of its Subsidiaries and, to the knowledge
of the Company, no union organizing activities are
taking place, except (with respect to any matter
specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as could not
reasonably be expected to have a Material Adverse
Effect.
6.22 COLLATERAL DOCUMENTS.
(a) The provisions of each of the
Collateral Documents are effective to create in favor of
the Administrative Agent for the benefit of the Banks, a
legal, valid and enforceable first priority security
interest in all right, title and interest of the Company
and its Subsidiaries in the collateral described
therein; and financing statements have been filed in the
offices in all of the jurisdictions listed in the
schedule to the Security Agreement.
(b) All representations and warranties of
the Company and any of its Subsidiaries party thereto
contained in the Collateral Documents are true and
correct in all material respects.
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 Administrative 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 such financial
statements shall be accompanied by the opinion of a
nationally recognized independent public accounting firm
(the "Independent Auditor"), which opinion shall state
that such consolidated financial statements present
fairly in all material respects the financial position
and results of operations of the Company and its
Consolidated Subsidiaries for the periods indicated in
conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or
limited because of a restricted or limited examination
by the Independent Auditor of any material portion of
the Company's or any Subsidiary's records; 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 and its
Consolidated Subsidiaries.
7.02 CERTIFICATES; OTHER INFORMATION. The Company
shall furnish to the Administrative Agent, with sufficient
copies for each Bank:
(a) As soon as available, but not later
than 24 days after the close of each month until the
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 Refining Company
or Giant Industries Arizona, Inc. to the Sellers and any
written objections thereto furnished by Sellers to San
Juan Refining Company or Giant Industries Arizona, Inc.
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 Administrative
Agent, at the request of any Bank, may from time to time
reasonably request.
7.03 NOTICES. The Company shall promptly notify
the Administrative 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 Administrative 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;
(e) of the entry by the Company or any of
its Subsidiaries into any Specified Swap Contract,
specifying the identity of the Swap Provider, the
notional amount, the nature of the Specified Swap
Contract and such other information as the
Administrative Agent reasonably may request;
(f) of the occurrence of any default,
event of default, termination event or other event under
any Specified Swap Contract that after the giving of
notice, passage of time or both, would permit either
counterparty to such Specified Swap Contract to
terminate early any or all trades relating to such
contract, and the liability, if any, of the Company or
Subsidiary, as applicable, in the event thereof;
(g) upon the request from time to time of
the Administrative Agent, the Swap Termination Values,
together with a description of the method by which such
values were determined, relating to any then outstanding
Swap Contracts to which the Company or any of its
Subsidiaries is party; and
(h) 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 shall, and shall cause each of its
Material Subsidiaries to:
(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 shall,
and shall cause each of its Material Subsidiaries to,
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. In addition to any other insurance
requirements set forth in the Security Documents, the Company
shall, and shall cause each of its 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 shall,
and shall cause each of its Material Subsidiaries to, 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 shall, and
shall cause each of its 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 shall, and shall cause each of its
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 Administrative 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 Administrative 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 shall, and
shall cause each of its 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; NEW SUBSIDIARY
SECURITY AGREEMENTS.
(a) If, at any time after the date of this
Agreement, there exists any Subsidiary organized under
the laws of any state in the United States of America
that (a) total assets with a book value of $2,000,000 or
more or (b) executes a guaranty agreement with respect
to the Indentures or any other indebtedness for borrowed
money, then the Company shall cause each such Subsidiary
to do the following: (i) execute and deliver to the
Administrative Agent a Supplemental Guaranty and (ii)
furnish the Administrative Agent with a written opinion
of counsel for each such Subsidiary Guarantor in
substantially the form set forth in Exhibit "D"; in each
case with such revisions as may be reasonably requested
by the Administrative Agent or the Banks.
(b) The Company also shall cause each
Person that becomes a Subsidiary after the date of this
Agreement (including any "inactive" Subsidiary that
resumes active business at any time after the date of
this Agreement) to (i) execute and deliver to the
Administrative Agent a Security Agreement in
substantially the form of Exhibit I in favor of the
Administrative Agent, the Banks and the other Swap
Providers, together with such financing statements and
other documents and instruments related thereto as the
Administrative Agent or the Majority Banks may require;
(ii) take all other actions necessary or, in the opinion
of the Administrative Agent or the Majority Banks,
desirable to perfect and protect the first priority Lien
created by the Collateral Documents, and to enhance the
Administrative Agent's ability to preserve and protect
its interests in and access to the Collateral; and (iii)
furnish the Administrative Agent with a written opinion
of counsel for each such Person in substantially the
form set forth in Exhibit D; in each case with such
revisions as may be reasonably requested by the
Administrative Agent or the Banks.
7.13 USE OF PROCEEDS. The Company shall use
the proceeds of the Revolving Loans (a) to refinance
existing indebtedness under that certain Credit
Agreement dated October 4, 1995, by and among the
Company, the Administrative Agent and the financial
institutions parties thereto, (b) to make capital
contributions and loans to the Guarantors for working
capital expenditures, (c) for the issuance of standby
letters of credit pursuant to Article III hereof in the
ordinary course of business and (d) for Acquisitions
otherwise permitted in accordance with the terms hereof;
provided that the aggregate amount of proceeds used to
finance Acquisitions during the term hereof (excluding
amounts, not in excess of $9,000,000, used to finance
the acquisition of assets by the Company or by Giant
Four Corners, Inc. from Thriftway Marketing Corp. and
Clayton Investment Company and their affiliates and
related companies pursuant to the terms of the
Definitive Agreement dated April 18, 1997 by and between
Giant Four Corners, Inc., Thriftway Marketing Corp. and
Clayton Investment Company, and the associated purchase
and sale agreements as provided therein) shall not
exceed $10,000,000.
7.14 SUBORDINATED INDEBTEDNESS. The Company
shall maintain at least $150,000,000 in Subordinated
Notes outstanding at all times throughout the term
hereof.
7.15 YEAR 2000. The Company has completed
or accomplished, or will complete or accomplish, the
following:
1. By September 30, 1998, prepare a
detailed project plan and budget
for ensuring that the Year 2000
problem is successfully addressed
in all material respects as it
pertains to the Company's own
business, properties or operations;
2. By December 31, 1998, prepare a
comprehensive, detailed inventory
and assessment of the risk posed by
the Year 2000 problem as it may
affect the Company's own business,
properties or operations; and
containing contingency plans to
mitigate the effects of any third
party's unexpected failure to
address the Year 2000 problem;
3. By April 30, 1999, renovate all
material systems and equipment
affected by the Year 2000 problem
to cause them to perform correctly
date-sensitive functions for
relevant date data from before and
after December 31, 1999 ("Year 2000
Compliance") or replace them with
technology not so affected, and
commence testing;
4. By January 1, 1999, make detailed
inquiry of material suppliers,
vendors and customers of the
Company, to ascertain whether such
persons are aware of the need to
address the Year 2000 problem and
whether they are taking appropriate
steps to do so; and
5. By April 30, 1999, complete testing
and installation of all material
systems and equipment to ensure
timely Year 2000 Compliance.
7.16 FURTHER ASSURANCES. Promptly upon request
by the Administrative Agent or the Majority Banks, the
Company shall (and shall cause any of its Subsidiaries
to) do, execute, acknowledge, deliver, record, re-
record, file, re-file, register and re-register, any and
all such further acts, deeds, conveyances, security
agreements, mortgages, assignments, estoppel
certificates, financing statements and continuations
thereof, termination statements, notices of assignment,
transfers, certificates, assurances and other
instruments the Administrative Agent or such Banks, as
the case may be, may reasonably require from time to
time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Document,
(ii) to subject to the Liens created by any of the
Collateral Documents any of the properties, rights or
interests covered by any of the Collateral Documents,
(iii) to perfect and maintain the validity,
effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby,
and (iv) to better assure, convey, grant, assign,
transfer, preserve, protect and confirm to the
Administrative Agent and Banks the rights granted or now
or hereafter intended to be granted to the Banks under
any Loan Document or under any other document executed
in connection therewith.
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. The Company shall not,
and shall not permit any of its 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 (other than a Lien on the
Collateral) existing on property of the Company or any
Subsidiary on the Execution 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
non-consensual statutory Liens (including statutory
liens in favor of mineral interest owners, securing only
amounts due for the purchase price, state royalty and
taxes in respect of product severed from a production
unit in New Mexico in which such interest owner owns an
interest) 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 and other than Liens on the Collateral) 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 (other than Liens on the
Collateral) on the property of the Company, any
Guarantor or any Subsidiary of any 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 not exceeding $3,000,000 in the
aggregate, 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 with respect to real property
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 (other than Liens on the
Collateral) 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) dominion
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 (other than Liens on the
Collateral) 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 has attached prior to acquisition
of such property or 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 (other than Liens on the
Collateral) 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 shall not,
and shall not permit any of its 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 assets under an
arrangement in the ordinary course of business whereby
the Company or any Subsidiary would then or thereafter
lease as lessee such assets under a Synthetic Lease;
provided that (i) at the time of such Disposition, no
Event of Default shall exist or shall result from such
Disposition, (ii) the aggregate book value of all such
assets disposed of pursuant to this Subsection 8.02(e)
does not exceed $52,500,000 and (iii) the net proceeds
of such Disposition are used by the Company to repay
Loans then outstanding; and
(f) Dispositions of assets 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 shall not, and shall not permit any of
its Material Subsidiaries to, 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 that is not a Wholly-Owned
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 shall not purchase or acquire, or permit
any of its 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, and investments by the
Company or any Guarantor or any of its or their
Subsidiaries in any of the Company's 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;
(e) extensions of credit described in
Schedule 8.04 attached hereto, through and including the
maturity date thereof, but not any renewals or
extensions thereof except as otherwise may be specified
in Schedule 8.04; and
(f) investments by the Company and its
Subsidiaries not otherwise permitted in Subsections
8.04(a) through (e), which do not exceed $1,000,000 in
the aggregate at any time outstanding.
8.05 LIMITATION ON SUBSIDIARY INDEBTEDNESS.
Neither the Guarantors nor any other Subsidiary of
the Company 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 described on Schedule 8.05.
8.06 TRANSACTIONS WITH AFFILIATES. The
Company shall not, and shall not permit any of
its 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, and shall not
suffer or permit any Subsidiary to, 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. S.S. 24, Seventh), as amended.
8.08 CONTINGENT OBLIGATIONS. The
Company shall not, and shall not permit any of
its 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) Contingent Obligations of the Company
and its Subsidiaries existing as of the Execution Date
and listed in Schedule 8.08;
(e) 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;
(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; and
(h) the guaranties described in Schedule
8.05.
8.09 RESTRICTED PAYMENTS. The Company
shall not, and shall not permit any of
its 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) the Company may purchase, redeem or
otherwise acquire shares of its common stock to the
extent permitted by the terms of the NBD Subordinated
Indenture, provided, however, that the Company may not
purchase, redeem or otherwise acquire more than
1,000,000 shares in the aggregate in addition to shares
acquired prior to the Execution Date.
8.10 SUBSIDIARY DIVIDENDS. The
Company will not, and it will not permit any of
its 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 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 Indentures, the 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 TANGIBLE NET WORTH.
From and after the Execution Date, the Company will
maintain at all times Consolidated Tangible Net Worth in
an amount not less than the sum of (i) $96,000,000, plus
(ii) 50% of Consolidated Net Income computed on a
cumulative basis for the period beginning October 1,
1998 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) 75% 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 September 30, 1998.
8.13 MINIMUM INTEREST COVERAGE RATIO.
The Company shall not permit (as of the end of any
fiscal quarter) the ratio of (i) Consolidated EBITDA
(plus Material Rents) for the four consecutive fiscal
quarters most recently then ended to (ii) Consolidated
Interest Expense (plus Material Rents) for the four
consecutive fiscal quarters most recently then ended (x)
to be less than 2.00 to 1.00, for any period of four
consecutive fiscal quarters ending after the Execution
Date and on or before December 31, 1999, or (y) to be
less than 2.25 to 1.00, for any period of four
consecutive fiscal quarters ending after December 31,
1999.
8.14 MAXIMUM CAPITALIZATION RATIO.
From and after the Execution Date, the Company shall
not permit the Capitalization Ratio (i) to be greater
than 72.5%, at any time prior to December 31, 1999, or
(ii) to be greater than 70.0%, at any time on or after
December 31, 1999.
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 (i)
fails to perform or observe any term, covenant or agreement
contained in Article VIII, and (A) such default shall continue
unremedied for a period of 15 days after the occurrence
thereof or (B) the Company shall fail to deliver to the
Administrative Agent and the Banks satisfactory certification
and evidence of the remedy thereof within 15 days after the
occurrence thereof, or (ii) fails to perform or observe any
term, covenant or agreement contained in SECTION 7.03(a); 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 Administrative
Agent or any Bank; or
(e) CROSS-DEFAULT. The Company or any Subsidiary
(i) fails to make any payment in respect of any Indebtedness,
Contingent Obligation or Commodity Swap 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, or any Specified
Swap Contract (whatever the amount), 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, Contingent
Obligation or Commodity Swap 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, or any Specified
Swap Contract (whatever the amount), 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, Specified Swap Contract or Commodity Swap
to be declared to be due and payable prior to its stated
maturity, or such Contingent Obligation, Specified Swap
Contract or Commodity Swap to become payable or cash
collateral in respect thereof to be demanded; or (iii)
any Indebtedness, Contingent Obligation or Commodity
Swap of the Company or any Subsidiary in excess of
$3,000,000, or any Specified Swap Contract (whatever the
amount), shall be declared due and payable prior to its
stated maturity or cash collateral is demanded in
respect of such Contingent Obligations, Specified Swap
Contracts or Commodity Swaps; 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 Material
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 Material 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 Material 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
Material 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 final judgments, final 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 any of the Subordinated Notes is for any
reason revoked or invalidated, the Trustee under either
of the Indentures, any successor trustee thereto or any
other Person contests in any material respect the
validity or enforceability thereof, or the Indebtedness
hereunder 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; or
(p) COLLATERAL.
(i) any provision of any
Collateral Document shall for any
reason cease to be valid and binding on or
enforceable against the Company or any
Subsidiary party thereto or the Company or
any Subsidiary shall so state in writing
or bring an action to limit its
obligations or liabilities thereunder; or
(ii) any Collateral Document
shall for any reason (other than
pursuant to the terms thereof) cease to
create a valid security interest in the
Collateral purported to be covered thereby
or such security interest shall for any
reason cease to be a perfected and first
priority security interest.
9.02 REMEDIES. If any Event of Default occurs
and is continuing, the Administrative 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 9.01 (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 Administrative 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 ADMINISTRATIVE AGENT
10.01 APPOINTMENT AND AUTHORIZATION.
(a) Each Bank hereby irrevocably (subject
to SECTION 10.09) appoints, designates and authorizes
the Administrative 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 Administrative Agent shall not have
any duties or responsibilities, except those expressly
set forth herein, nor shall the Administrative 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 Administrative
Agent. Without limiting the generality of the foregoing
sentence, the use of the term "agent" in this Agreement
or any other Loan Document with reference to the
Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market
custom, and is intended to create or reflect only an
administrative relationship between independent
contracting parties.
(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
Administrative 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 Administrative 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
"Administrative 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 Administrative 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 Administrative
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 ADMINISTRATIVE 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 Administrative Agent under or in
connection with, this Agreement or any other Loan
Document, or for the value of or title to any
Collateral, 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 ADMINISTRATIVE AGENT.
(a) The Administrative 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 Administrative Agent. The Administrative 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
Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative Agent for the account of the
Banks, unless the Administrative 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 Administrative Agent will
notify the Banks of its receipt of any such notice.
Subject to Subsection 10.04(a), the Administrative 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 Administrative Agent has
received any such request, the Administrative 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
Administrative 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, the value of and title
to any Collateral 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
Administrative Agent, the Administrative 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, 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 Administrative Agent upon
demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs)
incurred by the Administrative 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 Administrative 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 Administrative Agent.
10.08 ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY.
Bank of America 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
Bank of America were not the Administrative Agent or the
Issuing Bank hereunder and without notice to or consent
of the Banks. The Banks acknowledge that, pursuant to
such activities, Bank of America 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, Bank of
America 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 Administrative Agent.
10.09 SUCCESSOR ADMINISTRATIVE AGENT.
The Administrative Agent may, and at the request of
the Majority Banks shall, resign as Administrative Agent
upon 30 days' notice to the Banks. If the
Administrative 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 Administrative Agent, the Administrative 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 Administrative
Agent and the term "Administrative Agent" shall mean
such successor agent and the retiring Administrative
Agent's appointment, powers and duties as Administrative
Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as
Administrative 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 Administrative Agent under this Agreement.
If no successor agent has accepted appointment as
Administrative Agent by the date which is 30 days
following a retiring Administrative Agent's notice of
resignation, the retiring Administrative Agent's
resignation shall nevertheless thereupon become
effective and the Banks shall perform all of the duties
of the Administrative 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 is the Issuing
Bank, then Bank of America may not be removed as the
Administrative 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 Administrative
Agent, to deliver to the Administrative Agent:
(i) if such Bank claims an
exemption from, or a reduction of,
withholding tax under a United States tax
treaty, two properly completed and
executed copies of 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 Administrative
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
Administrative 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 Administrative 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 Administrative 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 Administrative
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 Administrative
Agent, then the Administrative 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 imposed by SECTIONs 1441 and
1442 of the Code, without reduction.
(e) If the IRS or any other Governmental
Authority of the United States or other jurisdiction
asserts a claim that the Administrative Agent did not
properly withhold tax from amounts paid to or for the
account of any Bank (because the appropriate form was
not delivered or was not properly executed, or because
such Bank failed to notify the Administrative 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
Administrative Agent fully for all amounts paid,
directly or indirectly, by the Administrative Agent as
tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the
amounts payable to the Administrative 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 Administrative
Agent.
10.11 COLLATERAL MATTERS.
(a) The Administrative Agent is authorized on
behalf of all the Banks, without the necessity of any
notice to or further consent from the Banks, from time to
time to take any action with respect to any Collateral or
the Collateral Documents which may be necessary to perfect
and maintain perfected the security interest in and
Liens upon the Collateral granted pursuant to the
Collateral Documents.
(b) The Banks irrevocably authorize the
Administrative Agent, at its option and in its
discretion, to release any Lien granted to or held by
the Administrative Agent upon any Collateral (i) upon
termination of the Commitments and payment in full of
all Loans and all other Obligations known to the
Administrative Agent and payable under this Agreement or
any other Loan Document; (ii) constituting property sold
or to be sold or disposed of as part of or in connection
with any disposition permitted hereunder;
(iii) constituting property in which the Company or any
Subsidiary owned no interest at the time the Lien was
granted or at any time thereafter; (iv) constituting
property leased to the Company or any Subsidiary under a
lease which has expired or been terminated in a
transaction permitted under this Agreement or is about
to expire and which has not been, and is not intended by
the Company or such Subsidiary to be, renewed or
extended; (v) consisting of an instrument evidencing
Indebtedness or other debt instrument, if the
indebtedness evidenced thereby has been paid in full; or
(vi) if approved, authorized or ratified in writing by
the Majority Banks or all the Banks, as the case may be,
as provided in subsection 11.01(f). Upon request by the
Administrative Agent at any time, the Banks will confirm
in writing the Administrative Agent's authority to
release particular types or items of Collateral pursuant
to this subsection 10.11(b), provided that the absence
of any such confirmation for whatever reason shall not
affect the Administrative Agent's rights under this
SECTION 10.11.
(c) Each Bank agrees with and in favor of
each other (which agreement shall not be for the benefit
of the Company or any Subsidiary) that the Company's
obligation to such Bank under this Agreement and the
other Loan Documents is not and shall not be secured by
any real property collateral now or hereafter acquired
by such Bank.
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
Administrative Agent at the written request of the
Majority Banks) and the Company and acknowledged by the
Administrative 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 Administrative
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; or
(f) discharge any Guarantor, or, except as
otherwise provided in SECTION 10.11(b), release any
portion of the Collateral, except as otherwise may be
provided in the Collateral Documents or except where the
consent of the Majority Banks only is specifically
provided for;
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
Administrative Agent in addition to the Majority Banks
or all the Banks, as the case may be, affect the rights
or duties of the Administrative 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, consents,
approvals, waivers 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 Administrative 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 Administrative 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
Administrative 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 Administrative
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 Administrative 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 Administrative
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 Administrative 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 Administrative Agent and
the Banks to receive written confirmation of any
telephonic or facsimile notice or the receipt by the
Administrative Agent and the Banks of a confirmation
which is at variance with the terms understood by the
Administrative 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 Administrative 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 Administrative Agent, and the Issuing Bank within
five Business Days after demand (subject to subsection
5.01(f)) for all reasonable costs and expenses incurred
by the Administrative 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 Administrative Agent and
the Issuing Bank with respect thereto; and
(b) pay or reimburse the Administrative
Agent, the Arranger and each Bank within five Business
Days after demand (subject to subsection 5.01(f)) 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.
(a) Whether or not the transactions contemplated
hereby are consummated, the Company shall indemnify,
defend 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
Administrative 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 (excluding, however, any action arising
solely among the Banks in their capacities as Banks),
whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "Indemnified
Liabilities"); 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.
(b) (i) The Company shall indemnify,
defend and hold harmless each Indemnified Person, from
and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits,
costs, charges, expenses or disbursements (including
Attorney Costs and the allocated cost of internal
environmental audit or review services), which may be
incurred by or asserted against such Indemnified Person
in connection with or arising out of any pending or
threatened investigation, litigation or proceeding, or
any action taken by any Person, with respect to any
Environmental Claim. No action taken by legal counsel
chosen by the Administrative Agent or any Bank in
defending against any such investigation, litigation or
proceeding or requested remedial, removal or response
action shall vitiate or any way impair the Company's
obligation and duty hereunder to indemnify and hold
harmless the Administrative Agent and each Bank.
(ii) In no event shall any site
visit, observation, or testing by the Administrative
Agent or any Bank (or any contractee of the
Administrative Agent or any Bank) be deemed a
representation or warranty that Hazardous Materials are
or are not present in, on, or under, any site, or that
there has been or shall be compliance with any
Environmental Law. Neither the Company nor any other
Person is entitled to rely on any site visit,
observation, or testing by the Administrative Agent or
any Bank. Neither the Administrative Agent nor any Bank
owes any duty of care to protect the Company or any
other Person against, or to inform the Company or any
other party of, any Hazardous Materials or any other
adverse condition affecting any site or property.
Neither the Administrative Agent nor any Bank shall be
obligated to disclose to the Company or any other Person
any report or findings made as a result of, or in
connection with, any site visit, observation, or testing
by the Administrative Agent or any Bank. Indemnified
Parties hereby reserve the right, and the Company hereby
expressly authorizes any Indemnified Party, to make
available to any party (including any governmental
agency or authority) any and all reports, whether
prepared by any Indemnified Party or prepared by the
Company and provided to any Indemnified Party
(collectively, "Environmental Reports") that any
Indemnified Party may have with respect to the property
owned or used by the Company or any of its Subsidiaries,
to the extent required in accordance with any
Requirement of Law or by any Governmental Authority.
(c) THE INDEMNIFICATION OBLIGATIONS OF THE
COMPANY CONTAINED IN THIS AGREEMENT SHALL APPLY 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. The agreements in this SECTION
11.05 shall survive payment of all other Obligations.
11.06 PAYMENTS SET ASIDE.
To the extent that the Company makes a payment to the
Administrative Agent or the Banks, or the Administrative
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 Administrative 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 Administrative Agent upon demand
its pro rata share of any amount so recovered from or
repaid by the Administrative Agent.
11.07 SUCCESSORS AND ASSIGNS.
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 Administrative 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
Administrative Agent, at any time assign and delegate to
one or more Eligible Assignees (provided that no written
consent of the Company or the Administrative 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
$10,000,000; provided, however, that (i) the Company and
the Administrative Agent may continue to deal solely and
directly with such Bank in connection with the interest
so assigned to an Assignee until (A) 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
Administrative Agent by such Bank and the Assignee;
(B) such Bank and its Assignee shall have delivered to
the Company and the Administrative 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 (C) the assignor Bank or Assignee
has paid to the Administrative Agent a processing fee in
the amount of $3,500.00, and (ii) if the assignor Bank
or any of its Affiliates is a Swap Provider with respect
to any Specified Swap Contract, such Bank shall not
assign all of its interest in the Loans and the
Commitments to an Assignee unless such Assignee, or an
Affiliate of such Assignee, shall also assume all rights
and obligations of such assignor Bank or Affiliate with
respect to such Specified Swap Contracts, with the
consent of the Company.
(b) From and after the date that the
Administrative Agent notifies the assignor Bank that it
has received (and provided its consent with respect to)
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 Administrative 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 Administrative 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
Administrative 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) 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 S.S. 203.14, and such Federal Reserve Bank
may enforce such pledge or security interest in any
manner permitted under applicable law.
11.09 CONFIDENTIALITY.
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 Administrative 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 or in connection
with other business now or hereafter existing or
contemplated with the Company or any Subsidiary; 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 Administrative 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.
11.10 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
Administrative 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
Administrative 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.
11.11 INTEREST.
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 Administrative Agent or the Banks or any other
person to the Company 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
the Company 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 Company, 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 the Company, 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.
11.12 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 11.12 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 the Company 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.
11.13 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 Administrative Agent, the Issuing Bank, Bank of
America or the Arranger under the Loan Documents, the
Company hereby irrevocably authorizes Bank of America,
after giving reasonable prior notice to the Company, to
debit any deposit account of the Company with Bank of
America 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
Bank of America'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.
11.14 NOTIFICATION OF ADDRESSES, LENDING OFFICES,
ETC. Each Bank shall notify the Administrative 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 Administrative
Agent shall reasonably request.
11.15 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.
11.16 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.
11.17 NO THIRD PARTIES BENEFITTED.
This Agreement is made and entered into for the sole
protection and legal benefit of the Company, the Banks,
the Administrative 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.
11.18 GOVERNING LAW.
(a) THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF CALIFORNIA AND APPLICABLE FEDERAL LAW;
AND THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR
OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF
CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE COMPANY, THE AGENT AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF
THE COMPANY, THE AGENT AND THE BANKS 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 ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, AND
CONSENT TO THE SERVICE OF PROCESS IN ANY SUCH LEGAL
ACTION OR PROCEEDING 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.
11.19 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.
11.20 ENTIRE AGREEMENT.
This Agreement, together with the other Loan
Documents, embodies the entire agreement and
understanding among the Company, the Banks and the
Administrative 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.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by
their proper and duly authorized officers as of the day
and year first above written.
GIANT INDUSTRIES, INC.
By: /s/ Mark B. Cox
---------------------------------
Name: Mark B. Cox
-------------------------------
Title: Treasurer
------------------------------
[THIS IS A SIGNATURE PAGE TO THE
GIANT INDUSTRIES, INC. CREDIT AGREEMENT]
<PAGE>
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent,
as Letter of Credit Issuing Bank and
as a Bank
By /s/ Claire M. Liu
-----------------------------------
Claire M. Liu
Managing Director
[THIS IS A SIGNATURE PAGE TO THE
GIANT INDUSTRIES, INC. CREDIT AGREEMENT]
<PAGE>
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Walter M. Roth
-----------------------------------
Name: Walter M. Roth
--------------------------------
Title: Vice President
-------------------------------
[THIS IS A SIGNATURE PAGE TO THE
GIANT INDUSTRIES, INC. CREDIT AGREEMENT]
<PAGE>
<PAGE>
BANK ONE, ARIZONA, INC.
By: /s/ Dennis Bourgeois
-----------------------------------
Name: Dennis Bourgeois
--------------------------------
Title: Senior Vice President
-------------------------------
[THIS IS A SIGNATURE PAGE TO THE
GIANT INDUSTRIES, INC. CREDIT AGREEMENT]
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1.01A
ACQUISITION EBITDA
ATTRIBUTED EBITDA
--------------------------
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
SUBJECT ACQUISITION 1998 1998 1998 1998
- -------------------- ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
DeGuelle Acquisition 438,088.00 -0- -0- -0-
Kaibab Acquisition 1,316,437.50 987,328.12 2,961,984.38 -0-
</TABLE>
<PAGE>
<PAGE>
SCHEDULE 1.01B
PREFERRED ELIGIBLE 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
BANK COMMITMENT PRO RATA SHARE
- -------------------------------- ------------ --------------
Bank of America National
Trust and Savings Association $25,000,000 38.46153846%
Union Bank of California, N.A. $20,000,000 30.76923077%
Bank One, Arizona, N.A. $20,000,000 30.76923077%
TOTAL: $65,000,000.00 100.00000000%
<PAGE>
<PAGE>
SCHEDULE 2.02
Pricing Chart
(Expressed in percent per annum)
PRICING LEVEL LEVEL I LEVEL II LEVEL III LEVEL IV
- ---------------------- ------- -------- --------- --------
APPLICABLE MARGIN-
OFFSHORE RATE LOANS 1.000 1.250 1.500 2.000
APPLICABLE MARGIN-
BASE RATE LOANS 0.000 0.000 0.000 0.000
RISK PARTICIPATION FEE 1.000 1.250 1.500 2.000
COMMITMENT FEE 0.325 0.350 0.375 0.500
Level I shall apply if the Company's Leverage Ratio is
less than or equal to 2.5:1.0. Level II shall apply if
the Company's Leverage Ratio is greater than 2.5:1.0,
but less than or equal to 3.5:1.0. Level III shall
apply if the Company's Leverage Ratio is greater than
3.5:1.0, but less than or equal to 4.5:1.0. Level IV
shall apply if the Company's Leverage Ratio is greater
than 4.5:1.0. Each adjustment of the Applicable
Margins, the Risk Participation Fee and the Commitment
Fee shall be made by the Administrative Agent and shall
be effective as of the earlier of (a) the date upon
which the Company delivers a Compliance Certificate to
the Administrative Agent pursuant to SECTION 7.02(b)
reflecting a changed pricing level (accompanied and
supported by the financial statements with respect to
which such Compliance Certificate is required to be
delivered) and (b) the date upon which the Company is
required by SECTION 7.02(b) to deliver such Compliance
Certificate; provided, however, that, if a Compliance
Certificate is not delivered by the date required in
SECTION 7.02(b), then, subject to the other provisions
of this Agreement, commencing on the date such
Compliance Certificate was required until such
Compliance Certificate is delivered, the Applicable
Margins, the Risk Participation Fee and the Commitment
Fee shall be those indicated for Level IV, and from and
after the date such Compliance Certificate is thereafter
received, the Applicable Margins, the Risk Participation
Fee and the Commitment Fee shall be as determined from
such Compliance Certificate; provided, further, that,
until the Administrative Agent's receipt of the first
Compliance Certificate required to be delivered after
the Execution Date, the Applicable Margins, the Risk
Participation Fee and the Commitment Fee shall be those
indicated for Level III.<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
L/C No. Outstanding Amount
------- ------------------
1. 0221969 $ 6,000.00
2. 0221973 40,000.00
3. 0222419 28,000.00
4. 0222564 400,000.00
5. LASB # 225605 85,000.00
6. 7400537 79,582.05
7. 7262813 11,400,000.00
8. 7354858 776,840.00
--------------
Total: $12,815,422.05
==============
<PAGE>
<PAGE>
SCHEDULE 6.11
UNDISCLOSED LIABILITIES
None
<PAGE>
<PAGE>
SCHEDULE 6.16
SUBSIDIARIES AND MINORITY INTERESTS
(a) SUBSIDIARIES
The following are wholly-owned Subsidiaries of the
Company:
Giant Exploration & Production Company, a Texas corporation
Giant Industries Arizona, Inc., an Arizona corporation
The following are wholly-owned Subsidiaries of Giant
Industries Arizona, Inc.:
Ciniza Production Company, a New Mexico corporation
San Juan Refining Company, a New Mexico corporation
Giant Four Corners, Inc., an Arizona corporation
Phoenix Fuel Company, an Arizona corporation
DeGuelle Oil Company, a Colorado corporation
Giant Mid-Continent, Inc., an Arizona corporation
Giant Stop-N-Go of New Mexico, a New Mexico corporation
Ciniza Pipe Line Inc., a New Mexico corporation (Inactive)
Giant Refining Company, a New Mexico corporation (Inactive)
(b) EQUITY INVESTMENTS
None
<PAGE>
<PAGE>
SCHEDULE 8.01
PERMITTED LIENS
MetLife Capital Corporation - Two Service Stations
MetLife Capital Corporation - Corporate Airplane
Miscellaneous Liens, including
Capitalized leases on trucks
and trailers with an aggregate
value not exceeding $1,500,000 - Various
<PAGE>
<PAGE>
SCHEDULE 8.04
PERMITTED LOANS AND INVESTMENTS
1. $5,000,000 Loan by Giant Industries, Inc.
to James E. Acridge due February 28, 2001.
<PAGE>
<PAGE>
SCHEDULE 8.05
CERTAIN PERMITTED INDEBTEDNESS
1. Giant Industries, Inc. & Giant Industries Arizona, Inc.
Permitted Indebtedness as of September 30, 1998:
DESCRIPTION BALANCE
Met Life $ 3,708,313.57
Miscellaneous $ 500,000.00 (estimates)
--------------
TOTAL $ 4,208,313.57
==============
2. Phoenix Fuels Co., Inc.: Permitted Indebtedness
as of September 30, 1998:
DESCRIPTION BALANCE
David G. & Judith G. Scott
Note $ 133,028.22
Conoco
Supplier Note $ 200,000.00
Becker Petroleum
Promissory Note $ 6,164.12
Mobil Oil
Supplier Note - Oil Depot $ 110,000.06
--------------
$ 449,192.40
==============
3. Effective upon consummation of the Thriftway
Acquisition: Obligations of Giant Four Corners, Inc.,
under the Master Lease and Option Agreement executed
pursuant to, and in the form attached as Exhibit B to,
the Definitive Agreement dated April 18, 1997 by and
between Giant Four Corners, Inc. as "Buyer" and
Thriftway Marketing Corp. and Clayton Investment Company
collectively as "Seller" and the Associated Purchase and
Sale Agreements to such Definitive Agreement, not to
exceed $30,330,000 in the aggregate, such obligations to
be guaranteed by Giant Industries Arizona, Inc.
4. That certain sale and lease agreement and related
agreements (the "FFCA Lease") proposed to be entered
into by and among FFCA Capital Holding Corporation
("FFCA"), a Delaware corporation, as purchaser/lessor,
Giant Industries Arizona, Inc., Giant Four Corners, Inc.
and the Company, as sellers, and Giant Industries
Arizona, Inc., as lessee, pursuant to which FFCA would
purchase from the sellers and lease to the lessee
various service stations and convenience markets, with
the lease obligations of Giant Industries Arizona, Inc.
thereunder to be guaranteed by the Company.
<PAGE>
<PAGE>
SCHEDULE 8.08
CERTAIN CONTINGENT OBLIGATIONS
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, 1997, Note 16
(Commitments and Contingencies), 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, Inc., as Issuer and all
Subsidiaries, as Guarantors of the $150,000,000 9%
Senior Subordinated Notes Due 2007, Indenture dated as
of August 26, 1997.
<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
[NAME OF GUARANTOR]
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 Administrative Agent
Administrative 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
1850 Gateway Blvd. - 5th Floor
Concord, CA 94520
Attention: John Kubokawa
Telephone: (925) 675-8401
Facsimile: (925) 675-8500
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Issuing Bank
Address for Notices:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Ida Rubens
Telephone: (312) 828-5239
Facsimile: (312) 974-9626
With a copy to:
Bank of America
Three Allen Center
333 Clay Street, Suite 4550
Attention: Claire Liu
Houston, Texas 77002-4103
Telephone: (713) 651-4855
Facsimile: (713) 651-4841
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as a Bank
Domestic and Eurodollar Lending Office:
Bank of America National Trust and
Savings Association
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Ida Rubens
Telephone: (312) 828-5239
Facsimile: (312) 974-9626
Address for Notices (other than Borrowing
Notices and Notices of Conversion/
Continuation):
Bank of America
Three Allen Center
333 Clay Street, Suite 4550
Houston, Texas 77002-4103
Attention: Claire Liu
Telephone: (713) 651-4855
Facsimile: (713) 651-4841
UNION BANK OF CALIFORNIA, N.A., as a Bank
Domestic and Eurodollar Lending Office:
Union Bank of California, N.A.
1980 Saturn St.
Monterey Park, CA 91754
Attention: Commercial Loan Operations
ABA # 122-000-496
Acct. # 070-196431
Ref.: Giant Industries
Address for Notices:
Energy Capital Services
445 S. Figueroa Street, 15th Floor
Los Angeles, CA 90071
Contact - Credit
Walter Roth, Vice President
Telephone: (213) 236-5772
Facsimile: (213) 236-4096
Contact - Operations
Patricia A. Gonzales
Assistant Vice President
Telephone: (213) 236-6199
Facsimile: (213) 236-4096
BANK ONE, ARIZONA, N.A., as a Bank
Domestic and Eurodollar Lending Office:
Bank One, Arizona, NA
201 N. Central, 9th Floor
Phoenix, AZ 85004
Attention: Gloria Thomas
Telephone: (602) 221-4751
Facsimile: (602) 221-1903
Address for Notices (other than Borrowing
Notices and Notices of Conversion/
Continuation):
Bank One, Arizona, NA
201 N. Central, 21st Floor
Phoenix, AZ 85004
Attention: Stephen Luttrell, VP
Telephone: (602) 221-2394
Facsimile: (602) 221-1502
<PAGE>
<PAGE>
EXHIBIT "A"
FORM OF NOTICE OF BORROWING
Date:__________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent (the "Administrative Agent") for the Banks (as
herein defined) from time to time party to the Credit Agreement, dated
as of ____________ ___, 1998 (as the same may be amended, modified or
restated from time to time, the "Credit Agreement"), among GIANT
INDUSTRIES, INC., a Delaware corporation, the several financial
institutions from time to time party thereto (the "Banks"), and the
Administrative Agent.
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:
1. Aggregate Total Amount: $________________
2. Revolving Loan advance date: ________________, ___.
3. Requested Interest Rate 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 $______________
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 Effective Amount of all outstanding Revolving Loans
together with the Effective Amount of all L/C Obligations does not
exceed the Commitments;
(d) The total amount of Revolving Loans used to finance
Acquisitions, including any portion of the proposed Borrowing(s) to be
used to finance any Acquisition(s), does not exceed $10,000,000; and
(e) No event or circumstance has occurred that has resulted or
could reasonably be expected to result in a Material Adverse Effect.
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 Administrative 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 "B"
FORM OF NOTICE OF CONVERSION/CONTINUATION
Date:_________________
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent (the "Administrative Agent") for the Banks (as
herein defined) from time to time party to the Credit Agreement,
dated as of ____________ ___, 1998 (as the same may be amended,
modified or restated from time to time, the "Credit Agreement"),
among GIANT INDUSTRIES, INC., a Delaware corporation, the several
financial institutions from time to time party thereto (the
"Banks"), and the Administrative Agent.
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. Loan to be converted or continued:
(1) Amount: $_______________
(2) Loan Date: _______________, 199___
(3) Existing Interest Rate 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___
B. Proposed conversion or continuation date: _____________, 199__
(the "Continuation/Conversion Date").
C. Loan described in (A) above is to be converted or continued as
follows:
(1) Amount: $_______________
(2) Proposed Conversion/Continuation Date: _________, 199___
(3) Requested Interest Rate 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 _________
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 Effective Amount of all outstanding Revolving
Loans together with the Effective Amount of all L/C Obligations
does not exceed the Commitments; and
(d) No event or circumstance has occurred that has
resulted or could reasonably be expected to result in a Material
Adverse Effect.
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 Administrative 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"
FORM OF COMPLIANCE CERTIFICATE
The undersigned authorized officer of GIANT INDUSTRIES,
INC. (the "Company"), delivers this Certificate pursuant to the
Credit Agreement dated as of ________ __, 1998 (as the same may be
amended, modified or restated from time to time, the "Credit
Agreement"), among the Company, the several financial institutions
from time to time party thereto (the "Banks"), and Bank of America
National Trust and Savings Association, as Administrative Agent and
Letter of Credit Issuing Bank (the "Administrative Agent"). The
undersigned hereby certifies to the Administrative 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 hereof, 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 _________________, ____.
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 Consolidated Tangible Net Worth (Section 8.12 of the
Credit Agreement)
(a) Consolidated Net Income, computed on a
cumulative basis for the period beginning
October 1, 1998, 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) 75% of the net assets received from the
issuance of any capital stock by the Company
after September 30, 1998 is: $_______
(d) Plus $96,000,000 $_______
(e) Minimum Consolidated Tangible Net Worth
(the sum of 1(b) plus 1(c) plus 1(d)) is: $_______
(f) Consolidated Tangible Net Worth:
(i) Consolidated Net Worth is: $_______
(ii) Net Book value of intangible assets is: $_______
(iii) Consolidated Tangible Net Worth
(Item 2(g)(i) minus Item 2(g)(ii) is: $_______
2. Minimum Interest Coverage Ratio (Section 8.13 of
the Credit Agreement)
(a) Consolidated EBITDA for the four fiscal
quarters ending on the Determination Date:
(i) Consolidated Net Income is: $_______
(ii) Consolidated Interest Expense is: $_______
(iii) Taxes measured by income included
in the determination of consolidated
Net Income are: $_______
(iv) Depreciation and amortization
expenses included in the determination
of Consolidated Net Income are: $_______
(v) Interest income not included in the
determination of Consolidated Net
Income is: $_______
(vi) Attributable Acquisition EBITDA
during the four fiscal quarters ending
on the Determination Date (pursuant to
Schedule 1.01A) is: $_______
(vii) Consolidated EBITBA (the sum of
Items 2(a)(i) plus 2(a)(ii) plus
2(a)(iii) plus 2(a)(iv) plus 2(a)(v) plus
2(a)(vi)) is: $_______
(b) Material Rents for the four fiscal quarters
ending on the Distribution Date: $_______
(c) Subtotal (the sum of 2(a)(vii) plus 2(b)) is: $_______
(d) Consolidated Interest Expense for the four
fiscal quarters ending on the Determination
(e) Material Rents for the four fiscal quarters
ending on the Determination Date: $_______
(f) Subtotal (the sum of 2(d) plus 2(e)) is: $_______
(g) Interest Coverage Ratio the ratio of 2(c) to
2(f)) is: ____:1.00
Minimum Interest Coverage Ratio required by
Section 8.13 of the Credit Agreement is: ____:1.00
3. Maximum Capitalization Ratio (Section 8.14 of the
Credit Agreement)
(a) Consolidated Funded Indebtedness:
(i) Liabilities for borrowed money are: $_______
(ii) Liabilities for deferred purchase
price of property or services is: $_______
(iii) Obligations under Capital Leases
are: $_______
(iv) Obligations under other "off balance
sheet" leases (excluding operating
leases other than Synthetic Leases)
are: $_______
(v) Obligations to redeem or purchase
stock or other equity interests are: $_______
(vi) Guaranty Obligations in respect of the
foregoing are: $_______
(vii) Consolidated Funded Indebtedness
(the sum of Items 3(a)(i) plus 3(a)(ii)
plus 3(a)(iii) plus 3(a)(iv) plus
3(a)(v) plus 3(a)(vi)) is: $_______
(b) Consolidated Total Capitalization:
(i) Consolidated Funded Indebtedness (Item
3(a)(vii)) is: $_______
(ii) Consolidated Net Worth is: $_______
(iii) Consolidated Total Capitalization
(the sum of 3(b)(i) and 3(b)(ii)) is: $_______
(c) Capitalization Ratio (the ratio of 3(a)
(vii) to 3(b)(iii)) is: $_______%
Maximum Capitalization Ratio required by
Section 8.14 of the Credit Agreement is
72.5% prior to December 31, 1999, and 70.0%
thereafter.
4. Leverage Ratio (Schedule 2.02 of the Credit Agreement)
(a) Consolidated Funded Indebtedness (Item
3(a)(vii)) is: $_______
(b) Consolidated EBITDA for the four fiscal
quarters ending on the Determination Date
(Item 2(a)(vii)) is: $_______
(c) Leverage Ratio (the ratio of 4(a) to
4(b)(iii)) is: ____:1.0
(d) Pricing Level corresponding to 4(c) is: Level____
Capitalized terms used herein without definition have the
meanings assigned to them in the Credit Agreement.
EXECUTED AND DELIVERED as of _________________, _____.
GIANT INDUSTRIES, INC.
Authorized Officer
<PAGE>
<PAGE>
ATTACHMENT 2
Exceptions to
Compliance Certificate
<PAGE>
<PAGE>
EXHIBIT D-1
FORM OF LEGAL OPINION OF COMPANY'S COUNSEL
December 23, 1998
Bank of America, National Trust and Savings Association,
as Administrative Agent, and the Banks listed on
Schedule 1 attached hereto
Re: Credit Agreement dated as of December 23, 1998 (the "Credit
Agreement"), between Giant Industries, Inc., a Delaware
corporation ("the Company") and the Banks listed on Schedule 1
("Banks") and Bank of America, National Trust and Savings
Association, as Administrative Agent for the Banks
("Administrative Agent")
Ladies and Gentlemen:
I am Director, Legal Department, of the Company and of Giant
Industries Arizona, Inc. ("Giant Arizona"), Ciniza Production
Company ("Ciniza"), San Juan Refining Company ("San Juan"), Giant
Exploration & Production Company ("Giant E&P"), Giant Four Corners,
Inc. ("Four Corners"), Giant Mid-Continent, Inc. ("Mid-Continent"),
Giant Stop-N-Go of New Mexico, Inc. ("Stop-N-Go"), DeGuelle Oil
Company ("DeGuelle"), and Phoenix Fuel Co., Inc. ("Phoenix Fuel")
(Giant Arizona, Ciniza, San Juan, Giant E&P, Four Corners,
Mid-Continent, Stop-N-Go, Deguelle, and Phoenix Fuel are
collectively referred to herein as "Giant Guarantors").
I have acted as counsel to the Company and the Giant Guarantors in
connection with certain matters with respect to (a) the Credit
Agreement, dated as of December 23, 1998 (the "Credit Agreement"),
among the Company, the several financial institutions from time to
time part thereto (the "Banks"), and Bank of America National Trust
and Savings Association, as Administrative Agent (the
"Administrative Agent") for the Banks and as Letter of Credit
Issuing Bank, and (b) the Loan Documents listed on Exhibit "A"
hereto (together with the Credit Agreement, the "Loan Documents").
This opinion is furnished to you pursuant to Section 5.01(e) of the
Credit Agreement and at the instruction of the Company and the Giant
Guarantors. All capitalized terms used but not otherwise defined
herein have the meanings assigned to them in the Credit Agreement.
In this connection, we have examined the following: (i) a copy of
the Loan Documents; (ii) certificates of good standing
("Certificates of Good Standing") from the states of Delaware,
Arizona and New Mexico as to the Company, and, as to the Giant
Guarantors, from the states of their incorporation and from each
state in which they are qualified as a foreign corporation and
conducts a significant amount of business; (iii) certificates of
officers of the Company and the Giant Guarantors; (iv) copies of
Articles or Certificates of Incorporation, Bylaws and relevant
corporate minutes of the Company and the Giant Guarantors.
We have relied upon certificates of certain officers of the Company
and the Giant Guarantors and upon the representations and warranties
contained in the Credit Agreement and the Guaranty Agreements
executed by the Giant Guarantors ("Giant Guarantees") with respect
to the accuracy of material factual matters contained therein which
were not independently known to us. With respect to questions of due
organization, valid existence, and good standing, we have relied
exclusively, and our opinion is based solely on, the Certificates of
Good Standing. With respect to questions of corporate power, we have
relied on the Articles or Certificates of Incorporation, Bylaws and
Arizona law and Delaware corporate law only.
In rendering the following opinion, we have assumed:
a) The genuineness of all signatures other than those of the
officers of the Company and the Giant Guarantors;
b) The authenticity and completeness of documents submitted as
originals, and the conformity to originals of documents submitted as
copies;
c) The due authorization, execution, acknowledgment where
necessary, delivery and performance, and the validity,
enforceability, legality, and binding effect of the Credit Agreement
and all documents in connection therewith with regard to the parties
to those agreements other than the Company and the Giant Guarantors;
d) The legal capacity of all natural persons executing the Credit
Agreement and the Giant Guarantees;
e) That the Credit Agreement and Loan Documents constitute an
integrated agreement between the parties to those agreements with
respect to the matters contained therein and that the same
constitute and evidence all the agreements and understandings
between the parties thereto with respect to the matters contained
therein and that there are no oral or written statements or
agreements that modify, amend or vary, or purport to modify, amend
or vary, any of the terms of such documents except for Post-closing
Conditions Letter dated the date hereof;
Based on the foregoing and subject to the limitations,
qualifications and assumptions set forth herein, it is our opinion
that:
1. The Company and each of the Giant Guarantors is a corporation
duly organized, validly existing and in good standing under the laws
of the respective jurisdiction of its incorporation. The Company and
each of the Giant Guarantors is duly qualified as a foreign
corporation and is licensed to do business and in good standing
under the laws of each jurisdiction where ownership, lease or
operation of its property or the conduct of its business requires
such qualification or license except where the failure to so qualify
or be licensed would not have a Material Adverse Effect on the
assets, financial condition, or operations of the Company and the
Giant Guarantors taken as a whole.
2. The Company and each of the Giant Guarantors have all
requisite corporate power and authority (including without
limitation all requisite licenses and permits) to execute, deliver
and perform its obligations under the Credit Agreement and the other
Loan Documents applicable to it, and to own its assets and to carry
on its business as currently conducted and as contemplated to be
conducted by the Credit Agreement.
3. The execution, delivery, and performance by the Company of
the Credit Agreement and the execution, delivery, and performance by
the Company and each of the Giant Guarantors of 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 Credit Agreement and
the other Loan Documents has been duly executed and delivered by the
Company and each of the Giant Guarantors, as applicable.
4. The execution, delivery and performance by the Company of the
Credit Agreement and Loan Documents, and the execution, delivery and
performance by the Giant Guarantors of the Giant Guaranty and the
Security Agreements do not and will not: (a) breach or constitute a
default under (i) their respective charters, articles or
certificates of incorporation or bylaws, (ii) any decree,
injunction, order, writ, or other action of any Governmental
Authority known to us applicable to them or their respective assets,
or (iii) the Indentures or any other material Contractual Obligation
known to us to which any of them is a party or by which any of their
respective properties may be bound, or (b) result in or require the
creation of any Lien (other than for the benefit of Banks) upon or
with respect to any of their respective assets under any document
evidencing any material Contractual Obligation known to us to which
such Person is a party.
5. To our knowledge there are no actions, suits, proceedings,
claims or disputes pending or threatened, in arbitration or before
any Governmental Authority, against the Company or the Giant
Guarantors or any of their respective assets or with respect to any
Plan which: (i) purport to affect or pertain to the Credit
Agreement, or any other Loan Documents, or any of the transactions
contemplated thereby; or (ii) if determined adversely to the Company
and the Giant Guarantors would reasonably be expected to have a
Material Adverse Effect. To our knowledge, there are no outstanding
judgments against the Company or the Giant Guarantors, and to our
knowledge, 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
execution, delivery or performance of the Credit Agreement or any
other Loan Documents or directing that the transactions provided for
therein not be consummated as therein provided.
6. Neither the consent of the shareholders of the Company or any
of the Giant Guarantors nor the consent of any holder of any
Indebtedness of the Company or any of the Giant Guarantors known to
us is or will be required as a condition to the validity or
enforceability of the Credit Agreement or any of the other Loan
Documents, except such as has been obtained.
The foregoing opinions are subject to the following comments,
qualifications, limitations and assumptions:
(a) I am expressing no opinion as to the right, title or
interest of the Company and the Giant Guarantors in any of the
collateral described in the Credit Agreement.
(b) The phrase "known to us" or words of similar import mean
actual knowledge as in-house counsel but without any other or
further investigation or review.
(c) I am qualified to practice law only in the State of
Arizona and the District of Columbia and do not purport to be an
expert on or express any opinion herein concerning any law other
than the laws of the State of Arizona, the General Corporation Law
of the State of Delaware and applicable federal law. With respect to
such laws, my opinions are as to what the law is or, in
circumstances where the status of the law is unclear, what the law
might reasonably be expected to be at the date hereof, and I assume
no obligation to revise or supplement this opinion due to any change
in the law by legislative action, judicial decision or otherwise. I
do not render any opinion with respect to any matters other than
those expressly set forth above.
This opinion is being furnished to you solely for your benefit and
the benefit of any other Banks and only with respect to the
transaction described above. Accordingly, it may not be relied upon
by, filed with or furnished to, quoted in any manner to, or referred
to in any financial statement, report or related document, or
delivered to, any other person or entity other than in connection
with this transaction without, in each instance, our prior written
consent.
Sincerely,
Kim H. Bullerdick
Director, Legal Department
KHB:jks
<PAGE>
<PAGE>
EXHIBIT A
LIST OF DOCUMENTS
1. Promissory Note(s) in the aggregate principal amount of
$65,000,000 executed by the Company and made payable to each of the
Banks, respectively, in their Pro Rata Share of the Commitments.
2. Guaranty executed by each of the Giant Guarantors in favor
of the Banks and the Administrative Agent (the "Giant Guarantees").
3. Security Agreements executed by the Company and each of its
Subsidiaries in favor of the Administrative Agent, as agent for
itself and the Banks.<PAGE>
<PAGE>
SCHEDULE I
LIST OF BANKS
Bank of America National Trust
and Savings Association
Agency Management Services #5596
1455 Market Street, 12th Floor
San Francisco, California 94103
Bank One Arizona, NA
201 N. Central Avenue, 21st Floor
Phoenix, Arizona 85004
Union Bank of California, NA
Energy Capital Services
445 South Figueroa Street, 15th Floor
Los Angeles, California 90071-1602
<PAGE>
<PAGE>
EXHIBIT D-2
FORM OF LEGAL OPINION OF COMPANY'S SPECIAL COUNSEL
This Exhibit is not filed herewith and will be furnished to the
Commission upon request.<PAGE>
<PAGE>
EXHIBIT "E"
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Agreement")
dated as of _______________, 199__ is made between _______________
(the "Assignor") and _________________________ (the "Assignee").
R E C I T A L S
WHEREAS, the Assignor is party to that certain Credit
Agreement, dated as of __________ __, 1998 (as the same may be
amended, modified or restated from time to time, the "Credit
Agreement"), among GIANT INDUSTRIES, INC., a Delaware corporation
(the "Company"), the several financial institutions from time to
time party thereto (the "Banks"), and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as Administrative Agent (the
"Administrative Agent") for the Banks from time to time party to
the Credit Agreement and as Letter of Credit Issuing 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 SIXTY FIVE MILLION AND NO/100 DOLLARS
($65,000,000.00); 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
principal amount of its outstanding Loans is $_________________,
(c) aggregate principal amount of its outstanding L/C Obligations
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 $__________ $__________ _______% $_________
The assignment set forth in this Section 1(a) shall be
without recourse to, or representation or warranty (except as
expressly provided in this Agreement) by, the Assignor.
(b) With effect on and after the Effective Date, the
Assignee shall be a party to the Credit Agreement, shall become a
"Bank" for all purposes as therein defined and contemplated, and
shall succeed to all of the rights and be obligated to perform all
of the obligations of a Bank under the Credit Agreement with a
Commitment in the amount and with the Pro Rata Share set forth
above for the Assignee. The Assignee agrees that it is bound by
the terms and conditions set forth in the Credit Agreement as if it
were an original signatory thereto, and that it will perform in
accordance with their terms all of the obligations which by the
terms of the Credit Agreement are required to be performed by it as
a Bank. It is the intent of the parties hereto that (i) the
Commitment of the Assignor shall, as of the Effective Date, be
reduced by the Assignee's Percentage Share and (ii) the Assignor
shall relinquish its rights and be released from its obligations
under the Credit Agreement to the extent such obligations have been
assumed by the Assignee.
2. Payments.
(a) As consideration for the sale, assignment and
transfer contemplated in Section 1 hereof, the Assignee shall pay
to the Assignor on the Effective Date in immediately available
funds an amount equal to Dollars
($_______________), 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
Administrative 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.
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 Assignor'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
Administrative 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 Administrative Agent.
(b) Promptly following the execution of this
Agreement, the Assignor shall deliver to the Administrative Agent
for acceptance by the Administrative 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 Administrative 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. Administrative Agent [INCLUDE ONLY IF ASSIGNOR IS
ADMINISTRATIVE AGENT].
(a) The Assignee hereby appoints and authorizes the
Assignor to take such action as Administrative Agent on its behalf
and to exercise such powers under the Credit Agreement as are
delegated to the Administrative 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 Administrative
Agent under the Credit Agreement.]
6. Representations and Warranties.
(a) The Assignor 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 Assignor 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 Assignor 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 Administrative Agent
or any guarantor which may be required in connection with the
assignment and assumption contemplated hereby.
8. Indemnity. The Assignee agrees to indemnify 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 non-performance 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 Assignor or the Assignee, at their respective addresses or
facsimile numbers set forth on the signature pages hereof and (ii)
if to the Company, the Administrative 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 Lending 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; provided, however, that no party shall assign its rights
hereunder without the prior written consent of the other party, the
Administrative Agent 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 California (without
regard to principles of conflicts of law). The Assignor and the
Assignee each irrevocably submits to the non-exclusive jurisdiction
of any California State or Federal court sitting in the Northern
District of California 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 California 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 Assignor 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:
- ASSIGNEE -
<PAGE>
<PAGE>
ANNEX I
TO
ASSIGNMENT AND ASSUMPTION AGREEMENT
1. Company:
2. Date of Credit Agreement: _______________, 1998
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_
To: Bank of America National Trust
and Savings Association,
as Administrative Agent
Agency Management Services #5506
Giant Industries, Inc.
Dear Sirs:
We refer to the Credit Agreement dated as of ____________
__, 1998 (the "Credit Agreement") among GIANT INDUSTRIES, INC., a
Delaware corporation (the "Company"), the several financial
institutions from time to time party thereto (the "Banks"), and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Administrative Agent (the "Administrative Agent") for the Banks
from time to time party to the Credit Agreement and as Letter of
Credit Issuing 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 and the Administrative Agent 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). [If the Assignor or
any of its Affiliates is a Swap Provider with respect to any
Specified Swap Contract and the Assignor is assigning all of its
interest in the Loans and the Commitment, add the following: The
Assignee, or its Affiliate designated in a separate written notice
to the Administrative Agent, has, with the consent of the Company,
assumed all rights and obligations of the Assignor and all of its
Affiliates with respect to all Specified Swap Contracts with
respect to which the Assignor or any of its Affiliates is a Swap
Provider.] Before giving effect to such assignment the Assignor'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 Pro Rata
Loans Obligations Share Commitment
----------- ----------- -------- ----------
Assignor $__________ $__________ _______% $_________
Assignee $__________ $__________ _______% $_________
2. The Assignee agrees that upon receiving the consent of
the Company and the Administrative 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 Administrative Agent, hereby grants
its consent to the foregoing assignment:
By
Name:
Title:
GIANT INDUSTRIES, INC.
hereby grants its consent
to the foregoing assignment:
By
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT "F"
FORM OF NOTE
[NAME OF BANK]
$____________ ___________ __, 1998
FOR VALUE RECEIVED, the undersigned, GIANT INDUSTRIES,
INC., a Delaware corporation (the "Borrower"), promises to pay to
the order of _________________________ (the "Bank"), for the
account of its Lending Office, the principal amount of ____________
MILLION AND NO/100 DOLLARS ($____________) or the aggregate unpaid
principal amount of all Revolving Loans made by the Bank to the
Borrower pursuant to Section 2.01 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, 1850 Gateway
Boulevard, 5th Floor, Concord, California 94520, 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
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 Revolving Loans shall be due and payable on
the 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 ____________ ____, 1998 (as the same may be amended, modified or
restated from time to time, the "Credit Agreement"), among
Borrower, the several financial institutions from time to time
party thereto (the "Banks"), and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION as Administrative Agent for the Banks and as
Letter of Credit Issuing Bank. All 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 hereof, and to the effect that no provision of the
Credit Agreement or this 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 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 Revolving Loans made pursuant to the Credit
Agreement subsequent to each such occurrence.
All 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 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 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 Revolving
Loans in accordance with the terms of the Credit Agreement.
The Borrower and any and all sureties, guarantors and
endorsers of this 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 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
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 Note.
This 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 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 NOTE,
THE BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY AND THE DEFENSES
OF FORUM NON CONVENIENS AND IMPROPER VENUE. THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF CALIFORNIA 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 PARTICIPANTS) IN ACCORDANCE WITH THE TERMS OF THE CREDIT
AGREEMENT.
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Note on the date first above written.
GIANT INDUSTRIES, INC.
By
Name:
Title:
<PAGE>
<PAGE>
GRID SCHEDULE
Attached to and made part of the Note, dated ____________
__, 1998, issued pursuant to that certain Credit Agreement, dated
as of ____________ __, 1998, among GIANT INDUSTRIES, INC., a
Delaware corporation, the several financial institutions from time
to time party thereto (the "Banks"), and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION as Administrative Agent for the Banks
from time to time party to the Credit Agreement and as Letter of
Credit Issuing Bank.
Date Principal
of Amount Type of Interest Interest Maturity
Loan of Loan Loan (1) Rate Period Date
CONTINUATION
Amount
of Unpaid
Principal Principal Name of
Paid or Balance Person
Prepaid or (Balance Making
Converted continued) Notation
<PAGE>
<PAGE>
EXHIBIT "G"
FORM OF GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT (this "Guaranty") by each of the
Persons now or hereafter signatories hereto (each a "Guarantor,"
and, collectively, the "Guarantors"), 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 "Administrative Agent"), as Letter of
Credit Issuing Bank and as the Administrative 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"), dated as of _________, 1998, among Giant Industries,
Inc., a Delaware corporation (the "Company"), the Banks and the
Administrative Agent. All capitalized terms used but not defined
herein shall have the meaning assigned to them in the Credit
Agreement.
W I T N E S S E T H:
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 Guarantors of this Guaranty;
WHEREAS, each Guarantor is a Subsidiary of the Company, is
engaged in business related to the business of the Company, and
will 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
and/or to continue the Loans, (ii) at the special insistence and
request of the Administrative Agent and the Banks, and (iii) for
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, each Guarantor, for the benefit
of the Administrative 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.
(a) Each Guarantor hereby, jointly and severally with
the Other Guarantors (as defined in Section 17 of this Guaranty),
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 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 Administrative
Agent or any Bank in enforcing any rights under this Guaranty;
subject, however, to the limitations set forth in Section 2(b)
hereof.
(b) Each Guarantor and by their acceptance hereof
each of the Administrative Agent and each Bank hereby confirms that
it is the intention of all such parties that the guarantee by such
Guarantor pursuant to this Guaranty not constitute a fraudulent
transfer or conveyance for purposes of any federal, state or
foreign law. To effectuate the foregoing intention, the
Administrative Agent, the Banks and each Guarantor hereby
irrevocably agree that the obligations of each Guarantor under the
Guaranty shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or
payments made by or on behalf of any Other Guarantor (as defined in
Section 17 of this Guaranty) in respect of the obligations of such
Other Guarantor under its Guaranty or pursuant to Section_17
hereof, result in the obligations of such Guarantor under this
Guaranty not constituting a fraudulent conveyance or fraudulent
transfer under federal, state or foreign law; provided, however,
that (i) the obligations of each Guarantor shall be presumed to be
the full amount of the Obligations and (ii) if any Guarantor claims
that such Guarantor's liability hereunder is less than the entire
amount of the Obligations, such Guarantor shall have the burden of
proving, by clear and convincing evidence, that such Guarantor's
liability hereunder should be so limited since the information
concerning, and the circumstances of, the financial condition of
such Guarantor is more readily available to and is under the
control of such Guarantor. Consistent with the intention of the
Guarantors and the Banks that the Obligations are and shall be
"Senior Indebtedness" (as such term is defined in the Indentures),
it is the intention of the parties hereto that, in determining the
amount of "all other contingent and fixed liabilities" of each
Guarantor, for purposes of the preceding sentence, the liabilities
of such Guarantor in respect of its guaranty of the indebtedness
evidenced by the Subordinated Notes shall first be determined by
reducing such liabilities to the maximum extent necessary and/or
possible, in accordance with the terms of such guaranty, to avoid
and/or minimize any corresponding reduction in the liabilities of
such Guarantor hereunder.
Section 3. Guaranty Absolute.
(a) The obligations of each Guarantor hereunder are
those of a primary obligor, and not merely a surety, and are
independent of the Obligations and the obligations of each Other
Guarantor (as defined in Section 17 of this Guaranty). A separate
action or actions may be brought against the Guarantors, or any of
them, whether or not an action is brought against the Company, any
other guarantor (including the Other Guarantors) or any other
obligor in respect of the Obligations or whether the Company, any
other guarantor (including Other Guarantors) or any other obligor
in respect of the Obligations is joined in any such action or
actions.
(b) The Guarantors guarantee 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
Administrative Agent or the Banks with respect thereto. Each
Guarantor agrees that its guarantee constitutes a guarantee of
payment when due and not of collection. The liability of the
Guarantors 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 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 (including Other Guarantors (as defined in Section 17 of
this Guaranty)) 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 (including Other
Guarantors (as defined in Section 17 of this Guaranty)) 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 of a 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 a 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 a
Guarantor or otherwise pursuant to applicable law, rescinded or
reduced in amount or must otherwise be restored or returned by the
Administrative 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 Guarantors agree that, for
purposes of this Guaranty and their obligations hereunder, the
Obligations shall be deemed to have been accelerated and the
Guarantors 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 Guarantors hereby waive 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
Administrative 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 (including Other Guarantors (as
defined in Section 17 of this Guaranty)) 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
Guarantors. Guarantors expressly waive each and every right to
which they may be entitled by virtue of the suretyship law of the
State of California.
Section 5. Subrogation.
(a) No Guarantor will 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 Administrative 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 Guarantors hereby consent to such action by the
Administrative Agent or such Bank and waive any claim based upon
such action, even if such action by the Administrative Agent or
such Bank shall result in a full or partial loss of any rights of
subrogation which the Guarantors, or any of them, might otherwise
have had but for such action by the Administrative Agent or such
Bank. Any election of remedies which results in the denial or
impairment of the right of the Administrative Agent or such Bank to
seek a deficiency judgment against the Company shall not impair a
Guarantor's obligation to pay the amount of the Obligations
provided herein as to such Guarantor. In the event the
Administrative 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 Administrative 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 Administrative Agent or such Bank but
shall be credited against the Obligations. The amount of the
successful bid at any such sale, whether the Administrative 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 Administrative Agent or any Bank might otherwise
be entitled but for such bidding at any such sale.
Section 6. Representations and Warranties.
(a) General. Each Guarantor represents and warrants
to the Administrative 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 such Guarantor, and such representations and warranties are
hereby incorporated by reference.
(b) Full Disclosure. Each 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 Execution 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. Each 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 Guarantors 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
Guarantors' businesses and the transactions contemplated in the
Credit Agreement produce distinct and identifiable financial and
economic direct and indirect benefits to the Guarantors.
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 Guarantors
shall, unless the Majority Banks waive compliance in writing,
comply with all the covenants related to the Guarantors, or any of
them, contained in the Credit Agreement.
(b) The Guarantors agree that at any time and from
time to time, at the expense of the Guarantors, the Guarantors will
promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or
that the Administrative Agent may reasonably request, to enable the
Administrative Agent to protect and to exercise and enforce its
rights and remedies hereunder.
Section 8. Application of Payments. Any payment
received by the Administrative Agent from the Guarantors (or from
any Bank pursuant to Section 13 below), shall be applied by the
Administrative 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 Administrative
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 Guarantors, or
their respective 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
Administrative 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
Administrative 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 any
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(s) affected thereby and by the Administrative Agent, and,
in the case of consents or waivers, by the Administrative 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. Nothing in this Section 11 shall require the
Administrative Agent to obtain the consent of any Guarantor prior
to taking any action described in Section 3(b) hereof.
Section 12. Notices. All notices, requests and other
communications provided for hereunder shall be in writing and given
to Administrative Agent as provided in Section 11.02 of the Credit
Agreement. All communications and notices hereunder to the
Guarantors shall be given to the Guarantors at their respective
addresses set forth on the signature pages hereof or at such other
address as shall be designated by Guarantors in a written notice to
the Administrative Agent.
Section 13. Right to Set-off.
(a) Upon the occurrence and during the continuance of
any Event of Default under the Credit Agreement, the Guarantors
authorize each Bank 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 Guarantors against
any and all of the Obligations, without prior notice to Guarantors
or demand under this Guaranty, all of which are hereby waived, 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 affected thereby 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 Guarantors, or any
of them) by any Bank shall be remitted to the Administrative 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 Guarantors, their respective successors and
assigns; and (c) inure to the benefit of the Administrative 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, all 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 Guarantors. Each of the Guarantors hereby
expressly covenants and agrees for the benefit of the
Administrative 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 Guarantors of whatsoever description
(including, without limitation, all intercompany receivables of the
Guarantors 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 Guarantors shall, if the Administrative Agent
shall so request, be collected and received by the Guarantors as
trustees for the Administrative Agent and the Banks and paid over
to the Administrative Agent and the Banks on account of the
Obligations but without reducing or affecting in any manner the
liability of the Guarantors under this Guaranty.
Section 16. Financial Reporting. Each Guarantor shall
furnish to the Administrative Agent all such financial statements
and other information relating to the financial condition,
properties and affairs of the Guarantor as any Bank, acting through
the Administrative Agent, may from time to time reasonably request.
Section 17. Other Guarantors. Each Guarantor
acknowledges that this Guaranty is a master Guaranty pursuant to
which other Subsidiaries of the Company (collectively, the "Other
Guarantors") now or hereafter may guarantee the payment and
performance of the Obligations, jointly and severally. In order to
provide for just and equitable contribution among the Guarantors,
the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under
this Guaranty, such Funding Guarantor shall be entitled to a
contribution from each Other Guarantor in a pro rata amount based
on the Adjusted Net Assets (hereinafter defined) of each Guarantor
(including the Funding Guarantor) for all payments, damages and
expenses incurred by the Funding Guarantor in discharging the
Obligations of the Company or any Other Guarantor's obligations
with respect to this Guaranty. For the purposes of this Section
17, the "Adjusted Net Assets" of a Guarantor at any date shall mean
the lesser of (i) the amount by which the fair value of the
property of such Guarantor exceeds the total amount of liabilities
of such Guarantor, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date, calculated in
accordance with Section 2(b) hereof), but excluding liabilities
under the Guaranty of such Guarantor at such date, and (ii) the
amount by which the present fair saleable value of the assets of
such Guarantor at such date exceeds the amount that will be
required to pay the probable liability of such Guarantor on its
debts (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date, calculated in
accordance with Section 2(b) hereof, and after giving effect to any
collection from any Subsidiary of such Guarantor in respect of the
obligations of such Subsidiary under this Guaranty), excluding debt
in respect of this Guaranty, as they become absolute and matured.
In the event the Guarantor makes any such payment to a Funding
Guarantor, the Guarantor shall be subrogated to the rights of such
Funding Guarantor to the extent of such payment. Notwithstanding
any provision of this Guaranty to the contrary, all rights of any
Funding 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, in cash, 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, in cash, all
Commitments have terminated and all Letters of Credit have expired.
No failure on the part of any one or more of the Guarantors 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 Other Guarantors with
respect to this Guaranty, its being agreed that each Guarantor
shall remain liable, jointly and severally with the Other
Guarantors, for up to the full amount of the Obligations, except as
the amount thereof may be limited as to a Guarantor by operation of
Section 2(b) hereof. This Section 17 is intended only to confirm
the relative rights of the Guarantors among themselves, and nothing
set forth in this sentence is intended to or shall impair the
obligations of the Guarantors, jointly and severally, to pay to the
Administrative 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 Guarantors to each
Bank or the Administrative 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
Guarantors shall pay all Other Taxes.
(b) The Guarantors, jointly and severally agree to
indemnify and hold harmless each Bank and the Administrative 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 Administrative 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 Administrative Agent makes written
demand therefor.
(c) If any 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 Administrative 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 Administrative 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 Administrative 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
any Guarantor of Taxes or Other Taxes, the Guarantor shall furnish
the Administrative Agent the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment
satisfactory to the Administrative Agent.
SECTION 20. Addition of Guarantors. Any Person who is
not a Guarantor on the date hereof may become a Guarantor by
executing and delivering to the Administrative Agent a Supplemental
Guaranty substantially in the form attached hereto, which
Supplemental Guaranty thereafter shall constitute a signature page
and part hereof for all purposes.
SECTION 21. GOVERNING LAW AND JURISDICTION.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS); PROVIDED THAT THE
ADMINISTRATIVE 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 CALIFORNIA OR OF THE UNITED STATES FOR THE
NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF
THIS GUARANTY, EACH 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, EACH GUARANTOR FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO IT AT ITS ADDRESS SPECIFIED IN SECTION 12 HEREOF, SUCH
SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR ANY
BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
GUARANTORS IN ANY OTHER JURISDICTION. EACH GUARANTOR WAIVES
PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
(c) EACH 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 ACTION OR PROCEEDING IN SUCH JURISDICTION IN
RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED HERETO.
SECTION 22. WAIVER OF JURY TRIAL. EACH GUARANTOR WAIVES
ITS RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION 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. EACH GUARANTOR AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH GUARANTOR
FURTHER AGREES THAT ITS 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 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 23. ENTIRE AGREEMENT. THIS WRITTEN GUARANTY
(INCLUDING ANY SUPPLEMENTAL GUARANTY OR OTHER AGREEMENT BY WHICH A
PERSON BECOMES A GUARANTOR) 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 Guarantors have caused this
Guaranty to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date(s) specified
below.
Date:
GIANT INDUSTRIES ARIZONA, INC.
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
GIANT EXPLORATION & PRODUCTION
COMPANY
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
GIANT FOUR CORNERS, INC.
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
CINIZA PRODUCTION COMPANY
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
SAN JUAN REFINING COMPANY
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
PHOENIX FUEL CO., INC.
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
DEGUELLE OIL COMPANY
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
GIANT MID-CONTINENT, INC.
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
GIANT STOP-N-GO OF NEW MEXICO, INC.
By
Name:
Title:
Address: c/o Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255-3465
Attention: President
<PAGE>
<PAGE>
[FORM OF]
SUPPLEMENTAL GUARANTY
This SUPPLEMENTAL GUARANTY (this "Supplemental Guaranty")
is executed and delivered as of , 199__, by
, a corporation ("New Guarantor") in favor
of Bank of America National Trust and Savings Association, as
Administrative Agent and as Letter of Credit Issuing Bank, and the
financial institutions from time to time parties to that certain
Credit Agreement (as previously and/or hereafter amended, modified,
supplemented or restated from time to time and at any time, the
"Credit Agreement"), entered into as of , 1998, by
and among Giant Industries, Inc., the financial institutions from
time to time parties thereto (the "Banks") and Bank of America
National Trust and Savings Association, as Administrative Agent for
the Banks and as Letter of Credit Issuing Bank. Capitalized terms
used but not otherwise defined herein have the meanings assigned to
them in the Credit Agreement.
WHEREAS, pursuant to the terms of the Credit Agreement, the
Banks agreed to make certain Loans to the Company; and
WHEREAS, pursuant to the terms of the Credit Agreement, the
Guarantors executed and delivered the Guaranty Agreement (as
previously and/or hereafter amended, modified, supplemented or
restated from time to time and at any time, the "Guaranty") in the
form attached to the Credit Agreement as Exhibit G; and
WHEREAS, pursuant to Section 7.12 of the Credit Agreement,
the Company agreed that if, at any time after the date of the
Credit 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 $5,000,000 or more, then the Company
shall, among other things, cause such Subsidiary to execute and
deliver to the Administrative Agent a Supplemental Guaranty in the
form attached to the Guaranty; and
WHEREAS, New Guarantor has become a Subsidiary of the
Company (within the meaning of the Credit Agreement) incorporated
under the laws of the state of with total assets with a
book value equal to or exceeding $5,000,000; and
NOW, THEREFORE, (i) in consideration of the foregoing
premises and to induce the Banks to continue to extend credit to
the Company in accordance with the Credit Agreement, (ii) at the
special insistence of the Company, the Administrative Agent and the
Banks, and (iii) for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, New
Guarantor, for the benefit of the Administrative Agent and the
Banks, hereby agrees as follows:
1. New Guarantor hereby elects to become a Guarantor for
purposes of the Credit Agreement, effective from the date hereof,
and agrees to perform all of the obligations of a Guarantor under,
and to be bound in all respects by the terms of, the Guaranty
(including without limitation all waivers, releases,
indemnifications and submissions set forth therein), all of which
terms are incorporated herein by reference, as if New Guarantor
were a signatory party thereto, and, accordingly, New Guarantor
hereby, jointly and severally with the Other Guarantors (as defined
in Section 17 of the Guaranty), 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 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 Administrative Agent or any Bank in enforcing any rights
under the Guaranty, in all respects upon the terms set forth in the
Guaranty.
2. Henceforth, all references to the "Guarantors," or each
individual "Guarantor," in the Guaranty shall be deemed to include
New Guarantor, in addition to the other Guarantors, as if New
Guarantor were a signatory party thereto.
3. New Guarantor hereby represents and confirms that the
representations and warranties set forth in the Guaranty and the
representations and warranties set forth in the Credit Agreement
with respect to each and/or all of the Guarantors and/or the
Subsidiaries of the Company are true and correct in all material
respects with respect to New Guarantor on and as of the date hereof
(and after giving effect hereto), as if set forth herein in their
entirety.
4. The address to which notices to New Guarantor under the
Guaranty should be directed is as follows:
5. This Supplemental Guaranty shall be governed by and
construed in accordance with the laws of the State of California.
Acceptance and notice of acceptance hereof are hereby waived in all
respects.
6. THIS Supplemental Guaranty AND THE GUARANTY
INCORPORATED HEREIN BY REFERENCE REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF 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, this Supplemental Guaranty is hereby
executed and delivered as of the date first above written.
[NAME OF NEW GUARANTOR]
By
Name:
Title:
<PAGE>
<PAGE>
EXHIBIT "H"
FORM OF BORROWING BASE REPORT
DELIVERED PURSUANT TO SECTION 7.02(a)
OF THE CREDIT AGREEMENT
BORROWING BASE REPORT
Calendar Month Ended _________________, ____
The undersigned authorized officer of GIANT INDUSTRIES,
INC., a Delaware corporation (the "Company"), delivers this
Certificate pursuant to Section 7.02(a) of the Credit Agreement
dated as of ________________, 1998 (the "Credit Agreement"), among
the Company, the several financial institutions from time to time
party thereto (the "Banks"), and Bank of America National Trust and
Savings Association (the "Administrative Agent"), as administrative
agent for the Banks and as Letter of Credit Issuing Bank.
Capitalized terms used herein without definition have the meanings
assigned to them in the Credit Agreement. The undersigned hereby
certifies to the Administrative Agent and the Banks as follows:
1. The undersigned hereby certifies that, to the best of
his knowledge (a) Annex 1 hereto is a true and accurate calculation
of the Borrowing Base as at the end of the calendar month ended
________________, _____, 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
_________________, ____.
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 ______________, _____.
GIANT INDUSTRIES, INC.
By
Authorized Officer
<PAGE>
<PAGE>
ANNEX 1
GIANT INDUSTRIES, INC.
BORROWING BASE CERTIFICATE
Calendar Month
Ended ____________, _____
Borrowing Base Calculation:
A. Eligible Accounts Receivable Borrowing Base
Amount [Item 4.D. from Annex 1a attached
hereto] $______________
B. Eligible Refinery Hydrocarbon Inventory
Borrowing Base Amount [Total indicated in
Annex 1b attached hereto] $______________
C. Borrowing Base (Sum of A & B) $______________
Lesser of Borrowing Base or $65,000,000 $______________
Less Outstanding at Month End:
Effective Amount of Revolving Loans
Outstanding $______________
Effective Amount of L/C Obligations
Outstanding $______________
Total Outstanding ($______________)
NET AVAILABILITY AT MONTH END: $______________
<PAGE>
<PAGE>
ANNEX 1(a)
GIANT INDUSTRIES, INC.
DETAIL OF ELIGIBLE ACCOUNTS RECEIVABLE, FIFO BASIS
________________, _____
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. Total ______ ______
3. Phoenix Fuel: ______ ______
4. Eligible Accounts Receivable
A. Total Accounts Receivable
(Item 1.D. plus Item 2.D.
plus Item 3) $_____ $_____
B. Advance Rate x .90 x .8
C. Sub Total per Obligor
Type (AxB) $_____ $_____
D. Total Eligible Accounts
Receivables Borrowing Base
Amount (Sum of Columns A
and B) $_____
<PAGE>
<PAGE>
ANNEX 1(b)
GIANT INDUSTRIES, INC.
INVENTORY DETAIL
___________, _____
Blmfld Ciniza Albq Other Total
Bbls Bbls Term. Bbls Bbls $/Bbl $
Feed Stock
Crude Oil
Field Tanks/Terminals
Pipeline Linefill
Tex new Mex Pipeline
Exchange and Other
Common Carriers
On site
(Less BS&W)
(Less Slop)
NGL's
Natural Gasoline
Isobutane
Normal Butane
Other
MTBE
Ethanol
Sub Total
Intermediate Products
Isomerate
Cat Feed
Gasoline Components
Naptha
Sub Total
Refined Products
Leaded Regular
Unleaded Regular
Unleaded Premium
Propane
JP-8
Jet-A
Diesel
Residual Fuel Oil
Other
Lube Inventories-Phoenix Fuel
Finished Product-Phoenix Fuel
Service Stations-Gasoline
Four Corners
Travel Center
Sub Total
Inventory Total
Eligible Refinery Hydrocarbon Inventory Borrowing Base Amount
Calculation
Product Line: Gross Inven. Amount Advance Rate Advance Amt.
Feedstock 80.00%
Intermediate Products 80.00%
Refined Products 80.00%
(excluding S.S. and T.C.)
Service Stations and 50.00%
Travel Center
Total<PAGE>
<PAGE>
EXHIBIT "I"
FORM OF SECURITY AGREEMENT
This Security Agreement is entered into this _____ day of
_______________, ____, by ______________________________, a
__________ corporation ("Debtor"), whose address is
______________________________, __________, __________, in favor of
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national
savings association (together with any successor Administrative
Agent under the Credit Agreement, "Secured Party"), as
administrative agent for itself, the financial institutions (the
"Banks") from time to time parties to that certain Credit Agreement
(the "Credit Agreement"), dated as of December 23, 1998, among
GIANT INDUSTRIES, INC. (the "Company"), the Banks and Secured
Party, and the other "Swap Providers" from time to time parties to
any "Specified Swap Contracts" (as each such term is defined in the
Credit Agreement). Capitalized terms used but not defined herein
have the meanings assigned to them in the Credit Agreement.
FOR VALUE RECEIVED, the receipt and sufficiency of which are
hereby acknowledged, and as a condition precedent to the extension
of credit by the Agent and the Banks under the Credit Agreement,
Debtor agrees as follows:
A. OBLIGATIONS SECURED. The security interest and pledges and
assignments as applicable granted hereby are to secure punctual
payment and performance of the following (all of which are herein
separately and collectively referred to as the "Obligations"):
(i) the Notes executed by the Company and payable to the
order of the Banks, respectively, and any and all extensions,
renewals, modifications and rearrangements thereof;
(ii) all obligations of the Company to Secured Party now or
hereafter existing under the Credit Agreement and other Loan
Documents, whether for principal (including reimbursement for
amounts drawn under Letters of Credit), interest, fees, expenses,
taxes, yield protection, indemnification or otherwise, and all
extensions, renewals, modifications and rearrangements thereof;
(iii) all obligations of the Company now or hereafter
existing under the Specified Swap Contracts, and all extensions,
renewals, modifications and rearrangements thereof; and
(iv) any and all other indebtedness, liabilities and obligations
whatsoever of Debtor under this Security Agreement and the other
Loan Documents, whether direct or indirect, absolute or contingent,
primary or secondary, due or to become due and whether now existing
or hereafter arising and howsoever evidenced or acquired, whether
joint or several, or joint and several.
B. DESCRIPTION OF COLLATERAL. Debtor hereby grants to Secured
Party, for its benefit and the ratable benefit of the Banks and
other Swap Providers, if any, a security interest in (and hereby
pledges and assigns as applicable), and agrees that Secured Party,
for its benefit and the ratable benefit of the Banks and other Swap
Providers, if any, shall continue to have a security interest in
(and a pledge and assignment as applicable of), all of Debtor's
right, title and interest in and to the following property (the
"Collateral"), whether now owned or hereafter acquired, to wit:
(i) all (A) crude oil, natural gas and natural gas
liquids, other hydrocarbons and ethanol (together, "Feedstocks"),
(B) Feedstocks that have been partially processed or refined as
isomerate, cat feed, gasoline components or naptha (together,
"Intermediate Products") and (C) gasoline, diesel, aviation fuel,
fuel oil, propane, ethanol, transmix and other products processed,
refined or blended from Feedstocks and Intermediate Products
(together "Refined Products"), in each case wherever located, now
or hereafter existing, and all accessions to any of the foregoing,
products of any of the foregoing and documents relating to any of
the foregoing (any and all such inventory, accessions, products and
documents herein called the "Inventory");
(ii) all accounts, contract rights, chattel paper,
instruments, general intangibles and other obligations of any kind
(including all rights to receive crude oil or petroleum products,
to receive payments of money or to receive other value pursuant to
contracts, agreements or other arrangements with other Persons, for
the trading, lending, borrowing or exchanging of crude oil or
petroleum products in the ordinary course of business), now or
hereafter existing, whether or not arising out of or in connection
with the sale or lease of goods or the rendering of services, and
all rights now or hereafter relating to any such accounts, contract
rights, chattel paper, instruments, general intangibles or
obligations (any and all such accounts, contract rights, chattel
paper, instruments, general intangibles, obligations and rights
herein called the "Accounts," and any and all such leases, security
agreements and other contracts herein called the "Related
Contracts"); and
(iii) all proceeds of any and all of the foregoing
Collateral (including proceeds that constitute property of any type
described in Subsections B(i) or B(ii) above) and, to the extent
not otherwise included, all (a) payments under insurance (whether
or not Secured Party is the loss payee thereof), or under any
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Collateral and (b) cash.
C. CONTRACTS AND AGREEMENTS. Anything herein to the
contrary notwithstanding, (1) Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent
set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Security Agreement had not
been executed, (2) the exercise by Secured Party of any of its
rights hereunder shall not release Debtor from any of its duties or
obligations under the contracts and agreements included in the
Collateral and (3) neither Secured Party nor any Bank or other Swap
Provider shall have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this
Security Agreement, nor shall Secured Party or any Bank or other
Swap Provider be obligated to perform any of the obligations or
duties of Debtor thereunder or take any action to collect or
enforce any claim for payment assigned hereunder.
D. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.
Debtor represents and warrants as follows:
1. Ownership; No Encumbrances. Except for the security
interest (and pledges and assignments as applicable) granted
hereby, the Debtor is, and as to any property acquired after the
date hereof which is included within the Collateral, Debtor will
be, the legal and beneficial owner of all such Collateral free and
clear of any and all Liens of any and every nature whatsoever
(subject only to Permitted Liens), and Debtor possesses evidence of
such ownership. Debtor has exclusive possession and control of the
Inventory, except to the extent that such Inventory is in transit
or held at terminals owned by third parties and commingled with
inventory owned by Persons other than Debtor. None of the
Inventory consists of minerals or the like (including oil and gas)
in which Debtor had any interest before extraction, and none of the
Accounts consist of accounts resulting from the sale of any such
minerals or the like or the sale of minerals or the like at the
wellhead or minehead.
2. No Third Party Financing Statements. There is no financing
statement or similar filing now on file in any public office
covering any part of the Collateral, except the financing
statements filed or to be filed in favor of Secured Party.
3. Accuracy of Information. All information furnished to
Secured Party concerning Debtor, the Collateral and the
Obligations, or otherwise for the purpose of obtaining or
maintaining credit, is or will be at the time the same is
furnished, accurate and complete in all material respects.
4. Authority. Debtor has full right, power and authority to
execute and perform this Agreement and to create the security
interest (and pledges and assignment as applicable) created by this
Agreement. The making and performance by Debtor of this Agreement
will not violate any articles of incorporation, bylaws or similar
document respecting Debtor, any provision of law, any order of
court or governmental agency, or any indenture or other agreement
to which Debtor is a party, or by which Debtor or any of Debtor's
property is bound, or be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under
any such indenture or other agreement, or result in the creation or
imposition of any Lien of any and every nature whatsoever upon the
Collateral, except as contemplated by this Agreement.
5. Addresses. The address of Debtor designated at the
beginning of this Agreement is Debtor's place of business, if
Debtor has only one place of business, or Debtor's chief executive
office, if Debtor has more than one place of business, and is the
office where Debtor keeps its records concerning the Accounts. All
originals of any chattel paper and any promissory notes or
instruments evidencing any of the Accounts have been delivered to
Secured Party (endorsed, in the case of promissory notes or
instruments, payable to the order of Secured Party). All of the
Inventory is located at the places specified in Schedule 1 attached
hereto.
6. Security Interest. This Security Agreement creates a
valid first-priority security interest in the Collateral, subject
only to Permitted Liens, securing payment of the Obligations, and
all filings and other actions necessary or desirable to perfect and
protect such security interest have been duly taken.
E. GENERAL COVENANTS. Debtor covenants and agrees as follows:
1. Assessments. Debtor shall promptly pay when due all taxes,
assessments, license fees, registration fees, and governmental
charges levied or assessed against Debtor or with respect to the
Collateral or any part thereof.
2. No Encumbrances. Debtor agrees not to suffer or permit any
charge, Lien, security interest, adverse claim or encumbrance of
any and every nature whatsoever against the Collateral or any part
thereof (subject only to Permitted Liens).
3. No Transfer. Except as otherwise provided in this Security
Agreement with respect to sales of inventory in the ordinary course
of business, Debtor shall not, without the prior written consent of
the Majority Banks, sell, assign, transfer, lease, charter,
encumber, hypothecate or dispose of the Collateral, or any part
thereof, or interest therein, or offer to do any of the foregoing.
4. Notices and Reports. Debtor shall promptly notify Secured
Party in writing of any change in the name, identity or structure
of Debtor, any charge, Lien, security interest, claim or
encumbrance asserted against the Collateral, any litigation against
Debtor or the Collateral, any theft, loss, injury or similar
incident involving the Collateral, and any other material matter
adversely affecting Debtor or the Collateral. Debtor shall furnish
such other reports, information and data regarding Debtor's
operations, the Collateral and such other matters as Secured Party
or any Bank may request from time to time.
5. Landlord's Waivers and Other Third Party Agreements.
Debtor shall use good faith efforts to furnish to Secured Party, if
requested at any time and from time to time, a landlord's waiver or
other third party agreement, as applicable, with respect to any
Collateral covered by this Security Agreement that is or may be
located upon leased premises, held by a bailee or otherwise subject
to any third party interest (actual or contingent), such landlord's
waivers and other third party agreements to be in such form and
upon such terms as are acceptable to Secured Party and the Majority
Banks.
6. Further Assurances. Debtor agrees to execute or procure,
as applicable, and deliver such financing statement or statements,
or amendments thereof or supplements thereto, or other documents,
agreements and assurances, and take all further action, as Secured
Party may from time to time require in order to perfect and protect
any security interest granted or purported to be granted hereby, to
establish or affirm the priority of the security interest granted
or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect
to any Collateral. Without limiting the generality of the
foregoing, Debtor shall (a) mark conspicuously each document
included in the Inventory, each chattel paper included in the
Accounts, each Related Contract, and, at the request of Secured
Party or the Majority Banks, each of its records pertaining to the
Collateral with a legend, in form and substance satisfactory to
Secured Party and the Majority Banks, indicating that such
document, chattel paper, Related Contract or Collateral is subject
to the security interest granted hereby, and (b) if any of the
Accounts is evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to Secured Party hereunder such
note, instrument or chattel paper, duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form
and substance satisfactory to Secured Party.
7. Protection of Collateral. Secured Party, at its
option, whether before or after default, but without any obligation
whatsoever to do so, may, and Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact, with full authority in
the place and stead of Debtor and in the name of Debtor or
otherwise, from time to time in Secured Party's discretion, to,
take any action and execute any instrument that Secured Party may
deem necessary or advisable to accomplish the purposes of this
Security Agreement, including the following: (a) discharge taxes,
claims, charges, Liens, security interests, assessments or other
encumbrances of any and every nature whatsoever at any time levied,
placed upon or asserted against the Collateral, (b) place and pay
for insurance on the Collateral, including insurance that only
protects Secured Party's interest, (c) pay for the repair,
improvement, testing, maintenance and preservation of the
Collateral, (d) file one or more financing or continuation
statements, and amendments and supplements thereto, relative to all
or any part of the Collateral without the signature of Debtor where
permitted by law, and pay any filing, recording, registration,
licensing or certification fees or other fees and charges related
to the Collateral, or (e) take any other action to preserve and
protect the Collateral and Secured Party's rights and remedies
under this Agreement as Secured Party may deem necessary or
appropriate. Debtor agrees that Secured Party shall have no duty
or obligation whatsoever to take any of the foregoing action.
Debtor agrees to promptly reimburse Secured Party upon demand for
any payment made or any expense incurred by the Secured Party
pursuant to this authorization. These payments and expenditures,
together with interest thereon from date incurred until paid by
Debtor at the maximum contract rate allowed under applicable laws,
which Debtor agrees to pay, shall constitute additional Obligations
and shall be secured by and entitled to the benefits of this
Security Agreement.
8. Inspection. Debtor shall at all reasonable times allow
Secured Party and each of the Banks by or through any of its
officers, agents, attorneys or accountants, to examine the
Collateral, wherever located, and to examine and make extracts from
Debtor's books and records.
9. Insurance. Debtor shall have and maintain insurance at all
time with respect to all tangible Collateral insuring against risks
of fire (including so-called extended coverage), theft and other
risks as Secured Party and the Majority Banks may require and shall
maintain liability insurance naming the Debtor, the Administrative
Agent and the Banks as insured parties, in each case containing
such terms, in such form and amounts and written by such companies
as may be satisfactory to Secured Party and the Majority Banks, all
of such insurance to (a) contain loss payable clauses in favor of
Secured Party as its interests may appear, (b) contain the
agreement by the insurer that any loss thereunder shall, subject to
the terms of this Security Agreement, be payable to Secured Party
notwithstanding any action, inaction or breach of representation or
warranty by Debtor and (c) provide that there shall be no recourse
against Secured Party or the Banks for payment of premiums or other
amounts with respect thereto. All policies of insurance shall
provide for at least thirty (30) days' prior written cancellation
notice to Secured Party and at the request of Secured Party shall
be delivered to and held by it. Debtor shall, as often as Secured
Party or any Bank reasonably may request, deliver to Secured Party
and the Banks a certificate of a reputable insurance broker with
respect to such insurance and permit Secured Party and any Bank to
discuss the terms and conditions of such insurance with such broker
and the insurer. Secured Party is hereby authorized to act as
attorney for Debtor in adjusting and settling insurance claims that
relate to the Collateral and endorsing any drafts or instruments.
Secured Party shall be authorized to apply the proceeds from any
insurance to the Obligations secured hereby whether or not such
Obligations are then due and payable. Debtor specifically
authorizes Secured Party to disclose information from the policies
of insurance to prospective insurers regarding the Collateral.
F. ADDITIONAL PROVISIONS REGARDING ACCOUNTS. The following
provisions shall apply to all Accounts included within the
Collateral:
1. Definitions. The term "account," as used in this
Agreement, shall have the same meaning as set forth in the Uniform
Commercial Code of California in effect as of the date of execution
hereof, and as set forth in any amendment to the Uniform Commercial
Code of California to become effective after the date of execution
hereof, and also shall include all present and future notes,
instruments, documents, general intangibles, drafts, acceptances
and chattel paper of Debtor, and the proceeds thereof.
2. Additional Warranties. As of the time any Account is
included in any Borrowing Base Report under the Credit Agreement,
Debtor shall be deemed further to have warranted as to each and all
of such Accounts as follows: (a) each Account and all papers and
documents relating thereto are genuine and in all respects what
they purport to be; (b) each Account is valid and subsisting and
arises out of a bona fide sale of goods sold and delivered to, or
out of and for services theretofore actually rendered by Debtor to,
the account debtor named in the account; (c) the amount of the
Account represented as owing is the correct amount actually and
unconditionally owing and is not subject to any setoffs, credits,
defenses, deductions or countercharges; and (d) Debtor is the owner
thereof free and clear of any charges, Liens, security interests,
adverse claims and encumbrances of any and every nature whatsoever
(subject only to Permitted Liens).
3. Collection of Accounts. Except as otherwise provided
herein, Debtor shall continue to collect all amounts due or to
become due to Debtor under the Accounts, and, in connection with
such collections, Debtor may take (and, at Secured party's
direction, shall take) such action as Debtor or Secured Party may
deem necessary or advisable to enforce collection of the Accounts.
Upon the occurrence and during the continuance of any Default or
Event of Default (and, in any event, after receipt by Debtor of
notice from Secured Party in accordance with the Credit Agreement)
(a) all amounts and proceeds (including instruments) received by
Debtor in respect of the Accounts shall be received in trust for
the benefit of Secured Party hereunder, shall be segregated from
other funds of Debtor and shall be forthwith paid over to Secured
Party in the same form as so received (with any necessary
endorsement), and, if any Event of Default has occurred and is
continuing, applied as provided by Section H.4. hereof, and (b)
Debtor shall not adjust, settle or compromise the amount or payment
of any Account, release wholly or partly any account debtor or
obligor thereunder or allow any credit or discount thereon.
Secured Party shall have the right in its own name or in the name
of Debtor, upon the occurrence and during the continuance of any
Default or Event of Default (and, in any event, after receipt by
Debtor of notice from Secured Party in accordance with the Credit
Agreement), to notify any and all account debtors to make payments
of the Accounts directly to Secured Party, to demand, collect,
receive, receipt for, sue for, compound and give acquittal for, any
and all amounts due or to become due on the Accounts and to endorse
the name of the Debtor on all commercial paper given in payment or
part payment hereof, and in Secured Party's discretion to file any
claim or take any other action or proceeding that Secured Party may
deem necessary or appropriate to protect and preserve and realize
upon the Accounts and related Collateral. Secured Party shall have
no duty or obligation whatsoever to collect any Account, or to take
any other action to preserve or protect the Collateral; however,
should Secured Party elect to collect any Account or take
possession of any Collateral, Debtor releases Secured Party from
any claim or claims for loss or damage arising from any act or
omission in connection therewith.
4. Addresses. Debtor shall keep its place of business, or, if
it has more than one place of business, its chief executive office,
and the office where it keeps its records concerning the Accounts,
at the location therefor specified in Subsection D.5., or, upon 30
days' prior written notice to Secured Party, at other locations in
jurisdictions where all actions required by Section E have been
taken with respect to Accounts; provided, however, that in no event
shall Debtor's records concerning Accounts be located outside of
the United States.
G. ADDITIONAL PROVISIONS REGARDING INVENTORY. The following
provisions shall apply to all inventory included within the
Collateral:
1. Location of Inventory. Debtor shall keep the Inventory
(other than Inventory sold in the ordinary course of business) at
the places therefor specified in Subsection D.5., or, upon 30 days'
prior written notice to Secured Party, at other places in
jurisdictions where all actions required by Section E have been
taken with respect to the Inventory; provided, however, that in no
event shall the Inventory be located outside the United States.
2. Use of Inventory. Unless and until the privilege of Debtor
to use inventory in the ordinary course of Debtor's business is
revoked by Secured Party upon the occurrence and during the
continuance of any Default or Event of Default, Debtor may use the
inventory in any manner not inconsistent with this Security
Agreement, may sell that part of the Collateral consisting of
Inventory provided that all such sales are in the ordinary course
of business, and may use and consume any raw materials or supplies
that are necessary in order to carry on Debtor's business. A sale
in the ordinary course of business does not include a transfer in
partial or total satisfaction of a debt.
3. Accounts as Proceeds. All accounts that are proceeds of
the Inventory included within the Collateral shall be subject to
all of the terms and provisions hereof pertaining to Accounts.
4. Protection of Inventory. Debtor shall take all action
necessary to protect and preserve the Inventory.
H. REMEDIES. Upon the occurrence of an Event of Default,
Secured Party, at its option, shall be entitled to exercise any one
or more of the following remedies (all of which are cumulative):
1. Declare Obligations Due. Secured Party, acting on behalf
of the Banks in accordance with the Credit Agreement, may declare
the Obligations or any part thereof immediately due and payable,
without demand, notice of intention to accelerate, notice of
acceleration, notice of nonpayment, presentment, protest, notice of
dishonor, or any other notice whatsoever, all of which are hereby
waived by Debtor and any maker, endorser, guarantor, surety or
other party liable in any capacity for any of the Obligations.
2. Remedies. Secured Party shall have all of the rights
and remedies provided for in this Security Agreement and in any
other agreements executed by Debtor, the rights and remedies in the
Uniform Commercial Code of California, and any and all other rights
and remedies at law and equity, all of which shall be deemed
cumulative. Without limiting the foregoing, Debtor agrees that
Secured Party shall have the right to (a) require Debtor to
assemble the Collateral and make it available to Secured Party at a
place designated by Secured Party that is reasonably convenient to
both parties, which Debtor agrees to do; (b) take possession of the
Collateral, with or without process of law, and, in this
connection, enter any premises where the Collateral is located to
remove same, to render it unusable, or to dispose of same on such
premises; (c) sell, lease or otherwise dispose of the Collateral,
by public or private proceedings, for cash or credit, without
assumption of credit risk; and/or (d) collect and receipt for,
compound, compromise, and settle, and give releases, discharges and
acquittances with respect to, any and all amounts owned by any
person or entity with respect to the Collateral. Unless the
Collateral is perishable or threatens to decline speedily in value
or is of a type customarily sold on a recognized market, Secured
Party will send Debtor reasonable notice of the time and place of
any public sale or of the time after which any private sale or
other disposition will be made. Any requirement of reasonable
notice to Debtor shall be met if such notice is mailed, postage
prepaid, to Debtor at the address of Debtor designated at the
beginning of this Agreement, at least ten (10) days before the day
of any public sale or at least ten (10) days before the time after
which any private sale or other disposition will be made. Secured
Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given, and Secured Party
may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor and such sale
may, without further notice, be made at the time and place to which
it is so adjourned.
3. Expenses. Debtor shall be liable for and agrees to pay the
reasonable expenses incurred by Secured Party in enforcing its
rights and remedies, in retaking, holding, testing, repairing,
improving, selling, leasing or disposing of the Collateral, or like
expenses, including, without limitation, attorneys' fees and legal
expenses incurred by Secured Party. These expenses, together with
interest thereon from the date incurred until paid by Debtor at the
maximum contract rate allowed under applicable laws, which Debtor
agrees to pay, shall constitute additional Obligations and shall be
secured by and entitled to the benefits of this Agreement.
4. Proceeds; Surplus; Deficiencies. Proceeds received by
Secured Party from disposition of the Collateral shall be applied
(after payment of Secured Party's expenses) in whole or in part by
Secured Party for the ratable benefit of the Banks and other Swap
Providers, if any, against all or any portion of the Obligations in
such order (but, in any event, pro rata among the Banks and other
Swap Providers, if any, as hereinafter provided) or manner as
Secured Party may elect. Proceeds distributed to the Banks and
other Swap Providers, if any, pursuant hereto shall be distributed
pro rata in such proportion as the total Obligations to each such
Person bears to the total Obligations to all such Persons;
provided, however, that, for the purposes of the foregoing, (a) the
Obligations to each such Person in respect of the Specified Swap
Contracts and all other Obligations described in items (iii) and
(iv) of Part A of this Security Agreement shall be deemed to
include only such amounts as are then due and payable in respect
thereof and (b) no amounts shall be deemed then due and payable to
any Bank or other Swap Provider, if any, for purposes hereof, with
respect to any Specified Swap Contract or any individual right to
indemnity, or to reimbursement or compensation pursuant to Article
IV, except to the extent that Secured Party shall have actually
received prior written notice thereof at its address specified in
Section 11.01 of the Credit Agreement. Debtor shall be entitled to
any surplus if one results after payment in full of all of the
Obligations.
5. Remedies Cumulative. The rights and remedies of Secured
Party are cumulative and the exercise of any one or more of the
rights or remedies shall not be deemed an election of rights or
remedies or a waiver of any other right or remedy. Secured Party
may remedy any default and may waive any default without waiving
the default remedied or without waiving any other prior or
subsequent default.
6. Non-Bank Swap Providers. Each Swap Provider, if any,
not a Bank, by its acceptance of any of the benefits of this
Security Agreement, shall be deemed to have (a) designated Secured
Party to hold the Collateral in accordance with the terms hereof
and otherwise to act as specified herein; (b) irrevocably
authorized Secured Party to take such action under the provisions
of this Security Agreement and to exercise such powers and to
perform such duties hereunder as are specifically delegated to or
required of Secured party by the terms hereof and such other powers
as are reasonably incidental thereto, and to exercise all remedies
available to Secured Party, including without limitation, the right
to foreclose or otherwise realize upon the Collateral and to
initiate, prosecute and defend any and all legal proceedings, by or
through its agents and employees; (c) agreed that Secured Party
shall have no duties or responsibilities except those expressly set
forth or described herein and that neither Secured Party nor any
other Agent-Related Person shall be liable for any action taken or
omitted by it as such hereunder or in connection herewith; (d)
agreed that the duties of Secured Party shall be mechanical and
administrative in nature, that Secured Party shall not have, by
reason of this Security Agreement a fiduciary relationship in
respect of such Person and that nothing in this Security Agreement,
express or implied, is intended to or shall be so construed as to
impose upon Secured Party any obligations in respect of this
Security Agreement, the Collateral or the Obligations secured
thereby except as expressly set forth herein; (e) agreed that
Secured Party shall not be responsible to any such Person for any
recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered
in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectability,
priority or sufficiency of this Security Agreement or be required
to make any inquiry concerning either the performance or observance
of any of the terms, provisions or conditions of this Security
Agreement, or the financial condition of the Company or the Debtor
or any of their respective Subsidiaries, or the existence or
possible existence of any Default or Event of Default under, or
noncompliance with, this Security Agreement or any other agreement
referenced herein; (f) waived any and all rights to require or
demand that Secured Party take any actions or refrain from taking
any actions with respect to the Collateral at any time, including
without limitation actions to foreclose upon any Collateral or
actions with respect to the release or substitution of any
Collateral at any time, to have agreed that decisions regarding the
exercise of all rights and the taking or refraining from taking of
any actions by Secured Party at any time with respect to the
Collateral or any of the Obligations referenced herein, including
without limitation actions to foreclose upon any Collateral or
actions with respect to the release or substitution of any
Collateral at any time, shall be between Secured Party and the
Banks in accordance with the terms of this Security Agreements and
their separate agreements and that all such decisions shall be
conclusive and binding on such Persons, and to have waived any and
all claims against Secured Party and/or any Bank in respect of any
such decision, exercise, action or inaction; (g) agreed that
Secured Party may resign from the performance of all its functions
and duties hereunder at any time by giving 20 Business Days' prior
written notice to the Company and the Banks at the addresses
specified in Section 11.01 of the Credit Agreement, following which
the holders of any and all then remaining Obligations shall perform
all of the duties of Secured Party under this Security Agreement
until such time, if any, as such Persons have appointed a successor
administrative agent to act as secured party on their behalf.
I. OTHER AGREEMENTS.
1. Savings Clause. Notwithstanding any provision to the
contrary herein, or in any of the documents evidencing the
Obligations or otherwise relating thereto, no such provision shall
require the payment or permit the collection of interest in excess
of the maximum permitted by applicable usury laws. If any such
excessive interest is so provided for, then in such event (i) the
provisions of this paragraph shall govern and control, (ii) neither
Debtor nor its successors or assigns or any other party liable for
the payment thereof, shall be obligated to pay the amount of such
interest to the extent that is in excess of the maximum amount
permitted by law, (iii) any such excess interest that may have been
collected shall be, at the option of the holder of the instrument
evidencing the Obligations, either applied as a credit against the
then unpaid principal amount thereof or refunded to the maker
thereof, and (iv) the effective rate of interest shall be
automatically reduced to the maximum lawful rate under applicable
usury laws as now or hereafter construed by the courts having
jurisdiction.
2. Indemnity and Expenses. Debtor agrees to indemnify Secured
Party and each of the Banks, and to hold Secured Party and each of
the Banks harmless, from and against any and all claims, losses and
liabilities arising out of or resulting from this Security
Agreement (including enforcement of this Security Agreement),
except claims, losses or liabilities resulting from such Person's
gross negligence or willful misconduct. Debtor will upon demand
pay to Secured Party the amount of any and all reasonable expenses,
including reasonable fees and disbursements of counsel and of any
experts and agents, that Secured Party or the Banks may incur in
connection with (a) the administration of this Security Agreement,
(b) the custody, preservation, use, operation or sale of, the
collection from, or any other realization upon any of, the
Collateral, (c) the exercise or enforcement of any of the rights of
Secured Party or the Banks hereunder or (d) the failure by Debtor
to perform or observe any of the provisions hereof.
3. Severability. Any provision hereof found to be invalid by
courts having jurisdiction shall be invalid only with respect to
such provision (and then only to the extent necessary to avoid such
invalidity). The offending provision shall be modified to the
maximum extent possible to confer upon Secured Party the benefits
intended thereby. Such provision as modified and the remaining
provisions hereof shall be construed and enforced to the same
effect as if such offending provision (or portion thereof) had not
been contained herein, to the maximum extent possible.
4. Use of Copies. Any carbon, photographic or other
reproduction of this Security Agreement or of any financing
statement signed by Debtor is sufficient as a financing statement
for all purposes, including without limitation, filing in any state
as may be permitted by the provisions of the Uniform Commercial
Code of such state.
5. Relationship to Other Agreements. This Security Agreement
and the security interests (and pledges and assignments as
applicable) herein granted are in addition to (and not in
substitution, novation or discharge of) any and all prior or
contemporaneous security agreements, security interests, pledges,
assignments, liens, rights, titles or other interests in favor of
Secured Party or assigned to Secured Party by others in connection
with the Obligations. All rights and remedies of Secured Party in
all such agreements are cumulative, but in the event of actual
conflict in terms and conditions, the terms and conditions of the
latest security agreement shall govern and control.
6. Notices. Any notice or demand given by Secured Party to
Debtor in connection with this Agreement, the Collateral or the
Obligations shall be deemed given and effective upon deposit in the
United States mail, postage prepaid, addressed to Debtor at the
address of Debtor designated at the beginning of this Security
Agreement. Actual notice to Debtor shall always be effective no
matter how given or received. All notices and other communications
to Secured Party hereunder shall be in writing and shall be mailed,
telecopied or delivered to Secured Party, as the case may be, at
the address therefor specified in Section 11.02 of the Credit
Agreement and shall be deemed given and effective at the time
specified in said Section 11.02.
7. Headings and Gender. Paragraph headings in this Security
Agreement are for convenience only and shall be given no meaning or
significance in interpreting this Agreement. All words used herein
shall be construed to be of such gender or number as the
circumstances require.
8. Amendments, Waivers, etc. No amendment or waiver of
any provisions of this Security Agreement or consent to any
departure by Debtor herefrom shall in any event be effective unless
the same is in writing and signed by Secured Party, and then such
waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. The waiver (whether
express or implied) by Secured Party of any breach of any term or
condition of this Security Agreement, or the consent (whether
express or implied) by any Bank thereto, shall not prejudice any
remedy of Secured Party or any Bank in respect of any continuing or
other breach of the terms and conditions hereof and shall not be
construed as a bar to any right or remedy that Secured Party or any
Bank would otherwise have on any future occasion under this
Security Agreement. No failure to exercise or delay in exercising,
on the part of Secured Party or any Bank, any right, power or
privilege under this Security Agreement shall operate as a waiver
thereof or the exercise of any other right, power or privilege.
9. Continuing Agreement. The security interest (and pledges
and assignments as applicable) hereby granted and all of the terms
and provisions in this Agreement shall be deemed a continuing
agreement. They shall continue in full force and effect and remain
effective between the parties until the repayment in full of all
Obligations and the termination or expiration of the Commitments
and all Letters of Credit.
10. Binding Effect. The provisions of this Security Agreement
shall be binding upon the successors and assigns of Debtor and the
rights, powers and remedies of Secured Party hereunder shall inure
to the benefit of the successors and assigns of Secured Party.
Without limiting the generality of the foregoing, any Bank may
assign or otherwise transfer any or all of its rights and
obligations under the Loan Documents to any other Person, and such
other Person shall thereupon become vested with all of the benefits
in respect thereof granted to such Bank herein or otherwise,
subject, however, to the provisions of Article X (concerning the
Administrative Agent) and Section 11.08 of the Credit Agreement.
11. GOVERNING LAW AND JURISDICTION.
(a) THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND APPLICABLE
FEDERAL LAW, EXCEPT TO THE EXTENT THAT THE PERFECTION OR EFFECT OF
PERFECTION OR NON-PERFECTION OF THE SECURITY INTERESTS HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT
IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS SECURITY AGREEMENT, DEBTOR CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION
OF THOSE COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, DEBTOR
FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS SPECIFIED IN SECTION I.6.
HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF SECURED PARTY OR
ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE
GUARANTORS IN ANY OTHER JURISDICTION. DEBTOR WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE
MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
(c) DEBTOR 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 ACTION OR PROCEEDING IN SUCH JURISDICTION IN
RESPECT OF THIS SECURITY AGREEMENT OR ANY DOCUMENT RELATED HERETO.
SECTION 11. WAIVER OF JURY TRIAL. DEBTOR WAIVES ITS
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS SECURITY 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. DEBTOR AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, DEBTOR FURTHER
AGREES THAT ITS 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 SECURITY 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 SECURITY AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
EXECUTED this _____ day of ________________, ____.
By
Name:
Title:
- DEBTOR -
<PAGE>
<PAGE>
Schedule 1
Locations of Inventory
[To be provided by Debtor]
EXHIBIT 10.15
ELEVENTH AMENDMENT
OF THE
EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST AGREEMENT
OF GIANT INDUSTRIES, INC.
AND AFFILIATED COMPANIES
Effective as of July 1, 1987, Giant Industries, Inc., an Arizona
corporation, and Ciniza Pipe Line, Inc., a New Mexico Corporation,
amended and restated the Joint Profit Sharing Plan and Trust Agreement
of Giant Industries, Inc., Giant Western Service Stations, Inc., and
Ciniza Pipe Line Inc., as the Employee Stock Ownership Plan and Trust
Agreement of Giant Industries, Inc. and Affiliated Companies (the
"Plan"). Effective as of July 1, 1987, the Plan was adopted by Ciniza
Production Company, a New Mexico corporation ("Ciniza"), and by J.E.A.
Company, Inc., an Arizona corporation.
Effective as of September 28, 1989, Ciniza Pipe Line Inc. was
merged into Giant Industries, Inc., an Arizona corporation. Effective
as of October 12, 1989, J.E.A. Company, Inc. was merged into Giant
Industries, Inc. and Giant Industries, Inc. changed its name to Giant
Industries Arizona, Inc. ("Giant Arizona").
On October 15, 1989, Giant Arizona entered into an Agreement and
Plan of Reorganization with Hixon Development Company, a Texas
corporation, ("Hixon") contemplating a merger whereby Giant Arizona and
Hixon would become wholly owned subsidiaries of Giant Industries,
Inc., a Delaware corporation ("Giant"). The stock of Giant became
publicly traded on December 15, 1989, and the merger was consummated on
December 21, 1989.
Effective as of December 21, 1989, the Plan was adopted by Giant
and by Hixon. The name of Hixon was changed to Giant Exploration &
Production Company, a Texas corporation ("E&P"), effective June 12,
1990. Giant, Giant Arizona, E&P, Ciniza, Giant Stop-N-Go of New
Mexico, a New Mexico corporation, and Giant Four Corners, Inc., an
Arizona corporation, and such other entities described in section 1.14
of the Plan are hereinafter collectively referred to as the "Employer".
Under Section 11.1 of the Plan, Giant has been granted the right to
amend the Plan in whole or in part at any time and from time to time,
subject to certain restrictions set forth in the Plan, on behalf of the
Employer.
NOW THEREFORE, Giant deems it advisable to amend the Plan in the
manner hereinafter set forth and hereby adopts this tenth amendment.
Pages 1.11 - 1.23 of Article I of the existing Plan is removed and
replaced by the attached Pages 1.11 - 1.23 of Article I which is
incorporated herein by this reference.
The terms used in this Eleventh Amendment which are defined in the
Plan shall have the same meaning given to such terms in the Plan.
Except as modified by this Eleventh Amendment, the Plan shall
continue in full force and effect and the Plan and all amendments
thereto shall be read, taken and construed as one and the same
document.
Executed on the 24 day of March, 1998, to be effective as of
July 1, 1999, unless otherwise specified on the relevant replacement
page.
FOR THE EMPLOYER: ADMINISTRATIVE COMMITTEE:
/s/ Kim H. Bullerdick
GIANT INDUSTRIES, INC. --------------------------------
A Delaware Corporation Kim H. Bullerdick
By /s/ Monte N. Swetnam /s/ Gary R. Dalke
-------------------------- --------------------------------
Monte N. Swetnam Gary R. Dalke
By /s/ Charley F. Yonker
-------------------------- --------------------------------
Charles F. Yonker
TRUSTEE:
WELLS FARGO BANK, N.A.
By:
------------------------------
Its: Vice President
---------------------------
<PAGE>
<PAGE>
Thriftway before May 28, 1997, but only if such employee was
employed by Thriftway on May 27, 1997 and became an Employee of the
Employer on or about May 28, 1997 in connection with the sale of
assets of Thriftway and certain related entities to the Employer,
(vii) effective as of January 1, 1998, all service by an employee of
Phoenix Fuel Co., Inc. ("Phoenix Fuel") for service with Phoenix
Fuel or an affiliate or predecessor employer of Phoenix Fuel to the
extent service was credited to such employee on June 3, 1997 under
the Phoenix Fuel Co., Inc. Section 401(k) Savings Plan as of June 3,
1997, but only if such employee was employed by Phoenix Fuel on June
2, 1997, and became an Employee of the Employer on June 3, 1997, in
connection with the sale of the stock of Phoenix Fuel to the
Employer, and (viii) effective as of July 1, 1999, all service by an
employee of Kaibab Industries, Inc. ("Kaibab") for services with
Kaibab or an affiliate or predecessor employer of Kaibab to the
extent service was credited to such employee on the day he became an
Employee of the Employer, and only if such employee was employed by
Kaibab immediately before becoming an Employee of the Employer and
became an Employee of the Employer on or after May 21, 1998, and on
or before December 31, 1998, in connection with the sale of certain
assets of Kaibab to the Employer.
1.15 "EMPLOYER REAL PROPERTY" shall mean real property (and
related personal property) which is leased to an Employer or to an
affiliate of such Employer as defined under Section 407(d)(7)
-1.11-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
of ERISA. Employer Real Property shall be deemed to be acquired by
the Plan on the date on which the Plan acquires the property or on
the date on which a lease from the Plan to the Employer (or
affiliate) is entered into, whichever is later.
1.16 "EMPLOYER STOCK" prior to December 21, 1989, shall
mean shares of common stock of Giant Industries Arizona, Inc., an
Arizona corporation, having a combination of voting power and
dividend rights equal to or in excess of that class of common stock
having the greatest voting power and that class of stock having the
greatest dividend rights, and on or after December 21, 1989 shall
mean shares of common stock issued by Giant Industries, Inc., a
Delaware corporation. Any valuation of Employer Stock prior to
December 21, 1989, and any valuation in the event shares of common
stock of Giant Industries, Inc. cease to be readily tradable on an
established securities market after December 21, 1989, shall be
performed by an independent appraiser who meets the requirements of
Code Section 410(a)(28)(c).
1.17 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.18 "EXEMPT LOAN" shall mean an exempt loan within the
meaning of Code Section 4975(d)(3) and Treasury Regulations Section
54.4975-7(b)(iii), the requirements of which are more fully set
forth in Section 9.2.
-1.12-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
1.19 "FIDUCIARY" shall mean, in accordance with Section
3(21) of ERISA, any person who exercises any discretionary authority
or discretionary control respecting management of the Plan or any
authority or control respecting management or disposition of Plan
assets, who renders investment advice for a fee or other
compensation (direct or indirect) with respect to Plan assets or
who has any authority or responsibility to do so, and any person who
has any discretionary authority or discretionary responsibility in
the administration of the Plan. The term Fiduciary shall be
construed as including the term "Named Fiduciary" as defined in
Section 402(a)(2) of ERISA with respect to those Fiduciaries who are
identified in the Plan as "Named Fiduciaries".
1.20 "FISCAL YEAR" shall mean the year beginning on
January 1 and ending on December 31, and such Fiscal Year shall be
the plan year for all purposes under ERISA and the Code.
1.21 "FORMER PARTICIPANT" shall mean a Participant whose
employment with the Employer has terminated but who has vested
Accounts under the Plan which have not been paid in full and which
continue to participate in the increase or decrease in Plan assets
including, for any Former Participant on or after December 21, 1989,
any increase or decrease in Employer Stock.
1.22 "GIANT" means Giant Industries, Inc., a Delaware
corporation.
-1.13-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
1.23 "GIANT ARIZONA" means Giant Industries Arizona,
Inc., an Arizona corporation.
1.24 "HIGHLY COMPENSATED EMPLOYEE" means, effective for
any Fiscal Year beginning on or after January 1, 1987, any Employee
who is a highly compensated employee as defined in Code Section
414(q) and the applicable Treasury regulations. Generally, any
Employee is considered a Highly Compensated Employee if during the
Determination Year or the Look-Back Year such Employee:
(a) was a "5% owner" as defined in Code Section
416(i)(B)(i) (i.e. who owns (or is treated as
owning) more than five percent (5%) of the
outstanding stock of the Employer or stock
possessing more than five percent (5%) of the total
combined voting power of all stock of the Employer
or, in the case of an unincorporated business, any
person who owns more than five percent (5%) of the
capital or profits interest in the Employer.) In
determining percentage ownership hereunder,
employers that would otherwise be aggregated under
Code Sections 414(b), (c) and (m) shall be treated
as separate employers;
(b) received Section 415 Compensation from the Employer
in excess of $75,000;
-1.14-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
(c) received Section 415 Compensation from the Employer
in excess of $50,000 and was in the "Top-Paid
Group." An Employee is in the Top-Paid Group if
such Employee is in the group consisting of the top
twenty percent (20%) of Employees when ranked on the
basis of Section 415 Compensation (as adjusted
below); or
(d) was an officer of the Employer whose Section 415
Compensation (as adjusted below) is greater than
$45,000 (or such other amount which is equal to
fifty percent (50%) of the amount specified in Code
Section 415(b)(1)(A) for the calendar year in which
the Determination Year or the Look-Back Year begins.
For purposes of this Section, the Determination Year
shall be the Plan Year in which testing is being performed. The
Employer has elected to treat the calendar year ending with or
within the Determination Year as the Look-Back Year as provided for
in Treasury regulations. Solely for purposes of identifying Highly
Compensated Employees under the terms of this Section and Code
Section 414(q), Section 415 Compensation means Section 415
Compensation as defined in Section 3.1(b) plus amounts described
under Code Sections 125, 402(e)(3) (formerly 402(a)(8)) or
402(h)(1)(B) that are otherwise excluded from Section 415
Compensation; and the dollar threshold amount specified in
-1.15-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
subsections (b) and (c) of this Section shall be adjusted at such
time and in such manner as is provided in the Code.
The term "Highly Compensated Employee" also includes a
former Employee who separated from service (or has a deemed
separation from service as determined under Treasury regulations)
prior to the Determination Year, performs no services for the
Employer during the Determination Year, and was a Highly Compensated
Employee either for the Look-Back Year or any Determination Year
ending on or after his 55th birthday.
The Committee shall make the determination of who is a
Highly Compensated Employee, including the determination of the
number and identity of the Top-Paid Group, the number of officers
includible in subsection (d), the number and identity of former
Employees considered to be Highly Compensated Employees, the
identity of "Excluded Employees," and Section 415 Compensation, in a
manner consistent with Code Section 414(q).
For purposes of this Section, an "Excluded Employee" is
defined under Code Section 414(q)(8) and generally includes (i)
Employees who have not completed six (6) months of service; (ii)
Employees who normally work less than 17 1/2 hours per week; (iii)
Employees who normally work during not more than six (6) months
during any Determination Year; (iv) Employees who have not attained
age 21; and (v) employees who are included in a unit of employees
covered by a collective bargaining agreement. The number of
-1.16-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
officers taken into account under subsection (d) will not exceed the
greater of 3 or 10% of the total number of Employees (after
subtracting Excluded Employees) but will not exceed 50 officers. If
no Employee satisfies the dollar threshold amount in subsection (d)
for the relevant Fiscal Year, the Committee will treat the highest
paid officer as satisfying subsection (d) for that Fiscal Year.
For purposes of applying any nondiscrimination test in a
manner consistent with the applicable Treasury regulations, the
Committee will treat as a single Highly Compensated Employee any
Highly Compensated Employee, who is a 5% owner or is one of the 10
Highly Compensated Employees with the greatest Section 415
Compensation for the Determination Year, and his spouse, lineal
ascendants or descendants or spouses of lineal ascendants or
descendants even if such family members are Highly Compensated
Employees in their own right.
1.25 "HIXON" shall mean Hixon Development Company, a
Texas corporation.
-1.17-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
1.26 "HOUR OF SERVICE" shall mean each hour for which
the Employee is directly or indirectly paid or entitled to payment
by the Employer for performance of duties for the Employer including
each hour for which back pay, irrespective of mitigation of damages,
has been either awarded or agreed to by the Employer, and including
each hour for which payment is made or payable to the Employee for
periods during which the Employee is on an Employer approved leave
of absence for vacation, jury, sick, or disability leave, or
military service. Hours of Service shall also include hours during
such additional periods of service as may be required pursuant to
Department of Labor regulations. Hours for nonperformance of duties
shall be credited in accordance with DOL Regulations Section
2530.200b-2(b). Hours shall be credited to the applicable
computation period in accordance with DOL Regulations Section
2530.200b-2(c).
1.27 "INELIGIBLE PARTICIPANT" shall mean, for purposes
of allocating Section 1042 Employer Stock, (a) a Participant who is
a more than twenty-five percent (25%) owner (or a Participant who is
treated under Code Section 409(n) as a more than twenty-five
percent (25%) owner) of any class of outstanding stock of Giant
Industries, Inc. (or prior to December 21, 1989, of Giant
Industries Arizona, Inc.) or of the total value of any class of
outstanding stock of Giant Industries, Inc. (or prior to December
21, 1989, of Giant Industries Arizona, Inc.) whether he has elected
-1.18-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
nonrecognition of gain under Section 1042 of the Code or not, or
(b) a Participant (or a Participant who is related within the
meaning of Code Section 409(n) to a Participant) who has elected
nonrecognition of gain under Section 1042 of the Code in connection
with the sale of Employer Stock to the Plan. A Participant who is
described in Section 1.27(b) but not in Section 1.27(a) shall be an
"Ineligible Participant" only for the period beginning on the date
on which the Employee Stock for which he elected Code Section 1042
treatment was sold to the Plan and ending on the later of (1) the
date which is ten (10) years after the date of such sale or (2) the
date on which any allocation under the Plan is made which is
attributable to the final payment of any indebtedness incurred by
the Plan in connection with such sale.
1.28 "INVESTMENT MANAGER" shall mean a fiduciary (other
than a Trustee or Named Fiduciary) designated by the Committee under
this Plan to whom has been delegated the power to manage, acquire or
dispose of all or any of the assets of the Plan, who is registered
as an investment advisor under the Investment Advisers Act of 1940,
is a bank as defined under the Investment Advisers Act of 1940 or is
an insurance company qualified to manage, acquire, or dispose of
assets under the laws of more than one State, and who has
acknowledged in writing that he is a fiduciary with respect to the
management, acquisition and control of Plan assets.
-1.19-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
1.29 "PARTICIPANT" shall mean any Employee of the
Employer who becomes eligible for participation in accordance with
the provisions of this Plan.
1.30 "PLAN" shall mean the qualified stock bonus plan
and trust set forth in this Agreement, which is intended to be a
qualified employee stock ownership plan and trust.
1.31 "QUALIFYING EMPLOYER REAL PROPERTY" shall mean
Employer Real Property:
(a) if a substantial number of the parcels are
dispersed geographically;
(b) if each parcel of real property and the
improvements thereon are suitable (or adaptable without excessive
cost) for more than one use;
(c) even if all such real property is leased to
one lessee (which may be an employer, or an affiliate of an
employer); and
(d) if the acquisition and retention of such
property comply with the provisions of this part of ERISA (other
than section 404(a)(1)(B) to the extent it requires diversification,
and sections 404(a)(1)(C), 406, and subsection (a) of this section).
1.32 "SECTION 1042 EMPLOYER STOCK" shall mean Employer
Stock acquired by the Plan prior to December 21, 1989 in a
transaction which qualified for nonrecognition of gain under Code
-1.20-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
Section 1042.
1.33 "SECTION 1042 EMPLOYER STOCK ACCOUNT" shall mean
the account used to reflect an interest in Section 1042 Employer
Stock.
1.34 "SUSPENSE ACCOUNT" shall mean the account used to
hold Employer Stock purchased pursuant to Article IX of the Plan
with the proceeds of an Exempt Loan, prior to allocation of such
stock to the Accounts of Participants under the Plan.
1.35 "TEMPORARY STOCK ACCOUNT" shall mean the interim
account used to hold Employer Stock purchased by the Trustee, other
than Employer Stock purchased pursuant to Article IX of the Plan
with the proceeds of an Exempt Loan, and to hold Employer Stock
contributed to the Plan by the Employer, prior to the allocation of
such stock to the Accounts of Participants each Fiscal Year in
accordance with Sections 4.4(a), 4.7(a) and 4.7(c).
1.36 "TRUST" or "TRUST FUND" shall mean the trust which
is established herein to hold and invest contributions made under
this Plan.
1.37 "TRUSTEE" shall mean the one or more individuals,
banks, trust companies or other financial institutions, which are
appointed in accordance with Article VIII to hold and manage the
assets of the Trust.
1.38 "UNION EMPLOYEE" shall mean any person employed by
Employer who is a member of a unit of employees covered by any
collective bargaining agreement between employee representatives
-1.21-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
and the Employer, wherein retirement benefits were the subject of
good faith bargaining between the parties thereto, unless said
agreement provides for participation in this Plan.
1.39 "UNRESTRICTED EMPLOYER STOCK" shall mean Employer
Stock which was not acquired in a transaction qualifying for
nonrecognition of gain under Section 1042 of the Code.
1.40 "UNRESTRICTED EMPLOYER STOCK ACCOUNT" shall mean
the account used to reflect an interest in Unrestricted Employer
Stock.
1.41 "VALUATION DATE" shall mean the last day of each
Fiscal Year unless otherwise specifically indicated.
1.42 "YEAR OF SERVICE" shall mean, for purposes of
eligibility under the Plan, the twelve (12) consecutive month period
commencing on
(a) the first day the Employee completes an Hour
of Service, or
(b) if the Employee incurs a Break in Service, the
first day the Employee completes an Hour of Service after such Break
in Service, and, each succeeding twelve (12) consecutive month
period beginning on anniversaries of that date during which the
Employee completes at least one thousand (1,000) Hours of Service.
The twelve (12) consecutive month period determined under this
Section for the calculation of a Year of Service for eligibility
shall be the Eligibility Computation Period.
1.43 "YEAR OF SERVICE" shall mean, for purposes of vesting
-1.22-
(Replacement Page,
Eleventh Amendment)
<PAGE>
<PAGE>
under the Plan, the Fiscal Year
(a) during which a Participant first completed an Hour
of Service either as an Employee or as a Union Employee; or
(b) if an Employee or a Union Employee incurs a Break
in Service, the Fiscal Year during which the Employee or Union
Employee completes an Hour of Service after such Break in Service,
and each succeeding Fiscal Year during which an Employee or a Union
Employee completes at least one thousand (1,000) Hours of Service;
provided, however, that any Employee or a Union Employee hired on or
before June 30, 1993 who becomes a Participant under the terms of
Section 2.1 prior to the Seventh Amendment shall be credited in all
events with one Year of Service for the Fiscal Year in which such
Employee or Union Employee becomes a Participant. The Fiscal Year
shall be the Vesting Computation Period.
-1.23-
(Replacement Page,
Eleventh Amendment)
EXHIBIT 10.20
THIRD AMENDMENT
OF THE
GIANT INDUSTRIES, INC.
& AFFILIATED COMPANIES
401(K) PLAN
WHEREAS, Giant Industries, Inc. and certain of its affiliates
(the "Employer") adopted the Giant Industries, Inc. & Affiliated
Companies 401(k) Plan (the "Plan") effective July 1, 1993; and
WHEREAS, the Employer amended and restated the Plan,
effective July 1, 1993, through an Adoption Agreement dated
September 10, 1994; and
WHEREAS, the Employer has the authority to amend the Plan.
NOW, THEREFORE, the Employer hereby amends the Plan as
follows:
Pages 3, 4 and 13, and the Attachment to Adoption Agreement
for Giant Industries, Inc. & Affiliated Companies 401(k) Plan of
the existing Plan are hereby removed and replaced by the attached
replacement pages 3, 4 and 13, and the Attachment to Adoption
Agreement for Giant Industries, Inc. & Affiliated Companies 401(k)
Plan.
This amendment is effective July 1, 1998, except as otherwise
stated in the replacement pages of the attachment.
GIANT INDUSTRIES, INC. &
AFFILIATED COMPANIES
12-10-98 By: /s/ CHARLES F. YONKER
-------- ----------------------------
Name: Charles F. Yonker
Title: Director Human Resources
Accepted by:
FIDELITY MANAGEMENT TRUST COMPANY,
as Trustee
-------- By:----------------------------
Name:
Title:
<PAGE>
<PAGE>
(b) THE TERM "EMPLOYER" INCLUDES THE FOLLOWING RELATED
EMPLOYER(S) (as defined in Section 2.01(a)(26)):
See attached sheet.
1.03 COVERAGE
(a) ALL EMPLOYEES WHO MEET THE CONDITIONS SPECIFIED
BELOW WILL BE ELIGIBLE TO PARTICIPATE IN THE PLAN.
(1) SERVICE REQUIREMENT (check one):
(A) [ ] no service requirement.
(B) [ ] three consecutive months of service
(no minimum number Hours of Service
can be required).
(C) [ ] six consecutive months of service (no
minimum number Hours of Service can be
required).
(D) [X] one Year of Service (1,000 Hours of
Service is required during the
Eligibility Computation Period.)
(2) AGE REQUIREMENT (check one):
(A) [X] no age requirement.
(B) [ ] must have attached age ___ (not to
exceed 21).
(Replacement Page,
Third Amendment)
3
<PAGE>
<PAGE>
(3) THE CLASS OF EMPLOYEES ELIGIBLE TO PARTICIPATE IN THE
PLAN (check one):
(A) [ ] includes all Employees of the Employer.
(B) [X] includes all Employees of the Employer except
for (check the appropriate box(es)):
(i) [X] Employees covered by a collective
bargaining agreement.
(ii) [ ] Highly Compensated Employees as
defined in Code Section 414(g).
(iii) [X] Leased Employees as defined in Section
2.01(a)(18).
(iv) [ ] Nonresident aliens who do not receive
any earned income from the Employer
which constitutes United States source
income.
(v) [ ] Other
Note: No exclusion in this section may create a
discriminatory class of employees. An
Employer's plan must still pass the Internal
Revenue Code coverage and participation
requirements if one or more of the above
groups of Employees have been excluded from
the Plan.
(b) THE ENTRY DATE(S) SHALL BE (check one):
(1) [ ] the first day of each Plan Year (not if Section
1.03 (a)(1)(D) is elected).
(2) [X] the first day of each Plan Year and the date six
months later. (July 1) See attachment.
(3) [ ] the first day of each Plan Year and the first
day of the fourth, seventh, and tenth months.
(4) [ ] the first day of each month.
(Replacement Page,
Third Amendment)
4
<PAGE>
<PAGE>
1.08 PREDECESSOR EMPLOYER SERVICE
[X] SERVICE FOR PURPOSES OF ELIGIBILITY IN SECTION 1.03(a)(1)
AND VESTING IN SECTION 1.07(a) OF THIS PLAN SHALL INCLUDE
SERVICE WITH THE FOLLOWING EMPLOYER(S):
(a) See attachment.
(b) See attachment.
(c) See attachment.
(d) See attachment.
(e) See attachment.
1.09 PARTICIPANT LOANS
PARTICIPANT LOANS (check (a) or (b)):
(a) [ ] WILL BE ALLOWED IN ACCORDANCE WITH SECTION 7.09,
SUBJECT TO A $1,000 MINIMUM AMOUNT AND WILL BE
GRANTED (check (1) or (2)):
(1) [ ] for any purpose.
(2) [ ] for hardship withdrawal (as defined in
Section 7.10) purposes only.
(b) [X] WILL NOT BE ALLOWED.
1.10 HARDSHIP WITHDRAWALS
PARTICIPANT WITHDRAWALS FOR HARDSHIP PRIOR TO TERMINATION OF
EMPLOYMENT (check one):
(a) [X] WILL BE ALLOWED IN ACCORDANCE WITH SECTION 7.10,
SUBJECT TO A $1,000 MINIMUM AMOUNT.
(b) [ ] WILL NOT BE ALLOWED.
(Replacement Page,
Third Amendment)
13
<PAGE>
<PAGE>
ATTACHMENT TO ADOPTION AGREEMENT FOR GIANT INDUSTRIES, INC.
AFFILIATED COMPANIES 401(K) PLAN
Section 1.03(b).
The Entry Date(s) shall include the first day of each month
between June 25, 1998 and December 31, 1998, but only for an
employee who was employed by Kaibab and was eligible to
contribute to the Kaibab Industries, Inc. 401(k) Employee
Savings Plan for Employees Not Covered under a Collective
Bargaining Agreement ("the Kaibab 401(k) Plan") immediately
before becoming an Employee of the Employer and who became an
Employee of the Employer on or after May 21, 1998 and on or
before December 31, 1998, in connection with the sale of
certain assets of Kaibab to the Employer.
Section 1.04(a)(4).
Effective January 1, 1997, Compensation shall exclude (1) the
value of a qualified or a nonqualified stock option granted to
an Employee by the Employer to the extent such value is
includable in the Employee's taxable income, (2) the amount
realized from the exercise of a qualified or nonqualified stock
option and (3) severance benefits.
Section 1.05(c)(4)(A).
An Employee of Giant Exploration & Production Company ("E&P")
who is employed by E&P on July 16, 1996, and who is not
thereafter transferred from E&P to another affiliate or
division that is part of the Employer, shall be deemed to
satisfy the requirements of this Section 1.05(c)(4)(A) for the
Plan Year ending December 31, 1996.
Section 1.08
(a) Effective as of January 1, 1996, Bloomfield Refining
Company ("Bloomfield"), The Gary-Williams Company ("Gary-
Williams"), and any affiliate or predecessor employer of
either, but only to the extent service was credited under
The Gary Tax Advantaged Savings Program and Profit-Sharing
Plan on October 4, 1995 with respect to such employer, and
only for employees who were employed by Bloomfield or
Gary-Williams on October 3, 1995,
-1- (Replacement Page,
Third Amendment)
<PAGE>
<PAGE>
and became Employees of the Employer on October 4, 1995,
in connection with the sale of assets of Bloomfield
Refining Company to the Employer.
(b) Effective as of January 1, 1996, Meridian Oil Inc.,
Meridian Oil Gathering Inc., and Meridian Oil Trading Inc.
(collectively "Meridian"), and any affiliate or predecessor
employer of Meridian, but only to the extent service was
credited under the Burlington Resources Retirement Savings
Plan on August 18, 1995 with respect to such employer, and
only for employees who were employed by Meridian on August
17, 1995, and became Employees of the Employer on August
18, 1995, in connection with the sale of assets of Meridian
to the Employer.
(c) Effective as of January 1, 1996, Texaco Refining and
Marketing Inc. ("Texaco"), and any affiliate or predecessor
employer of Texaco, but only to the extent service was
credited under any plan sponsored by Texaco that qualified
under Section 401(a)(4) of the Code, and only for an
employee who was employed by Texaco on July 24, 1993, and
became an Employee of the Employer on July 25, 1995 in
connection with the sale of assets of Texaco to the
Employer.
(d) Effective as of July 1, 1997, Thriftway Marketing
Corporation ("Thriftway") for service before May 28, 1997
but only for Pat Curtis, a human resource generalist, and
for employees employed by Thriftway on May 27, 1997 who
were employed or hired into the transportation division on
or about May 28, 1997 and who became Employees of the
Employer on May 28, 1997 in connection with the sale of
assets of Thriftway and certain related entities to the
Employer.
(e) Effective as of July 1, 1998, Kaibab Industries, Inc.
("Kaibab") and any affiliate or predecessor employer of
Kaibab, but only to the extent Service was granted under
the Kaibab 401(k) Plan and only for an employee who was
employed by Kaibab immediately before becoming an Employee
of the Employer and became an Employee of the Employer
on or after May 21, 1998 and on or before December 31,
1998, in connection with the sale of certain assets to
Kaibab to the Employer.
-2- (Replacement Page,
Third Amendment)
<PAGE>
<PAGE>
AMENDMENT TO BASIC PLAN DOCUMENT
(a) By way of clarification and emphasis, Section 13.01 is amended
by inserting the words "Discretionary authority" at the
beginning of each of clauses (b)-(f), and in each such clause,
revising "To" to read "to".
(b) The second sentence of Section 4.10(a)(1) is amended by
adding the following at the conclusion thereof: "; provided,
that in the case of a direct rollover of an eligible rollover
distribution from the Kaibab 401(k) Plan and the Kaibab
Industries, Inc. Employee Stock Ownership Plan (the 'Kaibab
plans'), the transfer may include a participant note for a plan
Loan from one of the Kaibab plans."
(c) By way of clarification and emphasis, Section 4.10(a)(2) is
amended by inserting the phrase "any or all" between the words
"accept" and "rollover" in both places they occur.
-3- (Replacement Page,
Third Amendment)
EXHIBIT 10.21
FOURTH AMENDMENT
OF THE
GIANT INDUSTRIES, INC.
& AFFILIATED COMPANIES
401(K) PLAN
WHEREAS, Giant Industries, Inc. and certain of its
affiliates (the "Employer") adopted the Giant Industries, Inc. &
Affiliated Companies 401(k) Plan (the "Plan") effective July 1,
1993; and
WHEREAS, the Employer amended and restated the Plan,
effective July 1, 1993, through an Adoption Agreement dated
September 10, 1994; and
WHEREAS, the Employer has the authority to amend the Plan.
NOW, THEREFORE, the Employer hereby amends the Plan as
follows:
Pages 7, and 9 of the existing Plan are hereby removed and
replaced by the attached replacement pages 7, and 9.
This amendment is effective January 1, 1999, except as
otherwise stated in the replacement ages of the attachment.
GIANT INDUSTRIES, INC. &
AFFILIATED COMPANIES
12-10-98 By: /s/ Charles F. Yonker Jr.
-------- ----------------------------
Date Name: Charles F. Yonker Jr.
Title: Director of Human Resources
Accepted by:
FIDELITY MANAGEMENT TRUST COMPANY,
as Trustee
-------- By:----------------------------
Date Name:
Title:
<PAGE>
<PAGE>
(3) ELIGIBILITY REQUIREMENT(S)
A Participant shall be entitled to Employer
Contributions for a Plan Year under this Subsection
(a) if the Participant satisfies the following
requirement(s) (Check the appropriate box(es) -
Options (B) and (C) may not be elected together):
(A) [ ] is employed by the Employer on the last day
of the Plan Year.
(B) [ ] earns at least 500 Hours of Service during
the Plan Year.
(C) [ ] earns at least 1,000 Hours of Service during
the Plan Year.
(D) [ ] no requirements.
Note: If option (A), (B) or (C) above is selected
then Employer Contributions can only be
funded by the Employer after Plan Year end.
(b) [X] DEFERRAL CONTRIBUTIONS
(1) REGULAR CONTRIBUTIONS
The Employer shall make a Deferral Contribution in
accordance with Section 4.01 on behalf of each
Participant who has an executed salary reduction
agreement in effect with the Employer for the
payroll period in question, not to exceed 15*% (no
more than 15%) of Compensation for that period.
*Effective 01/01/999
(A) A Participant may increase or decrease, on a
prospective basis, his salary reduction agree-
ment percentage (check one):
(i) [ ] As of the beginning of each payroll period.
(ii) [ ] As of the first day of each month.
(iii) [X] As of the next Entry Date.
(iv) [ ] (Specify, but be at least once per Plan Year)
____________________________________________
____________________________________________
(B) A participant may revoke, on a prospective basis, a
salary reduction agreement at any time upon proper
notice to the Administrator but in such case may not
file a new salary reduction agreement until (check
one):
(i) [ ] The first day of the next Plan Year.
(ii) [X] Any subsequent Plan Entry Date.
(iii) [ ] (Specify, but be at least once per Plan Year)
____________________________________________
____________________________________________
(Replacement Page,
Fourth Amendment)
7<PAGE>
<PAGE>
(c) [X] MATCHING CONTRIBUTIONS (only if Section 1.05(b) is checked)
(1) THE EMPLOYER SHALL MAKE A MATCHING CONTRIBUTION ON BEHALF
OF EACH PARTICIPANT IN AN AMOUNT EQUAL TO THE FOLLOWING
PERCENTAGE OF A PARTICIPANT'S DEFERRAL CONTRIBUTIONS DURING
THE PLAN YEAR (check one):
(A) [ ] 50%
(B) [ ] 100%
(C) [ ] ___%
(D) [ ] (Tiered Match) ___% of the first ___% of the
Participant's Compensation contributed to the Plan,
___% of the next ___% of the Participant's
Compensation contributed to the Plan,
___% of the next ___% of the Participant's
Compensation contributed to the Plan.
Note: The percentages specified above for Matching
Contributions may not increase as the percentage
of Compensation contributed increases.
(E) [X] The percentage declared for the year, if any, by
a Board of Directors' resolution.
(2) [ ] THE EMPLOYER MAY AT PLAN YEAR END MAKE AN ADDITIONAL
MATCHING CONTRIBUTION EQUAL TO A PERCENTAGE DECLARED
BY THE EMPLOYER, THROUGH A BOARD OF DIRECTORS'
RESOLUTION, OF THE DEFERRAL CONTRIBUTIONS MADE BY EACH
PARTICIPANT DURING THE PLAN YEAR (only if an option is
checked under Section 1.05(c)(1)).
(3) [X] MATCHING CONTRIBUTION LIMITS (check the appropriate
box(es)):
(A) [X] Deferral Contributions in excess of 12% of the
Participant's Compensation for the period in
question shall not be considered for Matching
Contributions.
Note: If the Employer elects a percentage limit in
(A) above and requests the Trustee to account
separately for matched and unmatched Deferral
Contributions, the Matching Contributions
allocated to each Participant must be computed,
and the percentage limit applied, based upon
each payroll period.
(B) [ ] Matching Contributions for each Participant for
each Plan Year shall be limited to $_________.
(Replacement Page,
Fourth Amendment)
9
EXHIBIT 10.24
REAL ESTATE PURCHASE AGREEMENT
THIS AGREEMENT is made this 5th day of October, 1997, between
Pinnacle Sonoran Desert Properties, L.L.C. ("Seller") and Giant
Industries Arizona, Inc. ("Purchaser").
In consideration of the following mutual promises, Seller and
Purchaser agree as follows:
1. SALE AND PURCHASE. Upon the following terms and
conditions, Seller shall sell and Purchaser shall purchase a
portion of that certain parcel of real estate known as Assessors
Parcel #211-40-006E and a portion of #211-40-006L, together with
all improvements thereon and appurtenances thereto, including all
fixtures and equipment attached thereto, located on the Northwest
corner of Tatum and Dynamite Boulevards, Phoenix, Arizona (the
"Property"). (See Exhibit A).
2. PURCHASE PRICE AND TERMS OF PAYMENT. The "Purchase
Price" for the Property shall be approximately Twelve and 20/100
Dollars ($12.20) per square foot for approximately Seventy-five
Thousand Square Feet (75,000 S.F.). Actual site perimeter
dimensions shall be as mutually agreed and indicated on a final
survey plat. The Purchase Price shall be payable by Purchaser to
Seller as follows:
a) EARNEST MONEY DEPOSIT. Within ten (10) days from
execution of this Agreement the sum of Ten Thousand and No/100
Dollars ($10,000.00) shall be deposited by Purchaser in escrow
with a mutually agreed to escrow agent as a refundable earnest
money deposit. The earnest money deposit shall be applied toward
the Purchase Price if Purchaser proceeds to buy the Property.
b) INSPECTION PERIOD DEPOSITS. Seller hereby grants
Purchaser an inspection period as described in Paragraph 4(a) of
this Agreement.
c) BALANCE AT CLOSING. The balance of the Purchase
Price shall be paid by Purchaser at Closing as later defined, in
cash, certified funds or by cashier's check.
3. TITLE EXAMINATION, MARKETABLE TITLE AND TITLE INSURANCE.
a) TITLE EXAMINATION. Within ten (10) days after the
execution of this Agreement, Seller shall furnish Purchaser with a
title commitment issued by a title insurance company licensed to
insure title to real estate in the county where the Property is
located. The title commitment shall constitute a promise by the
title insurance company to insure that title to the Property in
Purchaser's name in the amount of the Purchase Price. Purchaser
shall have five (5) days after the delivery of the title
commitment to Purchaser to review it and to present Seller with
written notice of any objections to the status of title as shown
by the commitment. Any objections which have not been presented
to Seller by the end of such period shall be deemed to have been
waived. If written objections to the title commitment are timely
made, then Seller, at Seller's expense, shall take such steps as
are necessary to satisfy such objections. If Purchaser's
objections have not been satisfied prior to Closing, then
Purchaser shall have the right to elect not to close on the
transaction and not to purchase the Property.
b) MARKETABLE TITLE. At Closing, Seller shall execute
a general warranty deed, conveying good and merchantable title to
the Property to Purchaser free and clear of all liens and
encumbrances and subject only to those matters reflected on the
title commitment and not objected to by Purchaser pursuant to this
paragraph.
c) TITLE INSURANCE. Immediately following Closing,
Seller, at Seller's expense, shall cause the title insurance
company to issue an owner's title insurance policy in favor of
Purchaser for the Property in the amount of the Purchase Price.
The title insurance policy shall set forth exceptions for only
those matters reflected on the title commitment and not objected
to by Purchaser pursuant to this paragraph and the standard
preprinted exceptions contained in the title insurance company's
standard form of title insurance, except that the standard survey
and materialmen's liens exceptions (standard exceptions 1 through
4) shall be deleted at Seller's expense. The expense of obtaining
any and all surveys, affidavits and other matters required by the
title insurance company to delete such standard exceptions shall
be borne by Seller.
4. CONTINGENCIES.
a) INSPECTION PERIOD. Purchaser shall have ten (10)
days after the execution of this Agreement in which to inspect the
Property and determine if, in Purchaser's opinion, the property is
suitable for development of a retail food and fuel facility. If
no written objections to the Property have been presented to
Seller by the end of such period, then Purchaser shall be deemed
to have accepted the Property and to have waived all objections to
it. If written objections are timely made, Seller, at Seller's
expense, shall take such steps as are reasonably necessary to
correct the conditions complained of. If Purchaser's objections
have not been satisfied prior to Closing, then Purchaser shall
have the right to elect not to close on the transaction and not to
purchase the Property.
b) SURVEY EXAMINATION. Within five (5) days after the
execution of this Agreement, Seller and Purchaser shall agree upon
site boundary dimensions and within an additional five (5) days
Seller shall furnish Purchaser with a current boundary and
improvement survey of the Property including a legal description
prepared by a duly licensed Arizona land surveyor. Purchaser
shall have two (2)) days after the delivery of the survey to
Purchaser to review it and to present Seller with written notice
of any objections to matters shown by the survey. Any objections
which have not been presented to Seller by the end of such period
shall be deemed to have been waived. If written objections to the
survey are timely made, then Seller, at Seller's expense, shall
take such steps as are necessary to satisfy the objections. If
Purchaser's objections have not been satisfied prior to Closing,
then Purchaser shall have the right to elect not to close on the
transaction and not to purchase the Property.
c) ZONING. Purchaser assumes that current zoning for
the land parcel will allow the construction of a food and fuel
facility , including liquor sales. If any State, County, City or
code restrictions prevent the operation of Purchaser's standard
food and fuel facility, Purchaser shall have the right to cancel
this agreement with no obligation to proceed with Closing.
d) ENVIRONMENTAL EXAMINATION. Within five (5) days of
the execution of this Agreement, Seller shall furnish Purchaser,
at Seller's expense, a Phase 1 Environmental Site Assessment for
the Property. Purchaser shall have five (5) days from the date of
receipt of the Phase 1 Evaluation within which to review the Phase
1 Evaluation. If Purchaser determines that there is reason to
believe that any hazardous waste, hazardous substance, pollutants
or other contaminants (collectively referred to as "Contaminants")
have been released on the Property or from or onto any other
property, then, within two (2) days, Purchaser shall notify Seller
in writing of any objections which Purchaser may have to
environmental matters disclosed by the Phase 1 Evaluation.
Failure to give such written notice to Seller shall constitute a
waiver of any objection by Purchaser to any environmental matter.
Within two (2) days after receiving written notice from Purchaser
of an objection, Seller may either: (i) terminate this Agreement
by written notice to Purchaser, and Escrow Agent, in which event
the earnest money deposit and all interest accrued thereon, if
any, shall be reimbursed to Purchaser and upon such reimbursement
this Agreement shall terminate and shall be of no further effect
except for those provisions concerning rights and duties after a
failure to close without fault of either party; (ii) commence all
curative actions; or (iii) give written notice of refusal to take
curative action. If Seller gives written notice of refusal to
take curative action, or if Seller commences curative action but
fails to cure any objection prior to the Closing, then Purchaser,
at Purchaser's option, may elect to: (i) waive the objection and
proceed to Closing, in which event all environmental matters shall
be deemed approved and accepted by Purchaser and Seller shall have
no further obligation to undertake curative action; or (ii)
terminate this Agreement by written notice to Seller and Escrow
Agent, in which event the earnest money deposit and all interest
accrued thereon shall be reimbursed to Purchaser and upon such
reimbursement this Agreement shall terminate and shall be of no
further effect except for those provisions concerning rights and
duties after a failure to close without fault of either party.
e) Purchase is subject to adequate traffic access to and
from the site.
f) Purchase is subject to the Seller providing all
necessary utilities to the site ready for hook-up, and Seller
providing properly compacted site rough graded to within 4" of
Purchaser's expected finished grade.
g) Purchase is subject to acquisition of all required
approvals from state, county, city and neighborhood authorities as
well as Purchaser's Board of Directors to allow the development of
a fuel and food facility.
h) Purchase is subject to a mutual agreement by the
Seller and Purchaser in regards to a sign easement at the
Northwest corner of Tatum and Dynamite Boulevards.
In addition to Seller's other indemnification
obligations set forth in this Agreement, Seller shall indemnify
Purchaser and hold Purchaser harmless from and against all
liabilities, obligations, losses, damages, penalties, claims,
environmental response and cleanup costs, finds, actions, suits,
costs, taxes, charges, expenses and disbursements, including legal
fees and expenses incident thereto, imposed on, incurred by, or
reserved against Purchaser in any way relating to or arising out
of the existence or presence of any Contaminant on, under, into or
from the Property at any time prior to Closing, including any
claims or damages in any related to or arising out of the removal,
treatment, storage, disposition, mitigation, cleanup or remedying
of the Contaminants of the Property and any claims or damages
arising from Seller's use of the Property in violation of any
applicable environmental law, rule, regulations or ordinance.
5. CLOSING. Closing of the transaction shall occur within
five (5) days after the final date of the Inspection Period.
Closing will occur in the offices of the title company issuing the
title commitment. The title company shall act, and is hereby
designated by the parties to act, as escrow agent for the Closing.
At Closing, the following actions shall occur, each action being
considered a condition precedent to the others and all being
considered as taking place simultaneously:
a) Seller shall execute, acknowledge and deliver to
Escrow Agent a general warranty deed, conveying the Property to
Purchaser as required under Paragraph 3(b).
b) Purchaser shall deliver to Escrow Agent cash,
certified funds or a cashier's check for the balance of the
Purchase Price, after making such adjustments as are shown on the
closing statements prepared by the Escrow Agent.
c) The Escrow Agent shall prepare and deliver closing
statements showing all prorations and other charges and credits to
each party, such statements to be approved by the respective
parties.
6. POST CLOSING. As soon as is practicable after Closing,
the Escrow Agent shall make such searches of the public records as
may be necessary to enable it to issue the title insurance policy
required to be provided pursuant to Paragraph 3(c), whereupon, if
such searches are satisfactory, then the transaction shall be
deemed to have closed and the Escrow agent shall (i) file the deed
for record, (ii) deliver the recorded deed and title insurance
policy to Purchaser, and (iii) deliver the note to Seller, and
(iv) shall disburse the funds as shown on the closing statements.
If such searches are not satisfactory, then the transaction shall
be deemed not to have closed, and the Escrow Agent shall hold the
unrecorded documents and funds thereafter as agent for the
parties. The documents and funds shall be delivered pursuant to
an agreement of the parties or an order of court specifying the
disposition thereof.
7. CLOSING COSTS. Seller shall pay the fees for recording
any instrument necessary to establish the marketability of
Seller's title to the Property and for recording the deed.
Purchaser shall pay for all other recording fees. Seller and
Purchaser shall each pay one-half (1/2) of any fee charged by the
title insurance company for closing the transaction.
8. PRORATION. Ad valorem taxes and all sewer, garbage,
water and other assessments applicable to the Property shall be
prorated as of the date of Closing, and, unless the actual amounts
for the year in which Closing occurs are known, shall be based
upon the latest known rates applied to the latest known assessed
valuation of the Property. Seller shall provide Purchaser and
Escrow Agent with the latest rates and assessed valuations of the
Property provided to Seller by the appropriate governmental
authorities. The prorations so determined shall be final and not
subject to recomputation after Closing.
9. RISK OF LOSS, POSSESSION AND DELIVERY. Possession of the
Property shall be transferred to Purchaser at Closing, and the
risk of loss shall shift to Purchaser at that time. Seller shall
deliver the Property to Purchaser graded as previously described
with all necessary utilities available for hook-up. Seller shall
be obligated to carry liability and extended coverage insurance on
the Property prior to Closing.
10. DEFAULT AND REMEDIES. If Seller defaults in the
performance of this Agreement, the Purchaser shall have the right
to specific performance, or to rescind this Agreement and recover
or retain the earnest money deposit, as the case may be, and any
other remedy provided by law. If Purchaser defaults in the
performance of this Agreement, Seller's sole remedy shall be the
retention of the earnest money deposit.
11. REAL ESTATE COMMISSIONS. Seller and Purchaser hereby
covenant that all real estate commission as a result of this
transaction will be paid by Seller. In the event of a breach of
this covenant, the party breaching this covenant shall indemnify
and hold the other party harmless from any claims of entitlement
to such a fee or commission. This covenant shall survive Closing
or the cancellation of this Agreement.
12. NOTICES. All notices or any other communications
required or permitted hereunder shall be in writing, and shall be
deemed to have been duly given when personally delivered or duly
deposited in the United States certified mail, return receipt
requested, properly stamped and addressed, to the parties at their
addresses listed below:
Seller: Pinnacle Sonoran Desert Properties, L.L.C.
Attention: Harv Acridge
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Purchaser: Giant Industries Arizona, Inc.
Attention: John Hosmar, Director,
Retail Development
23733 North Scottsdale Road
Scottsdale, Arizona 85255
1. MISCELLANEOUS.
a) ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between Seller and Purchaser respecting the sale
and purchase of the Property, and will supersede and replace any
and all prior and contemporaneous written and oral agreements,
promises, representations, or conditions with respect thereto.
b) APPLICABLE LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of Arizona.
c) BINDING EFFECT. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
heirs, successors, assigns and personal representatives.
d) MODIFICATION. This Agreement may be modified only by
a writing duly executed by the parties.
e) ASSIGNMENTS. This Agreement may not be assigned or
delegated by either party without the consent of the other party.
Any purported assignment without such consent shall be void and
shall entitle the other party to the remedies allowed herein for a
default in the performance of this Agreement.
f) FURTHER DOCUMENTATION. The parties shall, in good
faith, execute such additional documents as may be necessary or
appropriate to fully carry out the intent and purpose of this
Agreement.
g) TAX DOCUMENTATION. Following Closing, Seller shall
file a complete Form 1099-B, Proceeds from Real Estate, Broker,
and Barter Exchange Transactions, with the appropriate office of
the Internal Revenue Service, and shall deliver a copy to
Purchaser. This obligation shall survive Closing.
h) FACSIMILE AGREEMENT. Signed facsimiles of this
Agreement shall be binding.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
SELLER - PINNACLE SONORAN DESERT PROPERTIES, L.L.C.
By: /s/ Harvey Acridge 10-5-97
-------------------------- -------
Date
PURCHASER - GIANT INDUSTRIES ARIZONA, INC.
By: /s/ John C. Hosmar 10-1-97
-------------------------- -------
John C. Hosmar, Director, Date
Retail Development
<PAGE>
<PAGE>
EXHIBIT A
September 25, 1997
Legal description for Tatum Ranch - Parcel 46 Gas Station Site
A portion of the Southeast quarter of Section 30, Township 5
North, Range 4 East of the Gila and Salt River Base and Meridian,
Maricopa County, Arizona.
EXHIBIT 10.25
AMENDMENT TO REAL ESTATE PURCHASE AGREEMENT
Subject Property: A portion of that certain parcel of real
estate known as Assessors Parcel #211-40-006E
and a portion of ####-##-####; located on the
Northwest corner of Tatum & Dynamite Boulevards,
Phoenix, Arizona.
This amendment hereby declares that the "Purchase Price" for the
Property shall be Eight Hundred Ninety Thousand and 00/100 Dollars
($890,000.00).
The undersigned hereby agree to said amendment and acknowledge
that this amendment is to be made part of the original Real Estate
Purchase Agreement dated the 5th day of October, 1997 between Pinnacle
Sonoran Desert Properties, L.L.C. ("Seller") and Giant Industries
Arizona, Inc. ("Purchaser").
SELLER - PINNACLE SONORAN DESERT PROPERTIES, L.L.C.
By: /s/ Harvey Acridge 10-16-97
------------------------- --------
Date
PURCHASER - GIANT INDUSTRIES ARIZONA, INC.
By: /s/ John C. Hosmar 10-16-97
------------------------- --------
John C. Hosmar, Director, Date
Retail Development
EXHIBIT 10.26
SECOND AMENDMENT TO REAL ESTATE PURCHASE AGREEMENT
This Second Amendment to the Real Estate Purchase Agreement,
dated the 21st day of April, 1998 shall serve as an Addendum to
the Original Real Estate Purchase Agreement dated the 5th day
of October, 1997, as modified by the first Amendment to Real Estate
Purchase Agreement dated the 16th day of October, 1997, between
Pinnacle Sonoran Desert Properties, L.L.C. ("Seller") and Giant
Industries Arizona, Inc. ("Purchaser"), covering the following
described property:
A portion of that certain parcel of real estate known as
Assessors Parcel #211-40-006E and a portion of ####-##-####;
located on the Northwest corner of Tatum & Dynamite Boulevards,
Phoenix, Arizona.
The Seller and Purchase hereby agree to the following:
1. Right of First Refusal - See Exhibit B
2. Landscape and Signage Easement - See Exhibit C
3. Cross access easement/agreement - See Exhibit C
4. Closing date extension date to April 30, 1998.
The undersigned hereby agree to the above amendments and
acknowledge that this amendment is to be made part of the original
Real Estate Purchase Agreement as noted above.
SELLER - PINNACLE SONORAN DESERT PROPERTIES, L.L.C.
By: /s/ Harvey Acridge 4-20-98
-------------------- -------
Date
PURCHASER - GIANT INDUSTRIES ARIZONA, INC.
By: /s/ John C. Hosmar 4-21-98
-------------------- -------
John C. Hosmar, Director, Date
Retail Development
<PAGE>
<PAGE>
EXHIBIT B
RIGHT OF REPURCHASE
THIS RIGHT OF REPURCHASE ("Agreement") is entered into as of the
_____ day of April, 1998, by and between Giant Industries Arizona, Inc., an
Arizona corporation ("Giant"), and Pinnacle Sonoran Desert Properties,
L.L.C., an Arizona limited liability company ("Pinnacle").
RECITALS
A. Concurrently with the recordation of this Agreement,
Giant acquired certain real property from Pinnacle, located in Maricopa
County, Arizona and more particularly described on Exhibit "A" attached
hereto and incorporated herein by this reference ("Property"), which
is adjacent to real property owned by Pinnacle.
B. As a condition to Pinnacle's willingness to convey the
Property to Giant, Pinnacle desires a right to repurchase the Property
under certain circumstances, and Giant is willing to grant the right
to repurchase upon and subject to the terms and conditions set forth
in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, agree as follows:
1. Grant of Right to Repurchase. During the Repurchase Period
(as hereinafter defined), Giant hereby grants to Pinnacle a right to
repurchase the Property ("Right to Repurchase") upon the terms and subject
to the conditions of this Agreement, if any of the following events occur:
(i) Giant enters into a binding agreement to sell the Property to an
unrelated third party purchaser; (ii) Giant enters into a binding agreement
to sell all or substantially all of the assets of Giant (including the
Property) and James E. Acridge and/or his heirs and legatees (collectively,
"Acridge") will not own, directly or indirectly, more than fifteen
percent (15%) of the beneficial interest of the successor owner of the
Property; (iii) the merger or consolidation of Giant with and into another
entity where Giant is not the surviving entity and James E. Acridge will
not be employed as an executive officer (or similar capacity) of the new
entity; or (iii) Acridge's beneficial ownership interest in Giant is less
than fifteen percent (15%) and James E. Acridge will not be
employed as an executive officer of Giant. Upon execution of this
Agreement, Giant and Pinnacle shall execute and record a Memorandum of
the Right to Repurchase substantially in the form attached hereto as
Exhibit "B" and incorporated herein by this reference.
2. Repurchase Notice. If at any time during the Repurchase
Period, any of the events in Section 1 occur, Giant shall immediately
provide written notice to Pinnacle of the occurrence of such event,
together with a statement describing the general terms and conditions of
such event ("Repurchase Notice").
3. Term of Right to Repurchase. If not earlier terminated, the
Right of Repurchase shall terminate on May 1, 2028 ("Outside Date").
The period from the date of execution of this Agreement until the
Outside Date is referred to herein as the "Repurchase Period".
4. Exercise of Right to Repurchase. Pinnacle shall have 15
days from the date of a Repurchase Notice to deliver written notice to
Giant electing to purchase the Property ("Election Notice") along with an
earnest money deposit of $10,000.00. If Pinnacle does not deliver the
Election Notice and the earnest money deposit within the 15 day period,
the Right to Repurchase shall immediately terminate in accordance with
Section 5. If Pinnacle delivers the Election Notice and the earnest
money deposit within the 15 day period, Giant shall sell the
Property to Pinnacle on the following terms and conditions:
4.1 Purchase Price. The purchase price
for the Property shall be at the then real estate appraised value by
a mutually agreed upon appraisal and shall be paid by Pinnacle at
closing by cash, certified check, wire transfer or other readily
available funds. In addition, Pinnacle shall assume any indebtedness
encumbering the Property.
4.2 Assumption of Obligations.
Pinnacle shall assume and agree to be bound by any and all obligations of
Giant applicable to the Property, including, without limitation, tenant
leases, service contracts and construction contracts.
4.3 Closing. The closing of the repurchase shall occur
on or before 90 days after the date of the Election Notice.
4.4 Conveyance. At the closing, Giant shall convey the
Property to Pinnacle by Special Warranty Deed , subject to all matters of
record as of the date of closing
4.5 Costs. Pinnacle shall pay all escrow and closing
costs. Real property taxes relating to the Property for the current tax
year shall be prorated between Giant and Pinnacle as of the closing date,
based on the latest available estimates of the amount of such taxes.
4.6 No Other Assets. The Right to Repurchase shall
include only the Property, the buildings constructed on the Property, and
any fixtures attached to buildings on the Property. The Right to Repurchase
shall not apply to, and Giant shall have no obligation to sell or otherwise
transfer to Pinnacle, any other property or assets of Giant including, but
not limited to, any personal property located on or used in connection with
the Property or any agreements or permits relating to the Property.
5. Termination of Right to Repurchase. The Right to
Repurchase shall terminate and be of no further force and effect upon the
earliest of the following to occur: (i) failure by Pinnacle to deliver an
Election Notice and the earnest money deposit within the 15 day period
specified above; (ii) delivery of an Election Notice and the earnest money
deposit within the 15 day period specified in Section 3 above, but,
thereafter, a failure by Pinnacle to close the purchase of the Property as
provided above; (iii) expiration of the Repurchase Period; (iv) an attempt
by Pinnacle to improperly assign this Agreement. Upon termination of the
Right to Repurchase, Giant and Pinnacle shall execute and record a
Termination of Right to Repurchase, substantially in the form of Exhibit
"C" attached hereto and incorporated herein by this reference.
6. Subordinate. Pinnacle's Right to Repurchase is
subordinate to any acquisition or construction financing obtained by
Giant in connection with the Property and any easements, dedications,
covenants, conditions, restrictions or other encumbrances subsequently
recorded in the real estate records of the county where the Property
is located. This subordination provision is intended to be self-
executing and effective without further agreement or documentation from
Pinnacle; provided, however, Pinnacle shall execute any document
reasonably requested by Giant or any lender of Giant or encumbrancer
of the Property to confirm or establish this subordination.
7. Assignment. Pinnacle may not assign its interest in this
Agreement, without the prior written consent of Giant, which may be granted
or withheld in Giant's sole and absolute discretion.
8. Notices. All notices, requests and other communications
hereunder shall be in writing and shall be given by personal delivery;
overnight courier; or deposit in the United States mail, first class,
registered or certified, return receipt requested, postage prepaid,
correctly addressed to the intended recipient as follows:
If to Giant: Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Attention: Carlos A. Guerra, Esq.
With a copy to: Fennemore Craig
3003 North Central Avenue, Suite 2600
Phoenix, AZ 85012-2913
Attention: Jay S. Kramer, Esq.
If to Pinnacle: Pinnacle Sonoran Properties
23733 N. Scottsdale Road
Scottsdale, Arizona 85255
Attention: Harv Acridge
All notices shall be deemed given upon the earliest of (i) if hand-
delivered, upon actual receipt against signed acknowledgment of receipt
or affidavit of delivery; (ii) if mailed as provided above, on the
fourth (4th) day after the day of mailing; (iii) if sent by overnight
courier, on the next business day after the date of deposit with the
courier. Any party may change its address for the receipt of notices
at any time by giving written notice thereof to the other parties in
accordance with the terms of this Section.
9. Entire Agreement. This Agreement contains the complete
understanding and agreement of the parties hereto with respect to all
matters referred to herein, and all prior representations, negotiations and
understandings are superseded by this Agreement. Neither party shall be
liable or bound to the other in any manner by any agreement, warranty,
representation or guarantee, except as specifically set forth herein or in
any instrument executed pursuant hereto.
10. Attorneys' Fees. In the event either party shall employ
legal counsel or bring an action at law or other proceedings against the
other party to enforce any of the terms, covenants or conditions hereof,
the non-prevailing party shall pay the prevailing party's reasonable
attorneys' fees and court costs, as determined by the judge or arbitrator
sitting without a jury.
11. Severability. If any paragraph, section, sentence,
clause or phrase of this Agreement is or becomes illegal, null or void
for any reason or is held by any court of competent jurisdiction to be
illegal, null or void, the remaining paragraphs, sections, sentences,
clauses or phrases of this Agreement shall continue in full force and
effect and shall not be affected thereby.
12. Time of Essence. Time is of the essence of this Agreement
and each and every provision hereof.
13. Binding Effect. This Agreement and all of the terms and
provisions hereof shall inure to the benefit of and be binding upon the
heirs, administrators, personal representatives, successors and permitted
assigns of the parties hereto.
14. Time for Performance. If the date provided herein within
which any requirement must be met falls on a Saturday or Sunday or on any
legal holiday, then the date for compliance shall be extended to the next
day when none of the above is applicable.
15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona, without
reference to its conflicts of law principles.
16. Non-Waiver. No delay or failure by either party to
exercise any right under this Agreement and no partial or single
exercise of that right shall constitute a waiver of that or any other
right, unless otherwise expressly provided herein.
17. Headings. Headings in this Agreement are for
convenience only and shall not be used to interpret or construe its
provisions.
18. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, with
the same force and effect as if all signatures were appended to one
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date set forth above.
"GIANT"
GIANT INDUSTRIES OF
ARIZONA, INC., an
Arizona corporation
By: /s/ John C. Hosmar
--------------------------------
Name: John C. Hosmar
Title: Director of Retail Development
"PINNACLE"
PINNACLE SONORAN DESERT
PROPERTIES, L.L.C., an
Arizona limited
liability company
By: /s/ Harvey Acridge
---------------------------------
Name: Harvey Acridge
Title: General Manager
<PAGE>
<PAGE>
EXHIBIT "A"
Description of Giant Property
Legal Description for Tatum Ranch - Parcel 46
Gas Station Site
That part of the Southeast Quarter of Section 30, Township 5
North, Range 4 East, of the Gila and Salt River Meridian,
Maricopa County, Arizona.<PAGE>
<PAGE>
EXHIBIT "B"
Memorandum of Option
<PAGE>
<PAGE>
EXHIBIT "C"
Termination of Right to Repurchase
<PAGE>
<PAGE>
EXHIBIT C
WHEN RECORDED, RETURN TO:
Jay S. Kramer
Fennemore Craig
3003 North Central Avenue
Suite 2600
Phoenix, Arizona 85012-2913.
EASEMENT AGREEMENT
THIS EASEMENT AGREEMENT ("Agreement") is made as of the 20
day of March, 1998, by and between Giant Industries Arizona, Inc., an
Arizona corporation ("Giant"), and Pinnacle Sonoran Desert Properties,
L.L.C., an Arizona limited liability company ("Pinnacle").
RECITALS
A. Pinnacle owns certain real property located in Maricopa
County, Arizona and more particularly described on Exhibit "A" attached
hereto and incorporated herein by this reference ("Pinnacle Property").
Concurrently with the recordation of this Agreement, Giant acquired
certain real property from Pinnacle, located in Maricopa County,
Arizona and more particularly described on Exhibit "B" attached hereto
and incorporated herein by this reference ("Giant Property"). The
Pinnacle Property and the Giant Property are adjacent.
B. For the benefit of the Giant Property, Giant desires an
easement for ingress, egress and access on, over and across the
portions of the Pinnacle Property depicted on Exhibit "C" attached
hereto and incorporated herein by this reference ("Giant Easement
Area"). Pinnacle is willing to grant the desired easement on, over, and
across the Giant Easement Area, subject to the terms and conditions of
this Agreement.
C. Pinnacle desires the following easements: (i) an
easement for ingress, egress and access on, over and across portions
of the Giant Property depicted on Exhibit "D" attached hereto and
incorporated herein by this reference ("Pinnacle Access Easement
Area"); (ii) a landscaping easement on, over and under portions of the
Giant Property depicted on Exhibit "E" attached hereto and incorporated
herein by this reference ("Pinnacle Landscape Easement Area"); and
(iii) a signage easement on and over the portion of the Giant Property
depicted on Exhibit "F" attached hereto and incorporated herein by this
reference ("Pinnacle Signage Easement Area"), all subject to the terms
and conditions of this Agreement. The Pinnacle Access Easement Area,
the Pinnacle Landscape Easement Area, and the Pinnacle Signage Easement
Area are sometimes collectively referred to in this Agreement as the
"Pinnacle Easement Areas". Giant is willing to grant the desired
easements on, over and across the Pinnacle Easement Areas, subject to
the terms and conditions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Giant and Pinnacle, intending to be legally bound, hereby
agree as follows:
1. Giant Access Easement. Subject to the terms and
conditions of this Agreement, Pinnacle hereby grants, bargains, and
conveys to Giant, for the benefit of the Giant Property, a perpetual,
non-exclusive easement permitting Giant, its employees, agents,
contractors, guests and invitees pedestrian and vehicular ingress,
egress, and access on, over, and across the Giant Easement Area ("Giant
Easement"). Pinnacle shall maintain the Giant Easement Area in
accordance with Section 5.
2. Pinnacle Access Easement. Subject to the terms and
conditions of this Agreement, Giant hereby grants, bargains, and
conveys to Pinnacle, for the benefit of the Pinnacle Property, a
perpetual, non-exclusive easement permitting Pinnacle, its employees,
agents, contractors, guests and invitees pedestrian and vehicular
ingress, egress and access on, over and across the Pinnacle Access
Easement Area ("Pinnacle Access Easement"). Giant, at its sole cost and
expense, shall maintain the Pinnacle Access Easement Area in accordance
with Section 5.
3. Landscape Easement. Subject to the terms and conditions
of this Agreement, Giant hereby grants, bargains, and conveys to
Pinnacle, a perpetual, non-exclusive easement permitting Pinnacle, its
employees, contractors, and agents, to plant, install, maintain, or
replace landscaping on, over, across, and under the Pinnacle Landscape
Easement Area ("Pinnacle Landscape Easement"). Pinnacle, at its sole
cost and expense, shall maintain the Pinnacle Landscape Easement Area
in accordance with Section 5.
4. Signage Easement. Subject to the terms and conditions
of this Agreement, Giant hereby grants, bargains, and conveys to
Pinnacle, a perpetual, non-exclusive easement permitting Pinnacle, its
employees, contractors, and agents, to maintain, replace, repair,
reconstruct or reconfigure a monument size and design subject to
Giant's approval that will not be unreasonably withheld, sign identifying
the project (and not individual tenants or property owners), on the
Pinnacle Signage Easement Area ("Pinnacle Signage Easement"). Pinnacle
may not erect or maintain any sign advertising the sale of portions of
the Pinnacle Property or any other sign of a temporary nature on the
Pinnacle Signage Area. Pinnacle, at its sole cost and expense, shall
maintain the Pinnacle Signage Easement Area in accordance with Section 5.
5. Condition of Easements.
5.1 Standard of Maintenance. The Giant Easement Area
and the Pinnacle Easement Areas shall be maintained in a clean and
attractive manner, free of litter and debris, in substantial
conformance with other first class commercial developments in Maricopa
County, Arizona. Maintenance of the Giant Easement Area and the
Pinnacle Access Easement Area shall include keeping paved or otherwise
artificially surfaced areas in good repair, striped as necessary, and
reasonably free of potholes. Maintenance of the Pinnacle Landscape
Easement Area shall include installing, planting, weeding, pruning,
fertilizing, replacing shrubs and other landscaping as necessary, and
repairing automatic sprinkler systems as necessary. Maintenance of the
Pinnacle Signage Easement Area shall include installing, cleaning,
maintaining, repairing and replacing signage located within the
Pinnacle Signage Easement Area.
5.2 Pinnacle's Right to Maintain. If Giant fails to
maintain the Pinnacle Access Easement Area in accordance with Section
5.1, Pinnacle may provide Giant with written notice of this failure.
If, after 10 days written notice from Pinnacle to Giant, Giant fails
to maintain or repair any portion of the Pinnacle Access Easement Area
and/or fails to diligently prosecute such work to completion, Pinnacle
shall have the right, but not the obligation, to maintain and repair
the Pinnacle Access Easement Area. Pinnacle may then submit a statement
for, and reasonable documentation of, such expenses to Giant,
requesting reimbursement for any expenses incurred in performing the
maintenance or repair. Giant hereby authorizes Pinnacle and its agents,
employees and contractors to enter upon the Pinnacle Access Easement
Area to maintain and to make repairs pursuant to this Subsection 5.2.
5.3 Giant's Right to Maintain. If Pinnacle fails to
maintain the Giant Easement Area, the Pinnacle Landscape Easement Area
or the Pinnacle Signage Easement Area in accordance with Section 5.1,
Giant may provide Pinnacle with written notice of this failure. If,
after 10 days written notice from Giant to Pinnacle, Pinnacle fails to
maintain or repair any portion of these areas and/or fails to
diligently prosecute such work to completion, Giant shall have the
right, but not the obligation, to make the necessary maintenance or
repair. Giant may then submit a statement for, and reasonable
documentation of, such expenses to Pinnacle, requesting reimbursement
for any expenses incurred in performing the maintenance or repair.
Pinnacle hereby authorize and enter upon the Pinnacle Property to
maintain and to make repairs pursuant to this Subsection 5.3.
5.4 No Obstruction. Pinnacle covenants that it shall
not cause or permit the Giant Easement Area to be obstructed so as to
interfere with Giant's use. Giant covenants that it shall not cause or
permit the Pinnacle Access Easement Area to be obstructed so as to
interfere with Pinnacle's use. Without limiting the foregoing, Pinnacle
and Giant agree that no fence, wall, or other barrier that would
prevent, impair or obstruct passage of pedestrian or vehicular traffic
shall be erected on the Giant Easement Area or the Pinnacle Access
Easement Area.
6. Covenants Running with the Land. The Giant Easement and
the Pinnacle Access Easement shall be easements, restrictions, and
covenants running with the land and shall inure to the benefit of, and
be binding upon, the parties hereto and their respective heirs,
successors and assigns. The Pinnacle Landscape Easement and the
Pinnacle Signage Easement are personal to Pinnacle and shall not be
covenants running with the land, but may be assigned as follows: (i)
to a non-profit owners' association formed to manage and operate the
project, without the consent of Giant; or (ii) to another entity or
person.
7. Indemnification and Insurance.
7.1 Indemnification. Each party to this Agreement
shall indemnify, defend and hold the other party harmless, for, from,
and against any and all claims, demands, causes of action, losses,
damages, liabilities, obligations, costs, and expenses (including, but
not limited to, reasonable attorneys' fees, mechanics' and
materialmen's liens, and disbursements), arising out of any personal
injury or property damage alleged to have been caused by the other
party or the other party's agents, licensees, invitees, contractors or
employees and in any way related to this Agreement. The indemnity
obligations set forth in this Subsection 7.1 shall survive the
termination of the right to use the Giant Easement Area and/or the
Pinnacle Easement Areas pursuant to this Agreement.
7.2 Insurance. Each party to this Agreement shall
maintain a policy of commercial general liability insurance, with a
contractual liability endorsement, covering the indemnification
obligations set forth in this Agreement, in an amount prudent for
owners of similar properties in Maricopa County, Arizona, but in no
event less than $1,000,000, and naming the other party as an additional
insured. A policy complying with these requirements shall remain in
effect throughout the term of this Agreement. Any such insurance policy
shall require the insurer to provide both parties to this Agreement
with at least 30 days prior written notice of any cancellation of the
insurance policy. Certificates of insurance shall be provided by each
party upon request by the other party.
8. Entire Agreement. This Agreement contains the complete
understanding and agreement of the parties hereto with respect to all
matters referred to herein, and all prior representations, negotiations
and understandings are superseded by this Agreement. Neither party
shall be liable or bound to the other in any manner by any agreement,
warranty, representation or guarantee, except as specifically set forth
herein or in any instrument executed pursuant hereto.
9. Severability. If any paragraph, section, sentence,
clause or phrase of this Agreement is or becomes illegal, null or void
for any reason or is held by any court of competent jurisdiction to be
illegal, null or void, the remaining paragraphs, sections, sentences,
clauses or phrases of this Agreement shall continue in full force and
effect and shall not be affected thereby.
10. Notices. All notices, requests and other communications
hereunder shall be in writing and shall be given by personal delivery;
overnight courier; or deposit in the United States mail, first class,
registered or certified, return receipt requested, postage prepaid,
correctly addressed to the intended recipient as follows:
If to Giant: Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Attention: Carlos A. Guerra, Esq.
With a copy to: Fennemore Craig
3003 North Central Avenue, Suite 2600
Phoenix, AZ 85012-2913
Attention: Jay S. Kramer, Esq.
If to Pinnacle: Harvey Acridge
23733 North Scottsdale Road
Scottsdale, Arizona 85255
All notices shall be deemed given upon the earliest of (i) if hand-
delivered, upon actual receipt against signed acknowledgment of receipt
or affidavit of delivery; (ii) if mailed as provided above, on the
fourth (4th) day after the day of mailing; (iii) if sent by overnight
courier, on the next business day after the date of deposit with the
courier. Any party may change its address for the receipt of notices
at any time by giving written notice thereof to the other parties in
accordance with the terms of this Section.
11. Non-Waiver. No delay or failure by either party to
exercise any right under this Agreement and no partial or single
exercise of that right shall constitute a waiver of that or any other
right, unless otherwise expressly provided herein.
12. Interpretation. This Agreement shall be construed as a
whole and in accordance with its fair meaning, without regard to any
presumption or rule of construction causing this Agreement or any part
of it to be construed against the party causing the Agreement to be
written.
13. Headings. Headings in this Agreement are for
convenience only and shall not be used to interpret or construe its
provisions.
14. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Arizona,
without reference to its conflicts of law principles.
15. Attorneys' Fees. In the event either party shall employ
legal counsel or bring an action at law or other proceedings against
the other party to enforce any of the terms, covenants or conditions
hereof, the non-prevailing party shall pay the prevailing party's
reasonable attorneys' fees and court costs, as determined by the judge
or arbitrator sitting without a jury.
16. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, with
the same force and effect as if all signatures were appended to one
instrument.
"GIANT"
GIANT INDUSTRIES OF
ARIZONA, INC., an
Arizona corporation
By: /s/ John C. Hosmar
-----------------------------
Name: John C. Hosmar
Title: Director Retail Development
"PINNACLE"
PINNACLE SONORAN DESERT PROPERTIES, L.L.C., an
Arizona limited liability company
By: /s/ Harvey Acridge
Name:
Title: General Manager
<PAGE>
<PAGE>
STATE OF ARIZONA )
) ss
County of Maricopa )
The foregoing instrument was acknowledged before me this 20 day of
March 1998, by John C. Hosmar, the Director of R.E./Facilities
Development of Giant Industries Arizona, Inc., an Arizona
corporation, on behalf of the corporation.
/s/ Penelope M. Lewis
----------------------------
Notary Public
My Commission Expires:
10/26/2001
STATE OF ARIZONA )
)ss
County of Maricopa )
The foregoing instrument was acknowledged before me this 20 day of
March, 1998, by Harvey Acridge, the General Manager of Sonoran
Desert Properties, L.L.C., an Arizona corporation, on behalf of the
corporation.
/s/ Pamela J. Wisness
----------------------------
Notary Public
My Commission Expires:
July 20, 2001<PAGE>
<PAGE>
EXHIBIT "A"
Description of Pinnacle Property
That part of the Southeast quarter of Section 30, Township
5 North, Range 4 East of the Gila and Salt River Base and
Meridian, Maricopa County, Arizona.<PAGE>
<PAGE>
EXHIBIT "B"
Description of Giant Property
Legal Description for Tatum Ranch - Parcel 46
Gas Station Site
That prat of the Southeast Quarter of Section 30, Township
5 North, Range 4 East, of the Gila and Salt River Meridian,
Maricopa county, Arizona.<PAGE>
<PAGE>
EXHIBIT "C"
Depiction of Giant Easement Area
<PAGE>
<PAGE>
EXHIBIT "D"
Depiction of Pinnacle Access Easement Area
<PAGE>
<PAGE>
EXHIBIT "E"
Depiction of Pinnacle Landscape Easement Area
Legal Description for Tatum Ranch - Parcel 46
Landscape and Signage Easement
That part of the Southeast Quarter of Section 30, Township
5 North, Range 4 East, of the Gila and Salt River Meridian,
Maricopa County, Arizona.
<PAGE>
<PAGE>
EXHIBIT "F"
Depiction of Pinnacle Signage Easement Area
EXHIBIT 10.29
RETAIL LEASE
THIS RETAIL LEASE (the Lease ) is made this 1st day of July, 1998
by and between PINNACLE CITADEL LLC., an Arizona limited liability
company ("Landlord"), and GIANT INDUSTRIES ARIZONA, INC., an Arizona
corporation ("Tenant").
Landlord hereby leases to Tenant and Tenant leases from Landlord
for the term and upon the conditions and agreements set forth in this
Lease a portion of the real property described on Exhibit A attached
hereto, consisting of approximately 5,590 square feet of space consisting
of the entire 2nd floor space along with the 1st floor front office, 1st
floor closet, stair landing and stairwell together with any or all
additional space used in connection with Tenant's business (the
"Premises") in The Citadel (the "Center") along with six (6) covered
parking spaces numbered 1 through 6, each located in the area cross-
hatched on Exhibit B. The address of the premises is 8700 East Pinnacle
Peak Road, Scottsdale, Arizona 85255.
1. Term and Possession
(a) The term (the Term ) of this Lease shall commence on the
earlier of (i) the date possession is tendered by written notice to
Tenant or (ii) the date on which the Tenant shall first use or occupy any
part of the premises or (iii) the date a temporary certificate of
occupancy for the Premises is issued by the City of Scottsdale (the
"Commencement Date") and shall expire on July 31, 2003. The Tenant's
obligation to pay Rent (defined in Articles 2(d) below) shall begin on
the Commencement Date (the Rent Start Date"). The anticipated
Commencement Date is July 1, 1998. Upon request of either party after
the term has commenced, Landlord and Tenant shall jointly execute a
memorandum confirming the Commencement Date.
(b) Upon the expiration or earlier termination of this Lease
or upon the termination of Tenant's right of possession, whether by lapse
of time or otherwise, Tenant shall at once surrender possession of the
Premises to Landlord and remove all of Tenant's property as provided in
Article 10.
(c) Tenant shall have no right to hold over after the
expiration of this Lease without Landlord's prior written consent. If,
with Landlord's prior written consent, Tenant holds over after the
expiration of this Lease, Tenant shall become a tenant from month to
month only, upon all of the terms of this Lease except that Article 1(a)
shall not apply and the amount of the Minimum Annual Rent (defined at
Article 2(a) below) shall be increased to an amount equal to 125% of the
Minimum Annual Rent in effect immediately prior to the expiration.
(d) Provided Tenant has not been and/or Landlord has not deemed
Tenant in default under this Lease, Tenant shall have the
option, exercisable by written notice given to the Landlord
at least 180 days prior to the expiration of the then
current Term, to extend this Lease by one (1) successive
period of five (5) years. All the terms and conditions of
this Lease, including, without limitation, Article 2(b),
shall remain in full force and effect during the extended
Term. As used herein, the word Term shall hereafter mean
the Term as it may have been extended pursuant to this
Article 1(d).(e)
2. Rent
(a) Minimum Rent. Tenant shall pay to Landlord during the
Term at the office of Landlord, 23733 North Scottsdale Road, Scottsdale,
AZ 85255, or at such other place as Landlord may designate, without
notice, demand, deduction or set-off, Minimum Annual Rent in the amount
of $111,800.00 per annum, subject to adjustment as provided in Article
2(b), in equal monthly installments in advance on the first day of each
calendar month with applicable transaction privilege or other similar
sales tax. In addition, Tenant shall pay the amount of $40.00 per month
for each of the six (6) reserved covered parking spaces. In the event
the Rent Start Date does not occur on the first day of a calendar month,
Tenant shall pay Rent on the Rent Start Date for the fractional month on
a pro rata 30-day month basis.
(b) Adjustments. The Minimum Annual Rent shall be adjusted
upwards as of each one (1) year anniversary of the Commencement Date (the
Adjustment Date ) as follows:
(i) Landlord shall ascertain the Consumer Price Index
for All Urban Consumers - U.S. Cities Average - All Items (the "CPI")
published by the United States Department of Labor, Bureau of Labor
Statistics (1982-84 = 100) for the third full calendar month prior to the
Commencement Date for the first year adjustment and the third full
calendar month prior to the previous Adjustment Date for all following
adjustments (the "Base Index") and for the third full calendar month
prior to the Adjustment Date (the "Comparison Index").
(ii) The Minimum Annual Rent commencing as of each
Adjustment Date shall be equal to the Minimum Annual Rent in effect
immediately preceding each Adjustment Date (the "Effective Minimum Annual
Rent") times a fraction, the numerator of which is the Comparison Index
associated with that Adjustment Date and the denominator of which is the
Base Index, as illustrated in the following formula for the first (1st)
Adjustment Date:
Adjusted Minimum = Effective Minimum x Comparison Index
Annual Rent Annual Rent Base Index
(iii) Notwithstanding the foregoing, in no event shall
the Minimum Annual Rent be adjusted downwards. When the Minimum Annual
Rent payable as of each Adjustment Date is determined, Landlord shall
promptly give Tenant written notice of such adjusted Minimum Annual Rent
and the manner in which it was computed. The Minimum Annual Rent as so
adjusted from time to time shall be the "Minimum Annual Rent" for all
purposes under this Lease.
(iv) If at any time the CPI is no longer published or
its manner of calculation is materially changed, Landlord may substitute
a substitute index, reconciled to the month three (3) months prior to the
Commencement Date, as reasonably reflects changes in the purchasing power
of the dollar.
(c) Nature of Payments. All sums required to be paid by Tenant
under this Lease, whether or not so designated, including, without
limitation, Minimum Annual Rent and Tenant s Pro Rata Share of Operating
Costs are Rent and shall be paid without notice, demand, deduction, or
set-off.
(d) Late Charges and Interest. Any amount due from Tenant to
Landlord which is not paid when due shall bear interest at three percent
in excess of the prime rate as established from time to time by the Bank
of America Arizona (or, if such bank ceases to exist, such other
comparable financial institution as reasonably determined by Landlord)
from the due date until paid, but the payment of such interest shall not
excuse or cure any default by Tenant under this Lease. In addition, if
any Rent or other payment is not paid within five days of its due date,
then Tenant shall also pay to Landlord a late charge equal to ten percent
of the amount of such payment.
3. Use
(a) Tenant shall continuously and uninterruptedly
operate, use and occupy the Premises as an office and for no other
purpose whatsoever.
(b) Tenant, its agents, employees and/or contractors shall,
at Tenant s sole cost and expense, comply with the following:
(i) Tenant shall not use or permit upon the Premises
anything that would invalidate any policies of insurance now or hereafter
carried on the Premises or that will increase the rate of insurance on
the Premises or the Center;
(ii) Tenant shall pay all additional insurance
premiums which may be caused by the use which Tenant shall make of the
Premises;
(iii) Tenant shall not in any manner deface or injure
the Premises or overload any floor of the Premises;
(iv) Tenant shall not conduct or permit any auction
sale to be held on or about the Premises, whether such auction be
voluntary or involuntary, or any sidewalk sale without the prior written
consent of Landlord;
(v) Tenant shall not do anything or permit anything to
be done upon the Premises in any way tending to create a nuisance, or
tending to disturb any other lessee in the Center or tending to injure
the reputation of the Center, including, without limitation, the playing
of music audible outside the Premises and the affixing or maintaining
upon the glass panes or supports of the show windows or on or within 24"
of any window, doors or exterior walls of the Premises, any signs,
advertising placards, names, insignia, trademarks, descriptive material
or any other like item(s) without having first received the written
approval of Landlord as to the size, type, color, location, copy, nature
and display qualities of any such item. All signs shall comply with City
of Scottsdale sign ordinances and The Citadel sign criteria.
(vi) Tenant shall not display merchandise, advertise
or solicit business on the sidewalks and other Common Areas (defined at
Article 6(a) below) or place any handbills, bumper stickers or other
advertising devices on any vehicle parked in the Common Areas of any
other parking area of the Center;
(vii) Tenant shall not use the Premises for lodging
or sleeping
purposes;
(viii) Tenant shall not commit or suffer to be committed
any waste upon the Premises;
(ix) Tenant shall not violate any recorded restriction
or covenant affecting the Center, nor use the Premises for any purpose
which would be in violation of any exclusive rights or use granted to
other tenants in the Center. Landlord shall not grant exclusive rights
which would prohibit Tenant from exclusively using the Premises for the
purposes stated in Article 4(a) above except for incidental uses
ancillary to the main use of the other user.
(c) Tenant shall provide and maintain sanitary receptacles
within the Premises in which to place any refuse or trash. Tenant shall
cause such refuse or trash to be removed from the Premises to receptacles
designated by Landlord as often as required to maintain a sanitary
condition, but in no event less often than daily. No grease or rubbish
or hazardous waste shall be disposed of through any plumbing system.
Tenant shall sweep as needed and keep free of refuse all sidewalks
immediately adjacent to the Premises if so directed by Landlord. Tenant
shall not allow the Premises to be infested with insects or vermin.
(d) Tenant shall use its best efforts to complete all
deliveries, loading, unloading and services to the Premises before 10:00
a.m. each day. Tenant shall attempt to prevent any delivery trucks or
other vehicles servicing the Premises from parking or standing in front
of, or at the rear of, the Premises from 10:00 a.m. to 9:00 p.m. of each
day. Landlord reserves the right to further regulate the activities of
Tenant in regard to deliveries to and servicing of the Premises, and
Tenant agrees to abide by such further non-discriminatory regulations of
Landlord.
(e) Tenant, at Tenant's sole cost and expense, shall comply
with all present and future federal, state and local laws, ordinances,
orders, rules and regulations (collectively, "Laws"), and shall procure
all permits, certificates, licenses and other authorizations required by
applicable Law relating to Tenant's business or Tenant's use or occupancy
of the Premises or Tenant's activities on the Premises. Tenant shall
make all reports and filings required by applicable Laws.
(f) Tenant's Warranty as to Hazardous or Toxic Materials.
Tenant shall not cause or permit any Hazardous Substances to be brought
upon, kept or used in or about the Premises by Tenant, its agents,
employees, contractors or invitees, except such incidental quantities of
commonly used office supplies (such as copier fluid and typewriter
correction fluids) and ordinary cleaning solvents, provided that all of
the foregoing are only in such quantities as are normal for the permitted
use of the Premises, are used in the manner for which they are designed
and are at all times used, kept, and stored and disposed of in a manner
that strictly complies with all laws regulating any such Hazardous
Substances. Any Hazardous Substances placed in or on the Premises by
Tenant, its agents, employees, contractors or invitee shall remain the
property of Tenant, notwithstanding anything in the Lease to the
contrary. Tenant shall not install any underground storage tank on the
Premises, as such term is defined in 42 U.S.C. Section 66991 and the
regulations promulgated thereto, as amended from time to time and
including all pipes and conduiting relating thereto. If Tenant breaches
the covenants and obligations set forth herein, or if the presence of
Hazardous Substances on, in or about the Premises caused by Tenant, its
agents, employees, contractors or invitees, results in contamination of
the Premises, then Tenant shall indemnify, defend and hold Landlord, its
officers, employees, partners, agents and representatives, free and
harmless from and against any and all claims, judgments, penalties,
fines, costs, liabilities and damages, (including, without limitation,
sums paid in settlement of claims, attorneys' fees and expenses (through
all levels of proceedings), consultants or experts fees) and all costs
incurred in enforcing this indemnity which arise during or after the Term
as a result of the presence of such Hazardous Substances or any
contamination, damage or injury therefrom. This indemnification by Tenant
includes, without limitation, any and all costs incurred in connection
with any investigation of site conditions or any clean up, remedial,
removal or restoration work required by any federal, state or local
governmental agency or political subdivision because of the presence of
such Hazardous Substances caused by Tenant, its agents, employees, or
contractors in, on or about the Premises. Tenant shall promptly take all
actions, at its sole cost and expense, as are necessary to return the
Premises to the condition existing prior to the introduction of any such
Hazardous Substances, provided that Landlord's approval of such actions
is first obtained. Furthermore, Tenant shall immediately notify Landlord
of any inquiry, test, investigation or enforcement proceeding by or
against Tenant or the Premises concerning the presence of any Hazardous
Substances. Tenant acknowledges that Landlord, at Landlord's election,
shall have the right to negotiate, defend, approve and appeal any action
taken or order issued by any governmental authority with regard to any
Hazardous Substances condition which Tenant is obligated hereunder to
remediate. The provisions of this Article 4(f) shall survive the
expiration or sooner termination of the Term or of Tenant's right to
possession, whether by lapse of time or otherwise. The term "Hazardous
Substance" includes, without limitation, any material or substance which
is (i) defined or listed as a "hazardous waste", "extremely hazardous
waste", "restrictive hazardous waste" or "hazardous substance" or
considered a waste, condition of pollution or nuisance under any
Environmental Law (as defined below); (ii) petroleum or a petroleum
product or fraction thereof; (iii) asbestos; and/or (iv) substances known
to cause cancer and/or reproductive toxicity. The term "Environmental
Law" shall mean any federal, state or local law, statute, ordinance,
rule, regulation, order, consent, decree, judgment or common-law
doctrine, interpretation thereof, and provisions and conditions of
permits, licenses, plans, approvals and other operating authorizations
whether currently in force or hereafter enacted relating to health,
industrial hygiene or the environmental conditions on, under or about the
Premises or the Center, including, without limitation, (i) the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Sections 6901 et seq.; (iii) the Federal
Water Pollution Control Act, 33 U.S.C. Sections 1317 et seq., as such
laws are amended and the regulations and administrative codes applicable
thereto. It is the intent of the parties hereto to construe the terms
"Hazardous Substance" and "Environmental Law" in their broadest sense.
(g) Tenant shall keep its sign, exterior lighting and display
windows lit during those hours that Landlord in its sole discretion may
reasonably require.
(h) Tenant shall not use the Premises for any purpose other
than as set forth in Article 4(a) and shall notify Landlord in writing
of, and obtain Landlord s prior written consent to, any intended change
in the nature of its activities or business conducted on the Premises and
permitted by Article 4(a).
4. Taxes
(a) Tenant shall pay, prior to delinquency, all taxes assessed
against or levied upon Tenant's fixtures, furnishings, equipment and
other personal property (the Personalty ) located in or upon the
Premises. Tenant shall cause the Personalty to be assessed and billed
separately from the real property of which the Premises form a part. In
the event any or all of Tenant's Personalty shall be assessed and taxed
with the real property of which the Premises or the Center are a part,
Tenant shall pay to Landlord Tenant's share of such taxes within ten days
after delivery to Tenant by Landlord of a statement in writing setting
forth the amount of such taxes applicable to Tenant's Personalty.
(b) Tenant shall, simultaneously with the payment of any sums
required to be paid under this Lease as Rent, additional rent or
otherwise, pay or reimburse Landlord for any sales, use, rental,
transaction privilege or other excise tax imposed or levied on, or
measured by, the amount paid.
5. Common Areas
(a) All parking areas, access roads, driveways, pedestrian
sidewalks and ramps, landscaped areas, drainage facilities, exterior
lighting, signs, courtyards and other areas and improvements provided by
Landlord for the general use in common of tenants, their officers,
agents, employees, customers and other invites (collectively, the
"Common Areas") shall at all times be subject to the exclusive control
and management of Landlord, and Landlord shall have the right from time
to time to modify, enlarge or eliminate the same and to establish, modify
and enforce reasonable rules and regulations with respect thereto.
Tenant's right to use the Premises includes the non-exclusive right to
use the areas designated from time to time by Landlord as the Common
Areas.
(b) Landlord shall at all times have the right to designate a
particular parking area to be used by employees of Tenant and other
occupants of the Center and any such designation may be changed by
Landlord from time to time. Tenant and its employees shall park their
cars only in those portions of the Common Areas, if any, designated for
that purpose by Landlord. Tenant shall furnish Landlord from time to
time with an accurate current list of its and all its employees'
automobile license plate numbers within 15 days after taking possession
of the Premises and thereafter within 15 days after any change in the
accuracy of the list. If Tenant or its employees fail to park their cars
in designated parking areas, Landlord may charge Tenant $25.00 per day
per car for each such violation and shall have the right to have any such
car towed away.
6. Operating Costs, Real Property Taxes and Utilities
(a) Tenant shall pay as of the Rent Start Date to Landlord
Tenant's pro rata share of all of the Center's operating costs consisting
of the total cost and expense incurred in managing, operating,
maintaining replacing and repairing the Center and its Common Areas
including, without limitation, real property taxes and general and
special assessments, wages, salaries and employee benefits of persons
performing services in connection with the Center, utilities, parking lot
sweeping, sealing, patching, re-striping and resurfacing; repairs,
maintenance, and renewal of equipment and improvements, including roofs,
public liability and property damage insurance, fire and extended
coverage insurance, plate glass insurance and rent interruption
insurance, supplies, materials, tools, parts, and equipment, equipment
rental charges; bookkeeping, accounting, legal and other professional
charges and expenses, fees for permits and licenses, administrative
expenses, taxes, service and maintenance contracts, signage, advertising,
marketing and landscaping, cleaning, window washing, lighting, painting,
fire protection and fire hydrant charges, steam, water and sewer charges,
gas electricity and telephone utility charges, supplying music to the
Common Areas, depreciation of the cost of equipment used in operating and
maintaining the Common Areas, or rent paid for leasing such equipment,
Landlord s office rent or the fair market rental value of office space
in the Center used by Landlord to manage, operate and maintain the Common
Areas, security, etc., except that Tenant shall not pay any portion of
any costs related solely to the operation and/or maintenance of the
chiller tower which does not serve the Premises (collectively, the
Operating Costs ). Tenant's Pro Rata Share of the Operating Costs shall
be the proportion that the area of the Premises bears to the total
rentable area of all rentable space in the Center owned by the Landlord.
(b) On the first day of each month (or such other regular
cycle as Landlord may determine)Tenant shall pay a monthly advance charge
on account of Tenant's Pro Rata Share of the Operating Costs. The
amount of the monthly charge shall be established by Landlord and may be
adjusted from time to time by Landlord to reflect the actual cost. Within
120 days after the end of each fiscal year as established for the Center
by Landlord, Landlord shall provide to Tenant a reasonably detailed
summary of the actual Operating Costs showing Tenant's actual share and
the amount by which Tenant has overpaid or underpaid. Any overpayment
shall be credited to Tenant's account. Any deficiency shall be payable
within ten days after receipt of the statement. In the alternative,
Landlord may, at its option during all or part of the Term, bill Tenant
for its pro rata share of Operating Costs in arrears based on actual
costs as they are incurred, in which case Tenant shall pay the invoice
within ten days after receipt. However, Landlord s failure to provide
such reasonably detailed summary of the actual Operating Costs showing
Tenant's actual share and the amount by which Tenant has overpaid or
underpaid by the date provided above shall in no way excuse Tenant from
its obligation to pay its pro rata share of Operating Costs or constitute
a waiver of Landlord s right to bill and collect such pro rata share of
Operating Costs from Tenant in accordance with this Article 7(b).
(c) The operating costs for the fiscal year in which this
Lease commences or terminates shall be apportioned so that Tenant shall
not be responsible for costs that relate to periods prior to or
subsequent to the term of this Lease except any period of holding over.
(d) Tenant acknowledges that the utilities serving the
Premises are metered along with the utilities for the entire building of
which Premises are a part of. Tenant shall be solely responsible to pay
their proportionate share of said utilities (water & electrical) metered
to said building within ten (10) days of receipt of billing from
Landlord. Tenant s failure to timely pay its utility bills shall be
deemed a material breach of this Lease and an event of default.
Notwithstanding any other provision of this Lease, upon delivery of a
written notice by Landlord to Tenant of such even of default for failure
to pay such utility charges and Tenant s failure to cure said default
within 3 days of the delivery of such notice, Landlord may terminate this
Lease.
7. Construction, Delivery, and Condition
(a) If delivery of possession of the Premises to Tenant is
delayed beyond the anticipated Commencement Date because of a delay in
the completion of construction of the Premises by Landlord or because of
a failure of an existing tenant to surrender possession of the Premises
to Landlord, then this Lease shall remain in full force and effect,
Landlord shall not be liable to Tenant for any damage occasioned by
delay, and the Commencement Date shall be changed to the date actual
delivery of possession to Tenant is tendered. Notwithstanding the
foregoing, if tender of possession is delayed more than 120 days after
the anticipated Commencement Date as set forth in Article 1(a), Tenant,
by written notice to Landlord, may terminate this Lease prior to taking
possession, and upon such termination any Security Deposit shall be
refunded and both Landlord and Tenant shall be released of all further
obligation hereunder.
(b) Tenant accepts the Premises AS IS, acknowledges that
Landlord has made no representations or warranties with respect thereto
and is relying solely upon Tenant s own independent factual, physical and
legal investigation, tests and studies. No Improvements shall be
constructed until approved plans and specifications have been attached
to this Lease or otherwise accepted by both Landlord and Tenant.
Landlord will have final approval of all Improvements.
(c) All Work shall be performed by licensed, bondable
Contractors (defined below) approved in writing by Landlord, whose
approval shall not be unreasonably withheld. The term Contractor as
used herein includes subcontractors or other persons hired or retained
by Tenant to construct improvements in the Premises. No Work shall be
commenced until Landlord shall first have received from Tenant or its
contractor a labor and materials payment bond issued by a responsible
surety in form reasonably satisfactory to Landlord insuring that no
mechanic's lien may be asserted against the Premises or the Center in
connection with the Work. Landlord may post signs of non-responsibility
around the Premises.
(d) Tenant shall have no right to enter the Premises and/or
to perform the Work prior to the Commencement Date, without Landlord's
written consent. If Landlord does so consent, Tenant shall comply with
directions of the Landlord and shall not interfere with any of Landlord's
construction activities. Any work performed by Tenant, or any fixtures,
furnishings, equipment and other personal property moved onto the
Premises, shall be at Tenant's own risk. Neither Landlord nor Landlord's
agents or contractors shall be responsible to Tenant for damage or
destruction of Tenant's work or property excepting damage or destruction
occasioned by Landlord's own gross negligence. Tenant agrees to indemnify
Landlord and hold Landlord harmless from and against claims made with
respect to injuries to persons or damage or destruction of property of
other persons moved onto the Premises prior to the Commencement Date.
(e) Landlord has no obligation to design or construct
improvements or to make alterations in the Premises.
(f) Upon the expiration or earlier termination of this Lease or
upon the termination of Tenant's right of possession, whether by lapse
of time or otherwise, Tenant shall, upon demand by the Landlord, at
Landlord's option, at the Tenant's sole expense, forthwith remove any
alterations, additions or improvements made by Tenant, designated by
Landlord to be removed, and Tenant shall, forthwith at its sole cost and
expense, repair any damage to the Premises caused by such removal and
restore the Premises to a condition reasonably comparable to their
condition at the commencement of the Lease. If not so demanded by the
Landlord, then any alterations, additions or improvements to the
Premises, including signs, but not including movable furniture and trade
fixtures, shall at the expiration or earlier termination of this Lease
or upon the termination of Tenant's right of possession, whether by lapse
of time or otherwise, become a part of the realty and belong to Landlord.
8. Repair and Maintenance
(a) Tenant shall, at Tenant s sole cost and expense, as of the
Commencement Date maintain the Premises and the improvements thereon
(including without limitation all heating, air conditioning, ventilation,
electrical and plumbing systems serving the Premises, all signs, locks,
doors and door frames), in good condition and repair. All exterior and
interior glass in the Premises shall be maintained by Tenant and any
glass broken shall be promptly replaced by Tenant at its expense with
glass of the same kind, size and quality. If Tenant does not do so,
Landlord may, but need not, make any such repairs and replacements, and
Tenant shall pay Landlord the cost upon demand. Tenant hereby waives all
right, if any, to make repairs at the expense of Landlord.
(b) Subject to the provisions of Article 7, Landlord shall
repair and maintain the Common Areas, the roof and exterior of the
Premises and all utility lines below grade or in the Common Areas.
Landlord shall not be responsible to make any repairs or perform any
maintenance unless written notice of the need for such repairs or
maintenance is given by Tenant and Landlord determines, in good faith,
that such need does exist. Except in the case of a fire or casualty as
provided in Article 13 or in the event of a business interruption caused
solely by Landlord s gross negligence which exceeds 14 days, there shall
be no abatement of Rent and no liability of Landlord by reason of any
entry to the Premises, interruption of services or facilities, temporary
closure of Common Areas, or interference with Tenant's business arising
from the making of any repairs or maintenance.
9. Alterations and Personal Property
Tenant shall not make or suffer to be made any alterations,
additions or improvements to the Premises, including signs, without the
prior written consent of Landlord of which consent shall not be
unreasonably withheld, but which shall not be required to be given until
Landlord has actually received a copy of Tenant s building permit and
plans (interior and exterior). Landlord may condition its consent upon
provision of a payment bond, in amount and form reasonably satisfactory
to Landlord, covering the work to be done by Tenant's contractor. Tenant
shall not install any antenna, satellite dish or other fixture or
equipment on the roof or in the Common Areas. In the event Landlord
consents to the making of any alterations, additions or improvements to
the Premises by Tenant, they shall be made by Tenant at Tenant's sole
cost and expense and any contractor or person selected by Tenant to
perform the work must first be approved in writing by Landlord. Tenant
shall not permit any mechanic's or materialmen's lien to stand against
the Premises for any labor or materials provided to the Premises by any
contractor or other person hired or retained by Tenant. Tenant shall
cause any such lien to be discharged (by bonding or otherwise) within ten
days after demand by Landlord, and if it is not discharged within ten
days, Landlord may, in addition to all other remedies for an event of
default, pay or otherwise discharge the lien and immediately recover all
amounts so expended from Tenant as Rent. Upon the expiration or earlier
termination of this Lease or upon the termination of Tenant's right of
possession, whether by lapse of time or otherwise, Tenant shall, upon
demand by Landlord, at Landlord's option, at Tenant's sole cost and
expense, forthwith remove any alterations, additions or improvements made
by Tenant, designated by Landlord to be removed, and Tenant shall,
forthwith at its sole cost and expense, repair any damage to the Premises
caused by such removal and restore the Premises to a condition reasonably
comparable to their condition at the commencement of the Lease. If not
so demanded by Landlord, then any alterations, additions or improvements
to the Premises, including signs, but not including movable furniture and
trade fixtures, shall, upon the expiration or earlier termination of this
Lease or upon the termination of Tenant's right of possession, whether
by lapse of time or otherwise, become a part of the realty and belong to
Landlord.
10. Certain Rights Reserved by Landlord
Landlord shall have the right:
(i) To change the Center's name or street address;
(ii) To enter the Premises either personally or by designated
representative at all reasonable times during normal business hours or
other hours with prior notification for the purpose of examining or
inspecting the same, showing the same to prospective purchasers or
lessees, or performing any repairs, construction or alteration in
relation to the Center or which is Landlord's responsibility under this
Lease. Landlord shall be permitted to do any of the above without any
rebate of Rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the Premises thereby occasioned. Tenant
shall provide Landlord with a key to the Premises for purposes of
emergency entry by Landlord or its agents. Use of this key is to be
restricted to emergency situations or as permitted by Tenant hereunder.
(iii) To grant to anyone the exclusive right to conduct any
business or render any service in or to the Center, provided such
exclusive right shall not operate to exclude Tenant from the use
expressly permitted under Article 4.
None of the rights specified above shall be construed or
otherwise considered as a waiver of any rights Landlord may have under
this Lease, at law or in equity or otherwise.
11. Damage to Property; Injury to Persons; Insurance;
Indemnity
(a) Tenant shall defend, indemnify and hold Landlord harmless,
regardless of fault or negligence which is imputed to Landlord as the
owner of Center, from any and all claims costs, liability, damage or
expense, including reasonable attorneys' fees, for any death, damage or
injury to persons or property occurring on the Premises and resulting in
whole or in part from (i) any misrepresentation, breach of warranty or
nonfulfillment of any agreement on the part of Tenant contained in this
Lease, (ii) any act, omission or condition for which Tenant is solely
responsible under the Lease, (iii) any work of construction, improvement
or demolition controlled by or subject to the control of Tenant, (iv) the
negligence of Tenant, its agents, employees or contractors, (v) Tenant's
use or occupancy of the Premises, (vi) the conduct of its business, (vii)
from any activity, work, or thing done, permitted or suffered by Tenant
in or about the Premises, or (viii) from the condition of the Premises.
Tenant shall further defend, indemnify and hold Landlord harmless from
any and all claims arising in whole or in part from any breach or default
in the performance of this Lease by Tenant, and/or arising in whole or
in part from any act of Tenant, or of its agents or employees, and from
all costs, attorneys' fees, expenses and liabilities incurred directly
or indirectly as a result of any such act and/or claim. Tenant, as a
material part of the consideration to Landlord, hereby assumes all risk
of damage to property or injury to persons, in, upon, or about the
Premises from any cause, and Tenant hereby waives all claims in respect
thereto against Landlord. Landlord shall in no event be liable for loss
of or damage to any property by vandalism, theft or otherwise, or for any
injury or damage to persons or property resulting from fire, explosion,
falling plaster, steam, gas, electricity, water or rain which may leak
from any part of any building or from the pipes, appliances or plumbing
works therein, or from the roof, street or subsurface, or from any other
place resulting from dampness, or from the
elements or any other cause whatsoever. Landlord shall not be liable for
interference with the natural light. Tenant shall give immediate notice
to Landlord of any fire, accident or defect discovered with the Premises
or the building of which the Premises are a part. Tenant acknowledges
that it can protect itself against some or all of the foregoing risks by
procuring appropriate insurance. Tenant's indemnification obligations
shall survive the expiration or earlier termination of this Lease or upon
the termination of Tenant's right of possession, whether by lapse of time
or otherwise.
(b) Tenant shall, at Tenant s sole cost and expense, as of the
Commencement Date maintain fire and extended coverage insurance
throughout the term of this Lease in an amount equal to one hundred
percent of the replacement value of Tenant's fixtures, furnishings,
equipment and other personal property located on the Premises, together
with such other insurance as may be required by Landlord's lender or by
any government agency. All proceeds of Tenant's policy of fire and
extended coverage insurance shall be payable to Tenant, and all proceeds
of policies of insurance procured by Landlord shall be payable to
Landlord. Tenant hereby waives any right of recovery from Landlord and
Landlord hereby waives any right of recovery from Tenant for any loss or
damage (including consequential loss) resulting from any of the perils
insured against in the insurance policies required to be maintained
hereunder. During the Term, Tenant shall, at Tenant's sole cost and
expense, maintain general public liability insurance against claims for
personal injury, death or property damage occurring in, upon or about the
Premises. The limitation of liability of such insurance shall be not less
than Two Million Dollars in respect to injury or death of one person and
to the limit of not less than Two Million Dollars in respect to any one
accident and to the limit of not less than Five Hundred Thousand Dollars
in respect to property damage. All of Tenant's policies of liability
insurance shall be obtained by Tenant in an "occurrence" form and shall
name Landlord as an additional insured or loss payee, as appropriate. All
policies of insurance or copies thereof required to be carried by Tenant
under this Article 12 shall be delivered to Landlord prior to the
Commencement Date and thereafter at least thirty days prior to the
expiration of the then current policies. Each policy shall contain an
endorsement prohibiting cancellation or non-renewal without at least 30
days prior notice to Landlord.
12. Fire and Casualty
If the Premises are wholly or partially destroyed or damaged by
fire or other casualty, Landlord shall restore the Premises with
reasonable diligence; provided, however, that Landlord shall have no
obligation to restore improvements not originally provided by Landlord
or to replace any of Tenant's fixtures, furnishings, equipment or
personal property; and provided further that Landlord need not commence
repairs until insurance proceeds are available and are released in a
sufficient amount for such purpose by any lender holding a lien on all
or part of the Center. Proceeds of insurance payable with respect to a
fire or other casualty shall be received and held by Landlord.
Notwithstanding the foregoing, in the event the Premises are destroyed
or damaged by any fire or casualty to the extent of not less than
twenty-five percent of the replacement cost thereof, or if the fire or
casualty occurs within the last three years of the Term, then Landlord
shall have the option to terminate this Lease by giving notice to Tenant
within sixty days after the occurrence of such damage or destruction, in
which case Landlord shall retain all insurance proceeds with respect to
the Premises as its own property and shall not be required to spend any
more on the restoration than the amount of proceeds actually received by
Landlord. If Landlord does not terminate this Lease as provided above,
this Lease shall continue in full force and effect, but Minimum Annual
Rent shall equitably abate until the restoration is substantially
complete. However, in the event it is determined that Tenant's ability
to continuously operate and conduct business on the Premises is not
hindered, then Minimum Annual Rent shall abate in proportion to the
Premises under restoration. The provisions of this Lease shall govern
when this Lease shall be terminable as a result of a fire or casualty,
and no other rule or statute on the subject shall apply.
13. Condemnation
In the event the entire Premises shall be appropriated or taken
under the power of eminent domain, this Lease shall terminate and expire
as of the date of such taking. In the event more than twenty-five percent
of the Premises is taken under the power of eminent domain, or if by
reason of any appropriation or taking, regardless of the amount so taken,
the remainder of the Premises is not one undivided parcel of property,
either Landlord or Tenant shall have the right to terminate this Lease
as of the date Tenant is required to vacate a portion of the Premises
upon giving notice in writing of such election within thirty days after
receipt by Tenant from Landlord of written notice that the Premises have
been so appropriated or taken. If neither Landlord nor Tenant elects to
so terminate this Lease, or in the event less than twenty-five percent
of the Premises shall be appropriated under the power of eminent domain
by any public or quasi-public authority, and the remainder thereof is an
undivided parcel of property, then Landlord shall restore the Premises
to the extent practicable to their condition prior to the taking,
provided that no such restoration need commence until the condemnation
proceeds are available and released in a sufficient amount for such
purpose by any lender holding a lien on all or part of the Center and
further provided that Landlord shall not be required to spend more than
the condemnation proceeds actually received by Landlord, and thereafter
the Minimum Annual Rent shall be reduced on an equitable basis, taking
into account the relative value of the portion taken as compared to the
portion remaining. All awards or compensation for any taking of any part
of the Premises, whether payable to Landlord or Tenant, shall be the sole
property of Landlord. Notwithstanding anything to the contrary contained
herein, Tenant shall be entitled to receive any portion of an award of
compensation relating to damage to or loss of trade fixtures or other
personal property belonging to Tenant, and Landlord shall be under no
obligation to restore or replace Tenant's furnishings, fixtures,
equipment and personal property. For the purposes of this Article 14, a
voluntary sale or conveyance in lieu of condemnation shall be deemed an
appropriation or a taking under the power of eminent domain.
14. Assignment and Subletting; Sale by Landlord
(a) Tenant shall not, either voluntarily or by operation of
law, assign, hypothecate or transfer this Lease, or sublet the Premises
or any part thereof, or permit the Premises or any part thereof to be
occupied by anyone other than Tenant or Tenant's employees (individually,
a Transfer ), without the Landlord's prior written consent ("Transfer
Notice") which shall not be unreasonably withheld. Landlord shall be
under no obligation to give or withhold consent until after all
information reasonably required by Landlord with respect to the identity,
background, experience and financial worth of the proposed assignee,
transferee, or subtenant (the Transferee ) has been provided. No
hypothecation, assignment, sublease or other transfer to which Landlord
has consented shall be effective for any purpose until such time as fully
executed documents of such transaction have been provided to Landlord,
and, in the case of an assignment, the assignee has attorned directly to
Landlord, and in the case of a sublease, the sublessee has acknowledged
that the sublease is subject to all of the terms and conditions of this
Lease. Any assignment, mortgage, transfer or subletting of this Lease
which is not in compliance with the provisions of this Article 15 shall
be voidable by Landlord and shall, at the option of Landlord, terminate
this Lease. Any differing of use or extension of use by Tenant or any
Transferee will, at the option of Landlord terminate this Lease. The
consent by Landlord to an assignment or subletting shall not relieve
Tenant from obtaining the express written consent of Landlord to any
further assignment or subletting or release Tenant from any liability or
obligation hereunder, whether or not then accrued. Except as provided in
this Article, this Lease shall be binding upon and inure to the benefit
of the successors and assigns of the parties.
(b) In the event of a sale or conveyance by Landlord of the
Premises, Landlord shall be relieved of all future liability upon any of
the covenants or conditions, express or implied, in favor of Tenant, and
Tenant shall look solely to Landlord's successor in interest. This Lease
shall not be affected by any sale, and Tenant shall attorn to the
successor in interest. If any Security Deposit has been made by Tenant,
the successor in interest shall be obligated to return it in accordance
with the terms hereof and Landlord shall be discharged from any further
liability in reference thereto.
(c) If any rent of other monetary payment due under the terms
of this Lease is made by check wherein the payor is other than the Tenant
herein, acceptance thereof shall in no way constitute acceptance by
Landlord of any assignment or subletting. Any assignment or subletting
must comply with the conditions of this Article 15.
15. Estoppel Certificate
(a) Tenant shall at any time and from time to time upon not
less than ten days' prior written notice from Landlord execute,
acknowledge and deliver to Landlord a statement in writing (i) certifying
that this Lease is unmodified and in full force and effect (or if
modified, stating the nature of such modification and certifying that
this Lease, as so modified, is in full force and effect) and the dates
to which the rental and other charges are paid in advance, if any; (ii)
acknowledging that there are not, to Tenant's knowledge, any uncured
defaults on the part of Landlord hereunder, or specifying such defaults
if they are claimed; and (iii) certifying such other matters relating to
this Lease as Landlord may reasonably request. Any such statement may be
relied upon by any prospective purchaser or encumbrancer of all or any
portion of the real property of which the Premises are a part.
(b) Tenant's failure to deliver a statement within the time
prescribed by Landlord in its request for same shall be conclusive upon
Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Landlord, (ii) that there
are no uncured defaults in Landlord's performance, and (iii) that not
more than one month's rental has been paid in advance.
16. Landlord's Remedies
(a) The following shall constitute events of default:
(i) Tenant's failure to pay any amount due under Article
2, Article 5(b) or Article 7 of this Lease within 5 days of when due, or
Tenants failure to pay any other amount due under this Lease within 5
days after notice from Landlord.
(ii) Tenant's failure to execute, acknowledge and return
an estoppel certificate under Article 16 or a subordination agreement
under Article 19, within ten days after request.
(iii) Tenant's failure to perform any other obligation
under this Lease within fifteen days after notice of nonperformance;
provided, however, that if the breach is of such a nature that it can be
cured but it cannot be cured within fifteen days, Tenant shall be deemed
to have cured if cure is commenced promptly and diligently pursued to
completion with completion accomplished within 30 days of the original
notice of nonperformance; and provided further, that in the event of a
breach involving an imminent threat to health or safety, Landlord may in
its notice of breach reduce the period for cure to such shorter period
as may be reasonable under the circumstances.
(iv) Tenant vacates, abandons, or otherwise ceases to
operate the Premises on a continuing basis except temporary absence,
excused by Landlord in its sole discretion, by reason of fire, casualty,
or other cause wholly beyond Tenant's control.
(v) Any goods, chattels or equipment of Tenant are taken
in execution or in attachment or if a writ of execution is issued against
Tenant or if Tenant or any guarantor becomes insolvent or files a
petition under the Bankruptcy Act or becomes bankrupt or takes the
benefit of any statute that may be in force for bankrupt or insolvent
debtors or becomes involved in voluntary or involuntary winding-up
proceedings or if a receiver shall be appointed for the business,
property, affairs or revenues of Tenant or any guarantor (provided,
however, that in the case of involuntary proceedings, Tenant shall have
60 days to cause them to be dismissed), or if Tenant makes a bulk sale
of its goods or moves or commences, attempts or threatens to move its
goods, chattels and equipment out of the Premises other than in the
normal course of its business.
(b) Upon the occurrence of an event of default, Landlord, at
any time thereafter without further notice or demand, may, in addition
to all of its rights and remedies at law and/or at equity, exercise any
one or more of the following remedies concurrently or in succession, all
of which shall be cumulative:
(i) Terminate Tenant's right to possession of the Premises
by legal process or otherwise, with or without terminating this Lease,
and retake exclusive possession of the Premises.
(ii) From time to time relet all or portions of the
Premises, using reasonable efforts to mitigate Landlord's damages. In
connection with any reletting, Landlord may relet for a period extending
beyond the term of this Lease and may make alterations or improvements
to the Premises without releasing Tenant of any liability. Upon a
reletting of all or substantially all of the Premises, Landlord shall be
entitled to recover all of its then prospective damages for the balance
of the Lease term measured by the difference between amounts payable
under this Lease and the anticipated net proceeds of reletting during the
remaining Term. In no event shall Tenant be entitled to receive any
amount representing the excess of avails of reletting over amounts
payable hereunder.
(iii) From time to time recover accrued and unpaid rent
and damages arising from Tenant's breach of the Lease, regardless of
whether the Lease has been terminated, together with applicable late
charges and interest.
(iv) Enforce the statutory landlord's lien on Tenant's property.
(v) Recover all reasonable attorneys' fees incurred by
Landlord in connection with enforcing this Lease, recovering possession
and collecting amounts owned.
(vi) Perform the obligation on Tenant's behalf and recover
from Tenant, upon demand, the entire amount expended by Landlord plus 20%
for special handling, supervision, and overhead.
(vii) Terminate this Lease by giving written notice of
such intention to terminate. In the event that Landlord elects to
terminate this Lease, then Landlord may recover from Tenant:
(a) All unpaid Rent owed by Tenant as of the date
of termination; plus
(b) All Rent which would have been payable by
Tenant under this Lease but for its termination until the
time of award; plus
(c) All Rent under the Lease for the balance of
the Term after the time of award; plus
(d) All other damages incurred by Landlord as a
result of Tenant s default.
default.
Although defined elsewhere, the parties acknowledge that the term
Rent shall be deemed to be and mean the Annual Minimum Rent and all
other sums required to be paid by Tenant pursuant to the terms of this
Lease.
(viii) Pursue other remedies available at law or in equity.
(c) Upon a termination of Tenant's right to possession,
whether or not this Lease is terminated, subtenancies and other rights
of persons claiming under or through Tenant: (i) shall be terminated or
(ii) Tenant's interest shall be assigned to Landlord. Landlord may
separately elect termination or assignment with respect to each such
subtenancy or other matter.
17. Notices
All notices to be given by one party to the other under this
Lease shall be in writing, mailed or hand-delivered to each at the
address to the individual, set forth at the end of this Lease or at a
changed address if notice of the change is given to the other party in
writing. In the case of notice to Tenant after Tenant takes possession
of the Premises, notice shall be sufficient if mailed or delivered to the
address of the Premises. Mailed notices shall be sent by United States
certified or registered mail, postage prepaid. Such notices shall be
deemed to have been given upon posting in the United States mail. Actual
notice shall be no substitute for written notice under any provision of
this Lease.
18. Subordination
Landlord expressly reserves the right at any time to place ground
leases, liens and encumbrances on and against the Premises and the Center
(collectively, the Title Matters ), superior in lien and effect to this
Lease and the estate created hereby. Tenant acknowledges that there may
currently exist any such Title Matters which are superior in lien and
effect to this Lease and the estate created hereby. This provision shall
be self-operative, but Tenant shall nevertheless execute upon request
subordination agreements presented by Landlord to confirm the superiority
of the Title Matters.
19. Authority to Execute
Any individual executing this Lease on behalf of or as a
representative for a corporation or other person, firm, partnership or
entity represents and warrants that such individual is duly authorized
to execute and deliver this Lease on behalf of said corporation, person,
firm, partnership or other entity and that this Lease is binding upon
said entity in accordance with its terms. If Tenant is a corporation,
Tenant shall deliver to Landlord within fifteen days after the execution
hereof a certified copy of a resolution of the Board of Directors of said
corporation authorizing or ratifying the execution and delivery of this
Lease by the individuals executing and delivering same on behalf of
Tenant.
20. Brokers
Landlord and Tenant each covenant that they have not dealt with
any real estate broker or finder with respect to this Lease and each
party shall hold the other party harmless from all damages, claims,
liabilities or expenses, including reasonable and actual attorneys' fees
(through all levels of proceedings), resulting from any claims that may
be asserted against the other party by any real estate broker or finder
with whom the indemnifying party either has or is purported to have
dealt.
21. Arbitration
All controversies, disputes or claims arising between Landlord
and Tenant in connection with, arising from, or with respect to this
Lease or any agreement related to this Lease between the parties shall
be submitted for binding arbitration in accordance with rules of the
American Arbitration Association or any successor thereof. Arbitration
shall be conducted solely on an individual, not a class-wise basis,
unless all parties so agree. Venue of such arbitration shall be set in
Maricopa County, Arizona. Each party shall select one arbitrator (who
shall not be counsel for the party) and the two so designated shall
select a third arbitrator. If either party shall fail to designate an
arbitrator within ten (10) days after arbitration is requested, or if the
two arbitrators shall fail to select a third arbitrator within twenty
(20) days after arbitration is requested, then such arbitrator shall be
selected by the American Arbitration Association or any successor thereto
upon application of either party. Judgment upon any award of the
majority of arbitrators shall be binding, final and non-appealable and
shall be entered in a court of competent jurisdiction. The award of the
arbitrators may grant any relief which might be granted by a court of
general jurisdiction including, without limitation, an award of damages
and/or injunctive relief, and the costs of the arbitration, including the
reasonable fees of the arbitrators and reasonable attorney s fees. All
issues relating to the arbitrability or the enforcement of the agreement
to arbitrate contained herein shall be governed by the Federal
Arbitration Act (9 U.S.C. 1 et. seq.) and the Federal Common Law of
Arbitration.
22. Americans with Disabilities Act
Landlord and Tenant hereby acknowledge that the Americans with
Disabilities Act (the ADA ) may affect Tenant s use and occupancy of the
Premises and requires Tenant to modify or alter the design, layout or
other physical elements of the interior of the Premises or provide
auxiliary services in connection with its business operations. Tenant
shall comply in all respects with the requirement of the ADA as it
affects Tenant s use and occupancy of the Premises throughout the Term,
and Tenant acknowledges that, notwithstanding any modifications to the
Common Areas which may be made by Landlord in order to conform such areas
with the requirements of the ADA, Landlord makes no representation or
warranties regarding the compliance of the Premises of the Center with
the ADA, nor shall Landlord have any obligations or liabilities to Tenant
to construct any modifications or alterations to the interior of the
Premises in order to comply with the ADA.
23. General Provisions
(a) This Lease and the obligations of Tenant hereunder shall
not be affected or impaired because Landlord is unable to fulfill any of
its obligations hereunder or is delayed in doing so if such inability or
delay is caused by reason of any strike, lockout, civil commotion,
war-like operations, invasion, rebellion, hostilities, military or
usurped power, sabotage, governmental regulations or controls, inability
to obtain any material, service or financing, Act of God or other cause
beyond the control of the Landlord.
(b) Landlord shall have the right to, from time to time, make
rules and regulations for the Center and its operations. Tenant and its
officers, agents, and employees, agree to comply with the rules and
regulations established by Landlord and with such modifications and
additions as Landlord may hereafter make for the Center. Any violation
of the rules and regulations shall constitute a material breach of this
Lease.
(c) The article captions contained in this Lease are for
convenience only and shall not be considered in the construction or
interpretation of any provision. The masculine, feminine or neuter gender
and the singular or plural number shall be deemed to include the others
whenever the context so requires or indicates.
(d) This Lease contains all of the agreements of the parties
hereto with respect to any matter covered or mentioned in this Lease, and
no prior agreement or understanding pertaining to any matter shall be
effective for any purpose. No provision of this Lease may be amended or
added to except by an agreement in writing signed by the parties hereto
or their respective successors in interest.
(e) Submission of this instrument for examination shall not
bind Landlord in any manner, and no lease or obligations of Landlord
shall arise until this instrument is signed and delivered by authorized
officers of Landlord and Tenant.
(f) No rights to light or air over any property, whether
belonging to Landlord or any other persons, are granted to Tenant by this
Lease.
(g) No waiver by Landlord of any provisions of this Lease or
any breach by Tenant hereunder shall be deemed to be a waiver of any
other provision hereof, or of any subsequent breach by Tenant of the same
or any other provision. Landlord's consent to or approval of any act by
Tenant requiring Landlord's consent or approval shall not be deemed to
render unnecessary the obtaining of Landlord's consent to or approval of
any subsequent act of Tenant, whether or not similar to the act so
consented to or approved. No act or thing done by Landlord or Landlord's
agent during the term of this Lease shall be deemed an acceptance of a
surrender of the Premises, and no agreement to accept a surrender shall
be valid unless in writing and signed by Landlord. No employee of
Landlord or of Landlord's agents shall have any power to accept the keys
to the Premises prior to the termination of this Lease, and the delivery
of the keys to any employee shall not operate as a termination of the
Lease or a surrender of the Premises.
(h) Time is of the essence of this Lease.
(i) All exhibits attached hereto are incorporated herein by
this reference.
(j) The parties hereto agree that all the provisions hereof
are to be construed as covenants and agreements as though the words
importing such covenants and agreements were used in each separate
paragraph hereof. This Lease is the result of negotiations between
Landlord and Tenant, who each had the opportunity to obtain legal advice
regarding the same. This Lease shall not be construed for or against
Landlord or Tenant on the basis of which party physically served as
scrivener of this Lease.
(k) Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third person to create the
relationship of principal and agent, partnership, joint venture, or any
other association between Landlord and Tenant other than the
landlord-tenant relationship described herein.
(l) In the event either party shall commence or be required
to defend any action or proceeding against any other party by reason of
any breach or claimed breach of any provision of this Lease, to commence
or defend any action or proceeding in any way connected with this Lease
or to seek a judicial declaration of rights under this Lease, the party
prevailing in such action or proceeding shall be entitled to recover from
or to be reimbursed by the other party for the prevailing party's
reasonable attorneys' fees and costs through all levels of proceedings.
(m) If any provision of this Lease or the application thereof
to any person or circumstance shall be deemed invalid or unenforceable,
the remainder of this Lease and its application to other persons or
circumstances shall not be affected by such partial invalidity but shall
be enforced to the fullest extent permitted by law as though such invalid
or unenforceable provision was never a part hereof.
(n) This Lease shall be construed in accordance with the laws
of the State of Arizona without regard to its principles of choice of
law, and the parties agree that jurisdiction for all actions hereunder
shall lie therein.
(o) This Lease shall be governed by the laws of the State of
Arizona.
LANDLORD: ADDRESS:
Pinnacle Citadel, L.L.C. 23733 North Scottsdale Road
an Arizona limited liability company Scottsdale, Arizona 85255
By: Prime Pinnacle Peak Properties,
Inc., an Arizona corporation,
Its Managing Member
By: ____________________________
James E. Acridge, President
TENANT: ADDRESS:
Giant Industries Arizona, Inc. 23733 North Scottsdale Road
an Arizona corporation Scottsdale, AZ 85255
By: _________________________
Its: _________________________
EXHIBIT 10.30
RETAIL LEASE
THIS RETAIL LEASE (the "Lease") is made this 1st day of July,
1998 by and between PINNACLE CITADEL LLC., an Arizona limited
liability company ("Landlord"), and GIANT INDUSTRIES ARIZONA, INC.,
an Arizona limited liability company ("Tenant").
Landlord hereby leases to Tenant and Tenant leases from
Landlord for the term and upon the conditions and agreements set
forth in this Lease a portion of the real property described on
Exhibit A attached hereto known as the Inn at the Citadel, consisting
of approximately 8,176 square feet of space consisting of eleven
suites on the second floor and an office/lobby suite on the first
floor together with any or all additional space used in connection
with Tenant's business (the "Premises") in The Citadel (the "Center")
along with two (2) covered parking spaces numbered 9 and 10 each
located in the area cross-hatched on Exhibit B. The address of the
premises is 8700 East Pinnacle Peak Road, Scottsdale, Arizona 85255.
1. Term and Possession
(a) The term (the Term ) of this Lease shall commence on
the earlier of (i) the date possession is tendered by written notice
to Tenant or (ii) the date on which the Tenant shall first use or
occupy any part of the premises or (iii) the date a temporary
certificate of occupancy for the Premises is issued by the City of
Scottsdale (the "Commencement Date") and shall expire on June 30,
2003. The Tenant's obligation to pay Rent (defined in Articles 2(d)
below) shall begin on the Commencement Date (the Rent Start Date").
The anticipated Commencement Date is July 1, 1998. Upon request of
either party after the term has commenced, Landlord and Tenant shall
jointly execute a memorandum confirming the Commencement Date.
(b) Upon the expiration or earlier termination of this
Lease or upon the termination of Tenant's right of possession,
whether by lapse of time or otherwise, Tenant shall at once surrender
possession of the Premises to Landlord and remove all of Tenant's
property as provided in Article 10.
(c) Tenant shall have no right to hold over after the
expiration of this Lease without Landlord's prior written consent.
If, with Landlord's prior written consent, Tenant holds over after
the expiration of this Lease, Tenant shall become a tenant from month
to month only, upon all of the terms of this Lease except that
Article 1(a) shall not apply and the amount of the Minimum Annual
Rent (defined at Article 2(a) below) shall be increased to an amount
equal to 125% of the Minimum Annual Rent in effect immediately prior
to the expiration.
(d) Provided Tenant has not been and/or Landlord has not
deemed Tenant in default under this Lease, Tenant shall have the
option, exercisable by written notice given to the Landlord at least
180 days prior to the expiration of the then current Term, to extend
this Lease by one (1) successive period of five (5) years. All the
terms and conditions of this Lease, including, without limitation,
Article 2(b), shall remain in full force and effect during the
extended Term. As used herein, the word Term shall hereafter mean
the Term as it may have been extended pursuant to this Article 1(d).
2. Rent
(a) Minimum Rent. Tenant shall pay to Landlord during the
Term at the office of Landlord, 23733 North Scottsdale Road,
Scottsdale, AZ 85255, or at such other place as Landlord may
designate, without notice, demand, deduction or set-off, Minimum
Annual Rent in the amount of $163,520.00 per annum, subject to
adjustment as provided in Article 2(b), in equal monthly installments
in advance on the first day of each calendar month with applicable
transaction privilege or other similar sales tax. In addition,
Tenant shall pay the amount of $40.00 per month for each of the two
(2) reserved covered parking spaces. In the event the Rent Start
Date does not occur on the first day of a calendar month, Tenant
shall pay Rent on the Rent Start Date for the fractional month on a
pro rata 30-day month basis.
(b) Adjustments. The Minimum Annual Rent shall be
adjusted upwards as of each one (1) year anniversary of the
Commencement Date (the Adjustment Date ) as follows:
(i) Landlord shall ascertain the Consumer Price
Index for All Urban Consumers - U.S. Cities Average - All Items (the
"CPI") published by the United States Department of Labor, Bureau of
Labor Statistics (1982-84 = 100) for the third full calendar month
prior to the Commencement Date for the first year adjustment and the
third full calendar month prior to the previous Adjustment Date for
all following adjustments (the "Base Index") and for the third full
calendar month prior to the Adjustment Date (the "Comparison Index").
(ii) The Minimum Annual Rent commencing as of each
Adjustment Date shall be equal to the Minimum Annual Rent in effect
immediately preceding each Adjustment Date (the "Effective Minimum
Annual Rent") times a fraction, the numerator of which is the
Comparison Index associated with that Adjustment Date and the
denominator of which is the Base Index, as illustrated in the
following formula for the first (1st) Adjustment Date:
Adjusted Minimum = Effective Minimum x Comparison Index
Annual Rent Annual Rent Base Index
(iii) Notwithstanding the foregoing, in no event
shall the Minimum Annual Rent be adjusted downwards. When the Minimum
Annual Rent payable as of each Adjustment Date is determined,
Landlord shall promptly give Tenant written notice of such adjusted
Minimum Annual Rent and the manner in which it was computed. The
Minimum Annual Rent as so adjusted from time to time shall be the
"Minimum Annual Rent" for all purposes under this Lease.
(iv) If at any time the CPI is no longer published
or its manner of calculation is materially changed, Landlord may
substitute a substitute index, reconciled to the month three (3)
months prior to the Commencement Date, as reasonably reflects changes
in the purchasing power of the dollar.
(c) Nature of Payments. All sums required to be paid by
Tenant under this Lease, whether or not so designated, including,
without limitation, Minimum Annual Rent and Tenant s Pro Rata Share
of Operating Costs are Rent and shall be paid without notice,
demand, deduction, or set-off.
(d) Late Charges and Interest. Any amount due from Tenant
to Landlord which is not paid when due shall bear interest at three
percent in excess of the prime rate as established from time to time
by the Bank of America Arizona (or, if such bank ceases to exist,
such other comparable financial institution as reasonably determined
by Landlord) from the due date until paid, but the payment of such
interest shall not excuse or cure any default by Tenant under this
Lease. In addition, if any Rent or other payment is not paid within
five days of its due date, then Tenant shall also pay to Landlord a
late charge equal to ten percent of the amount of such payment.
3. Use
(a) Tenant shall continuously and uninterruptedly
operate, use and occupy the Premises as office suites or as an inn
along with a 1st floor office/lobby for the inn and for no other
purpose whatsoever and shall be open for business those hours that
conform with the hours of opening which are customary for businesses
of like character in the City of Scottsdale.
(b) Tenant, its agents, employees and/or contractors
shall, at Tenant s sole cost and expense, comply with the following:
(i) Tenant shall not use or permit upon the
Premises anything that would invalidate any policies of insurance now
or hereafter carried on the Premises or that will increase the rate
of insurance on the Premises or the Center;
(ii) Tenant shall pay all additional insurance
premiums which may be caused by the use which Tenant shall make of
the Premises;
(iii) Tenant shall not in any manner deface or
injure the Premises or overload any floor of the Premises;
(iv) Tenant shall not conduct or permit any auction
sale to be held on or about the Premises, whether such auction be
voluntary or involuntary, or any sidewalk sale without the prior
written consent of Landlord;
(v) Tenant shall not do anything or permit
anything to be done upon the Premises in any way tending to create
a nuisance, or tending to disturb any other lessee in the Center or
tending to injure the reputation of the Center, including, without
limitation, the playing of music audible outside the Premises and the
affixing or maintaining upon the glass panes or supports of the show
windows or on or within 24" of any window, doors or exterior walls
of the Premises, any signs, advertising placards, names, insignia,
trademarks, descriptive material or any other like item(s) without
having first received the written approval of Landlord as to the
size, type, color, location, copy, nature and display qualities of
any such item. All signs shall comply with City of Scottsdale sign
ordinances and The Citadel sign criteria.
(vi) Tenant shall not display merchandise,
advertise or solicit business on the sidewalks and other Common Areas
(defined at Article 6(a) below) or place any handbills, bumper
stickers or other advertising devices on any vehicle parked in the
Common Areas of any other parking area of the Center;
(vii) Tenant shall not use the Premises
designated as the office/lobby for lodging or sleeping purposes;
(viii) Tenant shall not commit or suffer to be
committed any waste upon the Premises;
(ix) Tenant shall not violate any recorded
restriction or covenant affecting the Center, nor use the Premises
for any purpose which would be in violation of any exclusive rights
or use granted to other tenants in the Center. Landlord shall not
grant exclusive rights which would prohibit Tenant from exclusively
using the Premises for the purposes stated in Article 4(a) above
except for incidental uses ancillary to the main use of the other
user.
(x) Tenant shall, at its sole cost and expense,
maintain the elevator located in the Center that services the Inn at
the Citadel in first class condition.
(c) Tenant shall provide and maintain sanitary receptacles
within the Premises in which to place any refuse or trash. Tenant
shall cause such refuse or trash to be removed from the Premises to
receptacles designated by Landlord as often as required to maintain
a sanitary condition, but in no event less often than daily. No
grease or rubbish or hazardous waste shall be disposed of through any
plumbing system. Tenant shall sweep as needed and keep free of
refuse all sidewalks immediately adjacent to the Premises if so
directed by Landlord. Tenant shall not allow the Premises to be
infested with insects or vermin.
(d) Tenant shall use its best efforts to complete all
deliveries, loading, unloading and services to the Premises before
10:00 a.m. each day. Tenant shall attempt to prevent any delivery
trucks or other vehicles servicing the Premises from parking or
standing in front of, or at the rear of, the Premises from 10:00 a.m.
to 9:00 p.m. of each day. Landlord reserves the right to further
regulate the activities of Tenant in regard to deliveries to and
servicing of the Premises, and Tenant agrees to abide by such further
non-discriminatory regulations of Landlord.
(e) Tenant shall, at Tenant's sole cost and expense,
comply with all present and future federal, state and local laws,
ordinances, orders, rules and regulations (collectively, "Laws"), and
shall procure all permits, certificates, licenses and other
authorizations required by applicable Law relating to Tenant's
business or Tenant's use or occupancy of the Premises or Tenant's
activities on the Premises. Tenant shall make all reports and
filings required by applicable Laws.
(f) Tenant's Warranty as to Hazardous or Toxic Materials.
Tenant shall not cause or permit any Hazardous Substances to be
brought upon, kept or used in or about the Premises by Tenant, its
agents, employees, contractors or invitees, except such incidental
quantities of commonly used office supplies (such as copier fluid and
typewriter correction fluids) and ordinary cleaning solvents,
provided that all of the foregoing are only in such quantities as are
normal for the permitted use of the Premises, are used in the manner
for which they are designed and are at all times used, kept, and
stored and disposed of in a manner that strictly complies with all
laws regulating any such Hazardous Substances. Any Hazardous
Substances placed in or on the Premises by Tenant, its agents,
employees, contractors or invitee shall remain the property of
Tenant, notwithstanding anything in the Lease to the contrary.
Tenant shall not install any underground storage tank on the
Premises, as such term is defined in 42 U.S.C. Section 66991 and the
regulations promulgated thereto, as amended from time to time and
including all pipes and conduiting relating thereto. If Tenant
breaches the covenants and obligations set forth herein, or if the
presence of Hazardous Substances on, in or about the Premises caused
by Tenant, its agents, employees, contractors or invitees, results
in contamination of the Premises, then Tenant shall indemnify, defend
and hold Landlord, its officers, employees, partners, agents and
representatives, free and harmless from and against any and all
claims, judgments, penalties, fines, costs, liabilities and damages,
(including, without limitation, sums paid in settlement of claims,
attorneys' fees and expenses (through all levels of proceedings),
consultants or experts fees) and all costs incurred in enforcing this
indemnity which arise during or after the Term as a result of the
presence of such Hazardous Substances or any contamination, damage
or injury therefrom. This indemnification by Tenant includes, without
limitation, any and all costs incurred in connection with any
investigation of site conditions or any clean up, remedial, removal
or restoration work required by any federal, state or local
governmental agency or political subdivision because of the presence
of such Hazardous Substances caused by Tenant, its agents, employees,
or contractors in, on or about the Premises. Tenant shall promptly
take all actions, at its sole cost and expense, as are necessary to
return the Premises to the condition existing prior to the
introduction of any such Hazardous Substances, provided that
Landlord's approval of such actions is first obtained. Furthermore,
Tenant shall immediately notify Landlord of any inquiry, test,
investigation or enforcement proceeding by or against Tenant or the
Premises concerning the presence of any Hazardous Substances. Tenant
acknowledges that Landlord, at Landlord's election, shall have the
right to negotiate, defend, approve and appeal any action taken or
order issued by any governmental authority with regard to any
Hazardous Substances condition which Tenant is obligated hereunder
to remediate. The provisions of this Article 4(f) shall survive the
expiration or sooner termination of the Term or of Tenant's right to
possession, whether by lapse of time or otherwise. The term
"Hazardous Substance" includes, without limitation, any material or
substance which is (i) defined or listed as a "hazardous waste",
"extremely hazardous waste", "restrictive hazardous waste" or
"hazardous substance" or considered a waste, condition of pollution
or nuisance under any Environmental Law (as defined below); (ii)
petroleum or a petroleum product or fraction thereof; (iii) asbestos;
and/or (iv) substances known to cause cancer and/or reproductive
toxicity. The term "Environmental Law" shall mean any federal, state
or local law, statute, ordinance, rule, regulation, order, consent,
decree, judgment or common-law doctrine, interpretation thereof, and
provisions and conditions of permits, licenses, plans, approvals and
other operating authorizations whether currently in force or
hereafter enacted relating to health, industrial hygiene or the
environmental conditions on, under or about the Premises or the
Center, including, without limitation, (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Sections 6901 et seq.; (iii) the
Federal Water Pollution Control Act, 33 U.S.C. Sections 1317 et seq.,
as such laws are amended and the regulations and administrative codes
applicable thereto. It is the intent of the parties hereto to
construe the terms "Hazardous Substance" and "Environmental Law" in
their broadest sense.
(g) Tenant shall keep its sign, exterior lighting and
display windows lit during those hours that Landlord in its sole
discretion may reasonably require.
(h) Tenant shall not use the Premises for any purpose
other than as set forth in Article 4(a) and shall notify Landlord in
writing of, and obtain Landlord s prior written consent to, any
intended change in the nature of its activities or business conducted
on the Premises and permitted by Article 4(a).
4. Taxes
(a) Tenant shall pay, prior to delinquency, all taxes
assessed against or levied upon Tenant's fixtures, furnishings,
equipment and other personal property (the Personalty ) located in
or upon the Premises. Tenant shall cause the Personalty to be
assessed and billed separately from the real property of which the
Premises form a part. In the event any or all of Tenant's Personalty
shall be assessed and taxed with the real property of which the
Premises or the Center are a part, Tenant shall pay to Landlord
Tenant's share of such taxes within ten days after delivery to Tenant
by Landlord of a statement in writing setting forth the amount of
such taxes applicable to Tenant's Personalty.
(b) Tenant shall, simultaneously with the payment of any
sums required to be paid under this Lease as Rent, additional rent
or otherwise, pay or reimburse Landlord for any sales, use, rental,
transaction privilege or other excise tax imposed or levied on, or
measured by, the amount paid.
(c) Concurrently with each payment of Minimum Annual Rent
hereunder, Tenant shall deliver to Landlord a copy of the Preliminary
Sales Tax Report filed (or required to be filed) by Tenant with the
Arizona Department of Revenue for the immediately preceding calendar
month, with respect to the business conducted in the Premises.
5. Common Areas
(a) All parking areas, access roads, driveways, pedestrian
sidewalks and ramps, landscaped areas, drainage facilities, exterior
lighting, signs, courtyards and other areas and improvements provided
by Landlord for the general use in common of tenants, their officers,
agents, employees, customers and other invites (collectively, the
"Common Areas") shall at all times be subject to the exclusive
control and management of Landlord, and Landlord shall have the right
from time to time to modify, enlarge or eliminate the same and to
establish, modify and enforce reasonable rules and regulations with
respect thereto. Tenant's right to use the Premises includes the
non-exclusive right to use the areas designated from time to time by
Landlord as the Common Areas.
(b) Landlord shall at all times have the right to designate
a particular parking area to be used by employees of Tenant and other
occupants of the Center and any such designation may be changed by
Landlord from time to time. Tenant and its employees shall park
their cars only in those portions of the Common Areas, if any,
designated for that purpose by Landlord. Tenant shall furnish
Landlord from time to time with an accurate current list of its and
all its employees' automobile license plate numbers within 15 days
after taking possession of the Premises and thereafter within 15 days
after any change in the accuracy of the list. If Tenant or its
employees fail to park their cars in designated parking areas,
Landlord may charge Tenant $25.00 per day per car for each such
violation and shall have the right to have any such car towed away.
6. Operating Costs, Real Property Taxes
and Utilities
(a) Tenant shall pay as of the Rent Start Date to Landlord
Tenant's pro rata share of all of the Center's operating costs
consisting of the total cost and expense incurred in managing,
operating, maintaining replacing and repairing the Center and its
Common Areas including, without limitation, real property taxes and
general and special assessments, wages, salaries and employee
benefits of persons performing services in connection with the
Center, utilities, parking lot sweeping, sealing, patching, re-
striping and resurfacing; repairs, maintenance, and renewal of
equipment and improvements, including roofs, public liability and
property damage insurance, fire and extended coverage insurance,
plate glass insurance and rent interruption insurance, supplies,
materials, tools, parts, and equipment, equipment rental charges;
bookkeeping, accounting, legal and other professional charges and
expenses, fees for permits and licenses, administrative expenses,
taxes, service and maintenance contracts, signage, advertising,
marketing and landscaping, cleaning, window washing, lighting,
painting, fire protection and fire hydrant charges, steam, water and
sewer charges, gas electricity and telephone utility charges,
supplying music to the Common Areas, depreciation of the cost of
equipment used in operating and maintaining the Common Areas, or rent
paid for leasing such equipment, Landlord s office rent or the fair
market rental value of office space in the Center used by Landlord
to manage, operate and maintain the Common Areas, security, etc.,
(collectively, the Operating Costs ). Tenant's Pro Rata Share of
the Operating Costs shall be the proportion that the area of the
Premises bears to the total rentable area of all rentable space in
the Center owned by the Landlord.
(b) On the first day of each month (or such other regular
cycle as Landlord may determine)Tenant shall pay a monthly advance
charge on account of Tenant's Pro Rata Share of the Operating Costs.
The amount of the monthly charge shall be established by Landlord
and may be adjusted from time to time by Landlord to reflect the
actual cost. Within 120 days after the end of each fiscal year as
established for the Center by Landlord, Landlord shall provide to
Tenant a reasonably detailed summary of the actual Operating Costs
showing Tenant's actual share and the amount by which Tenant has
overpaid or underpaid. Any overpayment shall be credited to Tenant's
account. Any deficiency shall be payable within ten days after
receipt of the statement. In the alternative, Landlord may, at its
option during all or part of the Term, bill Tenant for its pro rata
share of Operating Costs in arrears based on actual costs as they are
incurred, in which case Tenant shall pay the invoice within ten days
after receipt. However, Landlord s failure to provide such reasonably
detailed summary of the actual Operating Costs showing Tenant's
actual share and the amount by which Tenant has overpaid or underpaid
by the date provided above shall in no way excuse Tenant from its
obligation to pay its pro rata share of Operating Costs or constitute
a waiver of Landlord s right to bill and collect such pro rata share
of Operating Costs from Tenant in accordance with this Article 7(b).
(c) The operating costs for the fiscal year in which this
Lease commences or terminates shall be apportioned so that Tenant
shall not be responsible for costs that relate to periods prior to
or subsequent to the term of this Lease except any period of holding
over.
(d) Tenant shall be solely responsible for payment for and
pay before delinquency all utilities provided to the Premises as of
the Commencement Date, which shall be separately metered at Tenant's
expense. Tenant s failure to timely pay its utility bills shall be
deemed a material breach of this Lease and an event of default.
Notwithstanding any other provision of this Lease, upon delivery of
a written notice by Landlord to Tenant of such even of default for
failure to pay such utility charges and Tenant s failure to cure said
default within 3 days of the delivery of such notice, Landlord may
terminate this Lease.
7. Construction, Delivery, and
Condition
(a) If delivery of possession of the Premises to Tenant
is delayed beyond the anticipated Commencement Date because of a
delay in the completion of construction of the Premises by Landlord
or because of a failure of an existing tenant to surrender possession
of the Premises to Landlord, then this Lease shall remain in full
force and effect, Landlord shall not be liable to Tenant for any
damage occasioned by delay, and the Commencement Date shall be
changed to the date actual delivery of possession to Tenant is
tendered. Notwithstanding the foregoing, if tender of possession is
delayed more than 120 days after the anticipated Commencement Date
as set forth in Article 1(a), Tenant, by written notice to Landlord,
may terminate this Lease prior to taking possession, and upon such
termination any Security Deposit shall be refunded and both Landlord
and Tenant shall be released of all further obligation hereunder.
(b) Tenant accepts the Premises AS IS, acknowledges that
Landlord has made no representations or warranties with respect
thereto and is relying solely upon Tenant s own independent factual,
physical and legal investigation, tests and studies. No Improvements
shall be constructed until approved plans and specifications have
been attached to this Lease or otherwise accepted by both Landlord
and Tenant. Landlord will have final approval of all Improvements.
(c) All Work shall be performed by licensed, bondable
Contractors (defined below) approved in writing by Landlord, whose
approval shall not be unreasonably withheld. The term Contractor as
used herein includes subcontractors or other persons hired or
retained by Tenant to construct improvements in the Premises. No Work
shall be commenced until Landlord shall first have received from
Tenant or its contractor a labor and materials payment bond issued
by a responsible surety in form reasonably satisfactory to Landlord
insuring that no mechanic's lien may be asserted against the Premises
or the Center in connection with the Work. Landlord may post signs
of non-responsibility around the Premises.
(d) Tenant shall have no right to enter the Premises
and/or to perform the Work prior to the Commencement Date, without
Landlord's written consent. If Landlord does so consent, Tenant shall
comply with directions of the Landlord and shall not interfere with
any of Landlord's construction activities. Any work performed by
Tenant, or any fixtures, furnishings, equipment and other personal
property moved onto the Premises, shall be at Tenant's own risk.
Neither Landlord nor Landlord's agents or contractors shall be
responsible to Tenant for damage or destruction of Tenant's work or
property excepting damage or destruction occasioned by Landlord's own
gross negligence. Tenant agrees to indemnify Landlord and hold
Landlord harmless from and against claims made with respect to
injuries to persons or damage or destruction of property of other
persons moved onto the Premises prior to the Commencement Date.
(e) Landlord has no obligation to design or construct
improvements or to make alterations in the Premises.
(f) Upon the expiration or earlier termination of this Lease
or upon the termination of Tenant's right of possession, whether by
lapse of time or otherwise, Tenant shall, upon demand by the
Landlord, at Landlord's option, at the Tenant's sole expense,
forthwith remove any alterations, additions or improvements made by
Tenant, designated by Landlord to be removed, and Tenant shall,
forthwith at its sole cost and expense, repair any damage to the
Premises caused by such removal and restore the Premises to a
condition reasonably comparable to their condition at the
commencement of the Lease. If not so demanded by the Landlord, then
any alterations, additions or improvements to the Premises, including
signs, but not including movable furniture and trade fixtures, shall
at the expiration or earlier termination of this Lease or upon the
termination of Tenant's right of possession, whether by lapse of time
or otherwise, become a part of the realty and belong to Landlord.
8. Repair and Maintenance
(a) Tenant shall, at Tenant s sole cost and expense, as
of the Commencement Date maintain the Premises and the improvements
thereon (including without limitation all heating, air conditioning,
ventilation, electrical and plumbing systems serving the Premises,
all signs, locks, doors and door frames), in good condition and
repair. All exterior and interior glass in the Premises shall be
maintained by Tenant and any glass broken shall be promptly replaced
by Tenant at its expense with glass of the same kind, size and
quality. If Tenant does not do so, Landlord may, but need not, make
any such repairs and replacements, and Tenant shall pay Landlord the
cost upon demand. Tenant hereby waives all right, if any, to make
repairs at the expense of Landlord.
(b) Subject to the provisions of Article 7, Landlord shall
repair and maintain the Common Areas, the roof and exterior of the
Premises and all utility lines below grade or in the Common Areas.
Landlord shall not be responsible to make any repairs or perform any
maintenance unless written notice of the need for such repairs or
maintenance is given by Tenant and Landlord determines, in good
faith, that such need does exist. Except in the case of a fire or
casualty as provided in Article 13 or in the event of a business
interruption caused solely by Landlord s gross negligence which
exceeds 14 days, there shall be no abatement of Rent and no liability
of Landlord by reason of any entry to the Premises, interruption of
services or facilities, temporary closure of Common Areas, or
interference with Tenant's business arising from the making of any
repairs or maintenance.
9. Alterations and Personal Property
Tenant shall not make or suffer to be made any alterations,
additions or improvements to the Premises, including signs, without
the prior written consent of Landlord of which consent shall not be
unreasonably withheld, but which shall not be required to be given
until Landlord has actually received a copy of Tenant s building
permit and plans (interior and exterior). Landlord may condition its
consent upon provision of a payment bond, in amount and form
reasonably satisfactory to Landlord, covering the work to be done by
Tenant's contractor. Tenant shall not install any antenna, satellite
dish or other fixture or equipment on the roof or in the Common
Areas. In the event Landlord consents to the making of any
alterations, additions or improvements to the Premises by Tenant,
they shall be made by Tenant at Tenant's sole cost and expense and
any contractor or person selected by Tenant to perform the work must
first be approved in writing by Landlord. Tenant shall not permit any
mechanic's or materialmen's lien to stand against the Premises for
any labor or materials provided to the Premises by any contractor or
other person hired or retained by Tenant. Tenant shall cause any such
lien to be discharged (by bonding or otherwise) within ten days after
demand by Landlord, and if it is not discharged within ten days,
Landlord may, in addition to all other remedies for an event of
default, pay or otherwise discharge the lien and immediately recover
all amounts so expended from Tenant as Rent. Upon the expiration or
earlier termination of this Lease or upon the termination of Tenant's
right of possession, whether by lapse of time or otherwise, Tenant
shall, upon demand by Landlord, at Landlord's option, at Tenant's
sole cost and expense, forthwith remove any alterations, additions
or improvements made by Tenant, designated by Landlord to be removed,
and Tenant shall, forthwith at its sole cost and expense, repair any
damage to the Premises caused by such removal and restore the
Premises to a condition reasonably comparable to their condition at
the commencement of the Lease. If not so demanded by Landlord, then
any alterations, additions or improvements to the Premises, including
signs, but not including movable furniture and trade fixtures, shall,
upon the expiration or earlier termination of this Lease or upon the
termination of Tenant's right of possession, whether by lapse of time
or otherwise, become a part of the realty and belong to Landlord.
10. Certain Rights Reserved by
Landlord
Landlord shall have the right:
(i) To change the Center's name or street address;
(ii) To enter the Premises either personally or by
designated representative at all reasonable times during normal
business hours or other hours with prior notification for the purpose
of examining or inspecting the same, showing the same to prospective
purchasers or lessees, or performing any repairs, construction or
alteration in relation to the Center or which is Landlord's
responsibility under this Lease. Landlord shall be permitted to do
any of the above without any rebate of Rent and without any liability
to Tenant for any loss of occupation or quiet enjoyment of the
Premises thereby occasioned. Tenant shall provide Landlord with a key
to the Premises for purposes of emergency entry by Landlord or its
agents. Use of this key is to be restricted to emergency situations
or as permitted by Tenant hereunder.
(iii) To grant to anyone the exclusive right to conduct any
business or render any service in or to the Center, provided such
exclusive right shall not operate to exclude Tenant from the use
expressly permitted under Article 4.
None of the rights specified above shall be construed or
otherwise considered as a waiver of any rights Landlord may have
under this Lease, at law or in equity or otherwise.
11. Damage to Property; Injury to Persons;
Insurance; Indemnity
(a) Tenant shall defend, indemnify and hold Landlord
harmless, regardless of fault or negligence which is imputed to
Landlord as the owner of Center, from any and all claims costs,
liability, damage or expense, including reasonable attorneys' fees,
for any death, damage or injury to persons or property occurring on
the Premises and resulting in whole or in part from (i) any
misrepresentation, breach of warranty or nonfulfillment of any
agreement on the part of Tenant contained in this Lease, (ii) any
act, omission or condition for which Tenant is solely responsible
under the Lease, (iii) any work of construction, improvement or
demolition controlled by or subject to the control of Tenant, (iv)
the negligence of Tenant, its agents, employees or contractors, (v)
Tenant's use or occupancy of the Premises, (vi) the conduct of its
business, (vii) from any activity, work, or thing done, permitted or
suffered by Tenant in or about the Premises, or (viii) from the
condition of the Premises. Tenant shall further defend, indemnify
and hold Landlord harmless from any and all claims arising in whole
or in part from any breach or default in the performance of this
Lease by Tenant, and/or arising in whole or in part from any act of
Tenant, or of its agents or employees, and from all costs, attorneys'
fees, expenses and liabilities incurred directly or indirectly as a
result of any such act and/or claim. Tenant, as a material part of
the consideration to Landlord, hereby assumes all risk of damage to
property or injury to persons, in, upon, or about the Premises from
any cause, and Tenant hereby waives all claims in respect thereto
against Landlord. Landlord shall in no event be liable for loss of
or damage to any property by vandalism, theft or otherwise, or for
any injury or damage to persons or property resulting from fire,
explosion, falling plaster, steam, gas, electricity, water or rain
which may leak from any part of any building or from the pipes,
appliances or plumbing works therein, or from the roof, street or
subsurface, or from any other place resulting from dampness, or from
the
elements or any other cause whatsoever. Landlord shall not be liable
for interference with the natural light. Tenant shall give immediate
notice to Landlord of any fire, accident or defect discovered with
the Premises or the building of which the Premises are a part. Tenant
acknowledges that it can protect itself against some or all of the
foregoing risks by procuring appropriate insurance. Tenant's
indemnification obligations shall survive the expiration or earlier
termination of this Lease or upon the termination of Tenant's right
of possession, whether by lapse of time or otherwise.
(b) Tenant shall, at Tenant s sole cost and expense, as
of the Commencement Date maintain fire and extended coverage
insurance throughout the term of this Lease in an amount equal to one
hundred percent of the replacement value of Tenant's fixtures,
furnishings, equipment and other personal property located on the
Premises, together with such other insurance as may be required by
Landlord's lender or by any government agency. All proceeds of
Tenant's policy of fire and extended coverage insurance shall be
payable to Tenant, and all proceeds of policies of insurance procured
by Landlord shall be payable to Landlord. Tenant hereby waives any
right of recovery from Landlord and Landlord hereby waives any right
of recovery from Tenant for any loss or damage (including
consequential loss) resulting from any of the perils insured against
in the insurance policies required to be maintained hereunder. During
the Term, Tenant shall, at Tenant's sole cost and expense, maintain
general public liability insurance against claims for personal
injury, death or property damage occurring in, upon or about the
Premises. The limitation of liability of such insurance shall be not
less than Two Million Dollars in respect to injury or death of one
person and to the limit of not less than Two Million Dollars in
respect to any one accident and to the limit of not less than Five
Hundred Thousand Dollars in respect to property damage. All of
Tenant's policies of liability insurance shall be obtained by Tenant
in an "occurrence" form and shall name Landlord as an additional
insured or loss payee, as appropriate. All policies of insurance or
copies thereof required to be carried by Tenant under this Article
12 shall be delivered to Landlord prior to the Commencement Date and
thereafter at least thirty days prior to the expiration of the then
current policies. Each policy shall contain an endorsement
prohibiting cancellation or non-renewal without at least 30 days
prior notice to Landlord.
12. Fire and Casualty
If the Premises are wholly or partially destroyed or damaged
by fire or other casualty, Landlord shall restore the Premises with
reasonable diligence; provided, however, that Landlord shall have no
obligation to restore improvements not originally provided by
Landlord or to replace any of Tenant's fixtures, furnishings,
equipment or personal property; and provided further that Landlord
need not commence repairs until insurance proceeds are available and
are released in a sufficient amount for such purpose by any lender
holding a lien on all or part of the Center. Proceeds of insurance
payable with respect to a fire or other casualty shall be received
and held by Landlord. Notwithstanding the foregoing, in the event the
Premises are destroyed or damaged by any fire or casualty to the
extent of not less than twenty-five percent of the replacement cost
thereof, or if the fire or casualty occurs within the last three
years of the Term, then Landlord shall have the option to terminate
this Lease by giving notice to Tenant within sixty days after the
occurrence of such damage or destruction, in which case Landlord
shall retain all insurance proceeds with respect to the Premises as
its own property and shall not be required to spend any more on the
restoration than the amount of proceeds actually received by
Landlord. If Landlord does not terminate this Lease as provided
above, this Lease shall continue in full force and effect, but
Minimum Annual Rent shall equitably abate until the restoration is
substantially complete. However, in the event it is determined that
Tenant's ability to continuously operate and conduct business on the
Premises is not hindered, then Minimum Annual Rent shall abate in
proportion to the Premises under restoration. The provisions of this
Lease shall govern when this Lease shall be terminable as a result
of a fire or casualty, and no other rule or statute on the subject
shall apply.
13. Condemnation
In the event the entire Premises shall be appropriated or
taken under the power of eminent domain, this Lease shall terminate
and expire as of the date of such taking. In the event more than
twenty-five percent of the Premises is taken under the power of
eminent domain, or if by reason of any appropriation or taking,
regardless of the amount so taken, the remainder of the Premises is
not one undivided parcel of property, either Landlord or Tenant shall
have the right to terminate this Lease as of the date Tenant is
required to vacate a portion of the Premises upon giving notice in
writing of such election within thirty days after receipt by Tenant
from Landlord of written notice that the Premises have been so
appropriated or taken. If neither Landlord nor Tenant elects to so
terminate this Lease, or in the event less than twenty-five percent
of the Premises shall be appropriated under the power of eminent
domain by any public or quasi-public authority, and the remainder
thereof is an undivided parcel of property, then Landlord shall
restore the Premises to the extent practicable to their condition
prior to the taking, provided that no such restoration need commence
until the condemnation proceeds are available and released in a
sufficient amount for such purpose by any lender holding a lien on
all or part of the Center and further provided that Landlord shall
not be required to spend more than the condemnation proceeds actually
received by Landlord, and thereafter the Minimum Annual Rent shall
be reduced on an equitable basis, taking into account the relative
value of the portion taken as compared to the portion remaining. All
awards or compensation for any taking of any part of the Premises,
whether payable to Landlord or Tenant, shall be the sole property of
Landlord. Notwithstanding anything to the contrary contained herein,
Tenant shall be entitled to receive any portion of an award of
compensation relating to damage to or loss of trade fixtures or other
personal property belonging to Tenant, and Landlord shall be under
no obligation to restore or replace Tenant's furnishings, fixtures,
equipment and personal property. For the purposes of this Article 14,
a voluntary sale or conveyance in lieu of condemnation shall be
deemed an appropriation or a taking under the power of eminent
domain.
14. Assignment and Subletting; Sale by
Landlord
(a) Tenant shall not, either voluntarily or by operation
of law, assign, hypothecate or transfer this Lease, or sublet the
Premises or any part thereof, or permit the Premises or any part
thereof to be occupied by anyone other than Tenant or Tenant's
employees (individually, a Transfer ), without the Landlord's prior
written consent ("Transfer Notice") which shall not be unreasonably
withheld. However, Tenant may, without Landlord's prior approval,
sublet the Premises to Pinnacle Inn at The Citadel, LLC. Landlord
shall be under no obligation to give or withhold consent until after
all information reasonably required by Landlord with respect to the
identity, background, experience and financial worth of the proposed
assignee, transferee, or subtenant (the Transferee ) has been
provided. No hypothecation, assignment, sublease or other transfer
to which Landlord has consented shall be effective for any purpose
until such time as fully executed documents of such transaction have
been provided to Landlord, and, in the case of an assignment, the
assignee has attorned directly to Landlord, and in the case of a
sublease, the sublessee has acknowledged that the sublease is subject
to all of the terms and conditions of this Lease. Any assignment,
mortgage, transfer or subletting of this Lease which is not in
compliance with the provisions of this Article 15 shall be voidable
by Landlord and shall, at the option of Landlord, terminate this
Lease. Any differing of use or extension of use by Tenant or any
Transferee will, at the option of Landlord terminate this Lease. The
consent by Landlord to an assignment or subletting shall not relieve
Tenant from obtaining the express written consent of Landlord to any
further assignment or subletting or release Tenant from any liability
or obligation hereunder, whether or not then accrued. Except as
provided in this Article, this Lease shall be binding upon and inure
to the benefit of the successors and assigns of the parties.
(b) In the event of a sale or conveyance by Landlord of
the Premises, Landlord shall be relieved of all future liability upon
any of the covenants or conditions, express or implied, in favor of
Tenant, and Tenant shall look solely to Landlord's successor in
interest. This Lease shall not be affected by any sale, and Tenant
shall attorn to the successor in interest. If any Security Deposit
has been made by Tenant, the successor in interest shall be obligated
to return it in accordance with the terms hereof and Landlord shall
be discharged from any further liability in reference thereto.
(c) If any rent of other monetary payment due under the
terms of this Lease is made by check wherein the payor is other than
the Tenant herein, acceptance thereof shall in no way constitute
acceptance by Landlord of any assignment or subletting. Any
assignment or subletting must comply with the conditions of this
Article 15.
15. Estoppel Certificate
(a) Tenant shall at any time and from time to time upon
not less than ten days' prior written notice from Landlord execute,
acknowledge and deliver to Landlord a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect
(or if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and
effect) and the dates to which the rental and other charges are paid
in advance, if any; (ii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Landlord
hereunder, or specifying such defaults if they are claimed; and (iii)
certifying such other matters relating to this Lease as Landlord may
reasonably request. Any such statement may be relied upon by any
prospective purchaser or encumbrancer of all or any portion of the
real property of which the Premises are a part.
(b) Tenant's failure to deliver a statement within the
time prescribed by Landlord in its request for same shall be
conclusive upon Tenant (i) that this Lease is in full force and
effect, without modification except as may be represented by
Landlord, (ii) that there are no uncured defaults in Landlord's
performance, and (iii) that not more than one month's rental has been
paid in advance.
16. Landlord's Remedies
(a) The following shall constitute events of default:
(i) Tenant's failure to pay any amount due under
Article 2, Article 5(b) or Article 7 of this Lease within 5 days of
when due, or Tenants failure to pay any other amount due under this
Lease within 5 days after notice from Landlord.
(ii) Tenant's failure to execute, acknowledge and
return an estoppel certificate under Article 16 or a subordination
agreement under Article 19, within ten days after request.
(iii) Tenant's failure to perform any other obligation
under this Lease within fifteen days after notice of nonperformance;
provided, however, that if the breach is of such a nature that it can
be cured but it cannot be cured within fifteen days, Tenant shall be
deemed to have cured if cure is commenced promptly and diligently
pursued to completion with completion accomplished within 30 days of
the original notice of nonperformance; and provided further, that in
the event of a breach involving an imminent threat to health or
safety, Landlord may in its notice of breach reduce the period for
cure to such shorter period as may be reasonable under the
circumstances.
(iv) Tenant vacates, abandons, or otherwise ceases to
operate the Premises on a continuing basis except temporary absence,
excused by Landlord in its sole discretion, by reason of fire,
casualty, or other cause wholly beyond Tenant's control.
(v) Any goods, chattels or equipment of Tenant are
taken in execution or in attachment or if a writ of execution is
issued against Tenant or if Tenant or any guarantor becomes insolvent
or files a petition under the Bankruptcy Act or becomes bankrupt or
takes the benefit of any statute that may be in force for bankrupt
or insolvent debtors or becomes involved in voluntary or involuntary
winding-up proceedings or if a receiver shall be appointed for the
business, property, affairs or revenues of Tenant or any guarantor
(provided, however, that in the case of involuntary proceedings,
Tenant shall have 60 days to cause them to be dismissed), or if
Tenant makes a bulk sale of its goods or moves or commences, attempts
or threatens to move its goods, chattels and equipment out of the
Premises other than in the normal course of its business.
(b) Upon the occurrence of an event of default, Landlord,
at any time thereafter without further notice or demand, may, in
addition to all of its rights and remedies at law and/or at equity,
exercise any one or more of the following remedies concurrently or
in succession, all of which shall be cumulative:
(i) Terminate Tenant's right to possession of the
Premises by legal process or otherwise, with or without terminating
this Lease, and retake exclusive possession of the Premises.
(ii) From time to time relet all or portions of the
Premises, using reasonable efforts to mitigate Landlord's damages.
In connection with any reletting, Landlord may relet for a period
extending beyond the term of this Lease and may make alterations or
improvements to the Premises without releasing Tenant of any
liability. Upon a reletting of all or substantially all of the
Premises, Landlord shall be entitled to recover all of its then
prospective damages for the balance of the Lease term measured by the
difference between amounts payable under this Lease and the
anticipated net proceeds of reletting during the remaining Term. In
no event shall Tenant be entitled to receive any amount representing
the excess of avails of reletting over amounts payable hereunder.
(iii) From time to time recover accrued and unpaid
rent and damages arising from Tenant's breach of the Lease,
regardless of whether the Lease has been terminated, together with
applicable late charges and interest.
(iv) Enforce the statutory landlord's lien on Tenant's
property.
(v) Recover all reasonable attorneys' fees incurred
by Landlord in connection with enforcing this Lease, recovering
possession and collecting amounts owned.
(vi) Perform the obligation on Tenant's behalf and
recover from Tenant, upon demand, the entire amount expended by
Landlord plus 20% for special handling, supervision, and overhead.
(vii) Terminate this Lease by giving written notice
of such intention to terminate. In the event that Landlord elects to
terminate this Lease, then Landlord may recover from Tenant:
(a) All unpaid Rent owed by Tenant as of the
date of termination; plus
(b) All Rent which would have been payable by
Tenant under this Lease but for its termination until
the time of award; plus
(c) All Rent under the Lease for the balance
of the Term after the time of award; plus
(d) All other damages incurred by Landlord as
a result of Tenant s default.
default.
Although defined elsewhere, the parties acknowledge that the
term Rent shall be deemed to be and mean the Annual Minimum Rent
and all other sums required to be paid by Tenant pursuant to the
terms of this Lease.
(viii) Pursue other remedies available at law or in
equity.
(c) Upon a termination of Tenant's right to possession,
whether or not this Lease is terminated, subtenancies and other
rights of persons claiming under or through Tenant: (i) shall be
terminated or (ii) Tenant's interest shall be assigned to Landlord.
Landlord may separately elect termination or assignment with respect
to each such subtenancy or other matter.
17. Notices
All notices to be given by one party to the other under this
Lease shall be in writing, mailed or hand-delivered to each at the
address to the individual, set forth at the end of this Lease or at
a changed address if notice of the change is given to the other party
in writing. In the case of notice to Tenant after Tenant takes
possession of the Premises, notice shall be sufficient if mailed or
delivered to the address of the Premises. Mailed notices shall be
sent by United States certified or registered mail, postage prepaid.
Such notices shall be deemed to have been given upon posting in the
United States mail. Actual notice shall be no substitute for written
notice under any provision of this Lease.
18. Subordination
Landlord expressly reserves the right at any time to place
ground leases, liens and encumbrances on and against the Premises and
the Center (collectively, the Title Matters ), superior in lien and
effect to this Lease and the estate created hereby. Tenant
acknowledges that there may currently exist any such Title Matters
which are superior in lien and effect to this Lease and the estate
created hereby. This provision shall be self-operative, but Tenant
shall nevertheless execute upon request subordination agreements
presented by Landlord to confirm the superiority of the Title
Matters.
19. Authority to Execute
Any individual executing this Lease on behalf of or as a
representative for a corporation or other person, firm, partnership
or entity represents and warrants that such individual is duly
authorized to execute and deliver this Lease on behalf of said
corporation, person, firm, partnership or other entity and that this
Lease is binding upon said entity in accordance with its terms. If
Tenant is a corporation, Tenant shall deliver to Landlord within
fifteen days after the execution hereof a certified copy of a
resolution of the Board of Directors of said corporation authorizing
or ratifying the execution and delivery of this Lease by the
individuals executing and delivering same on behalf of Tenant.
20. Brokers
Landlord and Tenant each covenant that they have not dealt
with any real estate broker or finder with respect to this Lease and
each party shall hold the other party harmless from all damages,
claims, liabilities or expenses, including reasonable and actual
attorneys' fees (through all levels of proceedings), resulting from
any claims that may be asserted against the other party by any real
estate broker or finder with whom the indemnifying party either has
or is purported to have dealt.
21. Arbitration
All controversies, disputes or claims arising between
Landlord and Tenant in connection with, arising from, or with respect
to this Lease or any agreement related to this Lease between the
parties shall be submitted for binding arbitration in accordance with
rules of the American Arbitration Association or any successor
thereof. Arbitration shall be conducted solely on an individual, not
a class-wise basis, unless all parties so agree. Venue of such
arbitration shall be set in Maricopa County, Arizona. Each party
shall select one arbitrator (who shall not be counsel for the party)
and the two so designated shall select a third arbitrator. If either
party shall fail to designate an arbitrator within ten (10) days
after arbitration is requested, or if the two arbitrators shall fail
to select a third arbitrator within twenty (20) days after
arbitration is requested, then such arbitrator shall be selected by
the American Arbitration Association or any successor thereto upon
application of either party. Judgment upon any award of the majority
of arbitrators shall be binding, final and non-appealable and shall
be entered in a court of competent jurisdiction. The award of the
arbitrators may grant any relief which might be granted by a court
of general jurisdiction including, without limitation, an award of
damages and/or injunctive relief, and the costs of the arbitration,
including the reasonable fees of the arbitrators and reasonable
attorney s fees. All issues relating to the arbitrability or the
enforcement of the agreement to arbitrate contained herein shall be
governed by the Federal Arbitration Act (9 U.S.C. 1 et. seq.) and
the Federal Common Law of Arbitration.
22. Americans with Disabilities Act
Landlord and Tenant hereby acknowledge that the Americans with
Disabilities Act (the ADA ) may affect Tenant s use and occupancy of
the Premises and requires Tenant to modify or alter the design,
layout or other physical elements of the interior of the Premises or
provide auxiliary services in connection with its business
operations. Tenant shall comply in all respects with the requirement
of the ADA as it affects Tenant s use and occupancy of the Premises
throughout the Term, and Tenant acknowledges that, notwithstanding
any modifications to the Common Areas which may be made by Landlord
in order to conform such areas with the requirements of the ADA,
Landlord makes no representation or warranties regarding the
compliance of the Premises of the Center with the ADA, nor shall
Landlord have any obligations or liabilities to Tenant to construct
any modifications or alterations to the interior of the Premises in
order to comply with the ADA.
23. General Provisions
(a) This Lease and the obligations of Tenant hereunder
shall not be affected or impaired because Landlord is unable to
fulfill any of its obligations hereunder or is delayed in doing so
if such inability or delay is caused by reason of any strike,
lockout, civil commotion, war-like operations, invasion, rebellion,
hostilities, military or usurped power, sabotage, governmental
regulations or controls, inability to obtain any material, service
or financing, Act of God or other cause beyond the control of the
Landlord.
(b) Landlord shall have the right to, from time to time,
make rules and regulations for the Center and its operations. Tenant
and its officers, agents, and employees, agree to comply with the
rules and regulations established by Landlord and with such
modifications and additions as Landlord may hereafter make for the
Center. Any violation of the rules and regulations shall constitute
a material breach of this Lease.
(c) The article captions contained in this Lease are for
convenience only and shall not be considered in the construction or
interpretation of any provision. The masculine, feminine or neuter
gender and the singular or plural number shall be deemed to include
the others whenever the context so requires or indicates.
(d) This Lease contains all of the agreements of the
parties hereto with respect to any matter covered or mentioned in
this Lease, and no prior agreement or understanding pertaining to any
matter shall be effective for any purpose. No provision of this Lease
may be amended or added to except by an agreement in writing signed
by the parties hereto or their respective successors in interest.
(e) Submission of this instrument for examination shall
not bind Landlord in any manner, and no lease or obligations of
Landlord shall arise until this instrument is signed and delivered
by authorized officers of Landlord and Tenant.
(f) No rights to light or air over any property, whether
belonging to Landlord or any other persons, are granted to Tenant by
this Lease.
(g) No waiver by Landlord of any provisions of this Lease
or any breach by Tenant hereunder shall be deemed to be a waiver of
any other provision hereof, or of any subsequent breach by Tenant of
the same or any other provision. Landlord's consent to or approval
of any act by Tenant requiring Landlord's consent or approval shall
not be deemed to render unnecessary the obtaining of Landlord's
consent to or approval of any subsequent act of Tenant, whether or
not similar to the act so consented to or approved. No act or thing
done by Landlord or Landlord's agent during the term of this Lease
shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender shall be valid unless in writing and
signed by Landlord. No employee of Landlord or of Landlord's agents
shall have any power to accept the keys to the Premises prior to the
termination of this Lease, and the delivery of the keys to any
employee shall not operate as a termination of the Lease or a
surrender of the Premises.
(h) Time is of the essence of this Lease.
(i) All exhibits attached hereto are incorporated herein
by this reference.
(j) The parties hereto agree that all the provisions
hereof are to be construed as covenants and agreements as though the
words importing such covenants and agreements were used in each
separate paragraph hereof. This Lease is the result of negotiations
between Landlord and Tenant, who each had the opportunity to obtain
legal advice regarding the same. This Lease shall not be construed
for or against Landlord or Tenant on the basis of which party
physically served as scrivener of this Lease.
(k) Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third person to create the
relationship of principal and agent, partnership, joint venture, or
any other association between Landlord and Tenant other than the
landlord-tenant relationship described herein.
(l) In the event either party shall commence or be
required to defend any action or proceeding against any other party
by reason of any breach or claimed breach of any provision of this
Lease, to commence or defend any action or proceeding in any way
connected with this Lease or to seek a judicial declaration of rights
under this Lease, the party prevailing in such action or proceeding
shall be entitled to recover from or to be reimbursed by the other
party for the prevailing party's reasonable attorneys' fees and costs
through all levels of proceedings.
(m) If any provision of this Lease or the application
thereof to any person or circumstance shall be deemed invalid or
unenforceable, the remainder of this Lease and its application to
other persons or circumstances shall not be affected by such partial
invalidity but shall be enforced to the fullest extent permitted by
law as though such invalid or unenforceable provision was never a
part hereof.
(n) This Lease shall be construed in accordance with the
laws of the State of Arizona without regard to its principles of
choice of law, and the parties agree that jurisdiction for all
actions hereunder shall lie therein.
(o) This Lease shall be governed by the laws of the State
of Arizona.
LANDLORD: ADDRESS:
Pinnacle Citadel, L.L.C., an 23733 N. Scottsdale Road
Arizona limited liability company Scottsdale, Arizona 85255
By: Prime Pinnacle Peak Properties,
Inc., an Arizona corporation,
Its Managing Member
By: /s/ Harvey Acridge
-------------------------------
Harvey Acridge, General Manager
TENANT: ADDRESS:
Giant Industries Arizona, Inc. 23733 N. Scottsdale Road
an Arizona corporation Scottsdale, AZ 85255
By: /s/ James E. Acridge
----------------------------------
James E. Acridge
Its: CEO
----------------------------------
EXHIBIT 10.31
RETAIL SUBLEASE
THIS RETAIL SUBLEASE (the "Lease") is made this 1st day of
July, 1998 by and between GIANT INDUSTRIES ARIZONA, INC., an Arizona
corporation ("Lessor"), and PINNACLE INN AT THE CITADEL LLC, an
Arizona corporation ("Tenant").
Lessor is the lessee of 8,176 square feet of space in The
Citadel located at 8700 East Pinnacle Peak Road, Scottsdale, Arizona,
pursuant to a Lease of even date between Lessor, as tenant, and
Pinnacle Citadel LLC, as landlord (the "Senior Lease"). Lessor
desires to sublease to Tenant, and Tenant desires to rent and
sublease from Lessor, the 8,176 square feet of space, subject to the
terms and conditions of this Lease.
Notwithstanding the foregoing, Lessor may, with 120 days
written notification to Tenant, terminate Lease and Tenant will
vacate Premises at which time Lessor would occupy Premises as office
suites.
Lessor hereby leases to Tenant and Tenant leases from Lessor
for the term and upon the conditions and agreements set forth in this
Lease a portion of the real property described on Exhibit A attached
hereto known as the Inn at the Citadel, consisting of approximately
8,176 square feet of space consisting of eleven suites on the second
floor and an office/lobby suite on the first floor together with any
or all additional space used in connection with Tenant's business
(the "Premises") in The Citadel (the "Center") along with two (2)
covered parking spaces numbered 9 and 10 each located in the area
cross-hatched on Exhibit B. The address of the premises is 8700 East
Pinnacle Peak Road, Scottsdale, Arizona 85255.
1. Term and Possession
(a) The term (the Term ) of this Lease shall commence on
the earlier of (i) the date possession is tendered by written notice
to Tenant or (ii) the date on which the Tenant shall first use or
occupy any part of the premises or (iii) the date a temporary
certificate of occupancy for the Premises is issued by the City of
Scottsdale (the "Commencement Date") and shall expire on June 30,
2003. The Tenant's obligation to pay Rent (defined in Articles 2(d)
below) shall begin on the Commencement Date (the Rent Start Date").
The anticipated Commencement Date is July 1, 1998. Upon request of
either party after the term has commenced, Lessor and Tenant shall
jointly execute a memorandum confirming the Commencement Date.
(b) Upon the expiration or earlier termination of this
Lease or upon the termination of Tenant's right of possession,
whether by lapse of time or otherwise, Tenant shall at once surrender
possession of the Premises to Lessor and remove all of Tenant's
property as provided in Article 10.
(c) Tenant shall have no right to hold over after the
expiration of this Lease without Lessor's prior written consent.
If, with Lessor's prior written consent, Tenant holds over after the
expiration of this Lease, Tenant shall become a tenant from month to
month only, upon all of the terms of this Lease except that Article
1(a) shall not apply and the amount of the Minimum Annual Rent
(defined at Article 2(a) below) shall be increased to an amount equal
to 125% of the Minimum Annual Rent in effect immediately prior to the
expiration.
(d) Provided Tenant has not been and/or Lessor has not
deemed Tenant in default under this Lease, Tenant shall have the
option, exercisable by written notice given to the Lessor at least
180 days prior to the expiration of the then current Term, to extend
this Lease by one (1) successive period of five (5) years. All the
terms and conditions of this Lease, including, without limitation,
Article 2(b), shall remain in full force and effect during the
extended Term. As used herein, the word Term shall hereafter mean
the Term as it may have been extended pursuant to this Article 1(d).
2. Rent
(a) Minimum Rent. Tenant shall pay to Lessor during the
Term at the office of Lessor, 23733 North Scottsdale Road,
Scottsdale, AZ 85255, or at such other place as Lessor may designate,
without notice, demand, deduction or set-off, Minimum Annual Rent
in the amount of $163,520.00 per annum, subject to adjustment as
provided in Article 2(b), in equal monthly installments in advance
on the first day of each calendar month with applicable transaction
privilege or other similar sales tax. In addition, Tenant shall pay
the amount of $40.00 per month for each of the two (2) reserved
covered parking spaces. In the event the Rent Start Date does not
occur on the first day of a calendar month, Tenant shall pay Rent on
the Rent Start Date for the fractional month on a pro rata 30-day
month basis.
(b) Adjustments. The Minimum Annual Rent shall be
adjusted upwards as of each one (1) year anniversary of the
Commencement Date (the Adjustment Date ) as follows:
(i) Lessor shall ascertain the Consumer Price
Index for All Urban Consumers - U.S. Cities Average - All Items (the
"CPI") published by the United States Department of Labor, Bureau of
Labor Statistics (1982-84 = 100) for the third full calendar month
prior to the Commencement Date for the first year adjustment and the
third full calendar month prior to the previous Adjustment Date for
all following adjustments (the "Base Index") and for the third full
calendar month prior to the Adjustment Date (the "Comparison Index").
(ii) The Minimum Annual Rent commencing as of each
Adjustment Date shall be equal to the Minimum Annual Rent in effect
immediately preceding each Adjustment Date (the "Effective Minimum
Annual Rent") times a fraction, the numerator of which is the
Comparison Index associated with that Adjustment Date and the
denominator of which is the Base Index, as illustrated in the
following formula for the first (1st) Adjustment Date:
Adjusted Minimum = Effective Minimum x Comparison Index
Annual Rent Annual Rent Base Index
(iii) Notwithstanding the foregoing, in no event
shall the Minimum Annual Rent be adjusted downwards. When the Minimum
Annual Rent payable as of each Adjustment Date is determined, Lessor
shall promptly give Tenant written notice of such adjusted Minimum
Annual Rent and the manner in which it was computed. The Minimum
Annual Rent as so adjusted from time to time shall be the "Minimum
Annual Rent" for all purposes under this Lease.
(iv) If at any time the CPI is no longer published
or its manner of calculation is materially changed, Lessor may
substitute a substitute index, reconciled to the month three (3)
months prior to the Commencement Date, as reasonably reflects changes
in the purchasing power of the dollar.
(c) Nature of Payments. All sums required to be paid by
Tenant under this Lease, whether or not so designated, including,
without limitation, Minimum Annual Rent and Tenant s Pro Rata Share
of Operating Costs are Rent and shall be paid without notice,
demand, deduction, or set-off.
(d) Late Charges and Interest. Any amount due from Tenant
to Lessor which is not paid when due shall bear interest at three
percent in excess of the prime rate as established from time to time
by the Bank of America Arizona (or, if such bank ceases to exist,
such other comparable financial institution as reasonably determined
by Lessor) from the due date until paid, but the payment of such
interest shall not excuse or cure any default by Tenant under this
Lease. In addition, if any Rent or other payment is not paid within
five days of its due date, then Tenant shall also pay to Lessor a
late charge equal to ten percent of the amount of such payment.
3. Use
(a) Tenant shall continuously and uninterruptedly
operate, use and occupy the Premises as an inn along with a 1st floor
office/lobby for the inn and for no other purpose whatsoever and
shall be open for business those hours that conform with the hours
of opening which are customary for businesses of like character in
the City of Scottsdale.
(b) Tenant, its agents, employees and/or contractors
shall, at Tenant s sole cost and expense, comply with the following:
(i) Tenant shall not use or permit upon the
Premises anything that would invalidate any policies of insurance now
or hereafter carried on the Premises or that will increase the rate
of insurance on the Premises or the Center;
(ii) Tenant shall pay all additional insurance
premiums which may be caused by the use which Tenant shall make of
the Premises;
(iii) Tenant shall not in any manner deface or
injure the Premises or overload any floor of the Premises;
(iv) Tenant shall not conduct or permit any auction
sale to be held on or about the Premises, whether such auction be
voluntary or involuntary, or any sidewalk sale without the prior
written consent of Lessor;
(v) Tenant shall not do anything or permit
anything to be done upon the Premises in any way tending to create
a nuisance, or tending to disturb any other lessee in the Center or
tending to injure the reputation of the Center, including, without
limitation, the playing of music audible outside the Premises and the
affixing or maintaining upon the glass panes or supports of the show
windows or on or within 24" of any window, doors or exterior walls
of the Premises, any signs, advertising placards, names, insignia,
trademarks, descriptive material or any other like item(s) without
having first received the written approval of Lessor as to the size,
type, color, location, copy, nature and display qualities of any such
item. All signs shall comply with City of Scottsdale sign ordinances
and The Citadel sign criteria.
(vi) Tenant shall not display merchandise,
advertise or solicit business on the sidewalks and other Common Areas
(defined at Article 6(a) below) or place any handbills, bumper
stickers or other advertising devices on any vehicle parked in the
Common Areas of any other parking area of the Center;
(vii) Tenant shall not use the Premises
designated as the office/lobby for lodging or sleeping purposes;
(viii) Tenant shall not commit or suffer to be
committed any waste upon the Premises;
(ix) Tenant shall not violate any recorded
restriction or covenant affecting the Center, nor use the Premises
for any purpose which would be in violation of any exclusive rights
or use granted to other tenants in the Center. Lessor shall not
grant exclusive rights which would prohibit Tenant from exclusively
using the Premises for the purposes stated in Article 4(a) above
except for incidental uses ancillary to the main use of the other
user.
(x) Tenant shall, at its sole cost and expense,
maintain the elevator located in the Center that services the Inn at
the Citadel in first class condition.
(c) Tenant shall provide and maintain sanitary receptacles
within the Premises in which to place any refuse or trash. Tenant
shall cause such refuse or trash to be removed from the Premises to
receptacles designated by Lessor as often as required to maintain a
sanitary condition, but in no event less often than daily. No grease
or rubbish or hazardous waste shall be disposed of through any
plumbing system. Tenant shall sweep as needed and keep free of
refuse all sidewalks immediately adjacent to the Premises if so
directed by Lessor. Tenant shall not allow the Premises to be
infested with insects or vermin.
(d) Tenant shall use its best efforts to complete all
deliveries, loading, unloading and services to the Premises before
10:00 a.m. each day. Tenant shall attempt to prevent any delivery
trucks or other vehicles servicing the Premises from parking or
standing in front of, or at the rear of, the Premises from 10:00 a.m.
to 9:00 p.m. of each day. Lessor reserves the right to further
regulate the activities of Tenant in regard to deliveries to and
servicing of the Premises, and Tenant agrees to abide by such further
non-discriminatory regulations of Lessor.
(e) Tenant shall, at Tenant's sole cost and expense,
comply with all present and future federal, state and local laws,
ordinances, orders, rules and regulations (collectively, "Laws"), and
shall procure all permits, certificates, licenses and other
authorizations required by applicable Law relating to Tenant's
business or Tenant's use or occupancy of the Premises or Tenant's
activities on the Premises. Tenant shall make all reports and
filings required by applicable Laws.
(f) Tenant's Warranty as to Hazardous or Toxic Materials.
Tenant shall not cause or permit any Hazardous Substances to be
brought upon, kept or used in or about the Premises by Tenant, its
agents, employees, contractors or invitees, except such incidental
quantities of commonly used office supplies (such as copier fluid and
typewriter correction fluids) and ordinary cleaning solvents,
provided that all of the foregoing are only in such quantities as are
normal for the permitted use of the Premises, are used in the manner
for which they are designed and are at all times used, kept, and
stored and disposed of in a manner that strictly complies with all
laws regulating any such Hazardous Substances. Any Hazardous
Substances placed in or on the Premises by Tenant, its agents,
employees, contractors or invitee shall remain the property of
Tenant, notwithstanding anything in the Lease to the contrary.
Tenant shall not install any underground storage tank on the
Premises, as such term is defined in 42 U.S.C. Section 66991 and the
regulations promulgated thereto, as amended from time to time and
including all pipes and conduiting relating thereto. If Tenant
breaches the covenants and obligations set forth herein, or if the
presence of Hazardous Substances on, in or about the Premises caused
by Tenant, its agents, employees, contractors or invitees, results
in contamination of the Premises, then Tenant shall indemnify, defend
and hold Lessor, its officers, employees, partners, agents and
representatives, free and harmless from and against any and all
claims, judgments, penalties, fines, costs, liabilities and damages,
(including, without limitation, sums paid in settlement of claims,
attorneys' fees and expenses (through all levels of proceedings),
consultants or experts fees) and all costs incurred in enforcing this
indemnity which arise during or after the Term as a result of the
presence of such Hazardous Substances or any contamination, damage
or injury therefrom. This indemnification by Tenant includes, without
limitation, any and all costs incurred in connection with any
investigation of site conditions or any clean up, remedial, removal
or restoration work required by any federal, state or local
governmental agency or political subdivision because of the presence
of such Hazardous Substances caused by Tenant, its agents, employees,
or contractors in, on or about the Premises. Tenant shall promptly
take all actions, at its sole cost and expense, as are necessary to
return the Premises to the condition existing prior to the
introduction of any such Hazardous Substances, provided that Lessor's
approval of such actions is first obtained. Furthermore, Tenant
shall immediately notify Lessor of any inquiry, test, investigation
or enforcement proceeding by or against Tenant or the Premises
concerning the presence of any Hazardous Substances. Tenant
acknowledges that Lessor, at Lessor's election, shall have the right
to negotiate, defend, approve and appeal any action taken or order
issued by any governmental authority with regard to any Hazardous
Substances condition which Tenant is obligated hereunder to
remediate. The provisions of this Article 4(f) shall survive the
expiration or sooner termination of the Term or of Tenant's right to
possession, whether by lapse of time or otherwise. The term
"Hazardous Substance" includes, without limitation, any material or
substance which is (i) defined or listed as a "hazardous waste",
"extremely hazardous waste", "restrictive hazardous waste" or
"hazardous substance" or considered a waste, condition of pollution
or nuisance under any Environmental Law (as defined below); (ii)
petroleum or a petroleum product or fraction thereof; (iii) asbestos;
and/or (iv) substances known to cause cancer and/or reproductive
toxicity. The term "Environmental Law" shall mean any federal, state
or local law, statute, ordinance, rule, regulation, order, consent,
decree, judgment or common-law doctrine, interpretation thereof, and
provisions and conditions of permits, licenses, plans, approvals and
other operating authorizations whether currently in force or
hereafter enacted relating to health, industrial hygiene or the
environmental conditions on, under or about the Premises or the
Center, including, without limitation, (i) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Sections 9601 et seq.; (ii) the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Sections 6901 et seq.; (iii) the
Federal Water Pollution Control Act, 33 U.S.C. Sections 1317 et seq.,
as such laws are amended and the regulations and administrative codes
applicable thereto. It is the intent of the parties hereto to
construe the terms "Hazardous Substance" and "Environmental Law" in
their broadest sense.
(g) Tenant shall keep its sign, exterior lighting and
display windows lit during those hours that Lessor in its sole
discretion may reasonably require.
(h) Tenant shall not use the Premises for any purpose
other than as set forth in Article 4(a) and shall notify Lessor in
writing of, and obtain Lessor s prior written consent to, any
intended change in the nature of its activities or business conducted
on the Premises and permitted by Article 4(a).
4. Taxes
(a) Tenant shall pay, prior to delinquency, all taxes
assessed against or levied upon Tenant's fixtures, furnishings,
equipment and other personal property (the Personalty ) located in
or upon the Premises. Tenant shall cause the Personalty to be
assessed and billed separately from the real property of which the
Premises form a part. In the event any or all of Tenant's Personalty
shall be assessed and taxed with the real property of which the
Premises or the Center are a part, Tenant shall pay to Lessor
Tenant's share of such taxes within ten days after delivery to Tenant
by Lessor of a statement in writing setting forth the amount of such
taxes applicable to Tenant's Personalty.
(b) Tenant shall, simultaneously with the payment of any
sums required to be paid under this Lease as Rent, additional rent
or otherwise, pay or reimburse Lessor for any sales, use, rental,
transaction privilege or other excise tax imposed or levied on, or
measured by, the amount paid.
(c) Concurrently with each payment of Minimum Annual Rent
hereunder, Tenant shall deliver to Lessor a copy of the Preliminary
Sales Tax Report filed (or required to be filed) by Tenant with the
Arizona Department of Revenue for the immediately preceding calendar
month, with respect to the business conducted in the Premises.
5. Common Areas
(a) All parking areas, access roads, driveways, pedestrian
sidewalks and ramps, landscaped areas, drainage facilities, exterior
lighting, signs, courtyards and other areas and improvements provided
by Lessor for the general use in common of tenants, their officers,
agents, employees, customers and other invites (collectively, the
"Common Areas") shall at all times be subject to the exclusive
control and management of Lessor, and Lessor shall have the right
from time to time to modify, enlarge or eliminate the same and to
establish, modify and enforce reasonable rules and regulations with
respect thereto. Tenant's right to use the Premises includes the
non-exclusive right to use the areas designated from time to time by
Lessor as the Common Areas.
(b) Lessor shall at all times have the right to designate a
particular parking area to be used by employees of Tenant and other
occupants of the Center and any such designation may be changed by
Lessor from time to time. Tenant and its employees shall park their
cars only in those portions of the Common Areas, if any, designated
for that purpose by Lessor. Tenant shall furnish Lessor from time
to time with an accurate current list of its and all its employees'
automobile license plate numbers within 15 days after taking
possession of the Premises and thereafter within 15 days after any
change in the accuracy of the list. If Tenant or its employees fail
to park their cars in designated parking areas, Lessor may charge
Tenant $25.00 per day per car for each such violation and shall have
the right to have any such car towed away.
6. Operating Costs, Real Property Taxes and Utilities
(a) Tenant shall pay as of the Rent Start Date to Lessor
Tenant's pro rata share of all of the Center's operating costs
consisting of the total cost and expense incurred in managing,
operating, maintaining replacing and repairing the Center and its
Common Areas including, without limitation, real property taxes and
general and special assessments, wages, salaries and employee
benefits of persons performing services in connection with the
Center, utilities, parking lot sweeping, sealing, patching, re-
striping and resurfacing; repairs, maintenance, and renewal of
equipment and improvements, including roofs, public liability and
property damage insurance, fire and extended coverage insurance,
plate glass insurance and rent interruption insurance, supplies,
materials, tools, parts, and equipment, equipment rental charges;
bookkeeping, accounting, legal and other professional charges and
expenses, fees for permits and licenses, administrative expenses,
taxes, service and maintenance contracts, signage, advertising,
marketing and landscaping, cleaning, window washing, lighting,
painting, fire protection and fire hydrant charges, steam, water and
sewer charges, gas electricity and telephone utility charges,
supplying music to the Common Areas, depreciation of the cost of
equipment used in operating and maintaining the Common Areas, or rent
paid for leasing such equipment, Lessor s office rent or the fair
market rental value of office space in the Center used by Lessor to
manage, operate and maintain the Common Areas, security, etc.,
(collectively, the Operating Costs ). Tenant's Pro Rata Share of
the Operating Costs shall be the proportion that the area of the
Premises bears to the total rentable area of all rentable space in
the Center owned by the Lessor.
(b) On the first day of each month (or such other regular
cycle as Lessor may determine) Tenant shall pay a monthly advance
charge on account of Tenant's Pro Rata Share of the Operating Costs.
The amount of the monthly charge shall be established by Lessor and
may be adjusted from time to time by Lessor to reflect the actual
cost. Within 120 days after the end of each fiscal year as
established for the Center by Lessor, Lessor shall provide to Tenant
a reasonably detailed summary of the actual Operating Costs showing
Tenant's actual share and the amount by which Tenant has overpaid or
underpaid. Any overpayment shall be credited to Tenant's account. Any
deficiency shall be payable within ten days after receipt of the
statement. In the alternative, Lessor may, at its option during all
or part of the Term, bill Tenant for its pro rata share of Operating
Costs in arrears based on actual costs as they are incurred, in which
case Tenant shall pay the invoice within ten days after receipt.
However, Lessor s failure to provide such reasonably detailed summary
of the actual Operating Costs showing Tenant's actual share and the
amount by which Tenant has overpaid or underpaid by the date provided
above shall in no way excuse Tenant from its obligation to pay its
pro rata share of Operating Costs or constitute a waiver of Lessor
s right to bill and collect such pro rata share of Operating Costs
from Tenant in accordance with this Article 7(b).
(c) The operating costs for the fiscal year in which this
Lease commences or terminates shall be apportioned so that Tenant
shall not be responsible for costs that relate to periods prior to
or subsequent to the term of this Lease except any period of holding
over.
(d) Tenant shall be solely responsible for payment for and
pay before delinquency all utilities provided to the Premises as of
the Commencement Date, which shall be separately metered at Tenant's
expense. Tenant s failure to timely pay its utility bills shall be
deemed a material breach of this Lease and an event of default.
Notwithstanding any other provision of this Lease, upon delivery of
a written notice by Lessor to Tenant of such even of default for
failure to pay such utility charges and Tenant s failure to cure said
default within 3 days of the delivery of such notice, Lessor may
terminate this Lease.
7. Construction, Delivery, and Condition
(a) If delivery of possession of the Premises to Tenant
is delayed beyond the anticipated Commencement Date because of a
delay in the completion of construction of the Premises by Lessor or
because of a failure of an existing tenant to surrender possession
of the Premises to Lessor, then this Lease shall remain in full force
and effect, Lessor shall not be liable to Tenant for any damage
occasioned by delay, and the Commencement Date shall be changed to
the date actual delivery of possession to Tenant is tendered.
Notwithstanding the foregoing, if tender of possession is delayed
more than 120 days after the anticipated Commencement Date as set
forth in Article 1(a), Tenant, by written notice to Lessor, may
terminate this Lease prior to taking possession, and upon such
termination any Security Deposit shall be refunded and both Lessor
and Tenant shall be released of all further obligation hereunder.
(b) Tenant accepts the Premises AS IS, acknowledges that
Lessor has made no representations or warranties with respect thereto
and is relying solely upon Tenant s own independent factual, physical
and legal investigation, tests and studies. No Improvements shall be
constructed until approved plans and specifications have been
attached to this Lease or otherwise accepted by both Lessor and
Tenant. Lessor will have final approval of all Improvements.
(c) All Work shall be performed by licensed, bondable
Contractors (defined below) approved in writing by Lessor, whose
approval shall not be unreasonably withheld. The term Contractor as
used herein includes subcontractors or other persons hired or
retained by Tenant to construct improvements in the Premises. No Work
shall be commenced until Lessor shall first have received from Tenant
or its contractor a labor and materials payment bond issued by a
responsible surety in form reasonably satisfactory to Lessor insuring
that no mechanic's lien may be asserted against the Premises or the
Center in connection with the Work. Lessor may post signs of non-
responsibility around the Premises.
(d) Tenant shall have no right to enter the Premises
and/or to perform the Work prior to the Commencement Date, without
Lessor's written consent. If Lessor does so consent, Tenant shall
comply with directions of the Lessor and shall not interfere with any
of Lessor's construction activities. Any work performed by Tenant,
or any fixtures, furnishings, equipment and other personal property
moved onto the Premises, shall be at Tenant's own risk. Neither
Lessor nor Lessor's agents or contractors shall be responsible to
Tenant for damage or destruction of Tenant's work or property
excepting damage or destruction occasioned by Lessor's own gross
negligence. Tenant agrees to indemnify Lessor and hold Lessor
harmless from and against claims made with respect to injuries to
persons or damage or destruction of property of other persons moved
onto the Premises prior to the Commencement Date.
(e) Lessor has no obligation to design or construct
improvements or to make alterations in the Premises.
(f) Upon the expiration or earlier termination of this Lease
or upon the termination of Tenant's right of possession, whether by
lapse of time or otherwise, Tenant shall, upon demand by the Lessor,
at Lessor's option, at the Tenant's sole expense, forthwith remove
any alterations, additions or improvements made by Tenant, designated
by Lessor to be removed, and Tenant shall, forthwith at its sole cost
and expense, repair any damage to the Premises caused by such removal
and restore the Premises to a condition reasonably comparable to
their condition at the commencement of the Lease. If not so demanded
by the Lessor, then any alterations, additions or improvements to the
Premises, including signs, but not including movable furniture and
trade fixtures, shall at the expiration or earlier termination of
this Lease or upon the termination of Tenant's right of possession,
whether by lapse of time or otherwise, become a part of the realty
and belong to Lessor.
8. Repair and Maintenance
(a) Tenant shall, at Tenant s sole cost and expense, as
of the Commencement Date maintain the Premises and the improvements
thereon (including without limitation all heating, air conditioning,
ventilation, electrical and plumbing systems serving the Premises,
all signs, locks, doors and door frames), in good condition and
repair. All exterior and interior glass in the Premises shall be
maintained by Tenant and any glass broken shall be promptly replaced
by Tenant at its expense with glass of the same kind, size and
quality. If Tenant does not do so, Lessor may, but need not, make
any such repairs and replacements, and Tenant shall pay Lessor the
cost upon demand. Tenant hereby waives all right, if any, to make
repairs at the expense of Lessor.
(b) Subject to the provisions of Article 7, Lessor shall
repair and maintain the Common Areas, the roof and exterior of the
Premises and all utility lines below grade or in the Common Areas.
Lessor shall not be responsible to make any repairs or perform any
maintenance unless written notice of the need for such repairs or
maintenance is given by Tenant and Lessor determines, in good faith,
that such need does exist. Except in the case of a fire or casualty
as provided in Article 13 or in the event of a business interruption
caused solely by Lessor s gross negligence which exceeds 14 days,
there shall be no abatement of Rent and no liability of Lessor by
reason of any entry to the Premises, interruption of services or
facilities, temporary closure of Common Areas, or interference with
Tenant's business arising from the making of any repairs or
maintenance.
9. Alterations and Personal Property
Tenant shall not make or suffer to be made any alterations,
additions or improvements to the Premises, including signs, without
the prior written consent of Lessor of which consent shall not be
unreasonably withheld, but which shall not be required to be given
until Lessor has actually received a copy of Tenant s building permit
and plans (interior and exterior). Lessor may condition its consent
upon provision of a payment bond, in amount and form reasonably
satisfactory to Lessor, covering the work to be done by Tenant's
contractor. Tenant shall not install any antenna, satellite dish or
other fixture or equipment on the roof or in the Common Areas. In the
event Lessor consents to the making of any alterations, additions or
improvements to the Premises by Tenant, they shall be made by Tenant
at Tenant's sole cost and expense and any contractor or person
selected by Tenant to perform the work must first be approved in
writing by Lessor. Tenant shall not permit any mechanic's or
materialmen's lien to stand against the Premises for any labor or
materials provided to the Premises by any contractor or other person
hired or retained by Tenant. Tenant shall cause any such lien to be
discharged (by bonding or otherwise) within ten days after demand by
Lessor, and if it is not discharged within ten days, Lessor may, in
addition to all other remedies for an event of default, pay or
otherwise discharge the lien and immediately recover all amounts so
expended from Tenant as Rent. Upon the expiration or earlier
termination of this Lease or upon the termination of Tenant's right
of possession, whether by lapse of time or otherwise, Tenant shall,
upon demand by Lessor, at Lessor's option, at Tenant's sole cost and
expense, forthwith remove any alterations, additions or improvements
made by Tenant, designated by Lessor to be removed, and Tenant shall,
forthwith at its sole cost and expense, repair any damage to the
Premises caused by such removal and restore the Premises to a
condition reasonably comparable to their condition at the
commencement of the Lease. If not so demanded by Lessor, then any
alterations, additions or improvements to the Premises, including
signs, but not including movable furniture and trade fixtures, shall,
upon the expiration or earlier termination of this Lease or upon the
termination of Tenant's right of possession, whether by lapse of time
or otherwise, become a part of the realty and belong to Lessor.
10. Certain Rights Reserved by Lessor
Lessor shall have the right to enter the Premises either
personally or by designated representative at all reasonable times
during normal business hours or other hours with prior notification
for the purpose of examining or inspecting the same, showing the same
to prospective purchasers or lessees, or performing any repairs,
construction or alteration in relation to the Center or which is
Lessor's responsibility under this Lease. Lessor shall be permitted
to do any of the above without any rebate of Rent and without any
liability to Tenant for any loss of occupation or quiet enjoyment of
the Premises thereby occasioned. Tenant shall provide Lessor with a
key to the Premises for purposes of emergency entry by Lessor or its
agents. Use of this key is to be restricted to emergency situations
or as permitted by Tenant hereunder.
None of the rights specified above shall be construed or
otherwise considered as a waiver of any rights Lessor may have under
this Lease, at law or in equity or otherwise.
11. Damage to Property; Injury to Persons; Insurance; Indemnity
(a) Tenant shall defend, indemnify and hold Lessor
harmless, regardless of fault or negligence which is imputed to
Lessor from any and all claims costs, liability, damage or expense,
including reasonable attorneys' fees, for any death, damage or injury
to persons or property occurring on the Premises and resulting in
whole or in part from (i) any misrepresentation, breach of warranty
or nonfulfillment of any agreement on the part of Tenant contained
in this Lease, (ii) any act, omission or condition for which Tenant
is solely responsible under the Lease, (iii) any work of
construction, improvement or demolition controlled by or subject to
the control of Tenant, (iv) the negligence of Tenant, its agents,
employees or contractors, (v) Tenant's use or occupancy of the
Premises, (vi) the conduct of its business, (vii) from any activity,
work, or thing done, permitted or suffered by Tenant in or about the
Premises, or (viii) from the condition of the Premises. Tenant shall
further defend, indemnify and hold Lessor harmless from any and all
claims arising in whole or in part from any breach or default in the
performance of this Lease by Tenant, and/or arising in whole or in
part from any act of Tenant, or of its agents or employees, and from
all costs, attorneys' fees, expenses and liabilities incurred
directly or indirectly as a result of any such act and/or claim.
Tenant, as a material part of the consideration to Lessor, hereby
assumes all risk of damage to property or injury to persons, in,
upon, or about the Premises from any cause, and Tenant hereby waives
all claims in respect thereto against Lessor. Lessor shall in no
event be liable for loss of or damage to any property by vandalism,
theft or otherwise, or for any injury or damage to persons or
property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of any
building or from the pipes, appliances or plumbing works therein, or
from the roof, street or subsurface, or from any other place
resulting from dampness, or from the elements or any other cause
whatsoever. Lessor shall not be liable for interference with the
natural light. Tenant shall give immediate notice to Lessor of any
fire, accident or defect discovered with the Premises or the building
of which the Premises are a part. Tenant acknowledges that it can
protect itself against some or all of the foregoing risks by
procuring appropriate insurance. Tenant's indemnification obligations
shall survive the expiration or earlier termination of this Lease or
upon the termination of Tenant's right of possession, whether by
lapse of time or otherwise.
(b) Tenant shall, at Tenant s sole cost and expense, as
of the Commencement Date maintain fire and extended coverage
insurance throughout the term of this Lease in an amount equal to one
hundred percent of the replacement value of Tenant's fixtures,
furnishings, equipment and other personal property located on the
Premises, together with such other insurance as may be required by
Lessor's lender or by any government agency. All proceeds of Tenant's
policy of fire and extended coverage insurance shall be payable to
Tenant, and all proceeds of policies of insurance procured by Lessor
shall be payable to Lessor. Tenant hereby waives any right of
recovery from Lessor and Lessor hereby waives any right of recovery
from Tenant for any loss or damage (including consequential loss)
resulting from any of the perils insured against in the insurance
policies required to be maintained hereunder. During the Term,
Tenant shall, at Tenant's sole cost and expense, maintain general
public liability insurance against claims for personal injury, death
or property damage occurring in, upon or about the Premises. The
limitation of liability of such insurance shall be not less than Two
Million Dollars in respect to injury or death of one person and to
the limit of not less than Two Million Dollars in respect to any one
accident and to the limit of not less than Five Hundred Thousand
Dollars in respect to property damage. All of Tenant's policies of
liability insurance shall be obtained by Tenant in an "occurrence"
form and shall name Lessor as an additional insured or loss payee,
as appropriate. All policies of insurance or copies thereof required
to be carried by Tenant under this Article 12 shall be delivered to
Lessor prior to the Commencement Date and thereafter at least thirty
days prior to the expiration of the then current policies. Each
policy shall contain an endorsement prohibiting cancellation or non-
renewal without at least 30 days prior notice to Lessor.
12. Fire and Casualty
If the Premises are wholly or partially destroyed or damaged
by fire or other casualty, Lessor shall restore the Premises with
reasonable diligence; provided, however, that Lessor shall have no
obligation to restore improvements not originally provided by Lessor
or to replace any of Tenant's fixtures, furnishings, equipment or
personal property; and provided further that Lessor need not commence
repairs until insurance proceeds are available and are released in
a sufficient amount for such purpose by any lender holding a lien on
all or part of the Center. Proceeds of insurance payable with respect
to a fire or other casualty shall be received and held by Lessor.
Notwithstanding the foregoing, in the event the Premises are
destroyed or damaged by any fire or casualty to the extent of not
less than twenty-five percent of the replacement cost thereof, or if
the fire or casualty occurs within the last three years of the Term,
then Lessor shall have the option to terminate this Lease by giving
notice to Tenant within sixty days after the occurrence of such
damage or destruction, in which case Lessor shall retain all
insurance proceeds with respect to the Premises as its own property
and shall not be required to spend any more on the restoration than
the amount of proceeds actually received by Lessor. If Lessor does
not terminate this Lease as provided above, this Lease shall continue
in full force and effect, but Minimum Annual Rent shall equitably
abate until the restoration is substantially complete. However, in
the event it is determined that Tenant's ability to continuously
operate and conduct business on the Premises is not hindered, then
Minimum Annual Rent shall abate in proportion to the Premises under
restoration. The provisions of this Lease shall govern when this
Lease shall be terminable as a result of a fire or casualty, and no
other rule or statute on the subject shall apply.
13. Condemnation
In the event the entire Premises shall be appropriated or
taken under the power of eminent domain, this Lease shall terminate
and expire as of the date of such taking. In the event more than
twenty-five percent of the Premises is taken under the power of
eminent domain, or if by reason of any appropriation or taking,
regardless of the amount so taken, the remainder of the Premises is
not one undivided parcel of property, either Lessor or Tenant shall
have the right to terminate this Lease as of the date Tenant is
required to vacate a portion of the Premises upon giving notice in
writing of such election within thirty days after receipt by Tenant
from Lessor of written notice that the Premises have been so
appropriated or taken. If neither Lessor nor Tenant elects to so
terminate this Lease, or in the event less than twenty-five percent
of the Premises shall be appropriated under the power of eminent
domain by any public or quasi-public authority, and the remainder
thereof is an undivided parcel of property, then Lessor shall restore
the Premises to the extent practicable to their condition prior to
the taking, provided that no such restoration need commence until the
condemnation proceeds are available and released in a sufficient
amount for such purpose by any lender holding a lien on all or part
of the Center and further provided that Lessor shall not be required
to spend more than the condemnation proceeds actually received by
Lessor, and thereafter the Minimum Annual Rent shall be reduced on
an equitable basis, taking into account the relative value of the
portion taken as compared to the portion remaining. All awards or
compensation for any taking of any part of the Premises, whether
payable to Lessor or Tenant, shall be the sole property of Lessor.
Notwithstanding anything to the contrary contained herein, Tenant
shall be entitled to receive any portion of an award of compensation
relating to damage to or loss of trade fixtures or other personal
property belonging to Tenant, and Lessor shall be under no obligation
to restore or replace Tenant's furnishings, fixtures, equipment and
personal property. For the purposes of this Article 14, a voluntary
sale or conveyance in lieu of condemnation shall be deemed an
appropriation or a taking under the power of eminent domain.
14. Assignment and Subletting
(a) Tenant shall not, either voluntarily or by operation
of law, assign, hypothecate or transfer this Lease, or sublet the
Premises or any part thereof, or permit the Premises or any part
thereof to be occupied by anyone other than Tenant or Tenant's
employees (individually, a Transfer ), without the Lessor's prior
written consent ("Transfer Notice"). Lessor shall be under no
obligation to give or withhold consent until after all information
reasonably required by Lessor with respect to the identity,
background, experience and financial worth of the proposed assignee,
transferee, or subtenant (the Transferee ) has been provided. No
hypothecation, assignment, sublease or other transfer to which Lessor
has consented shall be effective for any purpose until such time as
fully executed documents of such transaction have been provided to
Lessor, and, in the case of an assignment, the assignee has attorned
directly to Lessor, and in the case of a sublease, the sublessee has
acknowledged that the sublease is subject to all of the terms and
conditions of this Lease. Any assignment, mortgage, transfer or
subletting of this Lease which is not in compliance with the
provisions of this Article 15 shall be voidable by Lessor and shall,
at the option of Lessor, terminate this Lease. Any differing of use
or extension of use by Tenant or any Transferee will, at the option
of Lessor terminate this Lease. The consent by Lessor to an
assignment or subletting shall not relieve Tenant from obtaining the
express written consent of Lessor to any further assignment or
subletting or release Tenant from any liability or obligation
hereunder, whether or not then accrued. Except as provided in this
Article, this Lease shall be binding upon and inure to the benefit
of the successors and assigns of the parties.
(c) If any rent of other monetary payment due under the
terms of this Lease is made by check wherein the payor is other than
the Tenant herein, acceptance thereof shall in no way constitute
acceptance by Lessor of any assignment or subletting. Any assignment
or subletting must comply with the conditions of this Article 14.
15. Estoppel Certificate
(a) Tenant shall at any time and from time to time upon
not less than ten days' prior written notice from Lessor execute,
acknowledge and deliver to Lessor a statement in writing (i)
certifying that this Lease is unmodified and in full force and effect
(or if modified, stating the nature of such modification and
certifying that this Lease, as so modified, is in full force and
effect) and the dates to which the rental and other charges are paid
in advance, if any; (ii) acknowledging that there are not, to
Tenant's knowledge, any uncured defaults on the part of Lessor
hereunder, or specifying such defaults if they are claimed; and (iii)
certifying such other matters relating to this Lease as Lessor may
reasonably request. Any such statement may be relied upon by any
prospective purchaser or encumbrancer of all or any portion of the
real property of which the Premises are a part.
(b) Tenant's failure to deliver a statement within the
time prescribed by Lessor in its request for same shall be conclusive
upon Tenant (i) that this Lease is in full force and effect, without
modification except as may be represented by Lessor, (ii) that there
are no uncured defaults in Lessor's performance, and (iii) that not
more than one month's rental has been paid in advance.
16. Lessor's Remedies
(a) The following shall constitute events of default:
(i) Tenant's failure to pay any amount due under
Article 2, Article 5(b) or Article 7 of this Lease within 5 days of
when due, or Tenants failure to pay any other amount due under this
Lease within 5 days after notice from Lessor.
(ii) Tenant's failure to execute, acknowledge and
return an estoppel certificate under Article 16 or a subordination
agreement under Article 19, within ten days after request.
(iii) Tenant's failure to perform any other obligation
under this Lease within fifteen days after notice of nonperformance;
provided, however, that if the breach is of such a nature that it can
be cured but it cannot be cured within fifteen days, Tenant shall be
deemed to have cured if cure is commenced promptly and diligently
pursued to completion with completion accomplished within 30 days of
the original notice of nonperformance; and provided further, that in
the event of a breach involving an imminent threat to health or
safety, Lessor may in its notice of breach reduce the period for cure
to such shorter period as may be reasonable under the circumstances.
(iv) Tenant vacates, abandons, or otherwise ceases to
operate the Premises on a continuing basis except temporary absence,
excused by Lessor in its sole discretion, by reason of fire,
casualty, or other cause wholly beyond Tenant's control.
(v) Any goods, chattels or equipment of Tenant are
taken in execution or in attachment or if a writ of execution is
issued against Tenant or if Tenant or any guarantor becomes insolvent
or files a petition under the Bankruptcy Act or becomes bankrupt or
takes the benefit of any statute that may be in force for bankrupt
or insolvent debtors or becomes involved in voluntary or involuntary
winding-up proceedings or if a receiver shall be appointed for the
business, property, affairs or revenues of Tenant or any guarantor
(provided, however, that in the case of involuntary proceedings,
Tenant shall have 60 days to cause them to be dismissed), or if
Tenant makes a bulk sale of its goods or moves or commences, attempts
or threatens to move its goods, chattels and equipment out of the
Premises other than in the normal course of its business.
(b) Upon the occurrence of an event of default, Lessor,
at any time thereafter without further notice or demand, may, in
addition to all of its rights and remedies at law and/or at equity,
exercise any one or more of the following remedies concurrently or
in succession, all of which shall be cumulative:
(i) Terminate Tenant's right to possession of the
Premises by legal process or otherwise, with or without terminating
this Lease, and retake exclusive possession of the Premises.
(ii) From time to time relet all or portions of the
Premises, using reasonable efforts to mitigate Lessor's damages. In
connection with any reletting, Lessor may relet for a period
extending beyond the term of this Lease and may make alterations or
improvements to the Premises without releasing Tenant of any
liability. Upon a reletting of all or substantially all of the
Premises, Lessor shall be entitled to recover all of its then
prospective damages for the balance of the Lease term measured by the
difference between amounts payable under this Lease and the
anticipated net proceeds of reletting during the remaining Term. In
no event shall Tenant be entitled to receive any amount representing
the excess of avails of reletting over amounts payable hereunder.
(iii) From time to time recover accrued and unpaid
rent and damages arising from Tenant's breach of the Lease,
regardless of whether the Lease has been terminated, together with
applicable late charges and interest.
(iv) Enforce the statutory Lessor's lien on Tenant's
property.
(v) Recover all reasonable attorneys' fees incurred
by Lessor in connection with enforcing this Lease, recovering
possession and collecting amounts owned.
(vi) Perform the obligation on Tenant's behalf and
recover from Tenant, upon demand, the entire amount expended by
Lessor plus 20% for special handling, supervision, and overhead.
(vii) Terminate this Lease by giving written notice
of such intention to terminate. In the event that Lessor elects to
terminate this Lease, then Lessor may recover from Tenant:
(a) All unpaid Rent owed by Tenant as of the
date of termination; plus
(b) All Rent which would have been payable by
Tenant under this Lease but for its termination until
the time of award; plus
(c) All Rent under the Lease for the balance
of the Term after the time of award; plus
(d) All other damages incurred by Lessor as a
result of Tenant's default.
Although defined elsewhere, the parties acknowledge that the
term Rent shall be deemed to be and mean the Annual Minimum Rent
and all other sums required to be paid by Tenant pursuant to the
terms of this Lease.
(viii) Pursue other remedies available at law or in equity.
(c) Upon a termination of Tenant's right to possession,
whether or not this Lease is terminated, subtenancies and other
rights of persons claiming under or through Tenant: (i) shall be
terminated or (ii) Tenant's interest shall be assigned to Lessor.
Lessor may separately elect termination or assignment with respect
to each such subtenancy or other matter.
17. Notices
All notices to be given by one party to the other under this
Lease shall be in writing, mailed or hand-delivered to each at the
address to the individual, set forth at the end of this Lease or at
a changed address if notice of the change is given to the other party
in writing. In the case of notice to Tenant after Tenant takes
possession of the Premises, notice shall be sufficient if mailed or
delivered to the address of the Premises. Mailed notices shall be
sent by United States certified or registered mail, postage prepaid.
Such notices shall be deemed to have been given upon posting in the
United States mail. Actual notice shall be no substitute for written
notice under any provision of this Lease.
18. Subordination
Lessor expressly reserves the right at any time to place
ground leases, liens and encumbrances on and against the Premises and
the Center (collectively, the Title Matters ), superior in lien and
effect to this Lease and the estate created hereby. Tenant
acknowledges that there may currently exist any such Title Matters
which are superior in lien and effect to this Lease and the estate
created hereby. This provision shall be self-operative, but Tenant
shall nevertheless execute upon request subordination agreements
presented by Lessor to confirm the superiority of the Title Matters.
19. Authority to Execute
Any individual executing this Lease on behalf of or as a
representative for a corporation or other person, firm, partnership
or entity represents and warrants that such individual is duly
authorized to execute and deliver this Lease on behalf of said
corporation, person, firm, partnership or other entity and that this
Lease is binding upon said entity in accordance with its terms. If
Tenant is a corporation, Tenant shall deliver to Lessor within
fifteen days after the execution hereof a certified copy of a
resolution of the Board of Directors of said corporation authorizing
or ratifying the execution and delivery of this Lease by the
individuals executing and delivering same on behalf of Tenant.
20. Brokers
Lessor and Tenant each covenant that they have not dealt with
any real estate broker or finder with respect to this Lease and each
party shall hold the other party harmless from all damages, claims,
liabilities or expenses, including reasonable and actual attorneys'
fees (through all levels of proceedings), resulting from any claims
that may be asserted against the other party by any real estate
broker or finder with whom the indemnifying party either has or is
purported to have dealt.
21. Arbitration
All controversies, disputes or claims arising between
Lessor and Tenant in connection with, arising from, or with respect
to this Lease or any agreement related to this Lease between the
parties shall be submitted for binding arbitration in accordance with
rules of the American Arbitration Association or any successor
thereof. Arbitration shall be conducted solely on an individual, not
a class-wise basis, unless all parties so agree. Venue of such
arbitration shall be set in Maricopa County, Arizona. Each party
shall select one arbitrator (who shall not be counsel for the party)
and the two so designated shall select a third arbitrator. If either
party shall fail to designate an arbitrator within ten (10) days
after arbitration is requested, or if the two arbitrators shall fail
to select a third arbitrator within twenty (20) days after
arbitration is requested, then such arbitrator shall be selected by
the American Arbitration Association or any successor thereto upon
application of either party. Judgment upon any award of the majority
of arbitrators shall be binding, final and non-appealable and shall
be entered in a court of competent jurisdiction. The award of the
arbitrators may grant any relief which might be granted by a court
of general jurisdiction including, without limitation, an award of
damages and/or injunctive relief, and the costs of the arbitration,
including the reasonable fees of the arbitrators and reasonable
attorney s fees. All issues relating to the arbitrability or the
enforcement of the agreement to arbitrate contained herein shall be
governed by the Federal Arbitration Act (9 U.S.C. 1 et. seq.) and
the Federal Common Law of Arbitration.
22. Americans with Disabilities Act
Lessor and Tenant hereby acknowledge that the Americans with
Disabilities Act (the ADA ) may affect Tenant s use and occupancy of
the Premises and requires Tenant to modify or alter the design,
layout or other physical elements of the interior of the Premises or
provide auxiliary services in connection with its business
operations. Tenant shall comply in all respects with the requirement
of the ADA as it affects Tenant s use and occupancy of the Premises
throughout the Term, and Tenant acknowledges that, notwithstanding
any modifications to the Common Areas which may be made by Lessor in
order to conform such areas with the requirements of the ADA, Lessor
makes no representation or warranties regarding the compliance of the
Premises of the Center with the ADA, nor shall Lessor have any
obligations or liabilities to Tenant to construct any modifications
or alterations to the interior of the Premises in order to comply
with the ADA.
23. General Provisions
(a) This Lease and the obligations of Tenant hereunder
shall not be affected or impaired because Lessor is unable to fulfill
any of its obligations hereunder or is delayed in doing so if such
inability or delay is caused by reason of any strike, lockout, civil
commotion, war-like operations, invasion, rebellion, hostilities,
military or usurped power, sabotage, governmental regulations or
controls, inability to obtain any material, service or financing, Act
of God or other cause beyond the control of the Lessor.
(b) Any violation of the rules and regulations shall
constitute a material breach of this Lease.
(c) The article captions contained in this Lease are for
convenience only and shall not be considered in the construction or
interpretation of any provision. The masculine, feminine or neuter
gender and the singular or plural number shall be deemed to include
the others whenever the context so requires or indicates.
(d) This Lease contains all of the agreements of the
parties hereto with respect to any matter covered or mentioned in
this Lease, and no prior agreement or understanding pertaining to any
matter shall be effective for any purpose. No provision of this Lease
may be amended or added to except by an agreement in writing signed
by the parties hereto or their respective successors in interest.
(e) Submission of this instrument for examination shall
not bind Lessor in any manner, and no lease or obligations of Lessor
shall arise until this instrument is signed and delivered by
authorized officers of Lessor and Tenant.
(f) No rights to light or air over any property, whether
belonging to Lessor or any other persons, are granted to Tenant by
this Lease.
(g) No waiver by Lessor of any provisions of this Lease
or any breach by Tenant hereunder shall be deemed to be a waiver of
any other provision hereof, or of any subsequent breach by Tenant of
the same or any other provision. Lessor's consent to or approval of
any act by Tenant requiring Lessor's consent or approval shall not
be deemed to render unnecessary the obtaining of Lessor's consent to
or approval of any subsequent act of Tenant, whether or not similar
to the act so consented to or approved. No act or thing done by
Lessor or Lessor's agent during the term of this Lease shall be
deemed an acceptance of a surrender of the Premises, and no agreement
to accept a surrender shall be valid unless in writing and signed by
Lessor. No employee of Lessor or of Lessor's agents shall have any
power to accept the keys to the Premises prior to the termination of
this Lease, and the delivery of the keys to any employee shall not
operate as a termination of the Lease or a surrender of the Premises.
(h) Time is of the essence of this Lease.
(i) All exhibits attached hereto are incorporated herein
by this reference.
(j) The parties hereto agree that all the provisions
hereof are to be construed as covenants and agreements as though the
words importing such covenants and agreements were used in each
separate paragraph hereof. This Lease is the result of negotiations
between Lessor and Tenant, who each had the opportunity to obtain
legal advice regarding the same. This Lease shall not be construed
for or against Lessor or Tenant on the basis of which party
physically served as scrivener of this Lease.
(k) Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third person to create the
relationship of principal and agent, partnership, joint venture, or
any other association between Lessor and Tenant other than the
Lessor-Tenant relationship described herein.
(l) In the event either party shall commence or be
required to defend any action or proceeding against any other party
by reason of any breach or claimed breach of any provision of this
Lease, to commence or defend any action or proceeding in any way
connected with this Lease or to seek a judicial declaration of rights
under this Lease, the party prevailing in such action or proceeding
shall be entitled to recover from or to be reimbursed by the other
party for the prevailing party's reasonable attorneys' fees and costs
through all levels of proceedings.
(m) If any provision of this Lease or the application
thereof to any person or circumstance shall be deemed invalid or
unenforceable, the remainder of this Lease and its application to
other persons or circumstances shall not be affected by such partial
invalidity but shall be enforced to the fullest extent permitted by
law as though such invalid or unenforceable provision was never a
part hereof.
(n) This Lease shall be construed in accordance with the
laws of the State of Arizona without regard to its principles of
choice of law, and the parties agree that jurisdiction for all
actions hereunder shall lie therein.
(o) The parties expressly agree that all of the provisions
hereof, including all rights and privileges of Tenant hereunder, are
subject to the provisions of the Senior Lease as the rights and
privileges of the landlord thereunder.
(p) This Lease shall be governed by the laws of the State
of Arizona.
LESSOR: ADDRESS:
Giant Industries Arizona, Inc. 23733 N. Scottsdale Road
an Arizona corporation Scottsdale, AZ 85255
By: /s/ James E. Acridge
--------------------------------
James E. Acridge
Its: CEO
--------------------------------
TENANT: ADDRESS:
Pinnacle Inn at the Citadel, LLC 23733 N. Scottsdale Road
an Arizona limited liability company Scottsdale, Arizona 85255
By: /s/ Harvey Acridge
--------------------------------
Harvey Acridge, General Manager
EXHIBIT 10.32
SALE AND LEASE AGREEMENT
THIS SALE AND LEASE AGREEMENT (this "Agreement") is made
as of December 31, 1998, by and among FFCA CAPITAL HOLDING
CORPORATION, a Delaware corporation ("Buyer"), whose address
is 17207 North Perimeter Drive, Scottsdale, Arizona 85255, and
GIANT INDUSTRIES ARIZONA, INC., an Arizona corporation, and
GIANT FOUR CORNERS, INC., an Arizona corporation (individually
called "Seller" and collectively called "Sellers"), whose
collective address is 23733 North Scottsdale Road, Scottsdale,
Arizona 85255.
PRELIMINARY STATEMENT:
Unless otherwise expressly provided herein, all defined
terms used in this Agreement shall have the meanings set forth
in Section 1. Sellers own the Sites as set forth on Schedule
1 attached hereto. Sellers operate on the Sites either a
gasoline station or a combination convenience store and
gasoline station under the Giant, Mustang, Conoco, Conoco
Express, Thriftway, Plateau, Gasman or Gasamat brands or other
oil brand, and operate on some of the Sites a Franchisor
Restaurant in accordance with the terms of a franchise, license
and/or area development agreement between such Seller and the
Franchisor associated with such Franchisor Restaurant.
Sellers, as lessor, lease a portion of the building and
improvements located at the Subleased Sites to the Sublessees,
as lessee, pursuant to the Subleases for the purpose of
operating a business involving the retail sales of food items
(including a Franchisor Restaurant) or non-food items. Buyer
desires to purchase the Sites and lease the Sites to Lessee
pursuant to the Leases. Sellers and Sublessees will convert
the Subleases to subleases in order that the Subleases will be
junior, subordinate and subject to the Leases between Buyer,
as lessor, and Lessee. Guarantor will guaranty all of the
duties and obligations of Sellers under this Agreement and all
of the duties and obligations of Lessee under the Leases
pursuant to the Guaranties. Each Seller is an Affiliate of the
other Seller and each Seller is an Affiliate of Guarantor.
AGREEMENT:
In consideration of the mutual covenants and provisions of
this Agreement, the parties agree as follows:
1. DEFINITIONS. The following terms shall have the
following meanings for all purposes of this Agreement:
"Affiliate" means any Person which directly or indirectly
controls, is under common control with, or is controlled by any
other Person. For purposes of this definition, "controls",
"under common control with" and "controlled by" means the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such
person or entity, whether through ownership of voting
securities or otherwise.
"Buyer Entities" means, collectively, Buyer, Franchise
Finance and any Affiliate of Buyer or Franchise Finance.
"Closing" shall have the meaning set forth in Section 5.
"Closing Date" means the date specified as the closing date
in Section 5.
"Code" means the United States Bankruptcy Code, 11 U.S.C.
Sec. 101 et seq., as amended.
"Commitment" means that certain Commitment Letter dated
December 15, 1998, between Buyer and Guarantor with respect to
the transaction described in this Agreement, and any amendments
or supplements thereto.
"Counsel" means legal counsel to Sellers, Guarantor and
Lessee, licensed in the state(s) in which (i) each Site is
located, (ii) each Seller, Guarantor and Lessee is incorporated
or formed, and (iii) each Seller, Guarantor and Lessee
maintains its principal place of business, as selected by
Sellers, Guarantor and Lessee, and approved by Buyer.
"De Minimis Amounts" shall mean, with respect to any given
level of Hazardous Materials or Regulated Substances, that
level or quantity of Hazardous Materials or Regulated
Substances in any form or combination of forms which does not
constitute a violation of any Environmental Laws and is
customarily employed in, or associated with, similar businesses
located in the state in which each Site is located.
"Environmental Condition" means any condition with respect
to soil, surface waters, groundwaters, land, stream sediments,
surface or subsurface strata, ambient air and any environmental
medium comprising or surrounding each Site, whether or not yet
discovered, which could or does result in any damage, loss,
cost, expense, claim, demand, order or liability to or against
Sellers, Guarantor, Lessee or Buyer by any third party
(including, without limitation, any government entity),
including, without limitation, any condition resulting from the
operation of Sellers' business and/or the operation of the
business of any other property owner or operator in the
vicinity of each Site and/or any activity or operation formerly
conducted by any person or entity on or off each Site.
"Environmental Insurer" means such environmental insurance
company as Buyer may select in its sole discretion.
"Environmental Laws" means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations
and the like, as well as common law, relating to protection of
human health or the environment, relating to Hazardous
Materials, Regulated Substances or USTs, relating to liability
for or costs of Remediation or prevention of Releases or
relating to liability for or costs of other actual or
threatened danger to human health or the environment.
"Environmental Laws" includes, but is not limited to, the
following statutes, as amended, any successor thereto, and any
regulations promulgated pursuant thereto, and any state or
local statutes, ordinances, rules, regulations and the like
addressing similar issues: the Comprehensive Environmental
Response, Compensation and Liability Act; the Emergency
Planning and Community Right-to-Know Act; the Hazardous
Materials Transportation Act; the Resource Conservation and
Recovery Act (including but not limited to Subtitle I relating
to USTs); the Solid Waste Disposal Act; the Clean Water Act;
the Clean Air Act; the Toxic Substances Control Act; the Safe
Drinking Water Act; the Occupational Safety and Health Act; the
Federal Water Pollution Control Act; the Federal Insecticide,
Fungicide and Rodenticide Act; the Endangered Species Act; the
National Environmental Policy Act; and the River and Harbors
Appropriation Act. "Environmental Laws" also includes, but is
not limited to, any present and future federal, state and local
laws, statutes, ordinances, rules, regulations and the like,
as well as common law: conditioning transfer of property upon
a negative declaration or other approval of a Governmental
Authority with respect to Hazardous Materials, Regulated
Substances or USTs; requiring notification or disclosure of
Releases or other environmental condition of each Site to any
Governmental Authority or other person or entity, whether or
not in connection with transfer of title to or interest in
property; imposing conditions or requirements relating to
Hazardous Materials, Regulated Substances or USTs in connection
with permits or other authorization for lawful activity;
relating to nuisance, trespass or other causes of action
related to Hazardous Materials, Regulated Substances or USTs;
and relating to wrongful death, personal injury, or property
or other damage in connection with any physical condition or
use of each Site by reason of the presence of Hazardous
Materials, Regulated Substances or USTs in, on, under or above
each Site.
"Environmental Policy" or "Environmental Policies" means,
as the context requires, that certain environmental insurance
policy or those environmental insurance policies issued by
Environmental Insurer to Buyer with respect to each Site and/or
the Sites, which Environmental Policies shall be in form and
substance satisfactory to Buyer in its sole discretion.
"Event of Default" has the meaning set forth in Section 12.
"Facility" means either a gasoline station or a combination
convenience store and gasoline station operated under the
Giant, Mustang, Conoco, Conoco Express, Thriftway, Plateau,
Gasman or Gasamat brands or a nationally recognized oil brand
or another brand approved by Buyer. Upon prior written notice
to Buyer, a portion of any Site and Facility thereon may be
operated by Lessee as a Franchisor Restaurant and/or subleased
to a Sublessee pursuant to a Sublease for the purpose of
operating a business involving the retail sales of food items
(including a Franchisor Restaurant) or non-food items, provided
that no portion of any Site or Facility thereon shall be
operated by any Sublessee as a gasoline station or combination
convenience store and gasoline station without the prior
written consent of Buyer.
"Fee" means an underwriting, valuation and processing fee
equal to One Percent (1%) of the Purchase Price. Guarantor
paid Buyer one-half of the Fee at the time of Guarantor's
execution of the Commitment. At the Closing, Sellers or
Guarantor shall pay Buyer the remaining balance of the Fee.
"Franchise Finance" means Franchise Finance Corporation of
America, a Delaware corporation, and its successors.
"Franchisor" means the owner and holder of all of the
rights and privileges relative to the franchise rights
associated with a Franchisor Restaurant, including, without
limitation, all trade secrets, tradenames and trademarks
relative thereto.
"Franchisor Restaurant" means a regionally- or nationally
recognized franchise restaurant.
"Franchisor Restaurant Assignment Agreement" shall have the
meaning set forth in Section 2 hereof.
"Governmental Authority" means any governmental authority,
agency, department, commission, bureau, board, instrumentality,
court or quasi-governmental authority of the United States, the
states where the Sites are located or any political subdivision
thereof.
"Guarantor" means Giant Industries, Inc., a Delaware
corporation, and its successor.
"Guaranty" or "Guaranties" means, as the context requires,
one or more of an unconditional guaranty of payment and
performance dated as of the Closing in form and substance
acceptable to Buyer to be executed by Guarantor for the benefit
of Buyer, as such may be amended from time to time. A Guaranty
will be executed for each Site.
"Hazardous Materials" means (a) any toxic substance or
hazardous waste, substance, solid waste or related material,
or any pollutant or contaminant; (b) radon gas, asbestos in any
form which is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment which contains
dielectric fluid containing levels of polychlorinated biphenyls
in excess of federal, state or local safety guidelines,
whichever are more stringent, or any petroleum product; (c) any
substance, gas, material or chemical which is or may be defined
as or included in the definition of "hazardous substances,"
"toxic substances," "hazardous materials," hazardous wastes"
or words of similar import under any Environmental Laws; and
(d) any other chemical, material, gas or substance the exposure
to or release of which is or may be prohibited, limited or
regulated by any governmental or quasi-governmental entity or
authority that asserts or may assert jurisdiction over each
Site or the operations or activity at each Site, or any
chemical, material, gas or substance that does or may pose a
hazard to the health and/or safety of the occupants of each
Site or the owners and/or occupants of property adjacent to or
surrounding each Site.
"Lease" or "Leases" means, as the context requires, the
lease in form and substance attached to this Agreement as
Exhibit C and made a part hereof, executed and delivered by
Buyer, as lessor, and Lessee with respect to each Site, as such
may be amended from time to time. A Lease shall be executed
for each Site.
"Lessee" means Giant Industries Arizona, Inc., an Arizona
corporation.
"Memorandum of Lease" or "Memorandum of Leases" means, as
the context requires, the memorandum of lease in form and
substance acceptable to Buyer executed and delivered by Buyer,
as lessor, and Lessee with respect to each Site. A Memorandum
of Lease shall be executed for each Site.
"Non-Foreign Seller Certificate" or "Non-Foreign Seller
Certificates" means, as the context requires, one or more
certificates delivered by Sellers prior to or on the Closing
Date in form and substance acceptable to Buyer.
"Other Agreements" means, collectively, all agreements,
leases and instruments between, among or by (1) any of the
Seller Entities, and, or for the benefit of, (2) any of the
Buyer Entities, including, without limitation, promissory
notes, guaranties and leases, but excluding this Agreement.
"Permitted Exceptions" means those exceptions to title
relative to each Site that are approved in writing by Buyer
pursuant to Section 11.
"Person" means any individual, corporation, partnership,
limited liability company, trust, unincorporated organization,
Governmental Authority or any other form of entity.
"Purchase Price" means the amount specified in Section 3.
"Questionnaire" or "Questionnaires" means, as the context
requires, the environmental questionnaires completed by Sellers
with respect to the Sites and submitted to Environmental
Insurer in connection with the issuance of the Environmental
Policies. A Questionnaire will be completed for each Site by
the Seller who owns such Site.
"Regulated Substances" means "petroleum" and "petroleum-
based substances" or any similar terms described or defined in
any Environmental Laws and any applicable federal, state,
county or local laws applicable to or regulating USTs.
"Release" means any release, deposit, discharge, emission,
leaking, spilling, seeping, migrating, injecting, pumping,
pouring, emptying, escaping, dumping, disposing or other
movement of Hazardous Materials, Regulated Substances or USTs.
"Remediation" means any response, remedial, removal, or
corrective action, any activity to cleanup, detoxify,
decontaminate, contain or otherwise remediate any Hazardous
Material or Regulated Substance, any actions to prevent, cure
or mitigate any Release, any action to comply with any
Environmental Laws or with any permits issued pursuant thereto,
any inspection, investigation, study, monitoring, assessment,
audit, sampling and testing, laboratory or other analysis, or
any evaluation relating to any Hazardous Materials or Regulated
Substances.
"Seller Entities" means, collectively, Sellers, Lessee and
Guarantor and any Affiliate of any Seller, Lessee or Guarantor.
"Site" or "Sites" means, as the context requires, one or
more of the parcels of real estate, the addresses of which are
listed on Exhibit A attached hereto, together with all rights,
privileges and appurtenances associated therewith and all
buildings, fixtures and other improvements now or hereafter
located thereon (whether or not affixed to such real estate).
"Soft Costs" means certain fees, costs and expenses
relating to the acquisition of each Site including, without
limitation, the cost of title insurance, the reasonable
attorneys' fees of Sellers, the cost of surveys, stamp taxes,
transfer taxes, and escrow and recording fees, which shall be
approved as to category and amount by Buyer in its sole
discretion.
"Sublessee" or "Sublessees" means, as the context requires,
the lessee or lessees under the Subleases.
"Sublease" or "Subleases" means, as the context requires,
a lease or leases, if any, between Lessee, as sublessor, and
Sublessee or Sublessees relative to the subleasing of the
Subleased Sites for the purposes specifically permitted under
the Lease, which Subleases shall be subject, junior and
subordinate at all times and for all purposes to the terms and
provisions of the Leases.
"Subleased Site" or "Subleased Sites" means, as the context
requires, a portion of one or more of the sites listed on
Schedule 2 attached hereto, if any, and made a part hereof that
may be subleased to a Sublessee pursuant to a Sublease for the
purpose of operating a business involving the retail sales of
food items (including a Franchisor Restaurant) or non-food
items, provided that no portion of any Subleased Site shall be
operated by a Sublessee as a gasoline station or combination
convenience store and gasoline station without the prior
written consent of Buyer. No Subleased Site shall constitute
any significant portion of the corresponding Site.
"Subordination Agreement" or "Subordination Agreements"
means, as the context requires, the subordination agreement in
form and substance acceptable to Buyer executed and delivered
by Lessee, each Seller who owns a Subleased Site and the
Sublessee that corresponds to such Subleased Site, if any,
pursuant to which such Seller will assign all of Seller's
right, title and interest (as lessor) in and to the Sublease
that corresponds to such Subleased Site to Lessee, and pursuant
to which each Sublease will be declared to be a sublease, which
Sublease will become junior, subordinate and subject to the
Lease between Buyer, as lessor, and Lessee for each such
Subleased Site. To the extent applicable, a Subordination
Agreement shall be executed for each Subleased Site.
"Threatened Release" means a substantial likelihood of a
Release which requires action to prevent or mitigate damage to
the soil, surface waters, groundwaters, land, stream sediments,
surface or subsurface strata, ambient air or any other
environmental medium comprising or surrounding each Site which
may result from such Release.
"Title Company" means the title insurance company described
in Section 6.
"USTs" means any one or combination of tanks and associated
piping systems used in connection with the storage, dispensing
and general use of Regulated Substances.
2. TRANSACTION. On the terms and subject to the
conditions set forth herein, Sellers shall sell, and Buyer
shall purchase the Sites pursuant to the Deeds (as that term
is defined in Section 11). Buyer shall lease each Site to
Lessee pursuant to a Lease. Buyer, as lessor, and Lessee shall
execute and deliver and cause each Memorandum of Lease to be
filed or recorded in the appropriate real property records
where each corresponding Site is located. In the event Lessee
shall sublease a Subleased Site to a Sublessee pursuant to a
Sublease, each Seller that owns such Subleased Site and Lessee
and the corresponding Sublessee, if any, will execute and
deliver to Buyer a Subordination Agreement. Giant Four
Corners, Inc., an Arizona corporation ("Giant Four Corners"),
will assign to Giant Industries Arizona, Inc., an Arizona
corporation, all of the right, title and interest of Giant Four
Corners in and to any franchise, license and/or area
development agreement between Giant Four Corners and the
Franchisor associated with any Franchisor Restaurant being
operated at any Site by Giant Four Corners pursuant to an
assignment and assumption agreement ("Franchisor Restaurant
Assignment Agreement") acceptable to Buyer and such Franchisor.
Guarantor will execute and deliver to Buyer the Guaranties.
The sale and purchase of the Sites pursuant to this
Agreement and the lease of each Site to Lessee pursuant to a
Lease are not severable and shall be considered a single
integrated transaction.
3. PURCHASE PRICE. The purchase price for all Sites
(the "Purchase Price") shall be $51,762,986.00, inclusive of
all Soft Costs and the Fee. The Purchase Price shall be
allocated among the Sites as shown on Exhibit B attached
hereto. The Purchase Price shall be paid at the Closing in
cash or its equivalent subject to any prorations and
adjustments required by this Agreement.
4. UNDERWRITING AND PROCESSING FEE. The portion of the
Fee paid to Buyer at the time of Seller's execution of the
Commitment is fully earned and is not refundable. The balance
of the Fee shall be paid at the Closing and shall be deemed
fully earned upon Buyer's receipt and will be nonrefundable at
that time. The Fee constitutes Buyer's underwriting and
processing fee. In the event the transaction set forth in this
Agreement fails to close due to a breach or default by Seller
under this Agreement, Buyer shall retain the portion of the Fee
paid to Buyer at the time of Seller's execution of the
Commitment (without affecting or limiting Buyer's remedies set
forth in this Agreement).
5. CLOSING DATE. The purchase and sale of the Sites
shall be closed (the "Closing") within 30 days following the
satisfaction of all of the terms and conditions contained
herein, but in no event shall the date of the Closing be
extended beyond December 31, 1998 (the "Closing Date"), and any
such extension shall not be effective unless approved by Buyer
in its sole discretion.
6. CLOSING. Prior to the execution of this Agreement
by the parties hereto, Sellers and Buyer ordered a title
insurance commitment from Lawyers Title Insurance Corporation,
at its national division offices located at 3636 North Central
Avenue, Suite 350, Phoenix, Arizona 85012, or an alternative
title company approved by Buyer for each Site ("Title
Company"). Prior to the Closing Date, the parties hereto shall
deposit with Title Company all documents and moneys necessary
to comply with their obligations under this Agreement. Title
Company shall not cause the transaction to close unless and
until it has received written instructions from Buyer to do so.
All costs of the transaction contemplated by this Agreement
(regardless of whether the transaction is consummated) shall
be borne by Sellers, including, without limitation, Buyer's in-
house site review and inspection costs and expenses, the cost
of the environmental report(s) or Environmental Policy for each
Site to be delivered pursuant to Section 11, the reasonable
fees and expenses of Buyer's attorneys, the cost of title
insurance for each Site, the attorneys' fees of Sellers, the
cost of the survey for each Site, stamp taxes, transfer fees
and escrow and recording fees. All real and personal property
and other applicable taxes and assessments and other charges
relating to each Site which are due and payable on or prior to
the Closing Date shall be paid by Sellers at or prior to the
Closing; and all other taxes and assessments shall be paid by
Sellers or Lessee in its capacity as lessee under each Lease
in accordance with the terms of each Lease. The Closing
documents shall be dated as of the Closing Date.
Sellers and Buyer hereby employ Title Company to act as
escrow agent in connection with this transaction. Sellers and
Buyer will deliver to Title Company all documents, pay to Title
Company all sums and do or cause to be done all other things
necessary or required by this Agreement, in the reasonable
judgment of Title Company, to enable Title Company to comply
herewith and to enable any title insurance policy provided for
herein to be issued. Title Company is authorized to pay, from
any funds held by it for Buyer's or Sellers' respective credit
all amounts necessary to procure the delivery of such documents
and to pay, on behalf of Buyer and Sellers, all charges and
obligations payable by them, respectively. Sellers will pay
all charges payable by them to Title Company. Title Company
is authorized, in the event any conflicting demand is made upon
it concerning these instructions or the escrow, at its
election, to hold any documents and/or funds deposited
hereunder until an action shall be brought in a court of
competent jurisdiction to determine the rights of Sellers and
Buyer or to interplead such documents and/or funds in an action
brought in any such court. Deposit by Title Company of such
documents and funds, after deducting therefrom its charges and
its expenses and attorneys' fees incurred in connection with
any such court action, shall relieve Title Company of all
further liability and responsibility for such documents and
funds. Title Company's receipt of this Agreement and opening
of an escrow pursuant to this Agreement shall be deemed to
constitute conclusive evidence of Title Company's agreement to
be bound by the terms and conditions of this Agreement
pertaining to Title Company. Disbursement of any funds shall
be made by wire transfer, as directed by Buyer. Title Company
shall be under no obligation to disburse any funds represented
by check or draft, and no check or draft shall be payment to
Title Company in compliance with any of the requirements
hereof, until it is advised by the bank in which such check or
draft is deposited that such check or draft has been honored.
Title Company is authorized to act upon any statement furnished
by the holder or payee, or a collection agent for the holder
or payee, of any lien on or charge or assessment in connection
with each Site, concerning the amount of such charge or
assessment or the amount secured by such lien without liability
or responsibility for the accuracy of such statement. The
employment of Title Company as escrow agent shall not affect
any rights of subrogation under the terms of any title
insurance policy issued pursuant to the provisions thereof.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. The
representations and warranties of Buyer contained in this
Section are being made to induce Sellers to enter into this
Agreement and consummate the transactions contemplated herein,
and Sellers have relied, and will continue to rely, upon such
representations and warranties. Buyer represents and warrants
to Sellers as follows:
A. Organization of Buyer. Buyer has been duly
formed, is validly existing and has taken all necessary
action to authorize the execution, delivery and
performance by Buyer of this Agreement.
B. Authority of Buyer. The person who has
executed this Agreement on behalf of Buyer is duly
authorized so to do.
C. Enforceability. Upon execution by Buyer,
this Agreement shall constitute the legal, valid and
binding obligation of Buyer, enforceable against Buyer
in accordance with its terms.
All representations and warranties of Buyer made in this
Agreement shall be and will remain true and complete as of the
Closing Date as if made and restated in full as of such date.
8. REPRESENTATIONS AND WARRANTIES OF SELLERS. The
representations and warranties of Sellers contained in this
Section are being made to induce Buyer to enter into this
Agreement and consummate the transactions contemplated herein,
and Buyer has relied, and will continue to rely, upon such
representations and warranties. For purposes of this Section
8, each Seller shall be deemed to have made the following
representations and warranties with respect to itself and
Guarantor and Lessee and with respect to all of the Sites that
each respective Seller owns. Each Seller, as applicable,
represents and warrants to Buyer as follows:
A. Information and Financial Statements.
Sellers have delivered to Buyer financial statements
(either audited financial statements or, if Sellers do
not have audited financial statements, certified
financial statements) and certain other information
concerning themselves and Guarantor and Lessee, which
financial statements and other information are true,
correct and complete in all material respects; and no
material adverse change has occurred with respect to
any such financial statements and other information
provided to Buyer since the date such financial
statements and other information were prepared or
delivered to Buyer. Sellers understand that Buyer is
relying upon such financial statements and information
and Sellers represent that such reliance is reasonable.
All such financial statements were prepared in
accordance with generally accepted accounting
principles consistently applied and accurately reflect,
as of the date of this Agreement and the Closing Date,
the financial condition of each individual or entity to
which they pertain.
B. Organization and Authority of Sellers.
(i) Each Seller is duly organized or formed, validly
existing and in good standing under the laws of each
respective Seller's state of incorporation or
formation, and each is qualified as a foreign
corporation, partnership or limited liability company,
as the case may be, to do business in any jurisdiction
where any Site owned by such Seller is located and in
any other jurisdiction where such qualification is
required. Guarantor is duly incorporated, validly
existing and in good standing under the laws of its
state of incorporation, and is qualified as a foreign
corporation to do business in any jurisdiction where
such qualification is required. Lessee is duly
incorporated, validly existing and in good standing
under the laws of its state of incorporation, and is
qualified as a foreign corporation to do business in
any jurisdiction where such qualification is required.
(ii) All necessary corporate, partnership or
limited liability company action, as the case may be,
has been taken by each Seller and by Guarantor and by
Lessee to authorize the execution, delivery and
performance of this Agreement and of the other
documents, instruments and agreements provided for
herein to which each Seller, Guarantor and Lessee is a
party.
(iii) The persons who have executed or will
execute this Agreement and the other documents,
instruments and agreements provided for herein on
behalf of each Seller are duly authorized so to do.
The persons who have executed or will execute the
documents, instruments and agreements to which
Guarantor is a party on behalf of Guarantor are duly
authorized so to do. The persons who have executed or
will execute the documents, instruments and agreements
to which Lessee is a party on behalf of Lessee are duly
authorized so to do.
C. Enforceability of Documents. Upon execution
by Sellers, this Agreement and the other documents,
instruments and agreements provided for herein to which
each Seller is a party shall constitute the legal,
valid and binding obligations of Sellers, enforceable
against Sellers in accordance with their respective
terms. Upon execution by Guarantor of the documents,
agreements and instruments to which Guarantor is a
party, such documents, instruments and agreements shall
constitute the legal, valid and binding obligations of
Guarantor, enforceable against Guarantor in accordance
with their respective terms. Upon execution by Lessee
of the documents, agreements and instruments to which
Lessee is a party, such documents, instruments and
agreements shall constitute the legal, valid and
binding obligations of Lessee, enforceable against
Lessee in accordance with their respective terms.
D. Litigation. There are no suits, actions,
proceedings or investigations pending or, to the
knowledge of Sellers, threatened against or involving
any Seller or any of the Sites or Guarantor or Lessee
before any court, arbitrator, or administrative or
governmental body which might reasonably result in any
material adverse change in the contemplated business,
condition, worth or operations of any Seller or any of
the Sites or of Guarantor or Lessee.
E. Absence of Breaches or Defaults. None of the
Sellers is in breach or default, and the authorization,
execution, delivery and performance of this Agreement
and the other documents, instruments and agreements
provided for herein to which each Seller is a party
will not result in any breach or default, under any
other document, instrument or agreement to which any
Seller is a party or by which any Seller or any of the
Sites is subject or bound. The authorization,
execution, delivery and performance of this Agreement
and the documents, instruments and agreements provided
for herein by Sellers will not violate any applicable
law, statute, regulation, rule, ordinance, code, rule
or order. Neither Guarantor nor Lessee is in breach or
default, and the authorization, execution, delivery and
performance by Guarantor and/or Lessee of the
documents, instruments and agreements to which
Guarantor and/or Lessee is/are a party will not result
in any breach or default, under any other document,
instrument or agreement to which Guarantor or Lessee is
a party or by which Guarantor or Lessee is subject or
bound. The authorization, execution, delivery and
performance of the documents, instruments and
agreements to which Guarantor and/or Lessee is/are a
party will not violate any applicable law, statute,
regulation, rule, ordinance, code, rule or order.
F. Utilities. At the Closing Date, each Site
will be served by ample public utilities to permit full
utilization of each Site for their intended purposes
and all utility connection fees and use charges will
have been paid in full.
G. Intended Use and Zoning; Compliance With
Laws. Lessee intends to use each Site solely for the
operation of either a gasoline station or combination
convenience store and gasoline station operated under
the Giant, Mustang, Conoco, Conoco Express, Thriftway,
Plateau, Gasman or Gasamat brands or a nationally
recognized oil brand or another brand approved by
Buyer. Lessee may use some or all of the Sites for the
operation of a Franchisor Restaurant in accordance with
the terms of a franchise, license and/or area
development agreement between Lessee and the Franchisor
associated with such Franchisor Restaurant. Lessee may
also sublease to a Sublessee pursuant to a Sublease a
portion of the improvements located at each Subleased
Site for the purpose of operating a business involving
the retail sales of food items (including a Franchisor
Restaurant) or non-food items, provided that no portion
of any Subleased Site may be operated by any Sublessee
as a gasoline station or combination convenience store
and gasoline station without the prior written consent
of Buyer, which consent shall not be unreasonably
withheld. Lessee also intends to use (or cause to be
used) the Sites for ingress, egress and parking related
to the purposes set forth in this Section, and for no
other purposes. Such intended uses will not violate
any zoning or other governmental requirement applicable
to each Site. Each Site complies fully with all
applicable statutes, regulations, rules, ordinances,
codes, licenses, permits, orders and approvals of any
governmental agencies, departments, commissions,
bureaus, boards or instrumentalities of the United
States, each state in which each such Site is located
and all political subdivisions thereof, including,
without limitation, all health, building, fire, safety
and other codes, ordinances and requirements, all
applicable standards of the National Board of Fire
Underwriters and the Americans With Disabilities Act of
1990, and there are no legal non-conforming uses,
buildings or structures on or at any of the Sites.
H. Area Development; Wetlands. No condemnation
or eminent domain proceedings affecting any Site have
been commenced or, to the best of Sellers' knowledge,
are contemplated. To the best of Sellers' knowledge,
the area where each Site is located has not been
declared blighted by any Governmental Authority. Each
Site and/or the real property bordering each Site is
not designated by any applicable federal, state and/or
local Governmental Authority as wetlands.
I. Licenses and Permits; Access. Prior to the
Closing Date, Lessee shall have obtained (or caused to
be obtained) all required licenses and permits, both
governmental and private, to use and operate each Site
in the intended manner. There are adequate rights of
access to public roads and ways available to each Site
to permit full utilization of each Site for its
intended purpose and all such public roads and ways
have been completed and dedicated to public use.
J. Condition of Sites. As of the Closing Date,
each Site, including all equipment and other personal
property located thereon will be of good workmanship
and materials, fully equipped and operational, in good
condition and repair, free from structural defects,
clean, orderly and sanitary, safe, well lit,
landscaped, decorated, attractive and well maintained.
K. Environmental. Each Seller is fully familiar
with the present use of each Site owned by such Seller,
and, after due inquiry, each Seller has become
generally familiar with the prior uses of each Site
owned by such Seller. To each Seller's knowledge, no
Hazardous Materials or Regulated Substances have been
used, handled, manufactured, generated, produced,
stored, treated, processed, transferred or disposed of
at or on any Site, except in De Minimis Amounts and in
compliance with all applicable laws, and no Release or
Threatened Release has occurred at or on any Site. To
each Seller's knowledge, no USTs are located on, at or
under any Site, except in full compliance with all
applicable laws, including, without limitation, all
Environmental Laws. To each Seller's knowledge, the
activities, operations and business undertaken on, at
or about each Site, including, but not limited to, any
past or ongoing alterations or improvements at each
Site, are and have been at all times, in compliance
with all applicable laws, including, without
limitation, all Environmental Laws. To each Seller's
knowledge, no further action is required to remedy any
Environmental Condition or violation of, or to be in
full compliance with, any Environmental Laws, and no
lien has been imposed on any Site in any federal, state
or local governmental or quasi-governmental entity in
connection with any Environmental Condition, the
violation or threatened violation of any Environmental
Laws or the presence of any Hazardous Materials,
Regulated Substances or USTs on or off any such Site.
There is no pending or, to each Seller's knowledge,
threatened litigation or proceeding before any court,
administrative agency or governmental body in which any
person or entity alleges the violation or threatened
violation of any Environmental Laws or the presence,
Release, Threatened Release or placement on or at any
Site of any Hazardous Materials, Regulated Substances
or USTs, or of any facts which would give rise to any
such action, nor has any Seller (a) received any notice
(and no Seller has any actual or constructive
knowledge) that any Governmental Authority or
quasi-governmental authority or any employee or agent
thereof has determined, threatens to determine or
requires an investigation to determine that there has
been a violation of any Environmental Laws at, on or in
connection with any Site or that there exists a
presence, Release, Threatened Release or placement of
any Hazardous Materials, Regulated Substances or USTs
on or at any Site, or the use, handling, manufacturing,
generation, production, storage, treatment, processing,
transportation or disposal of any Hazardous Materials,
Regulated Substances or USTs at or on any Site;
(b) received any notice under the citizen suit
provision of any Environmental Law in connection with
any Site or any facilities, operations or activities
conducted thereon, or any business conducted in
connection therewith; or (c) received any request for
inspection, request for information, notice, demand,
administrative inquiry or any formal or informal
complaint or claim with respect to or in connection
with the violation or threatened violation of any
Environmental Laws or existence of Hazardous Materials,
Regulated Substances or USTs relating to any Site or
any facilities, operations or activities conducted
thereon or any business conducted in connection
therewith.
The information and disclosures in each
Questionnaire are true, correct and complete in all
material respects, Buyer and Environmental Insurer may
rely on such information and disclosures, and the
person or persons executing each Questionnaire were
duly authorized to do so.
L. Title to Sites. Title to each of the Sites
is vested in each respective Seller as shown on
Schedule 1. On the Closing Date, each Seller will
convey to Buyer title to each Site owned by such
Seller, free and clear of all liens, encumbrances,
charges and security interests of any nature
whatsoever, except the Permitted Exceptions.
M. No Other Agreements and Options. Neither
Sellers, nor Guarantor, nor Lessee nor any Site is
subject to any commitment, obligation, or agreement,
including, but not limited to, any right of first
refusal, option to purchase or lease granted to a third
party, which could or would prevent any Seller from
completing or impair any Seller's ability to complete
the sale of any Site under this Agreement or which
would bind Buyer subsequent to consummation of the
transaction contemplated in this Agreement.
N. No Mechanics' Liens. There are no
outstanding accounts payable, mechanics' liens, or
rights to claim a mechanics' lien in favor of any
materialman, laborer, or any other person or entity in
connection with labor or materials furnished to or
performed on any portion of any Site; no work has been
performed or is in progress nor have materials been
supplied to any Site or agreements entered into for
work to be performed or materials to be supplied to any
Site prior to the date hereof, which will not have been
fully paid for on or before the Closing Date or which
might provide the basis for the filing of such liens
against any Site or any portion thereof; Sellers shall
be responsible for any and all claims for mechanics'
liens and accounts payable that have arisen or may
subsequently arise due to agreements entered into for
and/or any work performed on, or materials supplied to
any Site prior to the Closing Date; and Sellers shall
and does hereby agree to defend, indemnify and forever
hold Buyer and Buyer's designees harmless from and
against any and all such mechanics' lien claims,
accounts payable or other commitments relating to the
Sites.
O. No Reliance. Sellers acknowledge that Buyer
did not prepare or assist in the preparation of any of
the projected financial figures used by Sellers in
analyzing the economic viability and feasibility of the
transaction contemplated by this Agreement, and that
Sellers have not relied on any report or statement by
Buyer in entering into this Agreement. Furthermore,
Sellers acknowledge that they have not relied upon, nor
may they hereafter rely upon, the analysis undertaken
by Buyer in determining the Purchase Price, and such
analysis will not be made available to Sellers.
P. Affiliates. Each Seller is an Affiliate of
the other Seller, and each Seller is an Affiliate of
Guarantor.
Q. No Leases, Subleases or Use or Occupancy
Agreements. Other than the Leases to be entered into
by and between Buyer, as lessor, and Lessee, as of the
Closing, there are no leases, subleases or other
agreements relative to the use or occupancy of any of
the Sites, or any portion of any of the Sites.
All representations and warranties of Sellers made in this
Agreement shall be and will remain true and complete as of the
Closing Date as if made and restated in full as of such date
and shall survive the Closing. Sellers acknowledge and agree
that Environmental Insurer may rely on the environmental
representations and warranties set forth in this Agreement,
that Environmental Insurer is an intended third-party
beneficiary of such representations and warranties and that
Environmental Insurer shall have all rights and remedies
available at law or in equity as a result of a breach of such
representations and warranties, including, to the extent
applicable, the right of subrogation.
9. COVENANT AND AGREEMENT OF SELLERS. From the date of
the Commitment through the Closing Date, Sellers shall, at all
reasonable times, (i) provide Buyer and Buyer's officers,
employees, agents, advisors, attorneys, accountants,
architects, and engineers with access to each Site, all
drawings, plans, and specifications for each Site in possession
of any Seller, all engineering reports relating to each Site
in the possession of any Seller, the files and correspondence
relating to each Site, and the financial books and records,
including lists of delinquencies, relating to the ownership,
operation, and maintenance of each Site, and (ii) allow such
persons to make such inspections, tests, copies, and
verifications as Buyer considers necessary.
10. TRANSACTION CHARACTERIZATION. It is the intent of
the parties that the conveyance of the Sites to Buyer be
absolute conveyances in effect as well as form, and the
instruments of conveyance to be delivered at Closing are not
intended to serve or operate as mortgages, equitable mortgages,
deeds of trust, security agreements, trust conveyances or
financing or trust arrangements of any kind, nor as preferences
or fraudulent conveyances against any creditors of Seller.
After the execution and delivery of the special warranty deed
described in Section 11 for each Site, Sellers will have no
legal or equitable interest or any other claim or interest in
any of the Sites. Furthermore, the parties intend for the
Leases to be true leases and not transactions creating
financing leases, capital leases, equitable mortgages,
mortgages, deeds of trust, security interests or other
financing arrangements, and the economic realities of the
Leases are those of true leases. Notwithstanding the existence
of the Leases, neither party shall contest the validity,
enforceability or characterization of the sale and purchase of
the Sites by Buyer pursuant to this Agreement as absolute
conveyances, and both parties shall support the intent
expressed herein that the purchase of the Sites by Buyer
pursuant to this Agreement provides for absolute conveyances
and does not create any joint venture, partnership, equitable
mortgage, trust, financing device or arrangement, security
interest or the like, if, and to the extent that, any challenge
occurs.
11. CONDITIONS OF CLOSING. The obligation of Buyer to
consummate the transaction contemplated by this Agreement is
subject to the fulfillment or waiver of each of the following
conditions:
A. Title. Each Seller shall convey the Site or
Sites owned by such Seller to Buyer by a special
warranty deed (collectively, the "Deeds"), free of all
liens, encumbrances, restrictions, encroachments and
easements, except as otherwise specifically provided
herein or agreed to in writing by Buyer ("Permitted
Exceptions").
B. Condition of Sites; Approval by Buyer. Buyer
shall have inspected and approved each Site, and each
Site shall be in good condition and repair, of good
workmanship and materials, fully equipped and
operational, clean, orderly, sanitary, safe, well-lit,
landscaped, decorated, attractive and with a suitable
layout, physical plant, traffic pattern and location
all as determined by Buyer in its sole discretion.
C. Evidence of Title. Buyer shall have received
a preliminary title report and irrevocable commitment
to insure title by means of an ALTA extended coverage
owner's policy of title insurance (or its equivalent,
in the event such form is not issued in the
jurisdiction where each Site are located) issued by
Title Company showing good and marketable title in the
corresponding Seller that owns such Site, committing to
insure Buyer's fee simple ownership in each Site,
subject only to Permitted Exceptions relating to such
Site and containing such endorsements as Buyer may
require.
D. Survey. Buyer shall have received a current
ALTA survey of each Site, the form and substance of
which shall be satisfactory to Buyer in its reasonable
discretion. Seller shall have provided Buyer with
either (i) evidence satisfactory to Buyer that the
location of such Site is not within the 100-year flood
plain or identified as a special flood hazard area as
defined by the Federal Insurance Administration, or
(ii) evidence of flood insurance coverage acceptable to
Buyer if such Site has been identified as a special
flood hazard area.
E. Environmental. Buyer shall have received (at
Buyer's sole election) either (i) a Phase I
environmental report with respect to each Site (and a
Phase II environmental report, if necessary, as
determined by Buyer in its sole discretion), the form,
substance and conclusions of which shall be
satisfactory to Buyer in its sole discretion, or (ii)
an Environmental Policy with respect to each Site.
F. Compliance With Representations, Warranties
and Covenants. All obligations of Sellers under this
Agreement shall have been fully performed and complied
with, and no event shall have occurred or condition
shall exist which would, upon the Closing Date, or,
upon the giving of notice and/or passage of time,
constitute a breach or default hereunder or under any
Lease or any other agreement between or among Buyer and
Seller or Guarantor or Lessee pertaining to the subject
matter hereof, and no event shall have occurred or
condition shall exist or information shall have been
disclosed by Sellers or discovered by Buyer which has
had or would have a material adverse effect on any
Site, Sellers' or Buyer's willingness to consummate the
transaction contemplated by this Agreement, as
determined by Buyer in its sole and absolute
discretion.
G. Proof of Insurance. Seller shall have caused
Lessee to deliver to Buyer copies of insurance
policies, showing that all insurance required by each
Lease providing coverage and limits satisfactory to
Buyer are in full force and effect.
H. Zoning. If requested by Buyer, Sellers shall
have provided Buyer with evidence satisfactory to Buyer
to confirm that each Site is properly zoned for its use
as contemplated by this Agreement and that such use or
uses constitutes or constitute legal, conforming uses
and that the buildings, structures and improvements
located at each Site constitute legal, conforming
buildings, structures and improvements under applicable
zoning requirements.
I. Opinions of Counsel. Sellers shall have
caused Counsel to prepare and deliver for each Site one
or more opinion letters in form and substance
acceptable to Buyer.
J. Subordination Agreements. To the extent
Lessee shall, as of the Closing Date, sublease a
Subleased Site to a Sublessee pursuant to a Sublease,
Sellers shall have executed and delivered and shall
have caused Lessee and Sublessees, if any, to execute
and deliver to Buyer and Title Company for recordation
a Subordination Agreement for each Subleased Site.
Sellers shall have executed and delivered and shall
have caused Lessee and any third party using or
occupying any portion of any of the Sites (other than
Sublessees) to execute and deliver to Buyer a
Subordination Agreement (in form and substance
acceptable to Buyer) for each Site used or occupied by
such third party. Sellers shall notify Buyer in
writing prior to the Closing of any third party (other
than a Sublessee) using or occupying any of the Sites
or any portion of any of the Sites, and Buyer shall
have approved of such third party and such third-
party's use and occupancy of the Site.
K. Approval by Buyer of Subleases. To the
extent Lessee, as of the Closing Date, shall sublease
a Subleased Site to a Sublessee pursuant to a Sublease,
Buyer shall have approved the Sublease that corresponds
to each Subleased Site (and each Sublease shall have
been amended in a manner reasonably requested by Buyer)
and the Sublessee corresponding thereto. Buyer shall
have approved any agreement, lease or sublease pursuant
to which any third party (other than a Sublessee) uses
or occupies any of the Sites or any portion of any of
the Sites. Buyer shall have approved any third party
(other than a Sublessee) who uses or occupies any of
the Sites or any portion of any of the Sites and such
third-party's use and occupancy of the Site.
L. Approvals, Consents and Waivers. As of the
Closing, Sellers and Lessee shall have obtained (and
delivered to Buyer a copy and a reasonable description
of) all consents, approvals, waivers and authorizations
required to be obtained in connection with the
consummation of the transaction contemplated by this
Agreement.
M. Franchise Agreement. The franchise, license
and/or area development agreements between Lessee and
the Franchisor associated with such Franchisor
Restaurant with respect to each Site that is operated
by Lessee as a Franchisor Restaurant is valid, binding
and in full force and effect.
N. Agreement with Conoco Inc. Buyer shall have
received and approved the supply or license agreement
between Lessee and Conoco Inc., a Delaware corporation,
governing Lessee's business of offering for retail
sales petroleum and other products under the brand name
Conoco.
O. Franchisor Restaurant Assignment Agreement.
Sellers shall have executed and delivered to Buyer a
Franchisor Restaurant Assignment Agreement for each
Site operated by Giant Four Corners as a Franchisor
Restaurant, pursuant to which Giant Four Corners will
assign to Giant Industries Arizona, Inc., an Arizona
corporation, all of the right, title and interest of
Giant Four Corners in and to any franchise, license
and/or area development agreement between Giant Four
Corners and the Franchisor associated with any
Franchisor Restaurant being operated at such Site by
Giant Four Corners.
P. Closing Documents. On or prior to the
Closing Date, Buyer and Sellers, as may be appropriate,
shall execute and deliver or cause to be executed and
delivered to Title Company or Buyer, as may be
appropriate, all documents required to be delivered by
this Agreement, and such other documents, payments,
instruments and certificates, as Buyer may require in
form acceptable to Buyer, including, without
limitation, the following:
(i) Special Warranty Deed for each Site;
(ii) Lease for each Site;
(iii) Memorandum of Lease for each Site;
(iv) Proof of Insurance for each Site;
(v) Opinion(s) of Counsel;
(vi) Non-Foreign Seller Certificates;
(vii) UCC-1 Financing Statements;
(viii) Subordination Agreement for each
Subleased Site, as applicable;
(ix) Guaranty for each Site;
(x) Subordination Agreement, if applicable,
relative to each Site used or occupied by any third party
(other than a Sublessee);
(xi) Franchisor Restaurant Assignment
Agreements, as applicable;
(xii) Supply or license agreement between Lessee
and Conoco Inc.
Upon fulfillment or waiver of all of the above conditions,
Buyer shall deposit funds necessary to close this transaction
with the Title Company and this transaction shall close in
accordance with the terms and conditions of this Agreement.
12. DEFAULT AND REMEDIES. A. Each of the following
shall be deemed an event of default by Seller (an "Event of
Default"):
(i) If any representation or warranty of any
Seller is false in any material respect when made or
becomes false in any material respect prior to the
Closing Date;
(ii) If any Seller fails to keep or perform any
of the terms or provisions of this Agreement or if any
condition precedent is not satisfied by Sellers at or
prior to the Closing Date or if Guarantor fails to keep
or perform any of the terms or provisions of any
Guaranty or if Lessee fails to keep or perform any of
the terms or provisions of any Lease;
(iii) If any Seller, Guarantor or Lessee is or
becomes insolvent within the meaning of the Code, files
or notifies Buyer that it intends to file a petition
under the Code, initiates a proceeding under any
similar law or statute relating to bankruptcy,
insolvency, reorganization, winding up or adjustment of
debts (collectively, an "Action"), becomes the subject
of either a petition under the Code or an Action, or is
not generally paying its debts as the same become due;
(iv) If any event occurs or condition exists
which does or would upon the Closing Date constitute a
breach or default under any Lease or any other
agreement between any Seller or Lessee or Guarantor and
Buyer pertaining to the subject matter hereof; or
(v) If there is an event of default or breach
under any of the Other Agreements.
B. In the event of any Event of Default, Buyer shall be
entitled to exercise, at its option, concurrently, successively
or in any combination, all remedies available at law or in
equity, including without limitation any one or more of the
following:
(i) To terminate this Agreement by giving
written notice to Sellers in which none of the parties
hereto shall have any further obligation or liability,
except such liabilities as Sellers may have for such
breach or default;
(ii) To proceed with the Closing relative to all
of the Sites or any number of the Sites as determined
by Buyer and direct Title Company to apply such portion
of the Purchase Price as Buyer may deem necessary to
cure any such breach or default;
(iii) To bring an action for damages against any
Seller or all Sellers, which, in the event Buyer
proceeds to close on any Site, may include an amount
equal to the difference between the value of each Site
as conveyed to Buyer and the value each Site would have
had if all representations and warranties of Sellers
were true and Sellers had complied with all of its
obligations;
(iv) To bring an action to require any Seller or
all Sellers specifically to perform its or their
respective obligations hereunder; and/or
(v) To recover from Sellers all expenses,
including attorneys' fees, paid or incurred by Buyer as
a result of such breach or default.
13. ASSIGNMENTS. A. Buyer may assign in whole or in
part its rights under this Agreement. In the event of any
unconditional assignment of Buyer's entire right and interest
hereunder, Buyer shall automatically be relieved, from and
after the date of such assignment, of liability for the
performance of any obligation of Buyer contained herein.
B. Sellers shall not, without the prior written consent
of Buyer, which consent may be withheld in Buyer's sole
discretion, sell, assign, transfer (other than the Subleases),
mortgage, convey, encumber or grant any easements or other
rights or interests of any kind in any Site, any of Seller's
rights under this Agreement or any interest in any Seller,
whether voluntarily, involuntarily or by operation of law or
otherwise, including, without limitation, by merger,
consolidation, dissolution or otherwise.
14. INDEMNITY. Each Seller, jointly and severally,
agrees to indemnify, protect, hold harmless and defend Buyer
and its directors, officers, shareholders, employees,
successors, assigns, agents, lenders, contractors,
subcontractors, experts, licensees, affiliates, lessees,
mortgagees, trustees and invitees, as applicable (collectively,
the "Indemnified Parties"), from and against any and all
losses, costs, claims, liabilities, damages and expenses,
including, without limitation, Buyer's reasonable attorneys'
fees and consequential damages, arising as the result of an
Environmental Condition and/or a breach of any of the
representations, warranties, covenants, agreements or
obligations of any Seller set forth in this Agreement. Without
limiting the generality of the foregoing, such indemnity shall
include, without limitation, any damages incurred with respect
to any engineering, governmental inspection and attorneys' fees
and expenses that the Indemnified Parties may incur by reason
of any Environmental Condition and/or any representation or
warranty set forth in Section 8.K being false, or by reason of
any investigation or claim of any governmental agency in
connection therewith.
15. MISCELLANEOUS PROVISIONS.
A. Notices. All notices, consents, approvals or
other instruments required or permitted to be given by
either party pursuant to this Agreement shall be in
writing and given by (i) hand delivery, (ii) facsimile,
(iii) express overnight delivery service or
(iv) certified or registered mail, return receipt
requested, and shall be deemed to have been delivered
upon (a) receipt, if hand delivered, (b) transmission,
if delivered by facsimile, (c) the next business day,
if delivered by express overnight delivery service, or
(d) the third business day following the day of deposit
of such notice with the United States Postal Service,
if sent by certified or registered mail, return receipt
requested. Notices shall be provided to the parties
and addresses (or facsimile numbers, as applicable)
specified below:
If to Sellers: c/o Giant Industries, Inc.
Attention: Mr. Mark Cox
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Telephone: (602) 585-8888
Telecopy: (602) 585-8893
With a copy to: Giant Industries, Inc.
Legal Department
Attention: Carlos Guerra, Esq.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Telephone: (602) 585-8851
Telecopy: (602) 585-8985
If to Buyer: Dennis L. Ruben, Esq.
Executive Vice President
and General Counsel
FFCA Capital Holding
Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
B. Risk of Loss. Seller shall assume the risk
of loss, damage or destruction of any Site or all Sites
prior to the Closing Date.
C. Condemnation. In the event of a taking of
all or any part of any Site on or before the Closing,
Buyer at its sole option shall have the right to either
(i) receive the proceeds of any condemnation award and,
proceed to close this transaction relative to such Site
and the remaining Sites, or (ii) terminate this
Agreement relative to the Site that is the subject of
such taking and close this transaction relative to the
remaining Sites, or (iii) terminate this Agreement
relative to all Sites.
D. Real Estate Commission. Buyer and Sellers
represent and warrant to each other that they have
dealt with no real estate broker, agent, finder or
other intermediary in connection with the transactions
contemplated by this Agreement. Buyer and Sellers
shall indemnify and hold each other harmless from and
against any costs, claims or expenses, including
attorneys' fees, arising out of the breach of their
respective representations and warranties contained
within this Section.
E. Waiver and Amendment. No provisions of this
Agreement shall be deemed waived or amended except by
a written instrument unambiguously setting forth the
matter waived or amended and signed by the party
against which enforcement of such waiver or amendment
is sought. Waiver of any matter shall not be deemed a
waiver of the same or any other matter on any future
occasion.
F. Captions. Captions are used throughout this
Agreement for convenience of reference only and shall
not be considered in any manner in the construction or
interpretation hereof.
G. Buyer's Liability. Notwithstanding anything
to the contrary provided in this Agreement, it is
specifically understood and agreed, such agreement
being a primary consideration for the execution of this
Agreement by Buyer, that (i) there shall be absolutely
no personal liability on the part of any shareholder,
director, officer or employee of Buyer, with respect to
any of the terms, covenants and conditions of this
Agreement, (ii) Sellers waive all claims, demands and
causes of action against Buyer's officers, directors,
employees and agents in the event of any breach by
Buyer of any of the terms, covenants and conditions of
this Agreement to be performed by Buyer and
(iii) Sellers shall look solely to the assets of Buyer
for the satisfaction of each and every remedy of
Sellers in the event of any breach by Buyer of any of
the terms, covenants and conditions of this Agreement
to be performed by Buyer, such exculpation of liability
to be absolute and without any exception whatsoever.
H. Severability. The provisions of this
Agreement shall be deemed severable. If any part of
this Agreement shall be held unenforceable, the
remainder shall remain in full force and effect, and
such unenforceable provision shall be reformed by such
court so as to give maximum legal effect to the
intention of the parties as expressed therein.
I. Construction Generally. This is an agreement
between parties who are experienced in sophisticated
and complex matters similar to the transaction
contemplated by this Agreement and is entered into by
the parties in reliance upon the economic and legal
bargains contained herein and shall be interpreted and
construed in a fair and impartial manner without regard
to such factors as the party which prepared the
instrument, the relative bargaining powers of the
parties or the domicile of any party. Sellers and
Buyer were each represented by legal counsel competent
in advising them of their obligations and liabilities
hereunder.
J. Other Documents. Each of the parties agrees
to sign such other and further documents as may be
appropriate to carry out the intentions expressed in
this Agreement.
K. Attorneys' Fees. In the event of any
judicial or other adversarial proceeding between the
parties concerning this Agreement, the prevailing party
shall be entitled to recover all of its attorneys' fees
and other costs in addition to any other relief to
which it may be entitled. References in this Agreement
to Buyer's attorneys' fees and/or costs shall mean both
the fees and costs of independent counsel retained by
Buyer with respect to this transaction and the fees and
costs of Buyer's in-house counsel incurred in
connection with this transaction.
L. Entire Agreement. This Agreement, together
with any other certificates, instruments or agreements
to be delivered hereunder, constitute the entire
agreement between the parties with respect to the
subject matter hereof, and there are no other
representations, warranties or agreements, written or
oral, between Sellers and Buyer with respect to the
subject matter of this Agreement. Notwithstanding
anything in this Agreement to the contrary, upon the
execution and delivery of this Agreement by Sellers and
Buyer the Commitment shall be deemed null and void and
of no further force and effect and the terms and
conditions of this Agreement shall control
notwithstanding that such terms are inconsistent with
or vary from those set forth in the Commitment.
M. Recording. At the election of Buyer, this
Agreement may be recorded in the appropriate
governmental office or offices so as to impart
constructive notice of the terms and provisions hereof.
N. Forum Selection; Jurisdiction; Venue; Choice
of Law. Sellers acknowledge that this Agreement was
substantially negotiated in the State of Arizona, the
Agreement was signed by Buyer and Sellers in the State
of Arizona and delivered by Sellers in the State of
Arizona, all payments under the Leases will be
delivered in the State of Arizona and there are
substantial contacts between the parties and the
transactions contemplated herein and the State of
Arizona. For purposes of any action or proceeding
arising out of this Agreement, the parties hereto
hereby expressly submit to the jurisdiction of all
federal and state courts located in the State of
Arizona and Sellers consents that they may be served
with any process or paper by registered mail or by
personal service within or without the State of Arizona
in accordance with applicable law. Furthermore,
Sellers waive and agree not to assert in any such
action, suit or proceeding that it is not personally
subject to the jurisdiction of such courts, that the
action, suit or proceeding is brought in an
inconvenient forum or that venue of the action, suit or
proceeding is improper. It is the intent of the
parties hereto that all provisions of this Agreement
shall be governed by and construed under the laws of
the State of Arizona. To the extent that a court of
competent jurisdiction finds Arizona law inapplicable
with respect to any provisions hereof, then, as to
those provisions only, the law of the state in which
each Site is located shall be deemed to apply to such
Site. Nothing contained in this Section shall limit or
restrict the right of Buyer to commence any proceeding
in the federal or the state courts located in the state
in which each Site is located to the extent Buyer deems
such proceeding necessary or advisable to exercise
remedies available under the Agreement.
O. Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be
deemed an original.
P. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of Sellers and
Buyer and their respective successors and permitted
assigns, including, without limitation, any United
States trustee, any debtor-in-possession or any trustee
appointed from a private panel.
Q. Survival. Except for the conditions of
Closing set forth in Section 11, which shall be
satisfied or waived as of the Closing Date, all
representations, warranties, agreements, obligations
and indemnities of Sellers and Buyer set forth in this
Agreement shall survive the Closing.
R. Waiver of Jury Trial and Punitive,
Consequential, Special and Indirect Damages. BUYER AND
SELLERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF
THE PARTIES HERETO AGAINST THE OTHER OR ITS SUCCESSORS
WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT
CONTEMPLATED HEREIN OR RELATED HERETO. THIS WAIVER BY
THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL
ASPECT OF THEIR BARGAIN. FURTHERMORE, SELLERS AND
BUYER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT EITHER MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM THE
OTHER WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN
ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT
BY SELLERS OR BUYER AGAINST THE OTHER OR ITS RESPECTIVE
SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT
CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER BY
SELLERS AND BUYER OF ANY RIGHT EITHER MAY HAVE TO SEEK
PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES
HAS BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN
ESSENTIAL ASPECT OF THEIR BARGAIN.
IN WITNESS WHEREOF, Sellers and Buyer have entered into
this Agreement as of the date first above written.
BUYER:
FFCA CAPITAL HOLDING
CORPORATION, a Delaware corporation
By /s/ Stephen Y. Schwanz
--------------------------------------
Name: Stephen Y. Schwanz
Its: Vice President
SELLERS:
GIANT INDUSTRIES ARIZONA, INC.,
an Arizona corporation
By /s/ Mark B. Cox
--------------------------------------
Printed Name: Mark B. Cox
Its: Vice President
GIANT FOUR CORNERS, INC.,
an Arizona corporation
By /s/ Mark B. Cox
--------------------------------------
Printed Name: Mark B. Cox
Its: Vice President
<PAGE>
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on
December 30, 1998, by Stephen Y. Schwanz, Vice President, of
FFCA Capital Holding Corporation, a Delaware corporation, on
behalf of the corporation.
/s/ Paula T. Cross
--------------------------
Notary Public
My Commission Expires:
Nov. 29, 2000
<PAGE>
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on
December 30, 1998, by Mark Baker Cox, the Vice President of
GIANT INDUSTRIES ARIZONA, INC., an Arizona corporation, on
behalf of the corporation.
/s/ Paula T. Cross
--------------------------
Notary Public
My Commission Expires:
Nov. 29, 2000
<PAGE>
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on
December 30, 1998, by Mark Baker Cox, the Vice President of
GIANT FOUR CORNERS, INC., an Arizona corporation, on behalf
of the corporation.
/s/ Paula T. Cross
--------------------------
Notary Public
My Commission Expires:
Nov. 29, 2000
<PAGE>
<PAGE>
Giant AZ = Giant Industries Arizona, Inc.
Giant 4 = Giant Four Corners, Inc.
<TABLE>
<CAPTION>
SCHEDULE 1
(List of Sellers and list of Sites owned by each Seller)
Unit No. FFCA File No. Street Address City State Seller's
Name
-------- ------------- ----------------------- -------------- ----- -------------
<S> <C> <C> <C> <C> <C>
6901 8000-8344 825 Monroe Buckeye AZ Giant AZ
6906 8000-8345 945 N. Arizona Ave. Chandler AZ Giant AZ
6916 8000-8378 1951 E. Baseline Gilbert AZ Giant AZ
6907 8000-8348 1405 E. Ash Globe AZ Giant AZ
7193 8000-8349 410 Hopi Dr. Holbrook AZ Giant AZ
7222 8000-8350 1653 White Mtn. Blvd. Lakeside AZ Giant AZ
6915 8000-8351 6807 E. Baseline Rd. Mesa AZ Giant AZ
6917 8000-8352 3559 E. University Mesa AZ Giant AZ
6918 8000-8353 2743 S. Alma School Rd. Mesa AZ Giant AZ
6928 8000-7354 6608 E. Main St. Mesa AZ Giant AZ
6903 8000-8355 2120 Hwy 60/70 Miami AZ Giant AZ
6910 8000-8356 7450 W. Thomas Rd. Phoenix AZ Giant AZ
6913 8000-8357 5049 W. Buckeye Phoenix AZ Giant AZ
6932 8000-8358 4305 E. Ray Rd. Phoenix AZ Giant AZ
6908 8000-8359 300 Hwy 70 Safford AZ Giant AZ
7203 8000-8360 Hwy 191 Sanders AZ Giant 4
6904 8000-8361 7630 E. McDowell Rd. Scottsdale AZ Giant AZ
6909 8000-8362 3301 N. Hayden Rd. Scottsdale AZ Giant AZ
7223 8000-8363 1981 E. Deuce of Clubs Show Low AZ Giant 4
7123 8000-8364 379 S. Main Snowflake AZ Giant 4
7219 8000-8365 138 W. Main, Hwy 60 Springerville AZ Giant 4
7224 8000-8367 310 N. Main Taylor AZ Giant 4
6914 8000-8368 7550 S. Rural Rd. Tempe AZ Giant AZ
6902 8000-8369 2946 W. Hwy 70 Thatcher AZ Giant AZ
6921 8000-8370 7366 N. Oracle Rd. Tucson AZ Giant AZ
6922 8000-8371 2100 W. Ruthrauff Rd. Tucson AZ Giant AZ
6923 8000-8372 1530 W. St. Mary's Rd. Tucson AZ Giant AZ
6924 8000-8373 761 W. Ajo Tucson AZ Giant AZ
6925 8000-8374 1202 W. Ajo Tucson AZ Giant AZ
6926 8000-8375 6500 S. 12th Ave. Tucson AZ Giant AZ
6929 8000-8376 9491 E. 22nd St. Tucson AZ Giant AZ
6930 8000-8377 2750 S. Kolb Rd. Tucson AZ Giant AZ
6931 8000-8378 3780 W. Magee Rd. Tucson AZ Giant AZ
7320/ 8000-8379 Hwy 264 Tse Bontio NM
7321 Window Rock AZ Giant 4
7405 8000-8380 2201 Main St. Alamosa CO Giant 4
6063 8000-8381 650 Buck Highway Bayfield CO Giant AZ
7212 8000-8382 1525 Greenwood Canon City CO Giant 4
6064 8000-8384 2320 E. Main Cortez CO Giant AZ
7260 8000-8386 921 E. Main Cortez CO Giant 4
7676 8000-8391 805 Grand Del Norte CO Giant 4
7229 8000-8392 501 Railroad Ave. Dolores CO Giant 4
6059 8000-8393 26223 US Highway 160 Durango CO Giant AZ
6060 8000-8394 1991 Main Avenue Durango CO Giant AZ
6061 8000-8395 901 Camino Del Rio Durango CO Giant AZ
7111 8000-8396 20329 Hwy 160 West Durango CO Giant AZ
7677 8000-8397 605 First St. Monte Vista CO Giant 4
6062 8000-8398 635 San Juan Pagosa Springs CO Giant AZ
7675 8000-8399 30483 US Hwy 160 South Fork CO Giant 4
7237 8000-8400 1519 E. Main St. Trinidad CO Giant 4
7442 8000-8401 3501 Isleta Blvd., SW Albuquerque NM Giant 4
7446 8000-8403 937 Isleta SW Albuquerque NM Giant 4
7553 8000-8404 2504 Broadway SE Albuquerque NM Giant 4
7118 8000-8405 2790 US Hwy 550 Aztec NM Giant 4
7197 8000-8406 321 Main Ave. Aztec NM Giant 4
7283 8000-8408 1224 S. Main St. Belen NM Giant 4
7168 8000-8409 118 Hwy 44 West Bernalillo NM Giant 4
7293 8000-8410 401 Hwy 44 N. Bernalillo NM Giant 4
7210 8000-8411 204 S. Bloomfield Blvd. Bloomfield NM Giant 4
7214 8000-8412 602 W. Broadway Bloomfield NM Giant 4
7239 8000-8413 Star Rte 4, Box 3000 Bloomfield NM Giant 4
7215 8000-8415 Box 42 HCR 79 Cuba NM Giant 4
7244 8000-8416 11260 NM Hwy 44, Nagezzi Cuba NM Giant 4
7247 8000-8417 HCR 79 Box 10 Cuba NM Giant 4
7183 8000-8418 902 N. Riverside Dr. Espanola NM Giant 4
7555 8000-8420 286 S. Riverside Espanola NM Giant 4
7278 8000-8421 5th & Joseph Estancia NM Giant 4
7127 8000-8422 2603 E. 20th St. Farmington NM Giant 4
7211 8000-8423 2700 W. Main Farmington NM Giant 4
7217 8000-8424 8180 E. Main Farmington NM Giant 4
7218 8000-8425 5702 Hwy 64 Farmington NM Giant 4
7240 8000-8426 3001 Bloomfield Hwy Farmington NM Giant 4
7556 8000-8427 1500 San Juan Blvd. Farmington NM Giant 4
7204 8000-8428 HCR 4, Box 20 Gallup NM Giant 4
7408 8000-8429 3340 E. Hwy 66 Gallup NM Giant 4
7409 8000-8430 3302 W. Hwy 66 Gallup NM Giant 4
7557 8000-8431 800 E. Coal Gallup NM Giant 4
7198 8000-8432 4357 US Hwy 64 Kirtland NM Giant 4
7295 8000-8433 610 W. Hwy 66 Milan NM Giant 4
7297 8000-8434 5180 Hwy 68 Rancho de Taos NM Giant 4
7554 8000-8435 832 Sierra Vista Santa Fe NM Giant 4
7448 8000-8436 113268 S. Santa Fe Rd. Taos NM Giant 4
7257 8000-8437 Hwy 371 Thoreau NM Giant 4
7310 8000-8439 3890 US Hwy 64,
Fruitland, NM Waterflow NM Giant 4
</TABLE>
<PAGE>
<PAGE>
SCHEDULE 2
(List of Sublessees and list of Subleased Sites
leased by each Sublessee)
SELLERS REPRESENT AND WARRANT TO BUYER THAT, AS OF THE DATE OF
THIS AGREEMENT, THERE ARE NO SUBLEASES, THERE ARE NO SUBLESSEES,
AND THERE ARE NO SUBLEASED SITES.<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A
(List of Sites)
Unit No. FFCA File No. Street Address City State Zip Code
-------- ------------- ----------------------- -------------- ----- --------
<S> <C> <C> <C> <C> <C>
6901 8000-8344 825 Monroe Buckeye AZ 85326
6906 8000-8345 945 N. Arizona Ave. Chandler AZ 85224
6916 8000-8347 1951 E. Baseline Gilbert AZ 86234
6907 8000-8348 1405 E. Ash Globe AZ 85501
7193 8000-8349 410 Hopi Dr. Holbrook AZ 86025
7222 8000-8350 1653 White Mtn. Blvd. Lakeside AZ 85929
6915 8000-8351 6807 E. Baseline Rd. Mesa AZ 85208
6917 8000-8352 3559 E. University Mesa AZ 85203
6918 8000-8353 2743 S. Alma School Rd. Mesa AZ 85210
6928 8000-7354 6608 E. Main St. Mesa AZ 85205
6903 8000-8355 2120 Hwy 60/70 Miami AZ 85539
6910 8000-8356 7450 W. Thomas Rd. Phoenix AZ 85033
6913 8000-8357 5049 W. Buckeye Phoenix AZ 85043
6932 8000-8358 4305 E. Ray Rd. Phoenix AZ 85044
6908 8000-8359 300 Hwy 70 Safford AZ 85546
7203 8000-8360 Hwy 191 Sanders AZ 86512
6904 8000-8361 7630 E. McDowell Rd. Scottsdale AZ 85257
6909 8000-8362 3301 N. Hayden Rd. Scottsdale AZ 85251
7223 8000-8363 1981 E. Deuce of Clubs Show Low AZ 85901
7123 8000-8364 379 S. Main Snowflake AZ 85937
7219 8000-8365 138 W. Main, Hwy 60 Springerville AZ 85938
7224 8000-8367 310 N. Main Taylor AZ 85939
6914 8000-8368 7550 S. Rural Rd. Tempe AZ 85283
6902 8000-8369 2946 W. Hwy 70 Thatcher AZ 85552
6921 8000-8370 7366 N. Oracle Rd. Tucson AZ 85704
6922 8000-8371 2100 W. Ruthrauff Rd. Tucson AZ 85705
6923 8000-8372 1530 W. St. Mary's Rd. Tucson AZ 85745
6924 8000-8373 761 W. Ajo Tucson AZ 85713
6925 8000-8374 1202 W. Ajo Tucson AZ 85713
6926 8000-8375 6500 S. 12th Ave. Tucson AZ 85706
6929 8000-8376 9491 E. 22nd St. Tucson AZ 85710
6930 8000-8377 2750 S. Kolb Rd. Tucson AZ 85730
6931 8000-8378 3780 W. Magee Rd. Tucson AZ 85741
7320/ Hwy 264 Tse Bontio NM 87301
7321 8000-8379 Window Rock AZ 86515
7405 8000-8380 2201 Main St. Alamosa CO 81101
6063 8000-8381 650 Buck Highway Bayfield CO 81122
7212 8000-8382 1525 Greenwood Canon City CO 81212
6064 8000-8384 2320 E. Main Cortez CO 81321
7260 8000-8386 921 E. Main Cortez CO 81321
7676 8000-8391 805 Grand Del Norte CO 81132
7229 8000-8392 501 Railroad Ave. Dolores CO 81323
6059 8000-8393 26223 US Highway 160 Durango CO 81301
6060 8000-8394 1991 Main Avenue Durango CO 81301
6061 8000-8395 901 Camino Del Rio Durango CO 81301
7111 8000-8396 20329 Hwy 160 West Durango CO 81301
7677 8000-8397 605 First St. Monte Vista CO 81144
6062 8000-8398 635 San Juan Pagosa Springs CO 81147
7675 8000-8399 30483 US Hwy 160 South Fork CO 81154
7237 8000-8400 1519 E. Main St. Trinidad CO 81082
7442 8000-8401 3501 Isleta Blvd., SW Albuquerque NM 87105
7446 8000-8403 937 Isleta SW Albuquerque NM 87105
7553 8000-8404 2504 Broadway SE Albuquerque NM 87501
7118 8000-8405 2790 US Hwy 550 Aztec NM 87410
7197 8000-8506 321 Main Ave. Aztec NM 87410
7283 8000-8408 1224 S. Main St. Belen NM 87002
7168 8000-8409 118 Hwy 44 West Bernalillo NM 87004
7293 8000-8410 401 Hwy 44 N. Bernalillo NM 87004
7210 8000-8411 204 S. Bloomfield Blvd. Bloomfield NM 87413
7214 8000-8412 602 W. Broadway Bloomfield NM 87413
7239 8000-8413 Star Rte 4, Box 3000 Bloomfield NM 87413
7215 8000-8415 Box 42 HCR 79 Cuba NM 87013
7244 8000-8416 11260 NM Hwy 44, Nagezzi Cuba NM 87013
7247 8000-8417 HCR 79 Box 10 Cuba NM 87013
7183 8000-8418 902 N. Riverside Dr. Espanola NM 87532
7555 8000-8420 286 S. Riverside Espanola NM 87532
7278 8000-8421 5th & Joseph Estancia NM 87016
7127 8000-8422 2603 E. 20th St. Farmington NM 87401
7211 8000-8423 2700 W. Main Farmington NM 87401
7217 8000-8424 8180 E. Main Farmington NM 87401
7218 8000-8425 5702 Hwy 64 Farmington NM 87401
7240 8000-8426 3001 Bloomfield Hwy Farmington NM 87401
7556 8000-8427 1500 San Juan Blvd. Farmington NM 87401
7204 8000-8428 HCR 4, Box 20 Gallup NM 87301
7408 8000-8429 3340 E. Hwy 66 Gallup NM 87301
7409 8000-8430 3302 W. Hwy 66 Gallup NM 87301
7557 8000-8431 800 E. Coal Gallup NM 87301
7198 8000-8432 4357 US Hwy 64 Kirtland NM 87417
7295 8000-8433 610 W. Hwy 66 Milan NM 87021
7297 8000-8434 5180 Hwy 68 Rancho de Taos NM 87557
7554 8000-8435 832 Sierra Vista Santa Fe NM 87501
7448 8000-8436 113268 S. Santa Fe Rd. Taos NM 87571
7257 8000-8437 Hwy 371 Thoreau NM 87323
7310 8000-8439 3890 US Hwy 64 Waterflow NM 87421
Fruitland, NM
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT B
(Allocation of Purchase Price Among the Sites)
FFCA File No./Unit No. Purchase Price Address
---------------------- -------------- ----------------------
<S> <C> <C>
8000-8344/6901 $570,000 825 Monroe
8000-8345/6906 $1,090,000 945 N. Arizona Ave.
8000-8347/6916 $435,000 1951 E. Baseline
8000-8348/6907 $426,000 1405 E. Ash
8000-8349/7193 $440,000 410 Hopi Dr.
8000-8350/7222 $532,000 1653 White Mtn. Blvd.
8000-8351/6915 $1,300,000 6807 E. Baseline Rd.
8000-8352/6917 $551,000 3559 E. University
8000-8353/6918 $1,250,000 2743 S. Alma School Rd.
8000-7354/6928 $186,000 6608 E. Main St.
8000-8355/6903 $495,000 2120 Hwy 60/70
8000-8356/6910 $544,000 7450 W. Thomas Rd.
8000-8357/6913 $1,025,000 5049 W. Buckeye
8000-8358/6932 $1,000,000 4305 E. Ray Rd.
8000-8359/6908 $400,000 300 Hwy 70
8000-8360/7203 $1,300,000 Hwy 191
8000-8361/6904 $360,000 7630 E. McDowell Rd.
8000-8362/6909 $526,000 3301 N. Hayden Rd.
8000-8363/7223 $490,000 1981 E. Deuce of Clubs
8000-8364/7123 $590,000 379 S. Main
8000-8365/7219 $475,000 138 W. Main, Hwy 60
8000-8367/7224 $626,000 310 N. Main
8000-8368/6914 $1,000,000 7550 S. Rural Rd.
8000-8369/6902 $150,000 2946 W. Hwy 70
8000-8370/6921 $770,000 7366 N. Oracle Rd.
8000-8371/6922 $560,000 2100 W. Ruthrauff Rd.
8000-8372/6923 $710,000 1530 W. St. Mary's Rd.
8000-8373/6924 $745,000 761 W. Ajo
8000-8374/6925 $900,000 1202 W. Ajo
8000-8375/6926 $1,000,000 6500 S. 12th Ave.
8000-8376/6929 $880,000 9491 E. 22nd St.
8000-8377/6930 $926,000 2750 S. Kolb Rd.
8000-8378/6931 $885,000 3780 W. Magee Rd.
8000-8379/7320/7321 $1,150,000 Hwy 264, Tse Bontio, NM 87301
8000-8380/7405 $600,000 2201 Main St.
8000-8381/6063 $1,041,000 650 Buck Highway
8000-8382/7212 $264,000 1525 Greenwood
8000-8384/6064 $1,300,000 2320 E. Main
8000-8386/7260 $733,000 921 E. Main
8000-8391/7676 $704,000 805 Grand
8000-8392/7229 $150,000 501 Railroad Ave.
8000-8393/6059 $940,000 26223 US Highway 160
8000-8394/6060 $1,050,000 1991 Main Avenue
8000-8395/6061 $1,000,000 901 Camino Del Rio
8000-8396/7111 $440,000 20329 Hwy 160 West
8000-8397/7677 $450,000 605 First St.
8000-8398/6062 $725,000 635 San Juan
8000-8399/7675 $285,000 30483 US Hwy 160
8000-8400/7237 $255,000 1519 E. Main St.
8000-8401/7442 $219,000 3501 Isleta Blvd., SW
8000-8403/7446 $100,000 937 Isleta SW
8000-8404/7553 $450,000 2504 Broadway SE
8000-8405/7118 $600,000 2790 US Hwy 550
8000-8506/7197 $544,000 321 Main Ave.
8000-8408/7283 $455,000 1224 S. Main St.
8000-8409/7168 $290,000 118 Hwy 44 West
8000-8410/7293 $274,000 401 Hwy 44 N.
8000-8411/7210 $1,300,000 204 S. Bloomfield Blvd.
8000-8412/7214 $580,000 602 W. Broadway
8000-8413/7239 $605,000 Star Rte 4, Box 3000
8000-8415/7215 $360,000 Box 42 HCR 79
8000-8416/7244 $475,000 11260 NM Hwy 44, Nagezzi
8000-8417/7247 $400,000 HCR 79 Box 10
8000-8418/7183 $480,000 902 N. Riverside Dr.
8000-8420/7555 $472,000 286 S. Riverside
8000-8421/7278 $503,000 5th & Joseph
8000-8422/7127 $765,000 2603 E. 20th St.
8000-8423/7211 $468,000 2700 W. Main
8000-8424/7217 $830,000 8180 E. Main
8000-8425/7218 $726,000 5702 Hwy 64
8000-8426/7240 $505,000 3001 Bloomfield Hwy
8000-8427/7556 $400,000 1500 San Juan Blvd.
8000-8428/7204 $1,000,000 HCR 4, Box 20
8000-8429/7408 $401,986 3340 E. Hwy 66
8000-8430/7409 $302,000 3302 W. Hwy 66
8000-8431/7557 $151,000 800 E. Coal
8000-8432/7198 $356,000 4357 US Hwy 64
8000-8433/7295 $267,000 610 W. Hwy 66
8000-8434/7297 $800,000 5180 Hwy 68
8000-8435/7554 $414,000 832 Sierra Vista
8000-8436/7448 $341,000 113268 S. Santa Fe Rd.
8000-8437/7257 $705,000 Hwy 371
8000-8439/7310 $1,000,000 3890 US Hwy 64, Fruitland, NM
/TABLE
<PAGE>
<PAGE>
EXHIBIT C
(Form of Lease)
(Attached)
<PAGE>
<PAGE>
LEASE
THIS LEASE (this "Lease") is made as of
December , 1998 (the "Effective Date"), by and
between FFCA CAPITAL HOLDING CORPORATION, a Delaware
corporation ("Lessor"), whose address is 17207 North
Perimeter Drive, Scottsdale, Arizona 85255, and GIANT
INDUSTRIES ARIZONA, INC., an Arizona corporation ("Lessee"),
whose address is 23733 North Scottsdale Road, Scottsdale,
Arizona 85255.
W I T N E S S E T H :
THAT, in consideration of the mutual covenants and
agreements herein contained, Lessor and Lessee hereby
covenant and agree as follows:
1. Certain Defined Terms. The following terms
shall have the following meanings for all purposes of this
Lease:
"Adjustment Date" shall mean the second anniversary of
the Effective Date, and every second anniversary thereafter
during the Lease Term (including the extension period or
periods if Lessee exercises one or more of its options
pursuant to Section 28).
"Affiliate" means any Person which directly or
indirectly controls, is under common control with, or is
controlled by any other Person. For purposes of this
definition, "controls", "under common control with" and
"controlled by" means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management and policies of such person or entity,
whether through ownership of voting securities or otherwise.
"Base Annual Rental" means, as of the Effective Date,
an amount equal to $___________, as such Base Annual Rental
shall be adjusted from time to time as contemplated by
Section 4.
"Base Monthly Rental" means an amount equal to 1/12 of
the applicable Base Annual Rental.
"Code" means the United States Bankruptcy Code, 11
U.S.C. Sec. 101 et seq., as amended.
"De Minimis Amounts" shall mean, with respect to any
given level of Hazardous Materials or Regulated Substances,
that level or quantity of Hazardous Materials or Regulated
Substances in any form or combination of forms which does
not constitute a violation of any Environmental Laws and is
customarily employed in, or associated with, similar
businesses located in the state in which the Premises are
located.
"Environmental Insurer" means such environmental
insurance company as Lessor may select in its sole
discretion.
"Environmental Laws" means any present and future
federal, state and local laws, statutes, ordinances, rules,
regulations and the like, as well as common law, relating to
protection of human health or the environment, relating to
Hazardous Materials, Regulated Substances or USTs, relating
to liability for or costs of Remediation or prevention of
Releases or Threatened Releases or relating to liability for
or costs of other actual or threatened danger to human
health or the environment. "Environmental Laws" includes,
but is not limited to, the following statutes, as amended,
any successor thereto, and any regulations promulgated
pursuant thereto, and any state or local statutes,
ordinances, rules, regulations and the like addressing
similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and
Community Right-to-Know Act; the Hazardous Materials
Transportation Act; the Resource Conservation and Recovery
Act (including but not limited to Subtitle I relating to
underground storage tanks); the Solid Waste Disposal Act;
the Clean Water Act; the Clean Air Act; the Toxic Substances
Control Act; the Safe Drinking Water Act; the Occupational
Safety and Health Act; the Federal Water Pollution Control
Act; the Federal Insecticide, Fungicide and Rodenticide Act;
the Endangered Species Act; the National Environmental
Policy Act; and the River and Harbors Appropriation Act.
"Environmental Laws" also includes, but is not limited to,
any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as
well as common law: conditioning transfer of property upon a
negative declaration or other approval of a Governmental
Authority of the environmental condition of the property;
requiring notification or disclosure of Releases or
Threatened Releases or other environmental condition of the
Premises to any Governmental Authority or other person or
entity, whether or not in connection with transfer of title
to or interest in property; imposing conditions or
requirements in connection with permits or other
authorization for lawful activity; relating to nuisance,
trespass or other causes of action related to the Premises;
and relating to wrongful death, personal injury, or property
or other damage in connection with any physical condition or
use of the Premises.
"Environmental Policy" means the environmental
insurance policy issued by Environmental Insurer to Lessor
with respect to the Premises in connection with the
transaction contemplated by the Sale and Lease Agreement.
"Facility" means either a gasoline station or a
combination convenience store and gasoline station operated
under the Giant, Mustang, Conoco, Conoco Express, Thriftway,
Plateau, Gasman or Gasamat brands or a nationally recognized
oil brand or another brand approved by Lessor. Upon prior
written notice to Lessor, a portion of the Facility may be
operated by Lessee as a Franchisor Restaurant and/or
subleased to Sublessee pursuant to the Sublease for the
purpose of operating a business involving the retail sales
of food items (including a Franchisor Restaurant) or non-
food items, provided that no portion of the Premises or
Facility shall be operated by Sublessee as a gasoline
station or combination convenience store and gasoline
station without the prior written consent of Lessor.
"Franchise Finance" means Franchise Finance Corporation
of America, a Delaware corporation, and its successors.
"Franchisor" means the owner and holder of all of the
rights and privileges relative to the franchise rights
associated with a Franchisor Restaurant, including, without
limitation, all trade secrets, tradenames and trademarks
relative thereto.
"Franchisor Restaurant" means a regionally- or
nationally recognized franchise restaurant.
"Governmental Authority" means any governmental
authority, agency, department, commission, bureau, board,
instrumentality, court or quasi-governmental authority of
the United States, the states where the Premises is located
or any political subdivision thereof.
"Guarantor" means Giant Industries, Inc., a Delaware
corporation, and its successor.
"Guaranty" means that certain unconditional guaranty of
payment and performance dated as of the date of this Lease
executed by Guarantor.
"Hazardous Materials" means (i) any toxic substance or
hazardous waste, substance, solid waste or related material,
or any pollutant or contaminant; (ii) radon gas, asbestos in
any form which is or could become friable, urea formaldehyde
foam insulation, transformers or other equipment which
contains dielectric fluid containing levels of
polychlorinated biphenyls in excess of federal, state or
local safety guidelines, whichever are more stringent, or
any petroleum product; (iii) any substance, gas, material or
chemical which is or may be defined as or included in the
definition of "hazardous substances," "toxic substances,"
"hazardous materials," hazardous wastes" or words of similar
import under any Environmental Laws; and (iv) any other
chemical, material, gas or substance the exposure to or
release of which is or may be prohibited, limited or
regulated by any Governmental Authority or
quasi-governmental entity or authority that asserts or may
assert jurisdiction over the Premises or the operations or
activity at the Premises, or any chemical, material, gas or
substance that does or may pose a hazard to the health
and/or safety of the occupants of the Premises or the owners
and/or occupants of property adjacent to or surrounding the
Premises.
"Indemnified Parties" means Lessor and the directors,
officers, shareholders, partners, members, employees,
agents, servants, representatives, contractors,
subcontractors, affiliates, subsidiaries, participants,
successors and assigns of Lessor, including, but not limited
to, any successors by merger, consolidation or acquisition
of all or a substantial portion of Lessor's assets and
business.
"Lease Term" shall have the meaning described in
Section 3.
"Lease Year" means the 12-month period commencing on
January 1 and ending on December 31, and each successive
calendar year thereafter.
"Lessee Entities" means, collectively, Lessee and
Guarantor and any Affiliate of Lessee or Guarantor.
"Lessor Entities" means, individually or collectively,
Lessor, Franchise Finance and any Affiliate of Lessor or
Franchise Finance.
"Losses" means any and all claims, suits, liabilities
(including, without limitation, strict liabilities),
actions, proceedings, obligations, debts, damages, losses,
costs, expenses, diminutions in value, fines, penalties,
charges, fees, expenses, judgments, awards, amounts paid in
settlement and damages of whatever kind or nature
(including, without limitation, attorneys' fees and other
costs of defense).
"Minimum Purchase Price" means $______________.
"Other Agreements" means, collectively, all agreements
(including, without limitation, any equipment loan
agreement) and instruments between, among or by (1) any of
the Lessee Entities, and, or for the benefit of, (2) any of
the Lessor Entities, including, without limitation,
promissory notes, guaranties and leases, but excluding this
Lease.
"Person" means any individual, corporation,
partnership, limited liability company, trust,
unincorporated organization, Governmental Authority or any
other form of entity.
"Premises" means the parcel or parcels of real estate
legally described in Exhibit A attached hereto, all rights,
privileges and appurtenances associated therewith, and all
buildings, fixtures and other improvements now or hereafter
located thereon (whether or not affixed to such real
estate).
"Regulated Substances" means "petroleum" and
"petroleum-based substances" or any similar terms described
or defined in any Environmental Laws and any applicable
federal, state, county or local laws applicable to or
regulating USTs.
"Release" means any release, deposit, discharge,
emission, leaking, spilling, seeping, migrating, injecting,
pumping, pouring, emptying, escaping, dumping, disposing or
other movement of Hazardous Materials or Regulated
Substances.
"Remediation" means any response, remedial, removal, or
corrective action, any activity to cleanup, detoxify,
decontaminate, contain or otherwise remediate any Hazardous
Material or Regulated Substances, any actions to prevent,
cure or mitigate any Release, any action to comply with any
Environmental Laws or with any permits issued pursuant
thereto, any inspection, investigation, study, monitoring,
assessment, audit, sampling and testing, laboratory or other
analysis, or any evaluation relating to any Hazardous
Materials or Regulated Substances.
"Sale and Lease Agreement" means the Sale and Lease
Agreement dated of even date herewith by and among Lessor,
as buyer, and Giant Industries Arizona, Inc., an Arizona
corporation, and Giant Four Corners, Inc., an Arizona
corporation, as sellers, relative to the sale and purchase
of the Premises.
"Sublessee" means the lessee under the Sublease.
"Sublease" means a lease or sublease agreement between
Lessee, as sublessor, and Sublessee relative to the
subleasing of the Subleased Premises for the purposes
specifically permitted under this Lease, which Sublease
shall be subject, junior and subordinate at all times and
for all purposes to the terms and provisions of this Lease.
"Subleased Premises" means a portion of the Premises
that is subleased to Sublessee pursuant to the Sublease for
the purpose of operating a business involving the retail
sales of food items (including a Franchisor Restaurant) or
non-food items, provided that no portion of the Subleased
Premises shall be operated by Sublessee as a gasoline
station or combination convenience store and gasoline
station without the prior written consent of Lessor. The
Subleased Premises shall not constitute a significant
portion of the Premises.
"Threatened Release" means a substantial likelihood of
a Release which requires action to prevent or mitigate
damage to the soil, surface waters, groundwaters, land,
stream sediments, surface or subsurface strata, ambient air
or any other environmental medium comprising or surrounding
the Premises which may result from such Release.
"USTs" means any one or combination of tanks and
associated piping systems used in connection with the
storage, dispensing and general use of Regulated Substances.
2. Demise of Premises. In consideration of the
rentals and other sums to be paid by Lessee and of the other
terms, covenants and conditions on Lessee's part to be kept
and performed, Lessor hereby leases to Lessee, and Lessee
hereby takes and hires, the Premises.
3. Lease Term. The Lease Term shall commence as of
the Effective Date and shall expire on the day that is
fifteen (15) years after the Effective Date, unless
terminated sooner as provided in this Lease and as may be
extended for up to three (3) successive periods of five (5)
years each, as set forth in Section 28 below. The time
period during which this Lease shall actually be in effect
is referred to herein as the "Lease Term."
4. Rental and Other Payments. A. If the Effective
Date is a date other than the first day of the month, Lessee
shall pay Lessor on the Effective Date the Base Monthly
Rental prorated on the basis of the ratio that the number of
days from the Effective Date through the last day in the
month containing the Effective Date bears to the number of
days in such month. Thereafter, on or before the first day
of each succeeding calendar month, Lessee shall pay Lessor
in advance the Base Monthly Rental.
B. Commencing on the first Adjustment Date and on
each Adjustment Date thereafter, the Base Annual Rental
shall increase by an amount equal to the product of (i) the
Base Annual Rental then in effect, and (ii) Six Percent
(6.0%), which increases shall be compounded. The increased
Base Annual Rental shall constitute the Base Annual Rental
due and payable until the next Adjustment Date.
C. For any partial year between the commencement of
the Lease Term and the beginning of the next Lease Year and
the beginning of the last Lease Year and the end of the
Lease Term, calculation of the Base Annual Rental shall be
prorated on the basis of the ratio of the number of days in
such partial year to 365.
D. All sums of money required to be paid by Lessee
under this Lease which are not specifically referred to as
rent ("Additional Rental") shall be considered rent although
not specifically designated as such. Lessor shall have the
same remedies for nonpayment of Additional Rental as those
provided herein for the nonpayment of Base Annual Rental.
5. Representations and Warranties of Lessor.
Lessor represents and warrants to Lessee as follows:
A. Organization, Authority and Status of
Lessor. (i) Lessor has been duly organized and is
validly existing and in good standing under the laws
of the State of Delaware. All necessary corporate
action has been taken to authorize the execution,
delivery and performance by Lessor of this Lease and
the other documents, instruments and agreements
provided for herein. Lessor is not a "foreign
corporation" as such term is defined in the Internal
Revenue Code and the regulations promulgated
thereunder. Lessor's United States tax
identification number is 86-0908599.
(ii) The person who has executed this Lease
on behalf of Lessor is duly authorized so to do.
B. Enforceability. This Lease constitutes
the legal, valid and binding obligation of Lessor,
enforceable against Lessor in accordance with its
terms.
6. Representations and Warranties of Lessee. The
representations and warranties of Lessee contained in this
Section are being made to induce Lessor to enter into this
Lease and Lessor has relied, and will continue to rely, upon
such representations and warranties. Lessee represents and
warrants to Lessor as follows:
A. Organization, Authority and Status of
Lessee. (i) Lessee has been duly incorporated, is
validly existing and in good standing under the laws
of its state of incorporation, and is qualified as a
foreign corporation to do business in any
jurisdiction where such qualification is required.
All necessary corporate action has been taken to
authorize the execution, delivery and performance by
Lessee of this Lease and of the other documents,
instruments and agreements provided for herein.
Lessee is not a "foreign corporation", "foreign
partnership", "foreign trust" or "foreign estate", as
those terms are defined in the Internal Revenue Code
and the regulations promulgated thereunder. Lessee's
United States tax identification number is correctly
set forth on the signature page of this Lease.
(ii) The persons who have executed this
Lease on behalf of Lessee are duly authorized to do
so.
B. Enforceability. This Lease constitutes
the legal, valid and binding obligation of Lessee,
enforceable against Lessee in accordance with its
terms.
C. Litigation. There are no suits, actions,
proceedings or investigations pending, or, to the
best of its knowledge, threatened against or
involving Lessee before any court, arbitrator, or
administrative or governmental body which might
reasonably result in any material adverse change in
the contemplated business, condition, worth or
operations of Lessee or the Premises.
D. Absence of Breaches or Defaults. Lessee
is not, and the execution, delivery and performance
of this Lease and the documents, instruments and
agreements provided for herein will not result, in
any breach of or default under any other document,
instrument or agreement to which Lessee is a party or
by which Lessee, the Premises or any of Lessee's
property is subject or bound.
E. Franchisor Provisions. In the event
Lessee shall use a portion of the Premises for the
operation of a Franchisor Restaurant, Lessee has (as
of the Effective Date) entered into a franchise,
license and/or area development agreement with the
Franchisor associated with such Franchisor Restaurant
for conduct of the business at the Premises. Such
franchise, license and/or area development agreement
is valid, binding and in full force and effect,
permits Lessee to operate a Franchisor Restaurant on
a portion of the Premises.
F. Licenses and Permits. Lessee has
obtained (or caused to be obtained) all required
licenses and permits, both governmental and private,
to use and operate the Premises in the intended
manner, where the failure to so obtain such licenses
and permits might reasonably be expected to result in
a material adverse effect on Lessee or on the
Premises or on the business, operations, assets or
condition of the Premises.
G. Financial Condition; Information Provided
to Lessor. The financial statements, all financial
data and all other documents and information
heretofore delivered to Lessor by or with respect to
Lessee, Guarantor and/or the Premises in connection
with this Lease and/or relating to Lessee, Guarantor
and/or the Premises are true, correct and complete in
all material respects, and there have been no
amendments to such financial statements, financial
data and other documents and information since the
date such financial statements, financial data,
documents and other information were prepared or
delivered to Lessor, and no material adverse change
has occurred to any such financial statements,
financial data, documents and other information not
disclosed in writing to Lessor.
H. True Lease. Lessee intends for this
Lease to be a "true lease" and not a financing lease,
capital lease, mortgage, equitable mortgage, deed of
trust, trust agreement, security agreement or other
financing or trust arrangement, and the economic
realities of this Lease are those of a true lease.
The term of this Lease, including any term extensions
provided for in this Lease, is less than the
remaining economic life of the Premises. Lessee
waives any claim or defense based upon the
characterization of this Lease as anything other than
a true lease, and Lessee stipulates and agrees not to
challenge the validity, enforceability or
characterization of the lease of the Premises as a
true lease and further stipulates and agrees that
nothing contained in this Lease creates or is
intended to create a joint venture, partnership,
equitable mortgage, trust, financing device or
arrangement, security interest or the like. Lessee
shall support the intent of the parties that the
lease of the Premises pursuant to this Lease is a
true lease and does not create a joint venture,
partnership, equitable mortgage, trust, financing
device or arrangement, security interest or the like,
if, and to the extent that, any challenge occurs.
I. No Leases. Other than this Lease and, as
applicable, the Sublease, there are no leases,
subleases or use or occupancy agreements for the use
or occupancy of the Premises or any portion thereof.
7. Guaranty. On or before the execution of this
Lease, Lessee shall cause Guarantor to execute and deliver
to Lessor the Guaranty.
8. Rentals To Be Net to Lessor. The Base Annual
Rental payable hereunder shall be net to Lessor, so that
this Lease shall yield to Lessor the rentals specified
during the Lease Term, and that all costs, expenses and
obligations of every kind and nature whatsoever relating to
the Premises shall be performed and paid by Lessee.
9. Taxes and Assessments. Lessee shall pay, prior
to the earlier of delinquency or the accrual of interest on
the unpaid balance, all taxes and assessments of every type
or nature assessed against or imposed upon the Premises
during the Lease Term which affect in any manner the net
return realized by Lessor under this Lease, including
without limitation, the following:
A. All taxes and assessments upon the
Premises or any part thereof or and any personal
property, trade fixtures or any improvements located
on the Premises (including, without limitation, all
sales, use, transaction privilege and excise taxes
imposed as a result of the construction of the
Improvements), whether belonging to Lessor or Lessee,
or any tax or charge levied in lieu of such taxes and
assessments (excluding, however, the income taxes of
Lessor);
B. All taxes, charges, license fees and or
similar fees imposed by reason of the use of the
Premises by Lessee; and
C. All excise, transaction, privilege,
license, sales, use and other taxes upon the rental
or other payments hereunder, the leasehold estate of
either party or the activities of either party
pursuant to this Lease.
All taxing authorities shall be instructed to send all
tax and assessment invoices to Lessor. After recording the
information on such invoices, Lessor shall forward such
invoices to Lessee for payment. Within 30 days after each
tax and assessment payment is required by this Section to be
paid, Lessee shall provide Lessor with evidence satisfactory
to Lessor that such payment was made in a timely fashion.
Lessee may in good faith seek a refund, rebate or abatement
of any tax levied in connection with the Premises but only
if Lessor has approved of the arrangements for paying such
tax prior to it becoming a lien on the Premises.
10. Utilities. Lessee shall contract, in its own
name, for and pay when due all charges for the connection
and use of water, gas, electricity, telephone, garbage
collection, sewer use and other utility services supplied to
the Premises during the Lease Term. Under no circumstances
shall Lessor be responsible for any interruption of any
utility service.
11. Insurance. Throughout the Lease Term, Lessee
shall maintain at its sole expense the following types and
amounts of insurance (which may be included under a blanket
insurance policy if all the other terms hereof are
satisfied), in addition to such other insurance as Lessor
may reasonably require from time to time:
A. "All risks" property insurance against
loss, damage or destruction by fire and other
casualty, including theft, vandalism and malicious
mischief, flood (if the Premises are in a location
designated by the Federal Secretary of Housing and
Urban Development as a flood hazard area), earthquake
(if the Premises are in an area subject to
destructive earthquakes within recorded history),
boiler explosion (if there is any boiler upon the
Premises), plate glass breakage, sprinkler damage (if
the Premises have a sprinkler system), all matters
covered by a standard extended coverage endorsement
and such other risks as Lessor may reasonably
require, insuring the Premises and all improvements
thereon for not less than 100% of their full
insurable replacement cost.
B. Comprehensive general liability and
property damage insurance, including a products
liability clause, covering Lessor, Franchise Finance
and Lessee against bodily injury liability, property
damage liability and automobile bodily injury and
property damage liability, including without
limitation any liability arising out of the
ownership, maintenance, repair, condition or
operation of the Premises or adjoining ways, streets
or sidewalks and, if applicable, insurance covering
Lessor, Franchise Finance and Lessee against
liability arising from the sale of liquor, beer or
wine on the Premises. Such insurance policy or
policies shall contain a broad form contractual
liability endorsement under which the insurer agrees
to insure Lessee's obligations under Section 18
hereof to the extent insurable, and a "severability
of interest" clause or endorsement which precludes
the insurer from denying the claim of either Lessee,
Franchise Finance or Lessor because of the negligence
or other acts of the other, shall be in amounts of
not less than $1,000,000.00 per injury and occurrence
with respect to any insured liability, whether for
personal injury or property damage, or such higher
limits as Lessor may reasonably require from time to
time, and shall be of form and substance satisfactory
to Lessor.
C. State Worker's Compensation insurance in
the statutorily mandated limits, employer's liability
insurance with limits not less than $500,000 or such
greater amount as Lessor may from time to time
require and such other insurance as may be necessary
to comply with applicable laws.
D. Business interruption insurance equal to
100% of the Base Annual Rental then in effect for a
period of not less than 12 months.
All insurance policies shall:
(i) Provide for a waiver of subrogation
by the insurer as to claims against Lessor
and Franchise Finance, their employees and
agents;
(ii) Provide that such insurance cannot
be unreasonably cancelled, invalidated or
suspended on account of the conduct of
Lessee, its officers, directors, employees or
agents;
(iii) Provide that any "no other
insurance" clause in the insurance policy
shall exclude any policies of insurance
maintained by Lessor or Franchise Finance and
that the insurance policy shall not be
brought into contribution with insurance
maintained by Lessor or Franchise Finance;
(iv) Contain a standard without
contribution mortgage clause endorsement in
favor of any lender designated by Lessor and
Franchise Finance;
(v) Provide that the policy of insurance
shall not be terminated, cancelled or
substantially modified without at least 30
days' prior written notice to Lessor and
Franchise Finance and to any lender covered
by any standard mortgage clause endorsement;
(vi) Provide that the insurer shall not
have the option to restore the Premises if
Lessor elects to terminate this Lease in
accordance with the terms hereof; and
(vii) Be issued by insurance companies
licensed to do business in the state in which
the Premises is located and which are rated
A:VI or better by Best's Insurance Guide or
are otherwise approved by Lessor.
It is expressly understood and agreed that the
foregoing minimum limits of insurance coverage shall not
limit the liability of Lessee for its acts or omissions as
provided in this Lease. All insurance policies (with the
exception of worker's compensation insurance to the extent
not available under statutory law) shall designate Lessor
and Franchise Finance and any mortgagee of Lessor and
Franchise Finance as additional insureds as their interests
may appear and shall be payable as set forth in Section 20
hereof. All such policies shall be written as primary
policies, with deductibles not to exceed 10% of the amount
of coverage. Any other policies, including any policy now
or hereafter carried by Lessor or Franchise Finance, shall
serve as excess coverage. Lessee shall procure policies for
all insurance for periods of not less than one year and
shall provide to Lessor and Franchise Finance and any lender
designated by Lessor and Franchise Finance certificates of
insurance or, upon Lessor's request, duplicate originals of
insurance policies evidencing that insurance satisfying the
requirements of this Lease is in effect at all times.
12. Tax and Insurance Impound. Upon the occurrence
of a default under this Lease by Lessee, Lessor may require
Lessee to pay to Lessor sums which will provide an impound
account (which shall not be deemed a trust fund) for paying
up to the next one year of taxes, assessments and/or
insurance premiums. Upon such requirement, Lessor will
estimate the amounts needed for such purposes and will
notify Lessee to pay the same to Lessor in equal monthly
installments, as nearly as practicable, in addition to all
other sums due under this Lease. Should additional funds be
required at any time, Lessee shall pay the same to Lessor on
demand. Lessee shall advise Lessor of all taxes and
insurance bills which are due and shall cooperate fully with
Lessor in assuring that the same are paid. Lessor may
deposit all impounded funds in accounts insured by any
Federal or State agency and may commingle such funds with
other funds and accounts of Lessor. Interest or other gains
from such funds, if any, shall be the sole property of
Lessor. In the event of any default by Lessee, Lessor may
apply all impounded funds against any sums due from Lessee
to Lessor. Lessor shall give to Lessee an annual accounting
showing all credits and debits to and from such impounded
funds received from Lessee.
In the event Lessee is required under this Section
12 to pay impounds to Lessor, and provided no default shall
have occurred under this Lease (other than the default
hereunder that gave rise to Lessee's duty to pay impounds to
Lessor under this Section 12, which default Lessee shall
cure in the exercise of reasonably diligent good faith
efforts), and subject to Lessor's unconditional right to
apply all impounded funds against any sums due from Lessee
to Lessor under this Lease and further subject to Lessee's
duty (under the terms of Section 12 hereof) to pay such
additional funds as may be required at any time by Lessor,
Lessee shall not be deemed to be in default under this Lease
and Lessee shall not be responsible for payment of fines,
penalties or late charges assessed for Lessor's failure to
pay taxes, assessments and/or insurance premiums in a timely
manner.
13. Payment of Rental and Other Sums. All rental
and other sums which Lessee is required to pay hereunder
shall be the unconditional obligation of Lessee and shall be
payable in full when due without any setoff, abatement,
deferment, deduction or counterclaim whatsoever. Upon
execution of this Lease, Lessee shall establish arrangements
whereby payments of the Base Monthly Rental and impound
payments, if any, are transferred by wire or other means
directly from Lessee's bank account to such account as
Lessor may designate. Any delinquent payment (that is, any
payment not made within five calendar days after the date
when due) shall, in addition to any other remedy of Lessor,
incur a late charge of 10% (which late charge is intended to
compensate Lessor for the cost of handling and processing
such delinquent payment and should not be considered
interest) and bear interest at the rate of 18% per annum,
which interest rate shall accrue from the date such payment
was due, but in no event shall Lessee be obligated to pay a
sum of late charge and interest higher than the maximum
legal rate then in effect (the "Default Rate").
14. Use. A. Lessee shall use the Premises solely
for the operation of either a gasoline station or a
combination convenience store and gasoline station operated
under the Giant, Mustang, Conoco, Conoco Express, Thriftway,
Plateau, Gasman or Gasamat brands or a nationally recognized
oil brand or another brand approved by Lessor, and Lessee
may (upon prior written notice to Lessor) use a portion of
the Premises for the operation of a Franchisor Restaurant in
accordance with the terms of a franchise, license and/or
area development agreement between Lessee and the Franchisor
associated with such Franchisor Restaurant, and for no other
purpose. Lessee may (upon prior written notice to Lessor)
sublease to Sublessee pursuant to the Sublease the Subleased
Premises for the purpose of operating a business involving
the retail sales of food items (including a Franchisor
Restaurant) or non-food items, provided that no portion of
the Premises, the Facility or the Subleased Premises shall
be operated by Sublessee as a gasoline station or
combination convenience store and gasoline station (and
further provided that the Subleased Premises shall not
constitute a significant portion of the Premises, which
determination shall be made by Lessor in Lessor's reasonable
judgment) without the prior written consent of Lessor, which
consent shall not be unreasonably withheld. Lessee shall
occupy the Premises promptly following the Effective Date
and, except as set forth below, Lessee shall at all times
during the Lease Term diligently operate its business on the
Premises. Lessee may cease diligent operation of business
for a period not to exceed 90 days and may do so only once
within any five-year period during the Lease Term. If
Lessee does discontinue operation pursuant to this Section,
or, as applicable, if Sublessee discontinues operation at
the Subleased Premises, Lessee shall (i) give written notice
to Lessor 60 days prior to the day Lessee or, as applicable,
Sublessee, ceases operation, (ii) provide adequate
protection and maintenance of the Premises (including, as
applicable, the Subleased Premises) during any period of
vacancy and (iii) pay all costs necessary to restore the
Premises (including, as applicable, the Subleased Premises)
to their condition on the day operation of the business
ceased at such time as the Premises (including, as
applicable, the Subleased Premises) is reopened for Lessee's
or, as applicable, Sublessee's, business operations or other
substituted use approved by Lessor as contemplated below.
Notwithstanding anything herein to the contrary, Lessee
shall continue to pay Base Annual Rental and Base Monthly
Rental during any period in which Lessee or, as applicable,
Sublessee, discontinues operation as provided in this Lease.
B. Lessee shall not, by itself or through any
assignment, sublease or other type of transfer, convert the
Premises to an alternative use during the Lease Term without
Lessor's consent, which consent shall not be unreasonably
withheld. Lessor may consider any or all of the following
in determining whether to grant its consent, without being
deemed to be unreasonable: (i) whether the rental paid to
Lessor would be equal to or greater than the anticipated
rental assuming continued existing use, (ii) whether the
proposed rental to be paid to Lessor is reasonable
considering the converted use of the Premises and the
customary rental prevailing in the community for such use,
(iii) whether the converted use will be consistent with the
highest and best use of the Premises, and (iv) whether the
converted use will increase Lessor's risks or decrease the
value of the Premises.
15. Compliance with Laws, Restrictions, Covenants
and Encumbrances. A. Lessee's use and occupancy of the
Premises and, to the extent applicable, Sublessee's use and
occupancy of the Subleased Premises, and the condition
thereof, shall, at Lessee's sole cost and expense, comply
fully with (i) all applicable statutes, regulations, rules,
ordinances, codes, licenses, permits, orders and approvals
of any governmental agencies, departments, commissions,
bureaus, boards or instrumentalities of the United States,
the state in which the Premises are located and all
political subdivisions thereof, including, without
limitation, all health, building, fire, safety and other
codes, ordinances and requirements and all applicable
standards of the National Board of Fire Underwriters, and
(ii) all restrictions, covenants and encumbrances of record
with respect to the Premises.
B. Lessee will not permit any act or condition to
exist on or about the Premises which will increase any
insurance rate thereon, except when such acts are required
in the normal course of its business and Lessee shall pay
for such increase.
C. Without limiting the generality of the other
provisions of this Section, Lessee agrees that it shall be
responsible for complying in all respects with the Americans
with Disabilities Act of 1990, as such act may be amended
from time to time, and all regulations promulgated
thereunder (collectively, the "ADA"), as it affects the
Premises, including, but not limited to, making such
"readily achievable" changes to remove any architectural or
communications barriers, and providing auxiliary aides and
services within the Premises as may be required by the ADA.
Lessee further agrees that any and all alterations made to
the Premises during the Lease Term will comply with the
requirements of the ADA. All plans for alterations which
must be submitted to Lessor under the provisions of
Section 17 must include a statement from a licensed
Architect or Engineer certifying that they have reviewed the
plans, and that the plans comply with all applicable
provisions of the ADA. Any subsequent approval or consent
to the plans by the Lessor shall not be deemed to be a
representation of Lessor's part that the plans comply with
the ADA, which obligation shall remain with Lessee. Lessee
agrees that it will defend, indemnify and hold harmless
Lessor and Lessor's shareholders, directors, officers,
agents, attorneys and employees from and against any and all
claims, demands, causes of action, suits, proceedings,
liabilities, damages (including consequential and punitive
damages), losses, costs and expenses, including attorneys'
fees, caused by, incurred or resulting from Lessee's failure
to comply with its obligations under this Section.
D. To the best of Lessee's knowledge, the Premises
and Lessee and, to the extent applicable, Sublessee are not
in violation of or subject to any existing, pending or
threatened investigation or inquiry by any Governmental
Authority or to any remedial obligations under any
Environmental Laws, and this representation and warranty
would continue to be true and correct following disclosure
to the applicable Governmental Authority of all relevant
facts, conditions and circumstances, if any, pertaining to
the Premises. If any such investigation or inquiry is
subsequently initiated, Lessee will promptly notify Lessor.
E. Lessee has not obtained and is not required to
obtain any permits, licenses or similar authorizations to
construct, occupy, operate or use any buildings,
improvements, fixtures and equipment forming a part of the
Premises by reason of any Environmental Laws, except as
disclosed in writing to Lessor prior to the Effective Date.
F. Lessee has taken all reasonable steps to
determine and has determined to its reasonable satisfaction
that (i) no Hazardous Materials or Regulated Substances have
been disposed of or otherwise Released on or about the
Premises, (ii) the Premises does not contain Hazardous
Materials or Regulated Substances, except in De Minimis
Amounts; the Premises does not contain any USTs, except in
full compliance with all applicable laws, including, without
limitation, all Environmental Laws; (iii) there is no
Threatened Release; (iv) there is no past or present non-
compliance with Environmental Laws, or with permits issued
pursuant thereto, in connection with the Premises; (v)
Lessee does not know of, and has not received, any written
or oral notice or other communication from any person or
entity (including but not limited to a governmental entity)
relating to Hazardous Materials, Regulated Substances or
USTs or Remediation thereof, of possible liability of any
person or entity pursuant to any Environmental Law, other
environmental conditions in connection with the Premises, or
any actual or potential administrative or judicial
proceedings in connection with any of the foregoing; and
(vi) Lessee has truthfully and fully provided to Lessor, in
writing, any and all information relating to environmental
conditions in, on, under or from the Premises that is known
to Lessee and that is contained in Lessee's files and
records, including but not limited to any reports relating
to Hazardous Materials, Regulated Substances or USTs in, on,
under or from the Premises.
G. (1) Lessee covenants and agrees that:
(i) all uses and operations on or of the
Premises, whether by Lessee or any other person or
entity, shall be in compliance with all Environmental
Laws and permits issued pursuant thereto;
(ii) any Release or Threatened Release in, on,
under or from the Premises will be cured or corrected
by Lessee by Remediation and remediated by Lessee in
compliance with all applicable laws, including,
without limitation, all Environmental Laws, within 30
days of Lessee learning of, or discovering, such
Release or Threatened Release (provided that if such
cure, correction or remediation cannot reasonably be
cured within such 30-day period, and further provided
(A) such Release or Threatened Release does not place
any rights or property of Lessor in immediate
jeopardy, and (B) Lessee is diligently pursuing a
cure, correction and/or remediation, all as
determined by Lessor in its reasonable discretion,
then Lessee shall have such additional reasonable
period of time to cure, correct or remediate such
Release or Threatened Release, which additional
period of time shall in no event exceed 90 days after
Lessee learns of, or discovers, such Release or
Threatened Release);
(iii) there shall be no Hazardous Materials or
Regulated Substances in, on, or under the Premises,
except in De Minimis Amounts, and there shall be no
USTs in, on or under the Premises, except in full
compliance with all applicable laws, including,
without limitation, all Environmental Laws;
(iv) Lessee shall keep the Premises free and
clear of all liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any
act or omission of Lessee or any other person or
entity (the "Environmental Liens");
(v) Lessee shall, at its sole cost and expense,
fully and expeditiously cooperate in all activities
pursuant to this Section 15, including but not
limited to providing all relevant information and
making knowledgeable persons available for
interviews;
(vi) Lessee shall, at its sole cost and expense,
perform any environmental site assessment or other
investigation of environmental conditions in
connection with the Premises, pursuant to any
reasonable written request of Lessor (including but
not limited to sampling, testing and analysis of
soil, water, air, building materials and other
materials and substances whether solid, liquid or
gas) in the event that:
(A) Lessor shall have a
reasonable basis for believing
that (aa) a Release may have
occurred in, on or under the
Premises, or (bb) a Threatened
Release may occur, or (cc)
Lessee or the Premises may be
in violation of any
Environmental Laws, or
(B) an Event of Default
shall have occurred hereunder
(after the expiration of any
applicable cure or grace
period), or
(C) Lessor shall require
such environmental site
assessment or other
investigation during the last
two (2) Lease Years of the
Lease Term, or any portion
thereof, in connection with
Lessor's efforts to obtain an
extension of the term of the
insurance coverage provided by
the Environmental Policy, or
(D) any third party
requires or requests such
environmental site assessment
or other investigation,
including, without limitation,
any Governmental Authority,
court of competent
jurisdiction, Environmental
Insurer, investor involved in
any sale, disposition,
transfer or assignment of the
Premises or this Lease by
Lessor, any rating agency
and/or any of Lessor's
lenders, investment bankers,
or analysts relating to the
status as a real estate
investment trust of any of the
Lessor Entities.
Lessee shall share with Lessor (and Environmental Insurer if
requested by Lessor) the reports and other results from any
such environmental site assessment or other investigation,
and Lessor and other Indemnified Parties (including
Environmental Insurer) shall be entitled to rely on such
reports and other results therefrom.
(vii) Lessee shall, at its sole cost and
expense, comply with all reasonable written requests
of Lessor to (1) reasonably effectuate Remediation of
any condition (including but not limited to a Release
or Threatened Release) in, on, under or from the
Premises, provided Lessor shall have a reasonable
basis for believing that a Release may have occurred
in, on or under the Premises or if Lessor shall have
a reasonable basis to believe that Remediation of any
condition is required by applicable law, including,
without limitation, Environmental Laws or that a
Threatened Release may occur or that Lessee or the
Premises may be in violation of any Environmental
Laws; (2) comply with any Environmental Law; (3)
comply with any directive from any Governmental
Authority; and (4) take any other reasonable action
necessary or appropriate for protection of human
health or the environment;
(viii) Lessee shall not do or allow any tenant
or other user of the Premises to do any act that
materially increases the dangers to human health or
the environment, poses an unreasonable risk of harm
to any person or entity (whether on or off the
Premises), impairs or may impair the value of the
Premises, is contrary to any requirement of any
insurer, constitutes a public or private nuisance,
constitutes waste, or violates any covenant,
condition, agreement or easement applicable to the
Premises; and
(ix) Lessee shall, immediately upon learning of
or discovering the existence or occurrence of any of
the following matters or events, notify Lessor in
writing of (A) any Releases or Threatened Releases
in, on, under, from or migrating towards the
Premises; (B) any non-compliance with any
Environmental Laws related in any way to the
Premises; (C) any actual or potential Environmental
Lien; (D) any required or proposed Remediation of
environmental conditions relating to the Premises;
and (E) any written or oral notice or other
communication which Lessee becomes aware from any
source whatsoever (including but not limited to a
governmental entity) relating in any way to Hazardous
Materials, Regulated Substances or USTs or
Remediation thereof, possible liability of any person
or entity pursuant to any Environmental Law, other
environmental conditions in connection with the
Premises, or any actual or potential administrative
or judicial proceedings in connection with anything
referred to in this Section.
(2) In all circumstances other than the circumstances
set forth in the preceding subparagraph 15.G(1), Lessor and
any other person or entity designated by Lessor, including
but not limited to, any receiver, any representative of a
governmental entity, and any environmental consultant, shall
have the right, but not the obligation, to enter upon the
Premises at all reasonable times and upon no less than
twenty-four (24) hours prior written notice to Lessee
(except in cases of emergencies, in which case no prior
notice to Lessee is required) to assess any and all aspects
of the environmental condition of the Premises and its use,
including but not limited to conducting any environmental
assessment or audit (the scope of which shall be determined
in Lessor's sole and absolute discretion) and taking samples
of soil, groundwater or other water, air, or building
materials, and conducting other invasive testing. Lessee
shall cooperate with and provide access to Lessor and any
person or entity designated by Lessor. Any such assessment
or investigation performed pursuant to this subparagraph
15.G(2) shall be at Lessor's sole cost and expense, and
Lessor shall use good faith reasonable efforts to minimize
the impact of such assessments and investigations on
Lessee's business activities at the Premises.
H. Lessee shall, at its sole cost and expense,
protect, defend, indemnify, release and hold harmless the
Indemnified Parties from and against any and all Losses
(excluding Losses arising out of Lessor's gross negligence
or wilful misconduct) and costs of Remediation (whether or
not performed voluntarily), engineers' fees, environmental
consultants' fees, and costs of investigation (including but
not limited to sampling, testing, and analysis of soil,
water, air, building materials and other materials and
substances whether solid, liquid or gas) imposed upon or
incurred by or asserted against any Indemnified Parties, and
directly or indirectly arising out of or in any way relating
to any one or more of the following: (i) any presence of any
Hazardous Materials, Regulated Substances or USTs in, on,
above, or under the Premises; (ii) any past, present or
threatened Release in, on, above, under or from the
Premises; (iii) any activity by Lessee, any person or entity
affiliated with Lessee or any tenant or other user of the
Premises in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence,
disposition or other Release, generation, production,
manufacturing, processing, refining, control, management,
abatement, removal, handling, transfer or transportation to
or from the Premises of any Hazardous Materials or Regulated
Substances, or in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence,
disposition or other Release, control, management,
abatement, removal, handling, transfer or transportation to
or from the Premises of any USTs at any time located in,
under, on or above the Premises; (iv) any activity by
Lessee, any person or entity affiliated with Lessee or any
tenant or other user of the Premises in connection with any
actual or proposed Remediation of any Hazardous Materials or
Regulated Substances at any time located in, under, on or
above the Premises, whether or not such Remediation is
voluntary or pursuant to court or administrative order,
including but not limited to any removal, remedial or
corrective action; (v) any past, present or threatened non-
compliance or violations of any Environmental Laws (or
permits issued pursuant to any Environmental Law) in
connection with the Premises or operations thereon,
including but not limited to any failure by Lessee, any
person or entity affiliated with Lessee or any tenant or
other user of the Premises to comply with any order of any
Governmental Authority in connection with any Environmental
Laws; (vi) the imposition, recording or filing or the
threatened imposition, recording or filing of any
Environmental Lien encumbering the Premises; (vii) any
administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed
in this Section; (viii) any past, present or threatened
injury to, destruction of or loss of natural resources in
any way connected with the Premises, including but not
limited to costs to investigate and assess such injury,
destruction or loss; (ix) any acts of Lessee or other users
of the Premises in arranging for disposal or treatment, or
arranging with a transporter for transport for disposal or
treatment, of Hazardous Materials or Regulated Substances
owned or possessed by such Lessee or other users, at any
facility or incineration vessel owned or operated by another
person or entity and containing such or similar Hazardous
Materials or Regulated Substances; (x) any acts of Lessee or
other users of the Premises, in accepting any Hazardous
Materials or Regulated Substances for transport to disposal
or treatment facilities, incineration vessels or sites
selected by Lessee or such other users, from which there is
a Release, or a threatened Release of any Hazardous Material
or Regulated Substance which causes the incurrence of costs
for Remediation; (xi) any personal injury, wrongful death,
or property damage arising under any statutory or common law
or tort law theory, including but not limited to damages
assessed for the maintenance of a private or public nuisance
or for the conducting of an abnormally dangerous activity on
or near the Premises; and (xii) any misrepresentation or
inaccuracy in any representation or warranty or material
breach or failure to perform any covenants or other
obligations pursuant to this Section.
I. At its sole cost and expense, Lessee shall have
the Premises inspected as may be required by any
Environmental Law for seepage, spillage and other
environmental concerns. Lessee shall maintain and monitor
the USTs in accordance with all Environmental Laws. Lessee
shall provide Lessor with written certified results of all
inspections performed on the Premises. All costs and
expenses associated with the inspection, preparation and
certification of results, as well as those associated with
any corrective action, shall be paid by Lessee. All
inspections and tests performed on the Premises shall be in
compliance with all Environmental Laws.
J. Lessee shall comply or cause the compliance with
all applicable federal, state and local regulations and
requirements regarding USTs including, without limitation,
any of such regulations or requirements which impose
(i) technical standards, including, without limitation,
performance, leak prevention, leak detection, notification
reporting and record keeping, (ii) corrective action with
respect to confirmed and suspected Releases, and
(iii) financial responsibility for the payment of costs of
corrective action and compensation to third parties for
injury and damage resulting from Releases. Lessee shall
immediately notify Lessor, in writing, of (i) any Release or
Threatened Release, the presence on or under the Premises of
any Hazardous Materials or Regulated Substances in violation
of any applicable laws, including, without limitation, any
Environmental Laws, or the escape, seepage, leakage,
spillage, discharge, emission or release from any USTs on,
above or under the Premises, of any Hazardous Materials or
Regulated Substances, apparent or real and (ii) any and all
enforcement, clean-up, remedial, removal or other
governmental or regulatory actions threatened, instituted or
completed pursuant to any of the Environmental Laws
affecting the Premises.
K. Upon any such Release, escape, seepage, leakage,
spillage, discharge, emission or release from any USTs on,
above or under the Premises of any Hazardous Materials or
Regulated Substances, Lessee shall immediately remedy such
situation in accordance with all Environmental Laws and any
request of Lessor. Should Lessee fail to remedy or cause
the remedy of such situation in accordance with all
Environmental Laws, Lessor shall be permitted to take such
actions in its sole discretion to remedy such situation and
any reasonable costs and expenses incurred in connection
therewith will be paid by Lessee.
L. The obligations of Lessee and the rights and
remedies of Lessor set forth in this Section are independent
from those of Lessee. Furthermore, such obligations of
Lessee and rights and remedies of Lessor shall survive the
termination, expiration and/or release of this Lease.
M. In addition to the other requirements of this
Section, Lessee shall, at all times throughout the Lease
Term, comply, and cause Guarantor and, as applicable,
Sublessee to comply, with all federal, state or local
statutes, laws, rules, regulations, ordinances, codes,
policies or rules of common law now or hereafter in effect
and in each case, as amended, and any judicial or
administrative interpretation thereof, including any
judicial order, consent, decree or judgment, applicable to
Lessee and Guarantor and, as applicable, Sublessee.
16. Condition of Premises; Maintenance. Lessee has
inspected, or had the opportunity to inspect, the Premises
and hereby accepts the Premises "AS IS" and "WHERE IS" with
no representation or warranty of Lessor as to the condition
thereof. The Premises shall be kept in good, clean,
sanitary and working condition; and Lessee shall at all
times at its own expense maintain, repair and replace, as
necessary, the Premises, including all portions of the
Premises, whether or not the Premises were in such condition
on the Effective Date.
17. Waste; Alterations and Improvements. Lessee
shall not commit actual or constructive waste upon the
Premises. Lessee shall not alter (or permit to be altered)
the exterior, structural, plumbing or electrical elements of
the Premises in any manner without the consent of Lessor,
which consent shall not be unreasonably withheld or
conditioned; provided, however, Lessee may undertake
nonstructural alterations to the Premises costing less than
$100,000.00 without Lessor's consent. If Lessor consents to
the making of any such alterations, the same shall be made
by Lessee at Lessee's sole expense by a licensed contractor
and according to plans and specifications approved by Lessor
and subject to such other conditions as Lessor shall
require. Any work at any time commenced by Lessee on the
Premises shall be prosecuted diligently to completion, shall
be of good workmanship and materials and shall comply fully
with all the terms of this Lease. Upon completion of any
alterations, Lessee shall promptly provide Lessor with
(i) evidence of full payment to all laborers and materialmen
contributing to the alterations, (ii) an architect's
certificate certifying the alterations to have been
completed in conformity with the plans and specifications,
(iii) a certificate of occupancy, and (iv) any other
documents or information reasonably requested by Lessor.
Lessee shall execute and file or record, as appropriate, a
"Notice of Non-Responsibility," or any equivalent notice
permitted under applicable law in the state where the
Premises is located. Any addition to or alteration of the
Premises shall be deemed a part of the Premises and belong
to Lessor, and Lessee shall execute and deliver to Lessor
such instruments as Lessor may require to evidence the
ownership by Lessor of such addition or alteration.
18. Indemnification. Except for the gross
negligence or willful misconduct of Lessor, Lessee shall
indemnify, protect, defend and hold harmless Lessor and
Lessor's shareholders, directors, officers, lenders, agents,
lenders, attorneys and employees from and against any and
all claims, demands, causes of action, suits, proceedings,
liabilities, damages (including consequential and punitive
damages), losses, costs and expenses, including Lessor's
attorneys' fees, caused by, incurred or resulting from its
operations of or relating in any manner to the Premises,
whether relating to their original design or construction,
latent defects, alteration, maintenance, use by Lessee or
any person thereon, supervision or otherwise, or from any
breach of, default under or failure to perform any term or
provision of this agreement by Lessee, its officers,
employees, agents or other persons. It is expressly
understood and agreed that Lessee's obligations under this
Section shall survive the expiration or earlier termination
of this Lease for any reason.
19. Quiet Enjoyment. So long as Lessee shall pay
the rental and other sums herein provided and shall keep and
perform all of the terms, covenants and conditions on its
part herein contained, Lessee shall have, subject and
subordinate to Lessor's rights herein, the right to the
peaceful and quiet occupancy of the Premises.
20. Condemnation or Destruction. A. In case of a
taking of all or any part of the Premises or the
commencement of any proceedings or negotiations which might
result in a taking for any public or quasi-public purpose by
any lawful power or authority by exercise of the right of
condemnation or eminent domain or by agreement between
Lessor, Lessee and those authorized to exercise such right
("Taking"), Lessee will promptly give written notice thereof
to Lessor, generally describing the nature and extent of
such Taking and including copies of any documents or notices
received in connection therewith.
B. In case of a Taking of the whole of the
Premises, other than for temporary use ("Total Taking"),
this Lease shall terminate as of the date of such Total
Taking and all rentals, sums of money and other charges
provided to be paid by Lessee shall be apportioned and paid
to the date of such Total Taking. Total Taking shall
include a taking of substantially all the Premises if, in
the sole determination of Lessor, the remainder of the
Premises is not useable and cannot be made useable for the
purposes provided herein. Lessor shall be entitled to
receive the entire award or payment in connection with any
taking of the Premises without deduction for any estate
vested in Lessee by this Lease. Lessee hereby expressly
assigns to Lessor all of its right, title and interest in
and to every such award or payment and agrees that Lessee
shall not be entitled to any award or payment for the value
of Lessee's leasehold interest in the Lease. Lessee shall
be entitled to claim and receive any award or payment from
the condemning authority expressly granted for the taking of
Lessee's personal property, the interruption of its business
and moving expenses, but only if such claim or award does
not adversely affect or interfere with the prosecution of
Lessor's claim for the Taking. Lessee shall promptly send
Lessor copies of all correspondence and pleadings relating
to any such claim.
C. In case of a temporary use of all or any part of
the Premises by a Taking ("Temporary Taking"), this Lease
shall remain in full force and effect without any reduction
of Base Annual Rental, Additional Rental or any other sum
payable hereunder. Except as provided below, Lessee shall
be entitled to the entire award for a Temporary Taking,
whether paid by damages, rent or otherwise, unless the
period of occupation and use by the condemning authorities
shall extend beyond the date of expiration of this Lease, in
which case the award made for such Taking shall be
apportioned between Lessor and Lessee as of the date of such
expiration. At the termination of any such Temporary
Taking, Lessee will, at its own cost and expense and
pursuant to the terms of Section 17 above, promptly commence
and complete the restoration of the Premises; provided,
however, Lessee shall not be required to restore the
Premises if the term of this Lease shall expire prior to, or
within one year after, the date of termination of the
Temporary Taking, and in such event Lessor shall be entitled
to recover all damages and awards arising out of the failure
of the condemning authority to repair and restore the
Premises at the expiration of such Temporary Taking.
D. In the event of a Taking of less than all of the
Premises for other than a temporary use ("Partial Taking")
or of damage or destruction to all or any part of the
Premises, all awards, compensation or damages shall be paid
to Lessor, and Lessor shall have the option to (i) terminate
this Lease by notifying Lessee within 60 days after Lessee
gives Lessor notice of such damage or destruction or that
title has vested in the taking authority or (ii) continue
this Lease in effect, which election may be evidenced by
either a notice from Lessor to Lessee or Lessor's failure to
notify Lessee that Lessor has elected to terminate this
Lease within such 60-day period. Lessee shall have a period
of 60 days after Lessor's notice that it has elected to
terminate this Lease during which to elect to continue this
Lease on the terms herein provided. If Lessee does not
elect to continue this Lease or shall fail during such
60-day period to notify Lessor of Lessee's intent to
continue this Lease, then this Lease shall terminate as of
the last day of the month during which such period expired.
Lessee shall then immediately vacate and surrender the
Premises, all obligations of either party hereunder shall
cease as of the date of termination (provided, however,
Lessee's obligations to Lessor under Section 18 and Lessee's
obligations to pay Base Annual Rental, Additional Rental and
all other sums (whether payable to Lessor or a third-party)
accruing under this Lease prior to the date of termination
shall survive such termination) and Lessor may retain all
such awards, compensation or damages. If Lessor elects not
to terminate this Lease, or if Lessor elects to terminate
this Lease but Lessee elects to continue this Lease, then
this Lease shall continue in full force and effect on the
following terms: (i) all Base Annual Rental, Additional
Rental and other sums and obligations due under this Lease
shall continue unabated, and (ii) Lessee shall promptly
commence and diligently prosecute or caused to be commenced
and diligently prosecuted restoration of the Premises to the
same condition, as nearly as practicable, as prior to such
partial condemnation, damage or destruction as approved by
Lessor. Lessor shall promptly make available in
installments as restoration progresses an amount up to but
not exceeding the amount of any award, compensation or
damages received by Lessor, upon request of Lessee
accompanied by evidence reasonably satisfactory to Lessor
that such amount has been paid or is due and payable and is
properly a part of such costs and that Lessee has complied
with the terms of Section 17 above in connection with the
restoration.
Lessor shall be entitled to keep any portion of such
award, compensation or damages which may be in excess of the
cost of restoration, less the costs and expenses of Lessor
incurred in connection with such award, compensation or
damages (the "Excess Award"). Lessee shall bear all
additional costs, fees and expenses of such restoration in
excess of the amount of any such award, compensation or
damages. Upon payment of the Excess Award, if any, to
Lessor, Lessor and Lessee shall enter into an amendment to
this Lease pursuant to which (a) the Minimum Purchase Price
will be reduced by an amount equal to the Excess Award paid
to Lessor, and (b) the Base Annual Rental then in effect
shall be reduced by an amount equal to the product of the
Excess Award paid to Lessor multiplied by 9.75%.
E. Notwithstanding the foregoing, if at the time of
any Taking or at any time thereafter Lessee shall be in
default under this Lease and such default shall be
continuing, Lessor is hereby authorized and empowered but
shall not be obligated, in the name and on behalf of Lessee
and otherwise, to file and prosecute Lessee's claim, if any,
for an award on account of any Taking and to collect such
award and apply the same, after deducting all costs, fees
and expenses incident to the collection thereof, to the
curing of such default and any other then existing default
under this Lease.
F. Lessee hereby waives any and all rights, claims,
counterclaims and defenses available to Lessee arising
under, or pursuant to, Arizona Revised Statutes Section 33-
343.
21. Inspection. Lessor and its authorized
representatives shall have the right, at all reasonable
times and upon giving no less than twenty-four (24) hours
prior written notice to Lessee (except in cases of
emergencies, in which case no prior notice to Lessee is
required), to enter the Premises or any part thereof and
inspect the same and make photographic or other evidence
concerning Lessee's compliance with the terms of this Lease.
Lessor shall use good faith reasonable efforts to minimize
the impact of such entry and inspections on Lessee's
business activities at the Premises, and Lessee hereby
waives any claim for damages for any injury or inconvenience
to or interference with Lessee's business, any loss of
occupancy or quiet enjoyment of the Premises and any other
loss occasioned by such entry. Lessee shall keep and
maintain at the Premises or at Lessee's headquarter offices
full, complete and appropriate books of account and records
of Lessee's business activities relating to the Premises in
accordance with generally accepted accounting principles
consistently applied. The books and records of Lessee shall
at all reasonable times be open for inspection by Lessor,
its auditors or other authorized representatives.
22. Franchisor Requirements. In the event Lessor
approves the use of a portion of the Premises by Lessee for
the operation of a Franchisor Restaurant, Lessee shall, in
addition to the requirements set forth in this Lease, in its
use, occupancy and maintenance of the Premises, comply with
all requirements of its franchise, license and/or area
development agreement with Franchisor. Lessee hereby
consents to Lessor providing information it obtains to
Franchisor and to Lessor obtaining from Franchisor
information which Franchisor receives relating to Lessee's
operation of its business on the Premises.
23. Right of First Refusal. A. During the Lease
Term, Lessee shall have the right of first refusal to
purchase the Premises upon the terms and conditions set
forth in this Section 23. If at any time during the Lease
Term, Lessor shall receive a bona fide offer from a third
party for the purchase of the Premises (whether or not
solicited by Lessor) and Lessor shall desire to accept such
offer, Lessor shall notify Lessee of any such offer (the
"Offering Notice") by notice to Lessee specifying the
following terms and information:
A. the name and address of the third-party offeror,
B. the purchase price for the Premises,
C. the terms of any financing for the purchase,
D. the type of deed to be delivered by Lessor at the closing
(if such deed is other than a special warranty deed),
E. a list of any consensual mortgages, liens or encumbrances
placed on the Premises by Lessor that will not be discharged
and satisfied at the closing,
F. whether Lessor, as seller, or the purchaser is
responsible for payment of applicable transfer, documentary,
stamp, deed or other taxes payable in connection with the
proposed sale,
G. a list of fees and expenses payable by the purchaser
in connection with the proposed sale, and
H. any other terms and conditions set forth in the
purchase agreement between Lessor and such third-party
offeror (the "Third-Party Purchase Agreement") that are
material to the sale of the Premises, as determined
by Lessor in Lessor's reasonable discretion.
Notwithstanding the foregoing, Lessee shall not have the
right to exercise the right of first refusal or consummate
the exercise thereof if at the time of exercise or
consummation Lessee shall be in default of any of the terms
and conditions of this Lease or if any condition shall exist
which upon the giving of notice or the passage of time, or
both, would constitute a default by Lessee under this Lease.
B. Lessee shall have fifteen (15) calendar days
from the date of delivery of the Offering Notice to exercise
its right of first refusal hereunder. Such right of first
refusal shall be exercisable by Lessee notifying Lessor
(within such 15-day period) of Lessee's election to purchase
the Premises on the same terms and conditions as those set
forth in the Offering Notice (the "Exercise Notice"). Time
shall be of the essence with respect to Lessee's election
and the giving of the Exercise Notice, and any failure to
give Lessor the Exercise Notice within such 15-day period
shall be deemed to be an election by Lessee to waive the
rights granted to Lessee under this Section 23.
C. Upon Lessee giving Lessor the Exercise Notice,
Lessor and Lessee shall open an escrow account with a
recognized title insurance or trust company selected by
Lessor. Such escrow shall be subject to the standard escrow
instructions of the escrow agent, to the extent they are not
inconsistent with the terms of this Section 23 or the terms
of the Offering Notice. At or before the close of escrow,
Lessor shall deliver to the escrow agent its special
warranty deed (or such other type of deed as is specified in
the Offering Notice) conveying to Lessee all of Lessor's
right, title and interest in the Premises, free and clear of
all liens and encumbrances, except liens for taxes and
assessments and easements, covenants and restrictions of
record which were attached to the Premises as of the date
hereof, attached during the Lease Term through Lessee's
action or inaction, as the case may be, have been granted by
Lessor in lieu of a taking by the power of eminent domain or
the like, have been approved by Lessee, or which do not
materially adversely affect the use of the Premises as a
Facility or as otherwise specified in the Offering Notice.
In the event Lessor (in the exercise of Lessor's good faith
reasonable efforts) is unable to convey title as required,
Lessee agrees that Lessee's sole remedy or recourse shall be
either (i) to accept such title as Lessor can convey, or
(ii) to elect not to consummate its exercise of the right of
first refusal, in which case the right of first refusal
shall lapse and Lessor shall be entitled to sell and convey
the Premises to the third-party offeror substantially on the
terms set forth in the Offering Notice.
D. Both Lessor and Lessee agree to execute a
purchase agreement, escrow instructions and such other
instruments as may be necessary or appropriate to consummate
the sale of the Premises in the manner herein provided.
Unless otherwise specifically provided in the Offering
Notice, the sale of the Premises to Lessee shall be an "AS
IS" and "WHERE IS" sale, without any representations or
warranties, express or implied, on the part of Lessor
relative to the Premises and the condition of the Premises
and the suitability of the Premises for any particular use
or purpose, and with "ALL FAULTS" associated with the
Premises.
E. Notwithstanding any term or provision contained
in the Third-Party Purchase Agreement to the contrary, the
close of escrow of the sale of the Premises to Lessee shall
occur no later than the date that is forty-five (45) days
after Lessee gives Lessor the Exercise Notice. At the close
of escrow of the sale of the Premises to Lessee pursuant to
Lessee's right of first refusal hereunder (i) this Lease
shall terminate and Lessee shall receive a credit towards
the purchase price in an amount equal to that portion of the
Base Monthly Rental paid to Lessor prior to the date of the
close of escrow that is attributable to the period of time
after the close of escrow, and (ii) Lessee shall pay to the
third-party offeror identified in the Offering Notice, in
immediately available funds, an amount equal to such third-
party's reasonable out-of-pocket costs and expenses incurred
in connection with the proposed sale of the Premises to such
third party, including, without limitation, its reasonable
attorneys' fees.
F. In the event Lessee waives or is deemed to have
waived its right of first refusal to purchase the Premises,
Lessor shall thereafter have the right to sell and convey
the Premises to such third-party offeror on terms which are
substantially similar to the terms set forth in the Offering
Notice, and upon the consummation of such a sale, Lessee's
right of first refusal shall cease to exist, and this
Section 23 shall no longer be part of this Lease. In the
event Lessor shall not consummate such a sale to the third
party offeror or shall desire to sell the Premises to
another third-party offeror on terms not substantially
similar to the terms set forth in the Offering Notice, then
Lessee's right of first refusal shall remain in full force
and effect for the remainder of the Lease Term, and Lessor
shall be required to again offer the Premises to Lessee in
accordance with this Section 23.
G. Notwithstanding any provision or right contained
in this Lease to the contrary, Lessee's right of first
refusal shall not be applicable to any of the following
events, sales, dispositions or transfers, whether occurring
in one transaction or a series of transactions:
(a) any disposition, sale or other transfer of
the Premises to any of the Lessor Entities;
(b) any disposition, sale or other transfer to
the holder of a mortgage, lien or deed of trust covering
Lessor's interest in the Premises, or any nominee of such
holder, or any other person, firm, corporation, or other
entity who or which shall acquire title to Lessor's interest
in the Premises as a result of a foreclosure of such
mortgage, lien or deed of trust or as a result of delivery
of a deed in lieu of foreclosure;
(c) any disposition, sale or other transfer of
Lessor's interest in the Premises, or any portion thereof,
to any Governmental Authority or quasi-Governmental
Authority exercising the right or power of eminent domain or
condemnation, whether by reason of the exercise of such
right of power or by reason of the delivery of a deed in
lieu of eminent domain or condemnation;
(d) any change in the form of business entity
or ownership of any of the Lessor Entities, including, but
not limited to, any change by merger or consolidation of any
of the Lessor Entities, any acquisition, sale, disposition
or other transfer of all or a substantial portion of the
assets or business of any of the Lessor Entities, any sale,
disposition, pledge, creation, issuance, repurchase,
redemption, exchange or swap of common stock, preferred
stock or other equity interests of any type or nature in any
of the Lessor Entities, or any capitalization or
recapitalization in any form of any of the Lessor Entities;
(e) any disposition, sale or other transfer of
the Premises in connection with a simultaneous disposition,
sale or other transfer of other property or properties
(which are not being leased to Lessee) by any of the Lessor
Entities; and/or
(f) any disposition, sale, assignment or other
transfer of the Premises by any of the Lessor Entities to a
corporation, trust or other entity identified by any of the
Lessor Entities, and the issuance of certificates or other
instruments evidencing interests in pools of properties (of
which the Premises forms all or a part), whether in
connection with a permanent asset securitization or other
financing or investment arrangement or a disposition, sale,
assignment or other transfer of properties in anticipation
of a permanent asset securitization or other financing or
investment arrangement.
24. Default, Remedies and Measure of Damages. A.
Each of the following shall be deemed a material breach of
this Lease and a default by Lessee:
(i) If any representation or warranty of
Lessee herein was false in any material respect when
made or, in the event that any such representation or
warranty is continuing, becomes false in any material
respect at any time, or if Lessee renders any
statement or account that is false in any material
respect;
(ii) If any rent or other monetary sum due
hereunder is not paid within five days after the date
when due;
(iii) If Lessee or Guarantor becomes
insolvent within the meaning of the Code, files or
notifies Lessor that it intends to file a petition
under the Code, initiates a proceeding under any
similar law or statute relating to bankruptcy,
insolvency, reorganization, winding up or adjustment
of debts (collectively, hereinafter, an "Action"),
becomes the subject of either a petition under the
Code or an Action, or is not generally paying its
debts as the same become due;
(iv) If Lessee vacates or abandons the
Premises;
(v) If Lessee fails to observe or perform
any of the covenants, conditions, or obligations of
this Lease;
(vi) If there is a breach, default or
expiration of any franchise, license and/or area
development agreement permitting Lessee to operate
the Premises as a Franchisor Restaurant or if such
franchise, license and/or area development agreement
otherwise terminates or expires;
(vii) If there is a breach or default under
any of the Other Agreements; and/or
(viii) If a final, nonappealable judgment is
rendered by a court against either Lessee or
Guarantor which has a material adverse effect on the
ability to conduct business at the Premises for its
intended use, or which does not have a material
adverse effect on the ability to conduct business at
the Premises for its intended use but which is in the
amount of $10,000,000.00 or more, and in either event
is not discharged or provision made for such
discharge within 60 days from the date of entry
thereof.
B. If any default occurs pursuant to
subsection A.(ii) above, Lessor shall not be entitled to
exercise its remedies set forth in subsection D. below
unless and until Lessor shall have given Lessee notice
thereof and a period of five days from the delivery of such
notice shall have elapsed without such default being cured.
C. If any such breach or default does not involve
the payment of any rent or other monetary sum, is not
willful or intentional, does not place any rights or
property of Lessor in immediate jeopardy, and is within the
reasonable power of Lessee to cure within 30 days after
receipt of notice thereof, all as determined by Lessor in
its reasonable discretion, then such event shall not
constitute a default hereunder, unless and until Lessor
shall have given Lessee notice thereof and a period of 30
days shall have elapsed, during which period Lessee may
correct or cure such event, upon failure of which a default
shall be deemed to have occurred hereunder without further
notice or demand of any kind. If such nonmonetary breach or
default cannot reasonably be cured within such 30-day
period, as determined by Lessor in its reasonable
discretion, and Lessee is diligently pursuing a cure of such
breach or default, then Lessee shall have a reasonable
period to cure such breach or default, which shall in no
event exceed 90 days after receiving notice of the default
from Lessor.
D. As a material inducement to Lessor executing
this Lease, in the event of any breach or default, and with
or without any notice or demand, except the notice prior to
default required under certain circumstances by subsection
B. above or such other notice as may be required by statute
and cannot be waived by Lessee (all other notices being
hereby waived), Lessor shall be entitled to exercise, at its
option, concurrently, successively, or in any combination,
all remedies available at law or in equity, including
without limitation any one or more of the following:
(i) To terminate this Lease, whereupon
Lessee's right to possession of the Premises shall
cease and this Lease, except as to Lessee's
liability, shall be terminated;
(ii) To reenter and take possession of the
Premises, any or all personal property or fixtures of
Lessee upon the Premises and, to the extent
permissible, all franchises, licenses, distribution
agreements, permits and other rights or privileges of
Lessee pertaining to the use and operation of the
Premises and to expel Lessee and those claiming under
or through Lessee, without being deemed guilty in any
manner of trespass or becoming liable for any loss or
damage resulting therefrom, without resort to legal
or judicial process, procedure or action. No notice
from Lessor hereunder or under a forcible entry and
detainer statute or similar law shall constitute an
election by Lessor to terminate this Lease unless
such notice specifically so states. If Lessee shall,
after default, voluntarily give up possession of the
Premises to Lessor, deliver to Lessor or its agents
the keys to the Premises, or both, such actions shall
be deemed to be in compliance with Lessor's rights
and the acceptance thereof by Lessor or its agents
shall not be deemed to constitute a termination of
the Lease. Lessor reserves the right following any
reentry and/or reletting to exercise its right to
terminate this Lease by giving Lessee written notice
thereof, in which event this Lease will terminate as
specified in said notice;
(iii) To seize all personal property or
trade fixtures or fixtures upon the Premises which
Lessee owns or in which it has an interest (subject,
however, to the rights of any third party (other than
any of the Lessee Entities) who owns, or has a prior
security interest in, any such personal property), in
which Lessor shall have a landlord's lien and/or
security interest, and to dispose thereof in
accordance with the laws prevailing at the time and
place of such seizure or to remove all or any portion
of such property and cause the same to be stored in a
public warehouse or elsewhere at Lessee's sole
expense, without becoming liable for any loss or
damage resulting therefrom and without resorting to
legal or judicial process, procedure or action;
(iv) To bring an action against Lessee for
any damages sustained by Lessor or any equitable
relief available to Lessor;
(v) To relet the Premises or any part
thereof for such term or terms (including a term
which extends beyond the original term of this
Lease), at such rentals and upon such other terms as
Lessor, in its sole discretion, may determine, with
all proceeds received from such reletting being
applied to the rental and other sums due from Lessee
in such order as Lessor, may, in it sole discretion,
determine, which other sums include, without
limitation, all reasonable repossession costs,
brokerage commissions, reasonable attorneys' fees and
expenses, employee expenses, and reasonable
alteration, remodeling and repair costs and expenses
of preparing for such reletting. Except to the
extent required by applicable law, Lessor shall have
no obligation to relet the Premises or any part
thereof and shall in no event be liable for refusal
or failure to relet the Premises or any part thereof,
or, in the event of any such reletting, for refusal
or failure to collect any rent due upon such
reletting, and no such refusal or failure shall
operate to relieve Lessee of any liability under this
Lease or otherwise to affect any such liability.
Lessor reserves the right following any reentry
and/or reletting to exercise its right to terminate
this Lease by giving Lessee written notice thereof,
in which event this Lease will terminate as specified
in said notice;
(vi) To accelerate and recover from Lessee
all rent and other monetary sums due and owing and
scheduled to become due and owing under the Lease
both before and after the date of such breach for the
entire original scheduled term of this Lease;
(vii) To recover from Lessee all reasonable
costs and expenses, including attorneys' fees, court
costs, expert witness fees, costs of tests and
analyses, travel and accommodation expenses,
deposition and trial transcripts, copies and other
similar costs and fees, paid or incurred by Lessor as
a result of such breach, regardless of whether or not
legal proceedings are actually commenced;
(viii) To immediately or at any time
thereafter, and with or without notice, at Lessor's
sole option but without any obligation to do so,
correct such breach or default and charge Lessee all
reasonable costs and expenses incurred by Lessor
therein. Any sum or sums so paid by Lessor, together
with interest at the then existing maximum legal
rate, but not higher than 18% per annum, shall be
deemed to be additional rent hereunder and shall be
immediately due from Lessee to Lessor. Any such acts
by Lessor in correcting Lessee's breaches or defaults
hereunder shall not be deemed to cure said breaches
or defaults or constitute any waiver of Lessor's
right to exercise any or all remedies set forth
herein;
(ix) To immediately or at any time
thereafter, and with or without notice, except as
required herein, set off any money of Lessee held by
Lessor under this Lease against any sum owing by
Lessee or Guarantor hereunder; and/or
(x) To enforce, and Lessee does hereby
consent to such enforcement, notwithstanding the laws
of the State to the contrary, all of Lessor's
self-help remedies available at law or in equity
without Lessor resorting to any legal or judicial
process, procedure or action.
25. Mortgage, Subordination, Nondisturbance and
Attornment. A. Lessor's interest in this Lease and/or the
Premises shall not be subordinate to any encumbrances placed
upon the Premises by or resulting from any act of Lessee,
and nothing herein contained shall be construed to require
such subordination by Lessor. Lessee shall keep the
Premises free from any liens for work performed, materials
furnished or obligations incurred by Lessee. NOTICE IS
HEREBY GIVEN THAT LESSEE IS NOT AUTHORIZED TO PLACE OR ALLOW
TO BE PLACED ANY LIEN, MORTGAGE, DEED OF TRUST OR
ENCUMBRANCE OF ANY KIND UPON ALL OR ANY PART OF THE PREMISES
OR LESSEE'S LEASEHOLD INTEREST THEREIN, AND ANY SUCH
PURPORTED TRANSACTION SHALL BE VOID. FURTHERMORE, ANY SUCH
PURPORTED TRANSACTION SHALL BE DEEMED A TORTIOUS
INTERFERENCE WITH LESSOR'S RELATIONSHIP WITH LESSEE AND
LESSOR'S FEE OWNERSHIP OF THE PREMISES.
B. NOTWITHSTANDING THE PROVISIONS OF SECTION 25.A TO
THE CONTRARY, LESSEE SHALL HAVE THE RIGHT (UPON PRIOR
WRITTEN NOTICE TO LESSOR) TO ENCUMBER LESSEE'S INTEREST IN
THIS LEASE, PROVIDED THAT THE FORM AND SUBSTANCE OF THE
INSTRUMENT, PURSUANT TO WHICH LESSEE SHALL ENCUMBER LESSEE'S
INTEREST IN THIS LEASE, IS APPROVED BY LESSOR, WHICH
APPROVAL SHALL NOT BE UNREASONABLY WITHHELD.
C. This Lease at all times shall automatically be
subordinate to the lien of any and all ground leases,
mortgages and trust deeds now or hereafter placed upon the
Premises by Lessor, and Lessee covenants and agrees to
execute and deliver, upon demand, such further instruments
subordinating this Lease to the lien of any or all such
ground leases, mortgages or trust deeds as shall be desired
by Lessor, or any present or proposed mortgagees or trustees
under trust deeds, upon the condition that Lessee shall have
the right to remain in possession of the Premises under the
terms of this Lease, notwithstanding any default in any or
all such mortgages or trust deeds, or after foreclosure
thereof, so long as Lessee is not in default under any of
the covenants, conditions and agreements contained in this
Lease.
D. If any mortgagee or trustee elects to have this
Lease and the interest of Lessee hereunder be superior to
any such interest or right and evidences such election by
notice given to Lessee, then this Lease and the interest of
Lessee hereunder shall be deemed superior to any such
mortgage or trust deed, whether this Lease was executed
before or after such mortgage or trust deed and in that
event such mortgagee or trustee shall have the same rights
with respect to this Lease as if it had been executed and
delivered prior to the execution and delivery of the
mortgage or trust deed and has been assigned to such
mortgagee or trustee.
E. Although the foregoing provisions shall be
self-operative and no future instrument of subordination
shall be required, upon request by Lessor, Lessee shall
execute and deliver whatever instruments may be required for
such purposes, and in the event Lessee fails so to do within
10 days after demand, Lessee does hereby make, constitute
and irrevocably appoint Lessor as its agent and
attorney-in-fact and in its name, place and stead so to do,
which appointment shall be deemed "power coupled with an
interest". The preceding power of attorney is not affected
by subsequent disability or incapacity of Lessee or lapse of
time.
F. In the event any purchaser at a foreclosure sale
acquires title to the Premises pursuant to the exercise of
any remedy provided for in any mortgage or trust deed or
otherwise, Lessee shall attorn to such purchaser and
recognize such purchaser as Lessor under this Lease, which
shall continue in full force and effect as a direct lease
between such purchaser and Lessee. The foregoing provision
shall be self operative and effective without the execution
of any further instruments.
G. Lessee shall give written notice to any lender of
Lessor having a recorded lien upon the Premises or any part
thereof of which Lessee has been notified of any breach or
default by Lessor of any of its obligations under this Lease
and give such lender at least 60 days beyond any notice
period to which Lessor might be entitled to cure such
default before Lessee may exercise any remedy with respect
thereto. Upon request by Lessor, Lessee shall also provide
Lessee's most recent audited financial statements to Lessor
or any such lender and certify the continuing accuracy of
such financial statements in such manner as Lessor or such
lender may request.
26. Estoppel Certificate. A. At any time, and
from time to time, Lessee agrees, promptly and in no event
later than 10 days after a request from Lessor, to execute,
acknowledge and deliver to Lessor or any present or proposed
mortgagee or purchaser designated by Lessor a certificate in
the form supplied by Lessor, certifying: (i) that Lessee has
accepted the Premises (or, if Lessee has not done so, that
Lessee has not accepted the Premises, and specifying the
reasons therefor); (ii) that this Lease is in full force and
effect and has not been modified (or if modified, setting
forth all modifications), or, if this Lease is not in full
force and effect, the certificate shall so specify the
reasons therefor; (iii) the commencement and expiration
dates of the Lease Term and the terms of any extension
options of Lessee; (iv) the date to which the rentals have
been paid under this Lease and the amount thereof then
payable; (v) whether there are then any existing defaults by
Lessor in the performance of its obligations under this
Lease, and, if there are any such defaults, specifying the
nature and extent thereof; (vi) that no notice has been
received by Lessee of any default under this Lease which has
not been cured, except as to defaults specified in the
certificate; (vii) the capacity of the person executing such
certificate, and that such person is duly authorized to
execute the same on behalf of Lessee; and (viii) any other
information reasonably requested by Lessor, or its present
or proposed purchaser or mortgagee.
B. If Lessee shall fail or refuse to sign a
certificate in accordance with the provisions of this
Section within 10 days following a request by Lessor, Lessee
irrevocably constitutes and appoints Lessor as its
attorney-in-fact to execute and deliver the certificate to
any such third party, it being stipulated that such power of
attorney is a "power coupled with an interest" and is
irrevocable and binding. The preceding power of attorney is
not affected by subsequent disability or incapacity of
Lessee or lapse of time.
C. At any time, and from time to time, Lessee
agrees, promptly and in no event later than 15 days after a
request from Lessor, to cause Sublessee (to the extent
Lessee subleases the Subleased Premises to Sublessee
pursuant to the Sublease) to execute, acknowledge and
deliver to Lessor or any present or proposed mortgagee or
purchaser designated by Lessor a certificate in the form
supplied by Lessor, certifying: (i) that Sublessee has
accepted the Subleased Premises (or, if Sublessee has not
done so, that Sublessee has not accepted the Subleased
Premises, and specifying the reasons therefor); (ii) that
the Sublease is in full force and effect and has not been
modified (or if modified, setting forth all modifications),
or, if the Sublease is not in full force and effect, the
certificate shall so specify the reasons therefor; (iii) the
commencement and expiration dates of the term of the
Sublease and the terms of any extension options of
Sublessee; (iv) the date to which the rentals have been paid
under the Sublease and the amount thereof then payable;
(v) whether there are then any existing defaults by
sublessor in the performance of its obligations under the
Sublease, and, if there are any such defaults, specifying
the nature and extent thereof; (vi) that no notice has been
received by Sublessee of any default under the Sublease
which has not been cured, except as to defaults specified in
the certificate; (vii) the capacity of the person executing
such certificate, and that such person is duly authorized to
execute the same on behalf of Sublessee; and (viii) any
other information reasonably requested by Lessor, or its
present or proposed purchaser or mortgagee.
27. Assignment. A. Lessor shall have the right to
sell or convey the Premises subject to this Lease or to
assign its right, title and interest as Lessor under this
Lease in whole or in part. In the event of any such sale or
assignment other than a security assignment, Lessee shall
attorn to such purchaser or assignee and Lessor shall be
relieved, from and after the date of such transfer or
conveyance, of liability for the performance of any
obligation of Lessor contained herein, except for
obligations or liabilities accrued prior to such assignment
or sale.
B. Lessee acknowledges that Lessor has relied both on
the business experience and creditworthiness of Lessee and
upon the particular purposes for which Lessee intends to use
the Premises in entering into this Lease. Lessee shall not,
without the prior written consent of Lessor, which consent
shall not be unreasonably withheld or delayed: (i) assign,
transfer, convey, pledge, encumber or mortgage this Lease or
any interest therein, whether by operation of law or
otherwise (except that Lessee may assign Lessee's interest
in this Lease to an Affiliate of Lessee without the consent
of Lessor, provided that Lessee shall have notified Lessor
in writing of such intended assignment prior to the date on
which Lessee shall assign this Lease to Lessee's Affiliate,
and provided Lessor with a copy of the documents, agreements
and instruments pursuant to which Lessee shall assign its
interest in this Lease. In connection with any assignment
of this Lease by Lessee to Lessee's Affiliate, Lessee shall
transfer to such assignee all necessary licenses and
franchises or distribution agreements to continue operating
the Premises for the purposes herein provided. At the time
of any such assignment of this Lease by Lessee to Lessee's
Affiliate, such assignee shall assume all of the duties and
obligations of Lessee under this Lease pursuant to Lessor's
standard form of assumption agreement. No such assignment
by Lessee to Lessee's Affiliate shall relieve Lessee of its
duties and obligations respecting this Lease, and no such
assignment by Lessee to Lessee's Affiliate shall relieve
Guarantor of its obligations respecting the Guaranty);
(ii) assign, transfer, convey, pledge or mortgage any
interest in Lessee, whether by operation of law or
otherwise, including, without limitation, dissolution of
Lessee or, if Lessee is a corporation, a transfer (by one or
more transactions) of a majority of the voting stock of
Lessee, or if Lessee is a partnership, a transfer of the
controlling interest in Lessee (including the admission of
new partners or withdrawal of existing partners having a
controlling interest), regardless of whether the transfer is
made by one or more transactions, or whether one or more
persons hold the controlling interest prior to the transfer
or afterwards; or (iii) sublet all or any part of the
Premises other than to Sublessee pursuant to the Sublease.
It is expressly agreed that Lessor may withhold or condition
such consent based upon such matters as Lessor may in its
reasonable discretion determine, including, without
limitation, the experience and creditworthiness of the
assignee, the assumption by the assignee of all of Lessee's
obligations hereunder by undertakings enforceable by Lessor,
payment to Lessor of any rentals owing under a sublease
which are in excess of the rentals owing hereunder (after
deducting from such excess an amount equal to the
reasonable, actual costs and expenses incurred by Lessee in
connection with such subletting, provided Lessee shall have
provided Lessor with a reasonable description and amount of
all such deductions), the transfer to such assignee of all
necessary licenses and franchises or distribution agreements
to continue operating the Premises for the purposes herein
provided, receipt of such representations and warranties
from such assignee as Lessor may request, including such
matters as its organization, existence, good standing and
finances and other matters, whether or not similar in kind.
At the time of any such assignment which is approved by
Lessor, the assignee shall assume all of the obligations of
Lessee under this Lease pursuant to Lessor's standard form
of assumption agreement. No such assignment or subletting
shall relieve Lessee of its obligations respecting this
Lease and no such assignment or subletting shall relieve
Guarantor of its obligations respecting the Guaranty. Any
purported transfer, conveyance, pledge or mortgage in
violation of this paragraph shall be voidable at the sole
option of Lessor.
28. Option To Extend. Lessee, provided Lessee is
not in default hereunder at the time of exercise or at the
expiration of the Lease Term or, if applicable, the first
and second extensions of the Lease, shall have the option to
continue this Lease in effect for up to three (3) additional
successive periods of five (5) years each in accordance with
the terms and provisions of this Lease then in effect,
including, without limitation, the terms and provisions of
Subsection 4.B of this Lease relative to making periodic
increases in Base Annual Rental. Lessee shall exercise such
extension option by giving notice to Lessor of Lessee's
intention to do so not more than 270 days or less than 210
days prior to the expiration of the Lease Term or, as
applicable, the first and second extensions of the Lease
Term.
29. Notices. All notices, consents, approvals or
other instruments required or permitted to be given by
either party pursuant to this Lease shall be in writing and
given by (i) hand delivery, (ii) facsimile, (iii) express
overnight delivery service or (iv) certified or registered
mail, return receipt requested, and shall be deemed to have
been delivered upon (a) receipt, if hand delivered,
(b) transmission, if delivered by facsimile, (c) the next
business day, if delivered by express overnight delivery
service, or (d) the third business day following the day of
deposit of such notice with the United States Postal
Service, if sent by certified or registered mail, return
receipt requested. Notices shall be provided to the parties
and addresses (or facsimile numbers, as applicable)
specified below:
If to Lessee: c/o Giant Industries, Inc.
Attention: Mr. Mark Cox
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Telephone: (602) 585-8888
Telecopy: (602) 585-8893
With a copy to: Giant Industries, Inc.
Legal Department
Attention: General Counsel
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Telephone: (602) 585-8851
Telecopy: (602) 585-8985
If to Lessor: Dennis L. Ruben, Esq.
Executive Vice President
and General Counsel
FFCA Capital Holding Corporation
17207 North Perimeter Drive
Scottsdale, AZ 85255
Telephone: (602) 585-4500
Telecopy: (602) 585-2226
or to such other address or such other person as either
party may from time to time hereafter specify to the other
party in a notice delivered in the manner provided above.
30. Holding Over. If Lessee remains in possession
of the Premises after the expiration of the term hereof,
Lessee, at Lessor's option and within Lessor's sole
discretion, may be deemed a tenant on a month-to-month basis
and shall continue to pay rentals and other sums in the
amounts herein provided, except that the Base Monthly Rental
shall be automatically doubled, and to comply with all the
terms of this Lease; provided that nothing herein nor the
acceptance of rent by Lessor shall be deemed a consent to
such holding over. Lessee shall defend, indemnify, protect
and hold Lessor harmless from and against any and all
claims, losses and liabilities for damages resulting from
Lessee's failure to surrender possession upon the expiration
of the Lease Term, including, without limitation, any claims
made by any succeeding lessee.
31. Landlord's Lien/Security Interest. Lessee
agrees that Lessor shall have a landlord's lien, and
additionally hereby separately grants to Lessor a first and
prior security interest, in, on and against all personal
property (other than inventory held for sale in the normal
course of business), appliances, furniture, machinery, trade
fixtures and equipment of Lessee from time to time situated
on the Premises, which lien and security interest shall
secure the payment of all rental and other charges payable
by Lessee to Lessor under the terms hereof and all other
obligations of Lessee to Lessor under this Lease. Lessee
represents and warrants to Lessor that except for a limited
number of items of personal property (collectively, the
"Limited Items of Personal Property") which Limited Items of
Personal Property, in the aggregate, constitute an
insignificant portion of all personal property, appliances,
furniture, machinery, trade fixtures and equipment located
at the Premises, the landlord's lien and security interest
granted to Lessor under this Section 31 shall at all times
be a first and prior lien and security interest. Lessee
further represents and warrants to Lessor that the removal
of the Limited Items of Personal Property from the Premises
would have no material adverse effect or impact on the
Premises or on Lessee's business activities conducted at the
Premises. Lessee further agrees to execute and deliver to
Lessor from time to time such financing statements and other
documents as Lessor may then deem appropriate or necessary
to perfect and maintain said lien and security interest, and
expressly acknowledges and agrees that, in addition to any
and all other rights and remedies of Lessor whether
hereunder or at law or in equity, in the event of any
default of Lessee hereunder, Lessor shall have any and all
rights and remedies granted a secured party under the
Uniform Commercial Code then in effect in the State in which
the Premises is located. If Lessee shall fail for any
reason to execute any such financing statement or document
within 10 days after Lessor's request therefor, Lessor shall
have the right to execute the same as attorney-in-fact of
Lessee, which appointment shall be deemed "power coupled
with an interest". The preceding power of attorney is not
affected by subsequent disability or incapacity of Lessee or
lapse of time. Lessee covenants to promptly notify Lessor
of any changes in Lessee's name and/or organizational
structure which may necessitate the execution and filing of
additional financing statements (provided, however, the
foregoing shall not be construed as Lessor's consent to such
changes).
32. Removal of Lessee's Property. At the
expiration of the term of this Lease, and if Lessee is not
then in breach hereof, Lessee may remove from the Premises
all personal property belonging to Lessee. Lessee shall
repair any damage caused by such removal and shall leave the
Premises broom clean and in good and working condition and
repair inside and out, ordinary wear and tear excepted. Any
property of Lessee left on the Premises on the tenth day
following the expiration of the Lease Term shall
automatically and immediately become the property of Lessor.
33. Financial Statements. Within 45 days after the
end of each fiscal quarter and within 120 days after the end
of each fiscal year of Lessee, Lessee shall deliver to
Lessor (i) complete financial statements of Lessee including
a balance sheet, profit and loss statement, statement of
cash flows and all other related schedules for the fiscal
period then ended; and (ii) income statements for the
business at the Premises. All such financial statements
shall be prepared in accordance with generally accepted
accounting principles, consistently applied from period to
period, and shall be certified to be accurate and complete
by Lessee (or the Treasurer or other appropriate officer of
Lessee). Lessee and Guarantor understand that Lessor is
relying upon such financial statements and Lessee and
Guarantor represent that such reliance is reasonable. In
the event that Lessee's property and business at the
Premises is ordinarily consolidated with other business for
financial statement purposes, such financial statements
shall be prepared on a consolidated basis showing separately
the sales, profits and losses, assets and liabilities
pertaining to the Premises with the basis for allocation of
overhead of other charges being clearly set forth. The
financial statements delivered to Lessor need not be
audited, but Lessee shall deliver to Lessor copies of any
audited financial statements of Lessee which may be
prepared, as soon as they are available.
34. Force Majeure. Any prevention, delay or
stoppage due to strikes, lockouts, acts of God, enemy or
hostile governmental action, civil commotion, fire or other
casualty beyond the control of the party obligated to
perform shall excuse the performance by such party for a
period equal to any such prevention, delay or stoppage,
except the obligations imposed with regard to rental and
other monies to be paid by Lessee pursuant to this Lease.
35. Document Review. In the event Lessee makes any
request upon Lessor requiring Lessor or its attorneys to
review and/or prepare (or cause to be reviewed and/or
prepared) any document or documents in connection with or
arising out of or as a result of this Lease, then, except as
expressly stated elsewhere herein, Lessee shall reimburse
Lessor or its designee promptly upon Lessor's demand
therefor a reasonable processing and review fee.
36. Time Is of the Essence. Time is of the essence
with respect to each and every provision of this Lease in
which time is a factor.
37. Lessor's Liability. Notwithstanding anything
to the contrary provided in this Lease, it is specifically
understood and agreed, such agreement being a primary
consideration for the execution of this Lease by Lessor,
that (i) there shall be absolutely no personal liability on
the part of Lessor, its successors or assigns and its
officers, directors, employees and agents to Lessee with
respect to any of the terms, covenants and conditions of
this Lease, (ii) Lessee waives all claims, demands and
causes of action against Lessor's officers, directors,
employees and agents in the event of any breach by Lessor of
any of the terms, covenants and conditions of this Lease to
be performed by Lessor, and (iii) Lessee shall look solely
to the Premises and the other Sites (as the term "Sites" is
defined in the Sale and Lease Agreement) for the
satisfaction of each and every remedy of Lessee in the event
of any breach by Lessor of any of the terms, covenants and
conditions of this Lease to be performed by Lessor, or any
other matter in connection with this Lease or the Premises,
such exculpation of liability to be absolute and without any
exception whatsoever.
38. Consent of Lessor. Unless specified otherwise
herein, Lessor's consent to any request of Lessee may be
conditioned or withheld in Lessor's sole discretion. Lessor
shall have no liability for damages resulting from Lessor's
failure to give any consent, approval or instruction
reserved to Lessor, Lessee's sole remedy in any such event
being an action for injunctive relief.
39. Waiver and Amendment. No provision of this
Lease shall be deemed waived or amended except by a written
instrument unambiguously setting forth the matter waived or
amended and signed by the party against which enforcement of
such waiver or amendment is sought. Waiver of any matter
shall not be deemed a waiver of the same or any other matter
on any future occasion. No acceptance by Lessor of an
amount less than the monthly rent and other payments
stipulated to be due under this Lease shall be deemed to be
other than a payment on account of the earliest such rent or
other payments then due or in arrears nor shall any
endorsement or statement on any check or letter accompanying
any such payment be deemed a waiver of Lessor's right to
collect any unpaid amounts or an accord and satisfaction.
40. Successors Bound. Except as otherwise
specifically provided herein, the terms, covenants and
conditions contained in this Lease shall bind and inure to
the benefit of the respective heirs, successors, executors,
administrators and assigns of each of the parties hereto.
41. No Merger. The voluntary or other surrender of
this Lease by Lessee, or a mutual cancellation thereof,
shall not result in a merger of Lessor's and Lessee's
estates, and shall, at the sole option of Lessor, either
terminate any or all existing subleases or subtenancies, or
operate as an assignment to Lessor of any or all of such
subleases or subtenancies.
42. Captions. Captions are used throughout this
Lease for convenience of reference only and shall not be
considered in any manner in the construction or
interpretation hereof.
43. Severability. The provisions of this Lease
shall be deemed severable. If any part of this Lease shall
be held unenforceable by any court of competent
jurisdiction, the remainder shall remain in full force and
effect, and such unenforceable provision shall be reformed
by such court so as to give maximum legal effect to the
intention of the parties as expressed therein.
44. Characterization. A. It is the intent of the
parties hereto that the business relationship created by
this Lease and any related documents is solely that of a
long-term commercial lease between landlord and tenant and
has been entered into by both parties in reliance upon the
economic and legal bargains contained herein. None of the
agreements contained herein, is intended, nor shall the same
be deemed or construed, to create a partnership between
Lessor and Lessee, to make them joint venturers, to make
Lessee an agent, legal representative, partner, subsidiary
or employee of Lessor, nor to make Lessor in any way
responsible for the debts, obligations or losses of Lessee.
Lessee acknowledges that Lessor (or any Affiliate of
Lessor) and Franchisor are not affiliates, agents, partners
or joint venturers, nor do they have any other legal,
representative or fiduciary relationship.
B. Lessor and Lessee acknowledge and warrant to
each other that each has been represented by independent
counsel and has executed this Lease after being fully
advised by said counsel as to its effect and significance.
This Lease shall be interpreted and construed in a fair and
impartial manner without regard to such factors as the party
which prepared the instrument, the relative bargaining
powers of the parties or the domicile of any party.
Whenever in this Lease any words of obligation or duty are
used, such words or expressions shall have the same force
and effect as though made in the form of a covenant.
45. Easements. During the Lease Term Lessor shall
have the right to grant utility easements on, over, under
and above the Premises without the prior consent of Lessee,
provided that such easements will not materially interfere
with Lessee's long-term use of the Premises.
46. Bankruptcy. A. As a material inducement to
Lessor executing this Lease, Lessee acknowledges and agrees
that Lessor is relying upon (i) the financial condition and
specific operating experience of Lessee and Lessee's
obligation to use the Premises specifically in accordance
with this Lease, (ii) Lessee's timely performance of all of
its obligations under this Lease notwithstanding the entry
of an order for relief under the Code for Lessee and
(iii) all defaults under the Lease being cured promptly and
the Lease being assumed within 60 days of any order for
relief entered under the Code for Lessee, or the Lease being
rejected within such 60 day period and the Premises
surrendered to Lessor.
Accordingly, in consideration of the mutual covenants
contained in this Lease and for other good and valuable
consideration, Lessee hereby agrees that:
(i) All obligations that accrue under this
Lease (including the obligation to pay rent), from
and after the date that an Action is commenced shall
be timely performed exactly as provided in this Lease
and any failure to so perform shall be harmful and
prejudicial to Lessor;
(ii) Any and all rents that accrue from and
after the date that an Action is commenced and that
are not paid as required by this Lease shall, in the
amount of such rents, constitute administrative
expense claims allowable under the Code with priority
of payment at least equal to that of any other actual
and necessary expenses incurred after the
commencement of the Action;
(iii) Any extension of the time period
within which the Lessee may assume or reject the
Lease without an obligation to cause all obligations
under the Lease to be performed as and when required
under the Lease shall be harmful and prejudicial to
Lessor;
(iv) Any time period designated as the
period within which the Lessee must cure all defaults
and compensate Lessor for all pecuniary losses which
extends beyond the date of assumption of the Lease
shall be harmful and prejudicial to Lessor;
(v) Any assignment of the Lease must result
in all terms and conditions of the Lease being
assumed by the assignee without alteration or
amendment, and any assignment which results in an
amendment or alteration of the terms and conditions
of the Lease without the express written consent of
Lessor shall be harmful and prejudicial to Lessor;
(vi) Any proposed assignment of the Lease to
an assignee: (a) that will not use the Premises
specifically in accordance with this Lease, (b) that
does not possess financial condition, operating
performance and experience characteristics equal to
or better than the financial condition, operating
performance and experience of Lessee as of the
Effective Date, or (c) that does not provide
Guarantor of the Lease obligations with financial
condition equal to or better than the financial
condition of the original Guarantor of the Lease as
of the Effective Date, shall be harmful and
prejudicial to Lessor; and
(vii) The rejection (or deemed rejection) of
the Lease for any reason whatsoever shall constitute
cause for immediate relief from the automatic stay
provisions of the Code, and Lessee stipulates that
such automatic stay shall be lifted immediately and
possession of the Premises will be delivered to
Lessor immediately without the necessity of any
further action by Lessor.
B. No provision of this Lease shall be deemed a
waiver of Lessor's rights or remedies under the Code or
applicable law to oppose any assumption and/or assignment of
this Lease, to require timely performance of Lessee's
obligations under this Lease, or to regain possession of the
Premises as a result of the failure of Lessee to comply with
the terms and conditions of this Lease or the Code.
C. Notwithstanding anything in this Lease to the
contrary, all amounts payable by Lessee to or on behalf of
Lessor under this Lease, whether or not expressly
denominated as such, shall constitute "rent" for the
purposes of the Code.
D. For purposes of this Section addressing the
rights and obligations of Lessor and Lessee in the event
that an Action is commenced, the term "Lessee" shall include
Lessee's successor in bankruptcy, whether a trustee, Lessee
as debtor in possession or other responsible person.
47. No Offer. No contractual or other rights shall
exist between Lessor and Lessee with respect to the Premises
until both have executed and delivered this Lease,
notwithstanding that deposits may have been received by
Lessor and notwithstanding that Lessor may have delivered to
Lessee an unexecuted copy of this Lease. The submission of
this Lease to Lessee shall be for examination purposes only,
and does not and shall not constitute a reservation of or an
option for Lessee to lease or otherwise create any interest
on the part of Lessee in the Premises.
48. Other Documents. Each of the parties agrees to
sign such other and further documents as may be necessary or
appropriate to carry out the intentions expressed in this
Lease.
49. Attorneys' Fees. In the event of any judicial
or other adversarial proceeding between the parties
concerning this Lease, to the extent permitted by law, the
prevailing party shall be entitled to recover all of its
reasonable attorneys' fees and other costs in addition to
any other relief to which it may be entitled. In addition,
Lessor shall, upon demand, be entitled to all reasonable
attorneys' fees and all other costs incurred in the
preparation and service of any notice or demand hereunder,
whether or not a legal action is subsequently commenced.
References in this Lease to Lessor's attorneys' fees and/or
costs shall mean both the fees and costs of independent
counsel retained by Lessor with respect to the matter and
the fees and costs of Lessor's in-house counsel incurred in
connection with the matter.
50. Entire Agreement. This Lease, and any other
instruments or agreements referred to herein, constitute the
entire agreement between the parties with respect to the
subject matter hereof, and there are no other
representations, warranties or agreements except as herein
provided. Without limiting the foregoing, Lessee
specifically acknowledges that neither Lessor nor any agent,
officer, employee or representative of Lessor has made any
representation or warranty regarding the projected level of
Lessee's Gross Sales or the projected profitability of the
business to be conducted on the Premises. Furthermore,
Lessee acknowledges that Lessor did not prepare or assist in
the preparation of any of the projected figures used by
Lessee in analyzing the economic viability and feasibility
of the business to be conducted by Lessee at the Premises.
51. Forum Selection; Jurisdiction; Venue; Choice of
Law. Lessee acknowledges that this Lease was substantially
negotiated in the State of Arizona, the executed Lease was
delivered in the State of Arizona, all payments under the
Lease will be delivered in the State of Arizona and there
are substantial contacts between the parties and the
transactions contemplated herein and the State of Arizona.
For purposes of any action or proceeding arising out of this
Lease, the parties hereto expressly submit to the
jurisdiction of all federal and state courts located in the
State of Arizona. Lessee consents that it may be served
with any process or paper by registered mail or by personal
service within or without the State of Arizona in accordance
with applicable law. Furthermore, Lessee waives and agrees
not to assert in any such action, suit or proceeding that it
is not personally subject to the jurisdiction of such
courts, that the action, suit or proceeding is brought in an
inconvenient forum or that venue of the action, suit or
proceeding is improper. The creation of this Lease and the
rights and remedies of Lessor with respect to the Premises,
as provided herein and by the laws of the state in which the
Premises is located, shall be governed by and construed in
accordance with the internal laws of the state in which the
Premises is located without regard to principles of conflict
of law. With respect to other provisions of this Lease,
this Lease shall be governed by the internal laws of the
State of Arizona. Nothing contained in this Section shall
limit or restrict the right of Lessor to commence any
proceeding in the federal or state courts located in the
state in which the Premises is located to the extent Lessor
deems such proceeding necessary or advisable to exercise
remedies available under this Lease.
52. Counterparts. This Lease may be executed in
one or more counterparts, each of which shall be deemed an
original.
53. Joint and Several Liability. If Lessee
consists of more than one individual or entity, each such
individual and/or entity shall be jointly and severally
liable for all obligations of Lessee under this Lease.
54. Memorandum of Lease. Concurrently with the
execution of this Lease, Lessor and Lessee are executing
Lessor's standard form memorandum of lease in recordable
form, indicating the names and addresses of Lessor and
Lessee, a description of the Premises, the Lease Term, and
the terms of any options to extend the Lease Term, but
omitting rent and such other terms of this Lease as Lessor
may not desire to disclose to the public. Further, upon
Lessor's request, Lessee agrees to execute and acknowledge a
termination of lease and/or quit claim deed in recordable
form to be held by Lessor until the expiration or sooner
termination of the Lease Term.
55. No Brokerage. Lessor and Lessee represent and
warrant to each other that they have had no conversation or
negotiations with any broker concerning the leasing of the
Premises. Each of Lessor and Lessee agrees to protect,
indemnify, save and keep harmless the other, against and
from all liabilities, claims, losses, costs, damages and
expenses, including attorneys' fees, arising out of,
resulting from or in connection with their breach of the
foregoing warranty and representation.
56. Waiver of Jury Trial and Punitive,
Consequential, Special and Indirect Damages. LESSOR AND
LESSEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO
ANY AND ALL ISSUES PRESENTED IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES
HERETO AGAINST THE OTHER OR ITS SUCCESSORS WITH RESPECT TO
ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE,
THE RELATIONSHIP OF LESSOR AND LESSEE, LESSEE'S USE OR
OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR
DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. THIS WAIVER
BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE TO A
TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT
OF THEIR BARGAIN. FURTHERMORE, LESSEE AND LESSOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT
EITHER MAY HAVE TO SEEK PUNITIVE, CONSEQUENTIAL, SPECIAL AND
INDIRECT DAMAGES FROM THE OTHER WITH RESPECT TO ANY AND ALL
ISSUES PRESENTED IN ANY ACTION, PROCEEDING, CLAIM OR
COUNTERCLAIM BROUGHT BY LESSEE OR LESSOR AGAINST THE OTHER
OR ITS RESPECTIVE SUCCESSORS WITH RESPECT TO ANY MATTER
ARISING OUT OF OR IN CONNECTION WITH THIS LEASE OR ANY
DOCUMENT CONTEMPLATED HEREIN OR RELATED HERETO. THE WAIVER
BY LESSEE AND LESSOR OF ANY RIGHT EITHER MAY HAVE TO SEEK
PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS
BEEN NEGOTIATED BY THE PARTIES HERETO AND IS AN ESSENTIAL
ASPECT OF THEIR BARGAIN.
57. Reliance By Environmental Insurer. Lessee
acknowledges and agrees that Environmental Insurer may rely
on, and Environmental Insurer shall be an express third-
party beneficiary of, the representations, warranties,
covenants and agreements of Lessee set forth in this Lease,
and that Environmental Insurer shall have all rights and
remedies available at law or in equity as a result of a
breach of such representations, warranties, covenants and
agreements of Lessee, including to the extent applicable,
the right of subrogation.
58. Sublease. A. In the event Lessee shall sublease
the Subleased Premises to Sublessee pursuant to the
Sublease, Lessee shall execute and deliver to Lessor and
shall cause Sublessee to execute and deliver to Lessor a
subordination agreement (in form and substance reasonably
acceptable to Lessor), pursuant to which Lessee and
Sublessee shall make such amendments or modifications to the
Sublease as Lessor may reasonably request and pursuant to
which Lessee and Sublessee shall agree that the Sublease is
junior, subject and subordinate in all respects and at all
times to the terms and provisions of this Lease. In
connection with such subordination agreement, Lessor will
agree not to disturb Sublessee's use of the Subleased
Premises in the event of a termination of this Lease by
Lessor for Lessee's breach or default hereunder, provided
that Sublessee is not in default under the terms of the
Sublease, and further provided that neither Lessor nor
Lessor's successors or assigns shall have any duty or
obligation to operate or conduct any type of business or
business activities on or at the Premises, and further
provided Lessor shall have the right to enter into a new
lease with any third party for the operation of business
activities on the Premises on terms and provisions
acceptable to Lessor, and the Sublease shall be junior,
subordinate and subject to the terms and provisions of such
new lease.
B. Lessee shall not amend, modify or terminate the
Sublease without prior written notice thereof to Lessor.
Lessee shall not permit the Sublease to be encumbered or
mortgaged in any manner without the prior written consent of
Lessor, which consent shall not be unreasonably withheld.
Lessee shall not permit Sublessee to change the use of the
Subleased Premises without the prior written consent of
Lessor, which consent shall not be unreasonably withheld.
Lessee shall cause Sublessee to comply in all material
respects with the duties and obligations of Sublessee under
the Sublease, and shall cause Sublessee to comply with all
applicable laws, now in effect or hereafter enacted,
pertaining to the Premises and the Subleased Premises. The
term of the Sublease shall be no longer than the Lease Term
hereunder.
C. Except for the gross negligence or willful
misconduct of Lessor, Lessee shall indemnify, protect,
defend and hold harmless Lessor and Lessor's shareholders,
directors, officers, lenders, agents, lenders, attorneys and
employees from and against any and all claims, demands,
causes of action, suits, proceedings, liabilities, damages
(including consequential and punitive damages), losses,
costs and expenses, including Lessor's attorneys' fees,
caused by, incurred or resulting from the Sublease,
Sublessee or the operations of Sublessee or relating in any
manner to the Subleased Premises, whether relating to their
original design or construction, latent defects, alteration,
maintenance, use by Sublessee or any person thereon,
supervision or otherwise, or from any breach of, default
under or failure to perform any term or provision of the
Sublease. It is expressly understood and agreed that
Lessee's obligations under this Section shall survive the
expiration or earlier termination of this Lease for any
reason.
D. Nothing in the Sublease shall affect, amend, modify
or alter in any manner the terms, provisions and covenants
of this Lease. Lessee agrees that the Sublease shall at all
times be junior, subordinate and subject to the terms and
provisions of this Lease. Unless otherwise specifically
agreed to in writing by Lessor, Lessee agrees that Lessor
shall have no duty, obligation or liability arising under or
pursuant to the Sublease. Lessee shall perform and fulfil
all of the duties and obligations of Lessee under the
Sublease.
IN WITNESS WHEREOF, Lessor and Lessee have entered into
this Lease as of the date first above written.
LESSOR:
FFCA CAPITAL HOLDING CORPORATION, a Delaware corporation
By____________________________________
Name: Stephen Y. Schwanz
Its: Vice President
LESSEE:
GIANT INDUSTRIES ARIZONA, INC., an Arizona corporation
Lessee's Tax Identification Number: 86-0218157
By
Name: Mark B. Cox
Its: Vice President
Financial Officer and Treasurer
<PAGE>
Witness
In accordance with the requirements of Arizona Revised
Statutes Section 14-5501, et seq., the undersigned has
executed this Lease solely for the purpose of witnessing the
grant of the powers of attorney by Lessee to Lessor, as
described in this Lease.
________________________________________
Printed Name of Witness
<PAGE>
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on
December , 1998, by Stephen Y. Schwanz, Vice President,
of FFCA Capital Holding Corporation, a Delaware corporation,
on behalf of the corporation.
Notary Public
My Commission Expires:
<PAGE>
STATE OF ARIZONA ]
] SS.
COUNTY OF MARICOPA ]
The foregoing instrument was acknowledged before me on
December , 1998, by Mark B. Cox, Vice President, Financial
Officer and Treasurer of Giant Industries Arizona, Inc., an
Arizona corporation, on behalf of the corporation.
Notary Public
My Commission Expires:
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
EXHIBIT 10.34
AGREEMENT
1. EFFECTIVE DATE: September 17, 1998.
2. PARTIES:
2.1. JAMES E. ACRIDGE, an unmarried man ("Borrower"); and
2.2. GIANT INDUSTRIES, INC., a Delaware corporation
("Lender").
3. RECITALS:
3.1. Lender is making a loan in the original principal sum of
$4,000,000.00 (the "Loan") to Borrower in accordance with the
terms of a Promissory Note of even date herewith (the "Note").
3.2 Lender and Borrower desire to memorialize certain
agreements made between them in connection with the Loan.
3.3 Borrower is willing to make the agreements contained
herein in consideration of Lender having made the Loan to Borrower,
and Lender is willing to make the Loan to Borrower only upon the
additional terms and conditions set forth in this Agreement.
3.4 Lender has determined that it has, as one of the business
purposes in making the Loan to Borrower, the protection of the value
of its common stock, of which Borrower is one of the principal owners,
from the effects of any foreclosure of stock pledges made by Borrower
in the event of adverse action by lenders holding pledges of such stock
("Stock Pledges").
3.5 Borrower desires to avoid any such adverse action, and
desires to make certain agreements with Lender to protect against any
such adverse action.
4. AGREEMENTS
4.1 ADOPTION OF RECITALS. The foregoing recitals are adopted
as agreements of the parties and not as mere recitals of fact, and
are incorporated herein.
4.2 NOTICE OF STATUS OF STOCK PLEDGES. Borrower agrees to
provide to Lender, immediately upon receipt thereof, written notice
of (and in the case of an item which is written, true copies of):
4.2.1. any notice of default received on any Stock
Pledge or the underlying loan which Stock Pledge secures;
4.2.2. any margin call or other demand for the
furnishing of any additional security for any loan secured by a
Stock Pledge which Borrower is unable or unwilling to satisfy;
4.2.3. any notice of any fact which, with the passage of
time, will become a default under any loan secured by a Stock Pledge;
4.2.4. any notice that any lender holding a loan secured
by a Stock Pledge deems itself insecure or for any other reason
demands payment of the loan or gives notice that it will not renew the
loan upon its maturity even if such renewal is requested by Borrower;
4.2.5. any notice that any lender refuses to renew a
loan secured by a Stock Pledge following application or other request
for renewal by Borrower;
4.2.6. any demand for payment by any lender under a loan
secured by a Stock Pledge, whether or not there is any claim of
default (other than requests for payments due in the ordinary course
of such loan which are not of a material amount); or
4.2.7. the receipt of any levy or notice of levy or
issuance of a writ of replevin, execution or other writ of any
nature against any stock of Lender owned by Borrower, whether or not
such stock is subject to a Stock Pledge.
Any such notice shall be referred to herein as a "Default
Notice".
4.3 RIGHT OF FIRST REFUSAL. So long as there is an unpaid
balance under the Loan, in the event Borrower decides to sell or
otherwise dispose of any of the stock subject to a Stock Pledge,
Borrower shall first give written notice to Lender of his intent
to sell or otherwise dispose of the stock, with all details of the
intended disposition, including but not limited to the identity of
the transferee; the price upon sale or disposition; and the terms of
such sale or disposition. Borrower agrees that he shall not complete
such contemplated sale or disposition until the earlier of ten days
after said notice or a written waiver by Lender of this right of
first refusal. During the ten day period, Lender shall be entitled to
elect to exercise this right of first refusal by giving written
notice to Borrower of such election. In the event the election is to
exercise the right of first refusal, then Lender shall proceed to
close the transaction upon the same terms and conditions as were
contained in the original notice from Borrower, or upon such other
terms as Borrower and Lender may thereupon agree. If Lender does not
give notice of election to exercise the right of first refusal on or
before the close of business on the 10th day following receipt of
written notice by Lender, such right shall lapse as to the stock
involved in the notice, and Borrower may sell or dispose of such
stock on the same terms and conditions as contained in such notice.
4.4 NEGATIVE PLEDGE. Borrower agrees that, so long as there is
an outstanding balance under the Loan, Borrower shall not, without
the prior written consent of Lender (or compliance with the right of
first refusal set forth in the preceding section), sell, transfer,
encumber or further encumber any of the common stock of Lender owned
or controlled by Borrower, and that the sale, transfer or encumbrance
of any of such stock shall be a default hereunder, and shall entitle
Lender to accelerate the balance due under the Promissory Note and to
exercise any or all remedies available to it. The foregoing negative
pledge shall not prohibit Borrower from exercising his full borrowing
authority under any of the existing loans of Borrower that are
secured by a Stock Pledge.
4.5 PAYMENT OF LOANS SECURED BY STOCK PLEDGES. Borrower agrees
that he shall promptly discharge when due all sums due under each
loan secured by a Stock Pledge. If Lender determines that a default
exists or is imminent, Lender may give notice to Borrower to cure
such default or imminent default, and, if Borrower does not do so
within ten days (or such shorter period as may be required in any
Default Notice), Lender shall have the right, but not the obligation,
to cure such default on behalf of Borrower, and any amounts expended
pursuant to such cure by Lender shall be added to the indebtedness
and shall thereafter bear interest at the default rate set forth in
the Promissory Note until paid. Borrower hereby appoints Lender as
his attorney in fact for the purpose of making any such cure, which
power is coupled with an interest and is irrevocable so long as any
balance remains outstanding under the Loan.
4.6 VOTING RIGHTS. Notwithstanding anything in this agreement to
the contrary, during the period of this Agreement or until any stock
is actually sold or otherwise transferred out of the control of
Borrower, Borrower shall retain all voting rights attributable to
such stock, other than as may be specified in any Stock Pledge.
4.7 RELEASE OF GIANT. Borrower acknowledges with respect to the
amounts owing to Lender that Borrower has no offset, defense or
counterclaim with respect thereto, no claim or defense in the
abatement or reduction thereof, nor any other claim against Lender or
with respect to any document forming part of the transaction in
respect of which the Note was made, which shall include, but not be
limited to, any action which Lender may take in enforcing its rights
given under the Note or this Agreement. To the extent any such
offset, defense, counterclaim, or other claim (collectively,
"Claims") may exist, Borrower, on behalf of himself and his
successors and assigns,
4.7.1. hereby forever and irrevocably releases and
discharges Lender and its officers, successors, representatives,
agents, attorneys, employees, predecessors, and assigns, and each of
them, from any and all Claims, demands, obligations, suits, causes of
action, and liabilities whatsoever, in law or in equity, which
Borrower had, now has or may have which have arisen out of, or may
arise from, any matter, cause, event, or transaction, whether known
or unknown, or whether or not presently asserted, arising from or in
connection with the Loan, and
4.7.2. hereby waives the provisions of any law providing
that a general release does not extend to claims a party does not
know of or suspect to exist at the time it gives such release, and
4.7.3. Borrower does hereby agree that this waiver and
covenant on the part of Borrower is contractual, and not a mere
recital, and the parties acknowledge and agree that no liability
whatever is admitted by any party, except Borrower's indebtedness to
Lender under the Note and its associated documents and this
Agreement.
4.8 GENERAL BORROWER AGREEMENTS. Borrower agrees:
4.8.1. to provide Lender with all other documents
reasonably required by Lender to give effect to this Agreement;
4.8.2. Lender has no obligation whatsoever to make any
other loans or advances to or for his benefit;
4.8.3. this Agreement is not intended for and shall not be
construed for the benefit of any party not a signatory hereto;
4.8.4. this Agreement shall be binding upon, and inure to
the benefit of the parties hereto and their respective successors and
assigns;
4.8.5. this Agreement constitutes the entire agreement
(including all representations and promises made) among the parties
with respect to the subject matter hereof, and no modification or
waiver shall be effective unless in writing and signed by the party
to be charged;
4.8.6. the indebtedness represented by the Note and this
Agreement is for commercial or business purposes;
4.8.7. time is of the essence hereof; and
4.8.8. Borrower acknowledges that he has thoroughly read
and reviewed the terms and provisions of this Agreement and is
familiar with the same, that the terms and provisions contained
herein are clearly understood by him and have been fully and
unconditionally consented to by him, and that Borrower's execution of
this Agreement is done freely, voluntarily, with full knowledge and
without duress, and that in executing this Agreement, Borrower is
relying on no other representations either written or oral, express
or implied, made to Borrower by any other party hereto, and that the
consideration received by Borrower hereunder has been actual and
adequate.
4.9. NO RELEASE OF STOCK RESTRICTIONS. Nothing contained herein
shall annul, release, vary, modify or affect any currently-existing
restrictions on any stock of Lender owned by Borrower, all of which
shall continue in full force and effect. Lender specifically reserves
and shall have all rights and remedies available to it under such
stock restrictions for the purpose of compliance with law, regulation
or contract.
4.10. TIME OF THE ESSENCE. Time is of the essence of all
provisions of the Note and this Agreement.
4.11. NOTICES. Any notices required to be sent to any party
shall be sent to the parties as follows:
To Borrower:
James E. Acridge
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Facsimile number (602) 585-8985
To Lender:
Office of the General Counsel
Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 85255
Facsimile number (602) 585-8985
Notices shall be effective upon hand delivery or delivery by
facsimile transmission, followed by hand delivery. Either party shall
have the right to change the address for notices by delivery of a
written notice to such effect to the other party.
Dated as of the date first above written.
BORROWER:
/s/ James E. Acridge
-------------------------------
James E. Acridge
LENDER:
GIANT INDUSTRIES, INC., a Delaware corporation
By: /s/ Mark B. Cox
----------------------------
Name: Mark B. Cox
Title: Treasurer
EXHIBIT 10.35
PROMISSORY NOTE
James E. Acridge
Principal Amount: $4,000,000.00
Initial Rate: Prime plus 2.0%
Date of Note: September 17, 1998
For value received, JAMES E. ACRIDGE ("Borrower") promises
to pay to GIANT INDUSTRIES, INC., a Delaware corporation
("Giant"), or order, in lawful money of the United States of
America, the principal amount of four million dollars
($4,000,000.00), together with interest on the unpaid principal
balance from September 17, 1998, until paid in full. The
annual interest rate on this Note is the Prime rate as
published in the Western Edition of the Wall Street Journal on
September 17, 1998 plus two percent (2.0%).
Borrower will pay this loan in one principal and interest
payment of $4,188,712.33 on February 28, 1999. Borrower will
pay Giant at Giant's corporate offices, 23733 North Scottsdale
Road, Scottsdale, Arizona, 85255, or at such other place as
Giant may designate in writing. Unless otherwise agreed or
required by applicable law, payments will be applied first to
accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.
The annual interest rate for this Note is computed on the
basis of a 365-day year; that is, by applying the ratio of the
annual interest rate over a year of 365 days, multiplied by the
outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Under no
circumstances will the interest rate on this Note be more than
the maximum rate allowed by applicable law.
Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due.
Borrower will be in default if any of the following
happens: (a) Borrower fails to make any payment when due; (b)
Borrower fails to comply with or to perform when due any other
term, obligation, covenant, or condition contained in this
Note; (c) a receiver is appointed for any part of Borrower's
property, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws; or
(d) Borrower defaults under that certain Agreement, or even
date herewith, between Borrower and Giant.
Upon default, Giant may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount. Upon
default, including failure to pay upon final maturity, Giant,
at its option, may also, if permitted under applicable law,
increase the interest rate on this Note by an additional three
percent (3.0%). The interest rate will not exceed the maximum
rate permitted by applicable law. Giant may hire or pay
someone else to help collect this Note if Borrower does not
pay, and Borrower also will pay Giant that amount, if
reasonable. This includes, subject to any limits under
applicable law, Giant's reasonable attorneys' fees and Giant's
reasonable legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by
applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by law.
This Note has been delivered to Giant and accepted by
Giant in the State of Arizona. If there is a lawsuit, Borrower
agrees upon Giant's request to submit to the jurisdiction of
the courts of Maricopa County, the State of Arizona. This Note
shall be governed by and construed in accordance with the laws
of the State of Arizona.
Giant may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower, to the
extent allowed by law, waives presentment, demand for payment,
protest and notice of dishonor. The parties agree that Giant
may modify this loan without the consent of or notice to anyone
other than Borrower.
Borrower agrees to an effective rate of interest that is
the rate specified in this Note plus any additional rate
resulting from any other charges in the nature of interest paid
or to be paid in connection with this Note.
This Note has been issued pursuant to an Agreement, of
even date herewith, between Borrower and Giant, the provisions
of which are incorporated herein by reference.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTANDS
ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS
OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.
BORROWER:
/s/ JAMES E. ACRIDGE
----------------------
James E. Acridge
EXHIBIT 10.36
MODIFICATION AGREEMENT
1. EFFECTIVE DATE: December 23, 1998
2. PARTIES:
2.1. GIANT INDUSTRIES, INC., an Delaware corporation
("Giant"); and
2.2. JAMES E. ACRIDGE ("Borrower").
3. RECITALS:
3.1. Borrower and Giant entered into an Agreement dated
September 17, 1998, providing for the loan by Giant to Borrower
of Four Million Dollars ($4,000,000.00) upon the terms set
forth therein (the "Loan Agreement"). Pursuant to the Loan
Agreement, Borrower executed his Promissory Note of the same
date in favor of Giant calling for the repayment of such sum
(the "Original Note").
3.2. Borrower has requested that Giant advance additional
funds pursuant to the terms set forth herein.
3.3. Giant is willing to advance the additional funds
described herein, and in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties do hereby agree as
follows:
4. AGREEMENTS:
4.1. Giant hereby agrees to advance to Borrower an
additional sum of One Million Dollars ($1,000,000.00), to be
repaid by Borrower in accordance with the terms of the Amended
and Restated Promissory Note, in the form attached hereto as
Exhibit "A" and incorporated herein by this reference.
4.2. Borrower agrees to make an early interest payment on
the principal balance outstanding on December 31, 1998 under
the Amended and Restated Promissory Note at the Prime rate
published in the Western Edition of the Wall Street Journal on
September 17, 1998, plus two percent (2.0%) from September 17,
1998, through December 22, 1998, and at the Prime rate
published in the Western Edition of the Wall Street Journal on
September 17, 1998, plus three percent (3%) from December 23,
1998, through December 31, 1998. Thereafter, interest shall be
payable in accordance with the terms of the Amended and
Restated Note.
4.3. Borrower agrees to present to Giant, on or before
March 31, 1999, a plan of repayment for the Amended and
Restated Note in reasonable detail for the information of
Giant's Board of Directors.
4.4. The provisions of the Loan Agreement shall continue
in full force and effect in every respect, except that the
Amended and Restated Note shall govern the repayment of the
Loan as increased and extended by this Modification Agreement
and the Amended and Restated Promissory Note.
4.5. Giant and Borrower acknowledge and agree that (a) the
unpaid principal balance of the Loan as of the effective date
hereof is as set forth in the Amended and Restated Promissory
Note; (b) the Loan Agreement is a valid, binding agreement
enforceable in accordance with its terms as amended hereby; (c)
except as expressly provided herein, this Agreement shall not
modify the Loan Agreement; (d) nothing herein contained, and
nothing done pursuant hereto (i) is intended to affect, shall
affect, or shall be construed as affecting, the obligations set
forth in the Loan Agreement, or (ii) is intended to release or
affect, shall release or affect, or shall be construed as
releasing or affecting, the liability of any party or parties
who may now or hereafter be liable under or on account of the
Loan Agreement; and (e) the restrictions and terms of the Loan
Agreement continue in full force and effect except as expressly
modified hereby.
4.6. Borrower acknowledges that he has thoroughly read and
reviewed the terms and provisions of this Agreement and is
familiar with the same, that the terms and provisions contained
herein are clearly understood by him and have been fully and
unconditionally consented to by him, and that Borrower's
execution of this Agreement is done freely, voluntarily, with
full knowledge and without duress, and that in executing this
Agreement, Borrower is relying on no other representations
either written or oral, express or implied, made to Borrower by
any other party hereto, and that the consideration received by
Borrower hereunder has been actual and adequate.
4.7. Except as herein provided, all of the terms and
conditions of the Loan Agreement shall remain in full force and
effect, and the parties hereby ratify and confirm the security
and enforceability of the Loan Agreement, as expressly modified
by this Modification Agreement.
4.8. This Modification Agreement shall bind and inure to
the benefit of the parties hereto and their respective
successors and assigns and the subsequent holders or owners of
the Loan Agreement. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona.
4.9. This Agreement may be executed by the signing in
counterparts of this instrument. The execution of this
instrument by each of the parties signing a counterpart hereof
shall constitute a valid execution, and this instrument and all
of its counterparts so executed shall be deemed for all
purposes to be a single instrument. The signature of a
counterpart with the delivery thereof by facsimile
transmission, with the original to be placed in the U.S. Postal
Service, given to a recognized express delivery service or hand
delivered is acceptable for establishing the execution and
effectiveness hereof, and the parties are authorized to proceed
upon receipt of such signed counterparts by facsimile or
delivery, even though the originals may not arrive until later.
IN WITNESS WHEREOF, this Modification Agreement has been
executed to be effective (though not necessarily executed)
as of the date first above written.
GIANT:
GIANT INDUSTRIES, INC., a Delaware corporation
By: /s/ Mark B. Cox
----------------------------
Name: Mark B. Cox
Title: Treasurer
BORROWER:
/s/ James E. Acridge
-------------------------------
James E. Acridge
EXHIBIT 10.37
AMENDED AND RESTATED PROMISSORY NOTE
AMENDED AND RESTATED
PROMISSORY NOTE
James E. Acridge
Initial Principal Amount: $4,000,000.00
Initial Rate: Prime plus 2.0%
Date of Note: September 17, 1998
Additional Principal Amount: $1,000,000.00
Amended Rate: Prime plus 3.0% from and after December 23, 1998
Effective Date of Amendment: December 23, 1998
For value received, JAMES E. ACRIDGE ("Borrower") promises
to pay to GIANT INDUSTRIES, INC., a Delaware corporation
("Giant"), or order, in lawful money of the United States of
America, (a) the initial principal amount of four million
dollars ($4,000,000.00), together with interest on the unpaid
initial principal amount from September 17, 1998, until paid in
full and (b) the additional principal amount of one million
dollars ($1,000,000.00), together with interest on the unpaid
additional principal amount from December 23, 1998, until paid
in full. The annual interest rate on this Note is the Prime
rate as published in the Western Edition of the Wall Street
Journal on September 17, 1998, plus two percent (2.0%) from
September 17, 1998, through December 22, 1998, and the Prime
rate as published in the Western Edition of the Wall Street
Journal on September 17, 1998, plus three percent (3%) from
December 23, 1998, through February 28, 2001.
Borrower will pay an initial interest payment on or before
February 28, 1999 on all principal advanced through and
including December 31, 1998. Thereafter, Borrower will pay
interest only semi-annually on each June 30 and December 31 of
each year until February 28, 2001 (the "Maturity Date"), at
which time all outstanding principal and interest shall be
fully due and payable.
Borrower will pay Giant at Giant's corporate offices,
23733 North Scottsdale Road, Scottsdale, Arizona, 85255, or at
such other place as Giant may designate in writing. Unless
otherwise agreed or required by applicable law, payments will
be applied first to accrued unpaid interest, then to principal,
and any remaining amount to any unpaid collection costs and
late charges.
The annual interest rate for this Note is computed on the
basis of a 365-day year; that is, by applying the ratio of the
annual interest rate over a year of 365 days, multiplied by the
outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Under no
circumstances will the interest rate on this Note be more than
the maximum rate allowed by applicable law.
Borrower may pay without penalty all or a portion of the
amount owed earlier than it is due.
Borrower will be in default if any of the following
happens: (a) Borrower fails to make any payment when due; (b)
Borrower fails to comply with or to perform when due any other
term, obligation, covenant, or condition contained in this
Note; (c) a receiver is appointed for any part of Borrower's
property, or any proceeding is commenced either by Borrower or
against Borrower under any bankruptcy or insolvency laws; (d)
Borrower defaults under that certain Agreement, dated September
17, 1998, between Borrower and Giant; or (e) Borrower defaults
under that certain Agreement, of even date herewith, between
Borrower and Giant.
Upon default, Giant may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount. Upon
default, including failure to pay upon final maturity, Giant,
at its option, may also, if permitted under applicable law,
increase the interest rate on this Note by an additional three
percent (3.0%). The interest rate will not exceed the maximum
rate permitted by applicable law. Giant may hire or pay
someone else to help collect this Note if Borrower does not
pay, and Borrower also will pay Giant that amount, if
reasonable. This includes, subject to any limits under
applicable law, Giant's reasonable attorneys' fees and Giant's
reasonable legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by
applicable law, Borrower also will pay any court costs, in
addition to all other sums provided by Law.
This Note has been delivered to Giant and accepted by
Giant in the State of Arizona. If there is a lawsuit, Borrower
agrees upon Giant's request to submit to the jurisdiction of
the courts of Maricopa County, the State of Arizona. This Note
shall be governed by and construed in accordance with the laws
of the State of Arizona.
Giant may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower, to the
extent allowed by law, waives presentment, demand for payment,
protest and notice of dishonor. The parties agree that Giant
may modify this loan without the consent of or notice to anyone
other than Borrower.
Borrower agrees to an effective rate of interest that is
the rate specified in this Note plus any additional rate
resulting from any other charges in the nature of interest paid
or to be paid in connection with this Note.
This Amended and Restated Note has been issued pursuant to
a Loan Agreement dated September 17, 1998, followed by a
Modification Agreement, of even date herewith, between Borrower
and Giant, the provisions of which are incorporated herein by
reference.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTANDS
ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS
OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE
NOTE.
BORROWER:
/s/ James E. Acridge
--------------------------
James E. Acridge
EXHIBIT 21.1
SUBSIDIARIES OF
GIANT INDUSTRIES, INC.
(a Delaware corporation)
Jurisdiction of Names Under Which
Subsidiary Incorporation Company Does Business
---------- --------------- ---------------------
Giant Industries
Arizona, Inc. Arizona Giant Refining Company
Ciniza Pipe Line Company
Giant Transportation
Giant Service Stations
Giant Travel Center
TransWest Tank Lines
- Giant Four Corners,
Inc.* Arizona
- Giant Mid-Continent,
Inc.* Arizona
- Phoenix Fuel Co., Inc.* Arizona
- DeGuelle Oil Company* Colorado
- Ciniza Production
Company* New Mexico
- Giant Stop-N-Go of
New Mexico, Inc.* New Mexico
- San Juan Refining
Company* New Mexico Phoenix Fuel Company
Mesa Fuel Company
Tucson Fuel Company
Firebird Fuel Company
PFC Lubricants Company
Giant Exploration &
Production Company Texas
_______________
*A wholly-owned subsidiary of Giant Industries Arizona, Inc.
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 dated March 4, 1999 and March 30, 1999, appearing in the
Annual Report on Form 10-K of Giant Industries, Inc. for the year
ended December 31, 1998 and in the Annual Report on Form 11-K of
Giant Industries, Inc. for the year ended December 31, 1998,
respectively.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 30, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 55,697
<SECURITIES> 0
<RECEIVABLES> 39,510
<ALLOWANCES> 460
<INVENTORY> 51,349
<CURRENT-ASSETS> 171,726
<PP&E> 439,940
<DEPRECIATION> 138,008
<TOTAL-ASSETS> 525,785
<CURRENT-LIABILITIES> 80,622
<BONDS> 282,484
0
0
<COMMON> 122
<OTHER-SE> 127,580
<TOTAL-LIABILITY-AND-EQUITY> 525,785
<SALES> 642,504
<TOTAL-REVENUES> 642,504
<CGS> 465,605
<TOTAL-COSTS> 597,309
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,464
<INCOME-PRETAX> (3,726)
<INCOME-TAX> (1,509)
<INCOME-CONTINUING> (2,217)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,217)
<EPS-PRIMARY> (0.20)
<EPS-DILUTED> (0.20)
</TABLE>
EXHIBIT 99.1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 11-K
ANNUAL REPORT
_____________
PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Fiscal year Ended December 31, 1998
EMPLOYEE STOCK OWNERSHIP PLAN OF
GIANT INDUSTRIES, INC. AND AFFILIATED COMPANIES
GIANT INDUSTRIES, INC.
______________________
The principal executive offices of Giant Industries, Inc. are
located at 23733 North Scottsdale Road, Scottsdale, Arizona 85255.
<PAGE>
<PAGE>
FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements and Supplemental Schedules
Page Number
-----------
Independent Auditors' Report....................... F-1
Statements of Net Assets Available
for Benefits - December 31, 1998 and 1997.......... F-2
Statements of Changes in Net Assets
Available for Benefits - Years Ended
December 31, 1998 and 1997......................... F-3
Notes to Financial Statements...................... F-4 to F-6
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes.... F-7
Schedule of Reportable Transactions................ F-8
(b) Exhibits - none
<PAGE>
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Committee has duly caused this annual report
to be signed by the undersigned thereunto duly authorized.
EMPLOYEE STOCK OWNERSHIP PLAN OF GIANT
INDUSTRIES, INC. AND AFFILIATED COMPANIES
Date: March 30, 1999 Signature: /s/ Kim H. Bullerdick
-------------------------------
Kim H. Bullerdick
Secretary, Vice President
and Director, Legal Department
Date: March 30, 1999 Signature: /s/ Gary R. Dalke
-------------------------------
Gary R. Dalke, Vice President,
Controller, Accounting Officer
and Assistant Secretary
Date: March 30, 1999 Signature: /s/ Charley Yonker, Jr.
-------------------------------
Charley Yonker, Jr.,
Director of Human Resources
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
Administrative Committee
Employee Stock Ownership Plan of
Giant Industries, Inc. and Affiliated Companies
Scottsdale, Arizona
We have audited the accompanying statements of net assets available
for benefits of the Employee Stock Ownership Plan of Giant
Industries, Inc. and Affiliated Companies as of December 31, 1998
and 1997, and the related statements of changes in net assets
available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all
material respects, the net assets available for benefits of the
Employee Stock Ownership Plan of Giant Industries, Inc. and
Affiliated Companies as of December 31, 1998 and 1997, and the
changes in net assets available for benefits for the years then
ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on
the basic financial statements taken as a whole. The supplemental
schedules for the year ended December 31, 1998 on pages F-7 and F-8
are presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. These schedules
are the responsibility of the Plan's management. Such schedules
have been subjected to the auditing procedures applied in our audit
of the basic 1998 financial statements and, in our opinion, are
fairly stated in all material respects when considered in relation
to the basic financial statements taken as a whole.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 30, 1999
F-1
<PAGE>
<PAGE>
<TABLE>
EMPLOYEE STOCK OWNERSHIP PLAN OF
GIANT INDUSTRIES, INC. AND AFFILIATED COMPANIES
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
INVESTMENTS AT FAIR VALUE (Note 3):
Cash and cash equivalents.................... $ 35,989
Mutual funds................................. $ 3,339,084 2,876,097
Limited partnership.......................... 6,600 6,096
Common stock of Giant Industries, Inc........ 10,778,803 23,220,850
Loans to participants........................ 33,955 28,941
----------- -----------
Total investments at fair value........... 14,158,442 26,167,973
CONTRIBUTION RECEIVABLE........................ 536,478
INTEREST AND DIVIDENDS RECEIVABLE.............. 61,550
OTHER RECEIVABLES.............................. 1,406 470
----------- -----------
Total assets......................... 14,159,848 26,766,471
LIABILITIES
ACCRUED LIABILITIES............................ 9,247 9,247
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS.............. $14,150,601 $26,757,224
=========== ===========
</TABLE>
See notes to financial statements.
F-2
<PAGE>
<PAGE>
<TABLE>
EMPLOYEE STOCK OWNERSHIP PLAN OF
GIANT INDUSTRIES, INC. AND AFFILIATED COMPANIES
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
ADDITIONS:
Net appreciation in fair value
of investments (Note 3).......................... $ 6,536,632
Interest and dividend income....................... $ 186,571 342,652
Employer contribution.............................. 536,478
----------- -----------
Total additions.................................. 186,571 7,415,762
DEDUCTIONS
Distributions to participants.................... 2,122,077 1,686,067
Net depreciation in fair value of
investments (Note 3)........................... 10,671,117
----------- -----------
Total deductions................................. 12,793,194 1,686,067
----------- -----------
NET (DECREASE) INCREASE............................ (12,606,623) 5,729,695
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR.................................. 26,757,224 21,027,529
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR..... $14,150,601 $26,757,224
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN OF
GIANT INDUSTRIES, INC. AND AFFILIATED COMPANIES
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1. DESCRIPTION OF THE PLAN
GENERAL - On June 30, 1987, Giant Industries, Inc. (the
"Company") converted through an amendment, its Joint Profit
Sharing Plan to an Employee Stock Ownership Plan. The
Employee Stock Ownership Plan of Giant Industries, Inc. and
Affiliated Companies (the "Plan") is a non-contributory
defined contribution plan which covers all eligible
employees. The purpose of the Plan is to enable participants
to share in the ownership of the Company. The Summary Plan
Description describes the Plan, including contribution
allocations, termination, vesting and benefit provisions.
The Plan is subject to the requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA").
CONTRIBUTIONS - The Plan provides for a contribution from
the Company from its current or accumulated net income as
may be determined annually at the discretion of its Board of
Directors.
DISTRIBUTIONS - Benefits are recorded when paid. The Plan
records distributions for Plan participants who have
requested payment of their account in stock at the market
value of the stock on the date that the shares are
reregistered in the name of the participant.
PARTICIPATION AND VESTING - Each employee hired on or after
July 1, 1993 shall become a participant on his or her
participation date, which is defined as the January 1 or
July 1 coincident with or next following the date on which
the employee shall have completed one year of service. The
participation date of any employee hired prior to July 1,
1993 shall be determined in accordance with the terms of the
Plan prior to the seventh amendment. Participants' interests
in their accounts vest over a seven year period. In the
event the Plan is terminated by the Company, all
participants would immediately become 100 percent vested in
their accrued benefits as of the date of Plan termination.
ALLOCATIONS - Each participant's account is credited with an
allocation of the Company's contribution, investment income
and forfeitures of terminated participants' non-vested
accounts. Allocations to participant accounts are made on a
formula based on the ratio that each participant's
compensation, as defined, during the Plan year, bears to the
compensation of all such participants.
PLAN ADMINISTRATION - The Company administers the Plan
through an administrative committee comprised of three
employees who are appointed by the Company's Board of
Directors. Most expenses pertaining to the administration of
the Plan are being paid by the Company, at the Company's
option. Bank of America is the Plan's trustee and custodian
and Boyce & Associates is the Plan's recordkeeper.
Subsequent to December 31, 1998, the Plan changed its trustee
and custodian to Wells Fargo Bank, N.A.
AMENDMENTS - The Plan was amended nine times prior to 1997.
A tenth amendment was executed on December 15, 1997 to be
effective January 1, 1997 to permit prior service credit to
certain individuals who became employees of the Company in
connection with the Company's purchase of certain assets of
Thriftway and related entities and Phoenix Fuel Co., Inc. In
F-4
<PAGE>
<PAGE>
addition, the definition of compensation was changed to
exclude reimbursement or other expense allowances and
certain fringe benefits.
TERMINATION - Although it has not expressed any intent to do
so, the Company has the right under the Plan to discontinue
its contributions at any time and to terminate the Plan
subject to the provisions of ERISA.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting records of the Plan are maintained on the
accrual basis of accounting, and accordingly, revenues and
expenses are recorded in the year earned or incurred.
Investments included in the Statement of Net Assets
Available for Benefits are stated at fair value. The fair
value of marketable securities and mutual funds is
determined based on quoted market prices as of the Plan's
year-end. The fair value of the limited partnership is
management's best estimate based on an independent appraisal
provided by Bank of America. The Company's common stock
value is determined based on the quoted market price as
reported by the New York Stock Exchange as of the Plan's
year-end. Loans to participants are valued at cost which
approximates fair value. The net change in the fair value
of investments is recorded in the Statement of Changes in
Net Assets Available for Benefits as net appreciation
(depreciation) in fair value of investments. Interest and
dividend income is recorded on the accrual basis.
Benefits are recorded when paid.
The preparation of financial statements in conformity with
generally accepted accounting principles necessarily
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of
additions and deductions during the reporting period. Actual
results could differ from these estimates.
3. INVESTMENTS
The following tables present the fair value of investments
at December 31, 1998 and 1997, with the Bank of America
Balanced Fund and common stock of the Company representing
investments greater than 5 percent of the Plan's net assets at
December 31, 1998 and 1997.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------
NUMBER OF
SHARES OR
PRINCIPAL FAIR
AMOUNT VALUE
<S> <C> <C>
-----------
Mutual Funds:
ML Lee Acquisition 25 $ 5,733
Bank of America Balanced Fund 115,668 3,333,351
-----------
Total mutual funds 3,339,084
-----------
Limited partnership
- Recorp. Mtg. Investors II 1.5 6,600
-----------
Giant Industries, Inc. common stock 1,149,739 10,778,803
-----------
Loans to participants 33,955
-----------
Total $14,158,442
===========
</TABLE>
F-5<PAGE>
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------
NUMBER OF
SHARES OR
PRINCIPAL FAIR
AMOUNT VALUE
<S> <C> <C>
Cash and cash equivalents
- Bank of America
Short-term Investment Fund 35,989 $ 35,989
-----------
Mutual Funds:
ML Lee Acquisition 25 4,861
Bank of America Balanced Fund 115,251 2,871,236
-----------
Total mutual funds 2,876,097
-----------
Limited partnership
- Recorp. Mtg. Investors II 1.5 6,096
-----------
Giant Industries, Inc. common stock 1,222,150 23,220,850
-----------
Loans to participants 28,941
-----------
Total $26,167,973
===========
</TABLE>
Net (depreciation) appreciation in fair value of the Plan's
investments (including investments bought, sold and held during
the period) for the years ended December 31 consists of the
following:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Recorp. Mtg. Investors II $ 504 $ (504)
Mutual funds 449,992 418,954
Giant Industries, Inc. common stock (11,121,613) 6,118,182
------------ ----------
Net (depreciation) appreciation $(10,671,117) $6,536,632
============ ==========
</TABLE>
4. FEDERAL INCOME TAX STATUS
The plan obtained its latest determination letter on
April 2, 1997, in which the Internal Revenue Service
stated that the Plan, as then designed, was in compliance
with the applicable requirements of the Internal Revenue
Code. The Plan has been amended since receiving the
determination letter. However, the Plan administrator and
the Plan's tax counsel believe that the Plan is currently
designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code.
Therefore, no provision for income taxes has been included
in the Plan's financial statements.
5. RELATED PARTY TRANSACTIONS
Certain Plan investments are managed by Bank of America.
Bank of America is the Trustee as defined by the Plan and,
therefore, these transactions qualify as party-in-interest.
6. SUBSEQUENT EVENT
In the first quarter of 1999, the Company made contributions
totaling $3,000,000 to the Plan for the fiscal year ending
December 31, 1999. These contributions were made to, among
other things, provide an incentive for employees to focus on
achieving the Company's strategic goals for 1999. Allocation
of this amount to participants' accounts will be made as of
December 31, 1999.
* * * * * *
F-6
<PAGE>
<PAGE>
<TABLE>
EMPLOYEE STOCK OWNERSHIP PLAN OF
GIANT INDUSTRIES, INC. AND AFFILIATED COMPANIES
SUPPLEMENTAL SCHEDULE
DECEMBER 31, 1998
ITEM 27a - ASSETS HELD FOR INVESTMENT PURPOSES
<CAPTION>
COLUMN B COLUMN C COLUMN D COLUMN E
---------------------------- -------------------------------------------- ---------- -----------
DESCRIPTION OF INVESTMENT INCLUDING
IDENTITY OF ISSUER, BORROWER, COLLATERAL, RATE OF INTEREST, MATURITY CURRENT
LESSOR, OR SIMILAR PARTY DATE, PAR OR MATURITY VALUE COST VALUE
---------------------------- -------------------------------------------- ---------- -----------
<S> <C> <C> <C>
ML Lee Acquisition Mutual Fund - 25 shares $ 25,000 $ 5,733
Bank of America Balanced Fund - 115,668 shares 2,634,263 3,333,351
Recorp. Mtg. Investors II Limited Partnership - 1.5 units 60,000 6,600
Giant Industries, Inc. Common stock - 1,149,739 shares 6,793,080 10,778,803
Loans to participants Loans at prime plus 3%, collateralized by vested
accounts, due 1999 through 2004 33,955 33,955
---------- -----------
Total assets held for investment purposes $9,546,298 $14,158,442
========== ===========
</TABLE>
F-7
<PAGE>
<PAGE>
<TABLE>
EMPLOYEE STOCK OWNERSHIP PLAN OF
GIANT INDUSTRIES, INC. AND AFFILIATED COMPANIES
SUPPLEMENTAL SCHEDULE
DECEMBER 31, 1998
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
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COLUMN A COLUMN B COLUMN C COLUMN D COLUMN G COLUMN H COLUMN I
---------------------- ------------------------------------- ---------- ---------- ---------- ----------- ----------
CURRENT
VALUE OF
ASSET ON
IDENTITY OF PURCHASE SELLING COST TRANSACTION
PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE OF ASSET DATE NET GAIN
---------------------- ------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Series of Transactions
Bank of America Short-Term Investment Fund $3,075,458 $3,075,458 $3,075,458
Bank of America Short-Term Investment Fund $3,111,447 3,111,447 3,111,447
Bank of America Giant Industries, Inc. Common Stock 560,410 560,410 560,410
Bank of America Giant Industries, Inc. Common Stock 970,845 303,067 970,845 $667,778
NOTE: Reportable transactions are those transactions which either singularly or in series of combined purchases
and sales during the year exceed 5% of the fair value of the Plan's assets at the beginning of the year.
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