SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) September 25, 1997
ULTRAMAR DIAMOND SHAMROCK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-11154 13-3663331
(State or other (Commission (IRS employer
Jurisdiction of file number) identification no.)
incorporation)
9830 Colonnade Boulevard, San Antonio, Texas 78230
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 210-641-6800
ITEM 2. ACQUISITION OF ASSETS
Acquisition of Total
The acquisition of all outstanding common shares of Total Petroleum
(North America), Ltd. ("Total") by Ultramar Diamond Shamrock Corporation
("UDS") (the "Arrangement"), acting through 3007152 Nova Scotia Company
("Canco"), a wholly owned subsidiary of UDS, pursuant to an Arrangement
Agreement (the "Arrangement Agreement") dated as of April 15,1997,
between UDS, Total and Canco, was consummated on September 25, 1997. As
a result of the Arrangement, as of the effective time of the Arrangement
(the "Effective Time"), each share of common stock of Total was
converted into the right to receive .322 shares of UDS common stock,
with cash to be paid in lieu of fractional shares, and UDS became
responsible for payment of the outstanding debt of Total. 39,354,700
shares of Total common stock were outstanding at the Effective Time,
resulting in the issuance of 12,672,213 shares of UDS common stock. UDS
repaid approximately $396,000,000 in indebtedness of Total and its
subsidiaries on September 25, 1997, and left one Total credit facility,
under which approximately $50,000,000 was outstanding, in place. The
common stock of Total ceased trading on the American Stock Exchange and
the Pacific Stock Exchange at the close of business on September 24,
1997. Total has approximately 6,000 employees and operates refineries
in Ardmore, Oklahoma, Alma, Michigan, and Denver, Colorado. The three
refineries have a combined throughput capacity of approximately 150,000
barrels of crude oil per day. Total distributes gasoline and
merchandise through approximately 2,100 branded outlets in the central
United States, of which approximately 560 are company owned. UDS has no
immediate plans to discontinue any of Total's operations.
Standstill Arrangement
21,893,955 shares of Total common stock were owned by Total S.A., a French
corporation, and its subsidiaries at the Effective Time. Total S.A. and
UDS have entered into an agreement (the "Stockholder Agreement") whose term
ends on the earlier of the fifth anniversary of the Effective Time or the
date on which the board of directors of UDS (the "UDS Board") recommends
a transaction which would result in a third party beneficially owning 50%
or more of the then-outstanding UDS common shares. Under the terms of the
Stockholder Agreement, neither Total S.A., nor its subsidiaries will,
subject to certain limited exceptions, (a) acquire, agree to acquire, or
make any offer to acquire any securities, business, or material asset of
UDS, (b) make any proposal to enter into any merger or business combination
involving UDS, (c) participate in any solicitation of proxies with respect
to any voting securities of UDS or seek to influence any person with
respect to any such voting securities in any manner which has not been
recommended by the UDS Board, (d) form, join, or participate in a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) with respect to any voting
securities of UDS, (e) otherwise act, alone or in concert with others, to
seek to control or influence the management policies or actions of UDS, (f)
disclose any intention, plan, or arrangement inconsistent with the
foregoing clauses (a) through (e), (g) advise, assist or encourage any
other persons to take any action described in any of the foregoing clauses
(a) through (e), or (h) transfer any of its UDS common stock, other voting
stock of UDS or securities exercisable or exchangeable for UDS common stock
or other voting shares of UDS other than (1) pursuant to an underwritten
public offering in accordance with the terms of the Stockholder Agreement,
(2) after the period ending 180 days after the Effective Time, pursuant to
a private sale to a person who, after giving effect to such sale, would not
beneficially own (within the meaning of Rule 13d-3 under the Exchange Act)
4% or more of the outstanding UDS common stock, (3) any transfer pursuant
to Rule 144 or 145, if applicable, or any similar rule under the Securities
Act of 1933, as amended (the "Securities Act"), provided that, during such
180-day period, such transfer has been previously approved by UDS, (4)
pursuant to a tender offer or other transaction recommended by the UDS
Board, or (5) any transfer to any wholly owned subsidiary of Total S.A..
Certain Financing Arrangements
On September 25, 1997, approximately $396,000,000 in outstanding
indebtedness of Total and its subsidiaries was repaid by UDS with the
proceeds of the issuance of commercial paper by UDS, the proceeds of
borrowings by UDS under uncommitted bank credit lines, the application of
available Total cash and cash equivalents, and the proceeds of a loan to
UDS in the amount of $150,000,000 under a credit agreement (the "Credit
Agreement") dated effective September 25, 1997, between UDS and Morgan
Guaranty Trust Company of New York, acting as agent for itself and certain
other banks party to the Credit Agreement. The Credit Agreement terminates
on March 25, 1998, does not permit loans to be readvanced after they are
repaid, and provides for interest on outstanding loans at variable rates
based on eurodollar rates, certificate of deposit rates, and the prime
rate. The Credit Agreement contains requirements for the prepayment of
loans outstanding under it to the extent cash becomes available to UDS
through the issuance of debt or equity, the disposition of assets, or the
realization of proceeds under insurance policies because of a significant
casualty occurance (with certain limited exceptions in each case). The
provisions of the Credit Agreement are substantially similar in other
respects to those of other committed credit facilities of UDS. UDS intends
to refinance a significant portion of the indebtedness incurred in
connection with the acquisition of Total through the public issuance of
debt securities from its existing universal shelf registration.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of the Businesses Acquired.
Audited financial statements of Total and Subsidiaries:
Reports of Independent Accountants*
Consolidated Statement of Income -- Year Ended
December 31, 1996 **
Consolidated Balance Sheet -- December 31, 1996**
Consolidated Statement of Cash Flows -- Year Ended
December 31, 1996**
Consolidated Statement of Shareholders' Equity
-- Year Ended December 31, 1996**
Notes to Consolidated Financial Statements**
Unaudited Interim Condensed Consolidated Financial Statements of Total and
Subsidiaries:
Consolidated Statement of Income -- Six Months Ended June 30, 1997***
Consolidated Balance Sheet -- June 30, 1997***
Consolidated Statement of Cash Flows -- Six Months Ended June 30, 1997***
Notes to Consolidated Financial Statements***
_____________
* The Reports of Independent Accountants of Arthur Andersen LLP
on page 17 and Price Waterhouse LLP on page 18 of the Annual
Report on Form 10-K for the year ended December 31, 1996 of
Total (Commission File No. 1-6184) are incorporated herein by
reference.
** The Audited Financial Statements of Total and Subsidiaries,
including the notes thereto, are incorporated herein by
reference to pages 19 through 33 of the Annual Report on Form
10-K for the year ended December 31, 1996 of Total.
*** The unaudited interim condensed consolidated financial
statements of Total and Subsidiaries, including the notes
thereto, are incorporated herein by reference to pages 3
through 7 of the Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1997 of Total.
(b) Pro Forma Financial Information.
The following pro forma combined financial data for UDS gives effect to
the Arrangement as if it occurred on June 30, 1997, in the case of the pro
forma balance sheet data, and on January 1, 1996 and 1997, in the case of
the pro forma income statement data.
The Arrangement will be accounted for by UDS using the purchase method
of accounting. In connection therewith, the purchase price will be
allocated to the assets and liabilities of Total as of the Effective Time,
and the results of operations of Total will be included in UDS's results
of operations thereafter. The purchase price has been allocated in the pro
forma entries based on management's estimates of the fair values of the
assets and liabilities of Total available as of the date of this Current
Report on Form 8-K and, in some instances, the effects of conforming
Total's accounting practices to those of UDS. Following the consummation
of the Arrangement, such allocation will be reflected in the consolidated
balance sheet of UDS in accordance with information then available, which
could be materially different from the estimates reflected herein. As
additional information becomes available, adjustments to UDS's consolidated
financial statements may be necessary which could, among other things,
result in an increased allocation of costs to assets acquired in the
Arrangement, including goodwill.
The pro forma financial data should be read in conjunction with the
historical financial statements of Total and UDS, including the notes
thereto. The pro forma financial data is based on various assumptions and
are not necessarily indicative of the results that actually would have
occurred had the Arrangement been consummated on the dates indicated or
that may occur in the future.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(Unaudited, in millions)
<TABLE> Pro Forma
Adjustments
UDS Total Increase Pro Forma
Historical Historical (Decrease) Combined
<S> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents $ 93.0 $ 16.2 $ - $ 109.2
Accounts and notes
receivable 446.0 196.8 - 642.8
Inventories 562.7 176.8 14.7(a) 754.2
Deferred income
taxes 32.0 - 29.1(b,c) 61.1
Prepaid expenses
and other cur-
rent assets 38.8 39.8 (17.3)(c,d) 61.3
Total current
assets 1,172.5 429.6 26.5 1,628.6
Property, plant
and equipment,
net 2,719.0 827.9 (12.6)(c,d) 3,534.3
Other assets 304.3 32.0 111.5(e,d) 447.8
Total assets $ 4,195.8 $ 1,289.5 $ 125.4 $ 5,610.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable and
current portion
of long-term debt $ 7.1 $ - $ - $ 7.1
Accounts payable 258.7 265.5 - 524.2
Accrued liabilities 282.5 21.8 73.2(d,h,j) 377.5
Taxes other than
income taxes 205.3 49.6 - 254.9
Income taxes 24.7 - - 24.7
Total current
liabilities 778.3 336.9 73.2 1,188.4
Long-term debt 1,527.6 497.1 - 2,024.7
Other long-term
liabilities 306.4 69.5 62.5(d,h, 438.4
i,j)
Deferred income
taxes 109.0 12.9 (33.2)(d) 88.7
Company obligated
Preferred Stock
of subsidiary 200.0 - - 200.0
Stockholders' Equity:
Common Stock 0.7 355.0 (354.9)(f,g) 0.8
Additional paid-in
capital 1,140.2 79.7 316.2(f,g) 1,536.1
ESOP, treasury
stock and other (30.0) - - (30.0)
Retained earnings 224.5 (61.6) 61.6(g) 224.5
Foreign currency
translation ad-
justment (60.9) - - (60.9)
Total stockholders'
equity 1,274.5 373.1 22.9 1,670.5
$ 4,195.8 $ 1,289.5 $ 125.4 $ 5,610.7
</TABLE>
(a) To record the adjustment of crude oil and products inventories from the
lower of cost as determined by the last-in, first-out method of accounting
or net realizable value to fair market value.
(b) To record a deferred tax benefit ($25.7 million) representing the
income tax effect on the pro forma adjustments, calculated at a combined
federal and state rate of 38%.
(c) To reclassify certain prepaid expenses to deferred income taxes and
property, plant and equipment to conform to UDS's presentation.
(d) To adjust Total's assets and liabilities to fair market value,
including valuation reductions to capitalized costs based on anticipated
changes in operations and brands.
(e) To record the excess of the acquisition cost of Total over the fair
value of net assets acquired ($119.1 million).
(f) To record the acquisition of each issued and outstanding Total share
in exchange for 0.322 of a share of UDS common stock.
(g) To eliminate Total's equity at June 30, 1997 to include Total in the
consolidated balance sheet of UDS.
(h) To record the incremental costs and expenses directly resulting from
the Acquisition. These costs primarily consist of financial advisory fees;
outside legal, accounting and professional fees; and severance and other
benefit payments to employees of Total that will result from the
elimination of certain operational and administrative functions.
(i) To establish additional reserves ($54.2 million), principally relating
to environmental costs of the acquired properties to conform to the
financial presentation of UDS.
(j) To account for refinery maintenance turnaround costs under the deferral
and amortization method versus the accrual method, to conform to the
financial presentation of UDS.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(Unaudited, in millions, except per share data)
<TABLE> Pro Forma
Adjustments
UDS Total Increase Pro Forma
Historical Historical (Decrease) Combined
<S> <C> <C> <C> <C>
Sales and other
revenues $ 4,964.6 $ 1,141.9 $ 349.5(a) $ 6,456.0
Operating costs
and expenses:
Costs of products
sold and
operating
expenses - 1,085.8 (1,085.8)(b) -
Costs of products
sold 3,135.5 - 918.9(b,c,d) 4,054.4
Operating expenses 402.4 - 139.8(b,c,d) 542.2
Selling, general
and administra-
tive expenses 141.7 24.7 8.7(c,d) 175.1
Taxes other than
income taxes 1,029.8 - 360.3(a,d) 1,390.1
Depreciation and
amortization 89.7 31.8 7.2(e) 128.7
Total operating
costs and
expenses 4,799.1 1,142.3 349.1 6,290.5
Operating income 165.5 (0.4) 0.4 165.5
Interest income 7.9 - - 7.9
Interest expense (62.1) (14.9) - (77.0)
Gain on sale of
assets 11.0 - - 11.0
Income (loss)
before income
taxes 122.3 (15.3) 0.4 107.4
Income tax
(benefit)
expense 48.4 (7.2) 0.1(f) 41.3
Net income (loss) 73.9 (8.1) 0.3 66.1
Dividend require-
ment on preferred
stock 2.2 - - 2.2
Net income (loss)
applicable to
common shares $ 71.7 $ (8.1) $ 0.3 $ 63.9
Primary Earnings
Per Share $ 0.95 $ (0.20) $ 0.72
Fully Diluted
Earnings Per
Share $ 0.93 $ (0.20) $ 0.72
Weighted Average Common Shares
Outstanding
(thousands of shares)
Primary 75,677 39,216 (26,588)(g) 88,305
Fully Diluted 79,151 39,216 (26,588)(g) 91,779
</TABLE>
(a) To conform to UDS's practice of reporting sales by including federal
excise and state motor fuel taxes in sales and taxes other than income
taxes.
(b) To conform to UDS's practice of reporting costs of products sold
separate from operating expenses.
(c) To conform to UDS's practice of reporting certain expenses relating to
wholesale marketing, product distribution, credit card and fleet fueling
as selling, general and administrative expenses.
(d) To conform to UDS's practice of reporting taxes other than income taxes
separate from costs of products sold, operating expenses and selling,
general and administrative expenses.
(e) To reflect amortization of the acquisition cost of Total in excess of
the fair value of the net assets acquired, as well as to reflect changes
in depreciation and amortization due to changes in asset values.
(f) To reflect the income tax effect on the pro forma adjustments,
calculated at a combined federal and state statutory rate of 38%.
(g) To reflect the changes in shares as a result of the Arrangement.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
DECEMBER 31, 1996
(Unaudited, in millions, except per share data)
<TABLE>
Pro Forma
Adjustments
UDS Total Increase Pro Forma
Historical Historical (Decrease) Combined
<S> <C> <C> <C> <C>
Sales and other
revenues $10,208.4 $ 2,614.3 $ 719.1(a) $13,541.8
Operating costs
and expenses:
Cost of products
sold and
operating
expenses - 2,486.8 (2,486.8)(b) -
Costs of products
sold 6,550.0 - 2,143.0(b,c,d) 8,693.0
Operating ex-
penses 928.1 - 290.8(b,c,d) 1,218.9
Selling, general
and administra-
tive expenses 302.0 52.3 17.2(c,d) 371.5
Taxes other than
income taxes 2,101.1 - 738.1(a,d) 2,839.2
Depreciation and
amortization 179.9 60.8 8.5(e) 249.2
Merger and inte-
gration costs 77.4 - - 77.4
Total operating
costs and ex-
penses 10,138.5 2,599.9 710.8 13,449.2
Operating income 69.9 14.4 8.3 92.6
Interest income 18.4 - - 18.4
Interest expense (128.5) (26.6) - (155.1)
Income (loss)
before income
taxes (40.2) (12.2) 8.3 (44.1)
Income tax
(benefit) ex-
pense (4.3) (6.8) 3.1(f) (8.0)
Net income(loss) (35.9) (5.4) 5.2 (36.1)
Dividend require-
ment on prefer-
red stock 4.3 - - 4.3
Net income (loss)
applicable to
common shares $ (40.2) $ (5.4) $ 5.2 $ (40.4)
Primary Earnings
Per Share $ (0.54) $ (0.14) $ (0.46)
Fully Diluted
Earnings Per
Share $ (0.54) $ (0.14) $ (0.46)
Weighted Average
Common Shares
Outstanding
(thousands of
shares)
Primary 74,427 38,913 (26,383)(g) 86,957
Fully Diluted 74,427 38,913 (26,383)(g) 86,957
</TABLE>
(a) To conform to UDS's practice of reporting federal excise and state
motor fuel taxes in sales and taxes other than income taxes.
(b) To conform to UDS's practice of reporting costs of products sold
separate from operating expenses.
(c) To conform to UDS's practice of reporting certain expenses relating to
wholesale marketing, product distribution, credit card and fleet fueling
as selling, general and administrative expenses.
(d) To conform to UDS's practice of reporting taxes other than income taxes
separate from costs of products sold, operating expenses and selling,
general and administrative expenses.
(e) To reflect amortization of the acquisition cost of Total in excess of
the fair value of net assets acquired, as well as to reflect changes in
depreciation and amortization due to changes in asset values.
(f) To reflect the income tax effect on the pro forma adjustments,
calculated at a combined federal and state statutory rate of 38%.
(g) To reflect the changes in shares as a result of the Arrangement.
(c) Exhibits.
2.1 Arrangement Agreement (incorporated by reference to
Exhibit 10.1 to the Report on Form 10-Q for the quarter ended
March 31, 1997 of UDS)
10.1 Stockholder Agreement (incorporated by reference to
Exhibit 10.2 to the Report on Form 10-Q for the quarter ended
March 31, 1997 of UDS)
10.2 Loan Agreement
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Price Waterhouse LLP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
Ultramar Diamond Shamrock Corporation has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
ULTRAMAR DIAMOND SHAMROCK CORPORATION
(REGISTRANT)
By: /s/ H. Pete Smith
H. PETE SMITH
EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
October 3, 1997
EXHIBIT INDEX
Exhibit
Number
2.1 Arrangement Agreement (incorporated by reference to Exhibit 10.1 to
the Report on Form 10-Q for the quarter ended March 31, 1997 of UDS)
10.1 Stockholder Agreement (incorporated by reference to Exhibit 10.2 to
the Report on Form 10-Q for the quarter ended March 31, 1997 of UDS)
10.2 Loan Agreement
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Price Waterhouse LLP
EXHIBIT 10.2
$150,000,000
LOAN AGREEMENT
dated as of
September 25, 1997
among
Ultramar Diamond Shamrock Corporation
The Banks Party Hereto
and
Morgan Guaranty Trust Company of New York,
as Administrative Agent
---------------------------
J.P. Morgan Securities Inc.
Chase Securities Inc.
and
CIBC Wood Gundy Securities Corp.,
Arrangers
CIBC Inc.,
Documentation Agent
The Chase Manhattan Bank,
Syndication Agent
TABLE OF CONTENTS
Page
----
ARTICLE 1
Definitions
Section 1.1. Definitions....................................... 1
Section 1.2. Accounting Terms and Determinations............... 17
Section 1.3. Types of Borrowings............................... 17
ARTICLE 2
The Credits
<PAGE>
Section 2.1. Commitments to Lend............................... 17
Section 2.2. Notice of Borrowing............................... 18
Section 2.3. Notice to Banks; Funding of Loans................. 18
Section 2.4. Notes............................................. 19
Section 2.5. Maturity of Loans................................. 19
Section 2.6. Interest Rates.................................... 19
Section 2.7. Fees.............................................. 22
Section 2.8. Optional Termination or Reduction of Commitments.. 22
Section 2.9. Mandatory Termination and Reduction of
Commitments; Mandatory Prepayments.............. 23
Section 2.10. Optional Prepayments.............................. 23
Section 2.11. Method of Electing Interest Rates................. 24
Section 2.12. General Provisions as to Payments................. 25
Section 2.13. Funding Losses.................................... 26
Section 2.14. Computation of Interest and Fees.................. 26
Section 2.15. Regulation D Compensation......................... 27
ARTICLE 3
Conditions
Section 3.1. Closing........................................... 27
Section 3.2. Borrowings........................................ 28
ARTICLE 4
Representations and Warranties
Section 4.1. Existence and Business; Power and Authorization;
Enforceable Obligations......................... 29
Section 4.2. No Violation...................................... 29
Section 4.3. Litigation........................................ 29
Section 4.4. Financial Information............................. 29
Section 4.5. Material Adverse Change........................... 30
Section 4.6. Use of Proceeds; Margin Regulations............... 30
Section 4.7. Governmental Approvals............................ 30
Section 4.8. Investment Company Act; Public Utility Holding
Company Act..................................... 30
Section 4.9. No Default........................................ 30
Section 4.10. U.S. Taxes........................................ 30
Section 4.11. Foreign Taxes..................................... 30
Section 4.12. ERISA............................................. 31
Section 4.13. Ownership of Property; Liens...................... 31
Section 4.14. Accuracy and Completeness of Information.......... 32
Section 4.15. Environmental Matters............................. 32
Section 4.16. Significant Subsidiaries.......................... 32
ARTICLE 5
Affirmative Covenants
Section 5.1. Information Covenants................................. 33
Section 5.2. Books, Records and Inspections........................ 36
Section 5.3. Payment of Taxes...................................... 36
Section 5.4. Compliance with Law................................... 37
Section 5.5. Existence, Etc........................................ 37
Section 5.6. Insurance............................................. 37
Section 5.7. Maintenance of Property............................... 37
Section 5.8. Ownership of Subsidiaries............................. 38
ARTICLE 6
Negative Covenants
Section 6.1. Restriction on Fundamental Changes.................... 38
Section 6.2. Transactions with Affiliates.......................... 38
Section 6.3. Liens................................................. 39
Section 6.4. Use of Proceeds; Margin Regulations................... 40
Section 6.5. Environmental Matters................................. 41
Section 6.6. Leverage Ratio........................................ 41
Section 6.7. Interest Coverage Ratio............................... 41
ARTICLE 7
Events of Default; Remedies
Section 7.1. Events of Default..................................... 41
Section 7.2. Rights and Remedies................................... 43
ARTICLE 8
The Agent
Section 8.1. Appointment and Authorization......................... 44
Section 8.2. Agent and Affiliates.................................. 44
Section 8.3. Action by Agent....................................... 44
Section 8.4. Consultation with Experts............................. 44
Section 8.5. Liability of Agent.................................... 44
Section 8.6. Indemnification....................................... 45
Section 8.7. Credit Decision....................................... 45
Section 8.8. Successor Agent....................................... 45
Section 8.9. Agent's Fee........................................... 46
ARTICLE 9
Change in Circumstances
Section 9.1. Basis for Determining Interest Rate Inadequate or
Unfair.............................................. 46
Section 9.2. Illegality............................................ 46
Section 9.3. Increased Cost and Reduced Return..................... 47
Section 9.4. Taxes................................................. 48
Section 9.5. Base Rate Loans Substituted for Affected Fixed Rate
Loans............................................... 50
ARTICLE 10
Miscellaneous
Section 10.1. Notices............................................... 50
Section 10.2. No Waivers............................................ 51
Section 10.3. Expenses; Indemnification............................. 51
Section 10.4. Sharing of Set-offs................................... 51
Section 10.5. Amendments and Waivers................................ 52
Section 10.6. Successors and Assigns................................ 52
Section 10.7. Collateral............................................ 54
Section 10.8. Governing Law; Submission to Jurisdiction............. 54
Section 10.9. Counterparts; Integration; Effectiveness.............. 54
Section 10.10. WAIVER OF JURY TRIAL.................................. 54
COMMITMENT SCHEDULE
SCHEDULE 1.1 - Significant Subsidiaries
SCHEDULE 4.12 - Plans
EXHIBIT A - Note
EXHIBIT B - Opinion of Counsel for the Borrower
EXHIBIT C - Opinion of Special Counsel for the Agent
EXHIBIT D - Assignment and Assumption Agreement
LOAN AGREEMENT dated as of September 25, 1997 among ULTRAMAR
DIAMOND SHAMROCK CORPORATION, the BANKS party hereto and MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Agent.
The parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1. Definitions. The following terms, as used
herein, have the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section 2.6(b).
"Adjusted Consolidated Debt" means, without duplication, (i)
Indebtedness which is or should be reflected on a consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries, minus (ii) to
the extent reflected as assets on a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries, the sum of all (a) direct
obligations of the United States of America, or of any agency thereof,
or obligations guaranteed as to principal and interest by the United
States of America, or of any agency thereof, in either case maturing not
more than 180 days from the date of acquisition thereof by such Person;
(b) cash; (c) time deposits, bankers acceptances or certificates of
deposit issued by a Restricted Bank maturing not more than 180 days from
the date of acquisition thereof; (d) commercial paper rated A-2 or
better or P-2 or better by S&P or Moody's, respectively, maturing
not more than 180 days from the date of acquisition thereof; and (e)
other debt obligations rated at least A- by S&P or A3 by Moody's
maturing not more than 180 days from the date of acquisition thereof.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Agent,
completed by such Bank and returned to the Agent (with a copy to the
Borrower).
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with such Person. For purposes of this
definition, a Person will be deemed to control another Person if such
Person possesses, directly or indirectly, the power to (a) vote 10% or
more of the securities having ordinary voting power for the election of
directors of such other Person or (b) direct or cause the direction of
the management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agent" means Morgan Guaranty Trust Company of New York in its
capacity as administrative agent for the Banks hereunder, and its
successors in such capacity.
"Applicable Lending Office" means, with respect to any Bank, (i) in
the case of its Domestic Loans, its Domestic Lending Office and (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Assessment Rate" has the meaning set forth in Section 2.6(b).
"Asset Sale" means any sale, lease or other disposition (including
any such transaction effected by way of merger or consolidation or any
sale-leaseback transaction) by the Borrower or any of its Subsidiaries
of any asset, but excluding (i) dispositions of inventory, single retail
sites, cash, cash equivalents and obsolete or worn-out equipment in the
ordinary course of business and (ii) dispositions to the Borrower or any
Subsidiary; provided that a disposition of assets not excluded by
clauses (i) and (ii) above during any fiscal year shall not constitute
an Asset Sale unless and until (and solely to the extent that) the
aggregate Net Cash Proceeds from such disposition, when combined with
all other such dispositions previously made during such fiscal year
exceeds $5,000,000.
"Assignee" has the meaning set forth in Section 10.06(c).
"Authorized Officer" means (i) with respect to any Person that
is a corporation, the chief executive officer, the president, any
executive vice president, any senior vice president, any vice president,
the treasurer, or the chief financial officer of such Person, (ii) with
respect to any Person that is a partnership, the president, any
executive vice president, any senior vice president, any vice president,
the treasurer or the chief financial officer of a general partner of
such Person, (iii) with respect to any Person that is a limited
liability company, the president, any executive vice president, any
senior vice president, any vice president, the treasurer or the chief
financial officer of a member of such Person, or (iv) with respect to
any other Person, such representative of such Person that is approved by
the Agent in writing. No Person will be deemed to be an Authorized
Officer until named on a certificate of incumbency of such Person
delivered to the Agent on or after the Effective Date.
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 10.06(c), and
their respective successors.
"Bankruptcy Code" means Title 11, Section 101 et seq. of the United
States Code titled "Bankruptcy," as amended from time to time, and any
successor statute thereto.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1%
plus the Federal Funds Rate for such day.
"Base Rate Loan" means a Loan which bears interest at the Base
Rate pursuant to the applicable Notice of Borrowing or Notice of
Interest Rate Election or the provisions of Article 9.
"Borrower" means Ultramar Diamond Shamrock Corporation, a
Delaware corporation, and its successors.
"Borrowing" has the meaning set forth in Section 1.3.
"Canadian Revolver" means the Credit Agreement dated as of
December 19, 1996 among the Borrower, Canadian Ultramar Company, the
banks listed therein and Canadian Imperial Bank of Commerce, as agent,
as amended from time to time.
"Capital Lease" means any lease which in accordance with GAAP is
required to be capitalized on a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries, and for purposes of this
Agreement, the amount of these obligations will be the amount so
capitalized.
"CD Base Rate" has the meaning set forth in Section 2.6(b).
"CD Loan" means a Loan which bears interest at a CD Rate
pursuant to the applicable Notice of Borrowing or Notice of Interest
Rate Election.
"CD Margin" has the meaning set forth in Section 2.6(b).
"CD Rate" means a rate of interest determined pursuant to
Section 2.6(b) on the basis of an Adjusted CD Rate.
"CD Reference Banks" means Canadian Imperial Bank of Commerce,
The Chase Manhattan Bank and Morgan Guaranty Trust Company of New York.
"Change of Control" will be deemed to have occurred at such
time as any Person or any Persons acting together which would constitute
a "group" (a "Group") for purposes of Section 13(d) of the Securities
Exchange Act becomes the beneficial owner of 35% or more of the total
voting power of all classes of voting stock of the Borrower or such
Person or Group succeeds in having sufficient of its nominees elected to
the board of directors of the Borrower such that such nominees, when
added to any existing director remaining on the board of directors of
the Borrower after such election who is an Affiliate of such Group, will
constitute a majority of the board of directors of the Borrower.
"Closing Date" means the date on or after the Effective Date on
which the Agent shall have received all the documents specified in or
pursuant to Section 3.01.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
"Commitment" means (i) with respect to each Bank listed on the
Commitment Schedule, the amount set forth opposite the name of such Bank
on the Commitment Schedule and (ii) with respect to each Assignee which
becomes a Bank pursuant to Section 10.6(c), the amount of the Commitment
thereby assumed by it, in each case as such amount may be changed from
time to time pursuant to Section 2.11 or 10.6(b), or in any such case
the obligation to make Loans hereunder at any time outstanding not to
exceed such amount, as the context may require.
"Consolidated Cash Interest Expense" means, for any period,
Consolidated Interest Expense excluding, however, interest expense not
payable in cash (including amortization of discount).
"Consolidated EBITDA" means, for any period, the sum of (i)
Consolidated Net Income for such period plus (ii) to the extent deducted
in the determination of such Consolidated Net Income, (A) provisions for
taxes based on income, (B) Consolidated Interest Expense, (C)
depreciation, (D) amortization and (E) distributions to be made to the
holders of TOPrS, all as determined on a consolidated basis for the
Borrower and its Consolidated Subsidiaries.
"Consolidated Interest Expense" means, for any period, total
interest expense (including that portion attributable to Capital Leases
in accordance with GAAP and capitalized interest that is payable in
cash), net of interest income, of the Borrower and its Consolidated
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of the Borrower and its Consolidated Subsidiaries,
including without limitation, all commissions, discounts, other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and distributions made to the holders of TOPrS.
"Consolidated Net Income" means, for any period, the net income
(or loss) of the Borrower and its Consolidated Subsidiaries for such
period; provided that there shall be excluded (i) any after-tax gains or
losses attributable to asset sales (other than sales in the ordinary
course of business) or returned surplus assets of any Plan, (ii) up to
$127,800,000 of non-recurring charges in connection with or as a result
of (A) the Merger or (B) certain changes to conform the accounting
practices of Ultramar Corporation and Diamond Shamrock, Inc. and (iii)
to the extent not included in clauses (i) and (ii), any net
extraordinary gains or net extraordinary losses.
"Consolidated Net Tangible Assets" means at any date the total
consolidated assets of the Borrower and its Consolidated Subsidiaries
less all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangible items.
"Consolidated Net Worth" shall mean, at any date, the sum of (i)
the consolidated shareholders' equity of the Borrower and its
Consolidated Subsidiaries plus (ii) 50% of the liquidation value of
outstanding TOPrS, each determined as of such date, all computed in
conformity with GAAP.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of
the Borrower in its consolidated financial statements if such statements
were prepared as of such date.
"Contest" means, with respect to any Tax, Lien, or claim, a
contest pursued in good faith and by appropriate proceedings diligently
conducted or pursued by other reasonable methods, so long as the failure
to pay or discharge any such Tax, Lien or claim during the pendency of
such contest would not otherwise have a Material Adverse Effect on the
Person subject to any such Tax, Lien or claim.
"Contingent Obligation" means, with respect to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor from the primary
obligee, (b) to advance or supply funds (1) for the payment of any such
primary obligation or (2) to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the primary obligee of
the ability of the primary obligor to make payment of such primary
obligation but excluding agreements on the part of such Person to
supply crude oil or petroleum products or feedstock, or (d) otherwise to
assure or hold harmless the primary obligee against loss in respect of
such primary obligation; provided, however, that the term Contingent
Obligation does not include endorsements of instruments for deposit or
collection in the ordinary course of business.
"Default" means any event, act or condition which constitutes
an Event of Default or which with notice or lapse of time, or both,
would constitute an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in New York City are authorized
or required by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending
Office) or such other office as such Bank may hereafter designate as its
Domestic Lending Office by notice to the Borrower and the Agent;
provided that any Bank may so designate separate Domestic Lending
Offices for its Base Rate Loans, on the one hand, and its CD Loans, on
the other hand, in which case all references herein to the Domestic
Lending Office of such Bank refers to either or both of such offices, as
the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.6(b).
"Effective Date" means the date this Agreement becomes
effective in accordance with Section 10.9.
"Environmental Approvals" means any Governmental Approvals
required under applicable Environmental Laws.
"Environmental Claim" means any written notice, claim, demand or
similar communication by any Person alleging potential liability
(including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources
damages, property damages, personal injuries, fines or penalties)
arising out of, based on or resulting from (i) the presence, or release
into the environment, of any Material of Environmental Concern at any
location, whether or not owned by such Person or (ii) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law or Environmental Approval.
"Environmental Laws" means all Laws relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), including, without limitation, Laws relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Materials of Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time. Section references to ERISA are to
ERISA, as in effect at the date of this Agreement and any subsequent
provisions of ERISA amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Controlled Group" means the group consisting of the
Borrower and all members of a controlled group of corporations and all
trades or businesses (whether or not incorporated) under common control
with the Borrower that, together with the Borrower, are treated as a
single employer under regulations of the PBGC.
"ERISA Plan" means (i) any Plan that (a) is not a Multiemployer
Plan and (b) has Unfunded Benefit Liabilities and (ii) any Plan that is
a Multiemployer Plan.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including
dealings in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative
Questionnaire as its Euro-Dollar Lending Office) or such other office,
branch or affiliate of such Bank as it may hereafter designate as its
Euro-Dollar Lending Office by notice to the Borrower and the Agent.
"Euro-Dollar Loan" means a Loan which bears interest at a
Euro-Dollar Rate pursuant to the applicable Notice of Borrowing or
Notice of Interest Rate Election.
"Euro-Dollar Margin" has the meaning set forth in Section
2.6(c).
"Euro-Dollar Rate" means a rate of interest determined pursuant
to Section 2.6(c) on the basis of a London Interbank Offered Rate.
"Euro-Dollar Reference Banks" means the principal London
offices of Canadian Imperial Bank of Commerce, The Chase Manhattan Bank
and Morgan Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or
any successor) for determining the maximum reserve requirement for a
member bank of the Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of "Eurocurrency liabilities"
(or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Euro-Dollar Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of
any Bank to United States residents).
"Event of Bankruptcy" means, with respect to any Person, the
occurrence of any of the following events:
(i) the commencement by such Person of a voluntary case
concerning itself under the Bankruptcy Code or similar Law;
(ii) an involuntary case is commenced against such Person and
the petition is not controverted within 30 days, or is not
dismissed within 60 days, after commencement of the case;
(iii) a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of the
property of such Person or such Person commences any other
proceedings under any reorganization, arrangement, adjustment of
debt, relief of debtors, dissolution, insolvency or liquidation or
similar Law of any jurisdiction whether now or hereafter in effect
relating to such Person or there is commenced against such Person
any such proceeding which remains undismissed for a period of 60
days;
(iv) the entrance of any order for relief or other order
approving any such case or proceeding involving such Person;
(v) such Person is adjudicated insolvent or bankrupt;
(vi) such Person suffers any appointment of any
custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60
days;
(vii) such Person makes a general assignment for the
benefit of creditors;
(viii) such Person shall fail to pay, or shall state that it is
unable to pay, or shall be unable to pay, its debts generally as
they become due;
(ix) such Person shall by any act or failure to act
consent to, approve of or acquiesce in any of the foregoing for a
period of 60 days; or
(x) any partnership or corporate action, as the case
may be, is taken by such Person for the purpose of effecting any of
the foregoing.
"Event of Default" means the occurrence of any of the events
described in Section 7.1.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Domestic Business Day next succeeding such day,
provided that (i) if such day is not a Domestic Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions
on the next preceding Domestic Business Day as so published on the next
succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to
Morgan Guaranty Trust Company of New York on such day on overnight
Federal funds transactions as determined by the Agent.
"Fiscal Quarter" means a fiscal quarter of the Borrower.
"Fiscal Year" means a fiscal year of the Borrower.
"Fixed Rate Loans" means CD Loans or Euro-Dollar Loans or both.
"GAAP" means generally accepted accounting principles as in
effect from time to time, applied on a basis consistent (except for
changes with respect to which the Borrower's independent public
accountants concur) with the most recent audited consolidated financial
statements of the Borrower and its Consolidated Subsidiaries delivered
to the Banks.
"Governmental Approval" means any authorization, consent,
approval, license, lease, ruling, permit, certification, exemption or
filing for registration by or with any Governmental Authority.
"Governmental Authority" means any nation, state, sovereign, or
government, any federal, regional, state, local or political subdivision
and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"Group of Loans" means at any time a group of Loans consisting
of (i) all Loans which are Base Rate Loans at such time, (ii) all
Euro-Dollar Loans having the same Interest Period at such time or (iii)
all CD Loans having the same Interest Period at such time, provided
that, if a Loan of any particular Bank is converted to or made as a Base
Rate Loan pursuant to Article 9, such Loan shall be included in the same
Group or Groups of Loans from time to time as it would have been in if
it had not been so converted or made.
"Indebtedness" means, of any Person, without duplication, (i)
all obligations of such Person for borrowed money or for the deferred
purchase price of property or services (other than current trade
payables within credit terms normally prevailing in the industry and
accrued liabilities incurred in the ordinary course of business of such
Person), (ii) all obligations of such Person in respect of principal
evidenced by a note, bond, debenture or similar instrument, (iii) the
obligations of such Person which are capitalized under Capital Leases,
(iv) all non-contingent obligations (and, for purposes of Sections 6.3
and 7.1(d), all contingent obligations) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit
or similar instrument, (v) all Indebtedness of any other Person secured
by any Lien on any property owned by such Person, whether or not such
Indebtedness has been assumed by such Person, (vi) all obligations of
such Person in respect of surety bonds, appeal bonds or other similar
instruments, (vii) in the case of UDS Capital I, 50% of the liquidation
value of outstanding TOPrS and (viii) all Contingent Obligations of such
Person.
"Indemnitee" has the meaning set forth in Section 10.3(a).
"Interest Period" means: (a) with respect to each Euro-Dollar
Loan, the period commencing on the date of borrowing specified in the
applicable Notice of Borrowing or on the date specified in an applicable
Notice of Interest Rate Election and ending one, two, three or six
months thereafter, as the Borrower may elect in such notice; provided
that:
(i) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day will be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period will end on the next preceding Euro-Dollar Business
Day;
(ii) any Interest Period which begins on the last Euro-Dollar
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) will, subject to clause (c) below,
end on the last Euro-Dollar Business Day of a calendar month; and
(iii) any Interest Period which would otherwise end after the
Termination Date will end on the Termination Date.
(b) with respect to each CD Loan, the period commencing on the
date of borrowing specified in the applicable Notice of Borrowing or on
the date specified in an applicable Notice of Interest Rate Election and
ending 30, 60, 90 or 180 days thereafter, as the Borrower may elect in
such notice; provided that:
(i) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day will be extended to the
next succeeding Euro-Dollar Business Day; and
(ii) any Interest Period which would otherwise end
after the Termination Date will end on the Termination Date.
"Interest Rate Protection Agreements" means any interest rate
exchange, collar, cap or similar agreements providing interest rate
protection entered into by the Borrower or any of its Subsidiaries.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, Guarantee, time
deposit or otherwise (but not including any demand deposit).
"Law" means, with respect to any Governmental Authority, any
constitutional provision, law, statute, rule, regulation, ordinance,
treaty, order, decree, judgment, decision, certificate, holding,
injunction, Governmental Approval or requirement of such Government
Authority along with the interpretation and administration thereof by
any Governmental Authority charged with the interpretation or
administration thereof. Unless the context clearly indicates otherwise,
the term "Law" includes each of the foregoing (and each provision
thereof) as in effect at the time in question, including any amendments,
supplements, replacements, or other modifications thereto or thereof,
and whether or not in effect at the date of this Agreement.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any
other type of preferential arrangement that has substantially the same
practical effect as a security interest, in respect of such asset. For
the purposes of this Agreement, the Borrower or any Subsidiary will be
deemed to own subject to a Lien any asset which it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale
agreement, Capital Lease or other title retention agreement relating to
such asset.
"Loan" means a Domestic Loan or a Euro-Dollar Loan and "Loans"
means Domestic Loans or Euro-Dollar Loans or both; provided that, if any
such loan or loans (or portions thereof) are combined or subdivided
pursuant to a Notice of Interest Rate Election, the term Loan refers to
the combined principal amount resulting from such combination or to each
of the separate principal amounts resulting from such subdivision, as
the case may be.
"Loan Documents" means this Agreement and the Notes.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.6(c).
"Major Casualty Proceeds" means (i) the aggregate insurance
proceeds received in connection with one or more related events by the
Borrower or any of its Subsidiaries under any insurance policy
maintained by the Borrower or any of its Subsidiaries covering losses
with respect to tangible real or personal property or improvement but
excluding recoveries for costs incurred in connection with environmental
remediation or (ii) any award or other compensation with respect to any
condemnation of property (or any transfer or disposition of property in
lieu of condemnation) received by the Borrower or any of its
Subsidiaries, if the amount of such aggregate proceeds or award or other
compensation exceeds $5,000,000.
"Margin Stock" has the meaning provided such term in Regulation
U.
"Material Adverse Effect" means a material adverse effect upon
(i) the business, results of operations, financial condition or
prospects of the Borrower and its Consolidated Subsidiaries taken as a
whole, (ii) the ability of the Borrower to perform under any Loan
Document or (iii) the ability of any of the Banks to enforce any of the
Obligations or any of their rights and remedies against the Borrower
under the Loan Documents; provided that the failure of the Borrower to
consummate the transactions contemplated by the Arrangement Agreement
dated April 15, 1997 among the Borrower, 3007152 Nova Scotia Company and
Total Petroleum (North American) Ltd. shall not constitute a Material
Adverse Effect.
"Material Financial Obligation" means a principal or face
amount of Indebtedness and/or payment or collateralization obligations
in respect of Interest Rate Protection Agreements of the Borrower and/or
one or more of its Subsidiaries, arising in one or more related or
unrelated transactions, exceeding in the aggregate $25,000,000.
"Materials of Environmental Concern" means all materials,
substances and wastes regulated as hazardous under Environmental Laws.
"Merger" means the merger of Diamond Shamrock, Inc. with and
into Ultramar Corporation pursuant to the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger dated
as of September 22, 1996 between Ultramar Corporation and Diamond
Shamrock, Inc.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a Plan which is a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any Reduction Event,
an amount equal to the cash proceeds received by the Borrower or any of
its Subsidiaries from or in respect of such Reduction Event (including
any cash proceeds received as income or other cash proceeds of any
noncash proceeds of any Asset Sale), less the sum of (x) any expenses
reasonably incurred by such Person in respect of such Reduction Event
and (y) if such Reduction Event is an Asset Sale, (A) the amount of any
Debt (including prepayment penalties and interest breakage fees) secured
by a Lien on any asset disposed of in such Asset Sale and discharged
from the proceeds thereof and (B) any taxes actually paid or to be
payable by such Person (as estimated by a senior financial or accounting
officer of such Person giving effect to the overall tax position of
such Person) in respect of such Asset Sale.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the Borrower's obligation to
repay the Loans, and "Note" means any one of such promissory notes
issued hereunder.
"Notice of Borrowing" means a Notice of Borrowing (as defined in
Section 2.2).
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.11.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of the Borrower from time to time owing to
the Agent or any Bank under any Loan Document including, without
limitation, (i) all principal, interest, and fees, (ii) any amounts the
Agent or any Bank expends on behalf of the Borrower because the Borrower
under the Loan Documents fails to make any such payment when required
under the terms of any Loan Document, (iii) all amounts required to be
paid under any indemnification or similar provision and (iv) all fees
and expenses required to be paid pursuant to Section 10.3 of this
Agreement.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 10.6(a).
"PBGC" means the Pension Benefit Guaranty Corporation
established under ERISA, or any successor thereto.
"Permitted Transaction" has the meaning set forth in Section
6.1(a).
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
"Plan" means any employee benefit plan covered by Title IV of
ERISA, the funding requirements of which: (i) were the responsibility of
the Borrower or a member of the ERISA Controlled Group at any time
within the five years immediately preceding the Effective Date, (ii) are
currently the responsibility of the Borrower or a member of the ERISA
Controlled Group, or (iii) hereafter become the responsibility of the
Borrower or a member of the ERISA Controlled Group, including any such
plans as may have been, or may hereafter be, terminated for whatever
reason; provided, however, that solely for purposes of Section 4.12 and
Section 5.1(e) hereof, (A) the term "ERISA Controlled Group" in clauses
(i) and (ii) will not include a Person that was a member of the ERISA
Controlled Group solely as a result of the acquisition of a member of
such ERISA Controlled Group by Lasmo plc and (B) the Ultramar U.S.
Employees Retirement Plan with respect to any period on or after January
1, 1993 should not be considered a Plan under clause (i).
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to
time as its Prime Rate.
"PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.
"Quarterly Payment Dates" means each March 31, June 30,
September 30 and December 31.
"Reduction Event" means (i) the incurrence of any Debt by the
Borrower or any of its Subsidiaries on any date on or after the
Effective Date (other than (A) Debt incurred for the purpose of
financing all or any part of the cost of acquiring any asset, (B) the
Loans and (C) Debt incurred in connection with any commercial paper
program or money market line of the Borrower or any of its
Subsidiaries), (ii) the issuance of any equity securities by the
Borrower or any of its Subsidiaries on any date on or after the
Effective Date (other than any equity securities issued (A) in
connection with stock option or other employee benefit plans, (B) to the
Borrower or any of its Subsidiaries, (C) in connection with the
Borrower's dividend reinvestment plan, (D) upon the conversion or
redemption of preferred stock of the Borrower, or (E) in connection with
the acquisition of any asset by the Borrower) (iii) any Asset Sale
consummated on any date on or after the Effective Date and (iv) receipt
of Major Casualty Proceeds on or after the Effective Date. The
description of any transaction as falling within the above definition
does not affect any limitation on such transaction imposed by Article 6
of this Agreement.
"Reference Banks" means the CD Reference Banks or the
Euro-Dollar Reference Banks, as the context may require, and "Reference
Bank" means any one of such Reference Banks.
"Regulations D, G, T, U and X" means such Regulations of the
Federal Reserve Board as may be from time to time in effect and any
successor to all or any portion thereof.
"Regulation S-X" means Regulation S-X of the SEC and any
successor to all or any portion thereof.
"Reportable Event" has the meaning set forth in Section 4043(c)
of ERISA (other than a Reportable Event as to which the provision of 30
days' notice to the PBGC is waived under applicable regulations or with
respect to which the PBGC has by public notice announced that it will
not impose penalties for failure to comply), or is the occurrence of any
of the events described in Section 4063(a) or 4068(a) of ERISA.
"Required Banks" means at any time Banks having at least 66
2/3% of the aggregate amount of the Commitments or, if the Commitments
shall have terminated, holding Notes evidencing at least 66 2/3% of the
aggregate unpaid principal amount of the Loans.
"Restricted Bank" means (i) any Bank, (ii) any Lender under the
Canadian Revolver and (iii) any other commercial bank whose unsecured
long-term debt is rated BBB+ or better by S&P and Baa1 or better by
Moody's.
"S&P" means Standard & Poor's Ratings Services.
"SEC" means the Securities and Exchange Commission.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
"Significant Subsidiary" means (i) each of the Subsidiaries set
forth in Schedule 1.1 and their respective successors and (ii) any other
Subsidiary of the Borrower which is or would hereafter be classified as
a "significant subsidiary" of the Borrower under Regulation S-X of the
Securities and Exchange Commission as in effect on the date hereof.
"Subsidiary" means, with respect to any Person, (i) any
corporation 50% or more of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the
time stock of any class or classes of such corporation have or might
have voting power by reason of the happening of any contingency) is at
the time owned by such Person directly or indirectly through
Subsidiaries and (ii) any partnership, limited liability company,
association, joint venture, trust or other entity in which such Person,
directly or indirectly through Subsidiaries, is either a general
partner, or has a 50% or greater equity interest at the time or
otherwise owns a controlling interest.
"Termination Date" means March 25, 1998, or, if such day is not
a Euro-Dollar Business Day, the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month, in
which case the Termination Date will be the next preceding Euro-Dollar
Business Day.
"Termination Event" means (i) a Reportable Event, or (ii) the
initiation of any action by the Borrower, any member of the ERISA
Controlled Group or any ERISA Plan fiduciary to terminate an ERISA Plan
(other than pursuant to Section 4041(b) of ERISA) or the treatment of an
amendment to an ERISA Plan as a termination under ERISA, or (iii) the
institution of proceedings by the PBGC under Section 4042 of ERISA to
terminate an ERISA Plan or to appoint a trustee to administer any ERISA
Plan.
"TOPrS" means the 8.32% Trust Originated Preferred Securities of
UDS Capital I described in the Prospectus Supplement dated as of June
20, 1997.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the actuarial present value of
accumulated benefits under such Plan exceeds (ii) the fair market value
of all Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plan (on the basis of the
assumptions used in the most recent actuarial valuation report for such
Plans).
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories
and possessions.
Section 1.2. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be
prepared in accordance with GAAP; provided that, if the Borrower
notifies the Agent that the Borrower wishes to amend any covenant in
Article 5 or Article 6 or the definition of any term used therein to
eliminate the effect of any change in GAAP on the operation of such
covenant (or if the Agent notifies the Borrower that the Required Banks
wish to amend Article 5 or Article 6 or any such definition for such
purpose), then the Borrower's compliance with such covenant shall be
determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant or definition is amended in a manner
satisfactory to the Borrower and the Required Banks.
Section 1.3. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of the several Banks to be made to the Borrower
pursuant to Article 2 on a single date designated pursuant to Section
2.02. The Borrowing is classified for purposes of this Agreement by
reference to the pricing of Loans comprising the Borrowing (e.g.,
"Euro-Dollar Borrowing" is used to describe the Borrowing hereunder if
the Borrowing is comprised initially of Euro-Dollar Loans).
ARTICLE 2
The Credits
Section 2.1. Commitments to Lend. Each Bank severally agrees, on
the terms and conditions set forth in this Agreement, to make a loan to
the Borrower pursuant to this Section on a date designated pursuant
to Section 2.02, in an amount equal to the amount of its Commitment.
The Commitments are not revolving in nature and amounts prepaid pursuant
to Section 2.09 or 2.10 shall not be reborrowed.
Section 2.2. Notice of Borrowing. The Borrower shall give the
Agent notice (a "Notice of Borrowing") not later than 10:30 A.M. (New
York City time) on (a) the date of the Borrowing if the Borrowing is a
Base Rate Borrowing, (b) the second Domestic Business Day before the
Borrowing if the Borrowing is a CD Borrowing and (c) the third
Euro-Dollar Business Day before the Borrowing if the Borrowing is a
Euro-Dollar Borrowing, specifying:
(i) the date of the Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or a Euro-
Dollar Business Day in the case of a Euro-Dollar Borrowing;
(ii) whether the Loans comprising the Borrowing are to
bear interest initially at the Base Rate, a CD Rate or a
Euro-Dollar Rate; and
(iii) in the case of a CD Borrowing or a Euro-Dollar
Borrowing, the duration of the initial Interest Period applicable
thereto, subject to the provisions of the definition of Interest
Period.
Section 2.3. Notice to Banks; Funding of Loans. (a) Promptly
after receiving a Notice of Borrowing, the Agent shall notify each Bank
of the contents thereof and such Notice of Borrowing shall not
thereafter be revocable by the Borrower.
(b) Not later than 1:00 P.M. (New York City time) on the date of
the Borrowing, each Bank shall make available its share of the
Borrowing, in Federal or other funds immediately available in New York
City, to the Agent at its address referred to in Section 10.1. Unless
the Agent determines that any applicable condition specified in Article
3 has not been satisfied, the Agent will make the funds so received from
the Banks available to the Borrower at the Agent's aforesaid address.
(c) Unless the Agent shall have received notice from a Bank before
the date of the Borrowing that such Bank will not make available to the
Agent such Bank's share of the Borrowing, the Agent may assume that such
Bank has made such share available to the Agent on the date of the
Borrowing in accordance with subsection (b) of this Section and the
Agent may, in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent that
such Bank shall not have so made such share available to the Agent, such
Bank and, if such Bank shall have failed to do so within three Domestic
Business Days of demand therefor by the Agent, the Borrower severally
agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such
amount is made available to the Borrower until the date such amount is
repaid to the Agent, at the Federal Funds Rate. If such Bank shall
repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Bank's Loan included in the Borrowing for purposes
of this Agreement.
Section 2.4. Notes. (a) The Borrower's obligation to repay
the Loans of each Bank shall be evidenced by a single Note payable to
the order of such Bank for the account of its Applicable Lending Office
in an amount equal to the aggregate unpaid principal amount of such
Bank's Loans.
(b) Each Bank may, by notice to the Borrower and the Agent,
request that the Borrower's obligation to repay such Bank's Loans of a
particular type be evidenced by a separate Note in an amount equal to
the aggregate unpaid principal amount of such Loans. Each such Note
shall be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it relates solely to Loans of the
relevant type. Each reference in this Agreement to the "Note" of such
Bank shall be deemed to refer to and include any or all of such Notes,
as the context may require.
(c) Promptly after receiving each Bank's Note pursuant to Section
3.1(a), the Agent shall forward such Note to such Bank. Each Bank shall
record the date, amount and type of each Loan made by it and the date
and amount of each payment of principal made by the Borrower with
respect thereto, and may, if such Bank so elects in connection with any
transfer or enforcement of its Note, endorse on the schedule forming a
part thereof appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding; provided that a Bank's
failure to make any such recordation or endorsement shall not affect the
Borrower's obligations hereunder or under the Notes. Each Bank is hereby
irrevocably authorized by the Borrower so to endorse its Note and to
attach to and make a part of its Note a continuation of any such
schedule as and when required.
Section 2.5. Maturity of Loans. Each Loan shall mature, and
the principal amount thereof shall be due and payable (together with
interest accrued thereon), on the Termination Date.
Section 2.6. Interest Rates. (a) The unpaid principal amount
of each Base Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate for such day.
Such interest shall be payable quarterly in arrears on each Quarterly
Payment Date and, with respect to the principal amount of any Base Rate
Loan converted to a CD Loan or a Euro-Dollar Loan, on the date such
amount is so converted. Any overdue principal of or interest on any Base
Rate Loan shall bear interest, payable on demand, for each day until
paid at a rate per annum equal to the sum of 1% plus the Base Rate for
such day.
(b) The unpaid principal amount of each CD Loan shall bear
interest on the outstanding principal amount thereof, for each day
during each Interest Period applicable thereto, at a rate per annum
equal to the sum of the CD Margin for such day plus the Adjusted CD Rate
applicable to such Interest Period; provided that if any CD Loan shall,
as a result of clause (2)(b) of the definition of Interest Period, have
an Interest Period of less than 30 days, such CD Loan shall bear
interest for each day during such Interest Period at the Base Rate for
such day. Such interest shall be payable for each Interest Period on the
last day thereof and, if such Interest Period is longer than 90
days, at intervals of 90 days after the first day thereof. Any overdue
principal of or interest on any CD Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of
1% plus the higher of (i) the sum of the CD Margin for such day plus the
Adjusted CD Rate applicable to such Loan at the date such payment was
due and (ii) the rate applicable to Base Rate Loans for such day.
The "CD Margin" means .36%.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
----------
* The amount in brackets being rounded upward, if necessary,
to the next higher 1/100 of 1%.
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Agent to be the average (rounded
upward, if necessary, to the next higher 1/100 of 1%) of the prevailing
rates per annum bid at 10:00 A.M. (New York City time) (or as soon
thereafter as practicable) on the first day of such Interest Period by
two or more New York certificate of deposit dealers of recognized
standing for the purchase at face value from each CD Reference Bank of
its certificates of deposit in an amount comparable to the principal
amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed
by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including
without limitation any basic, supplemental or emergency reserves) for a
member bank of the Federal Reserve System in New York City with deposits
exceeding five billion dollars in respect of new non-personal time
deposits in dollars in New York City having a maturity comparable to the
related Interest Period and in an amount of $100,000 or more. The
Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance
Fund classified as adequately capitalized and within supervisory
subgroup "A" (or a comparable successor assessment risk classification)
within the meaning of 12 C.F.R. Section 327.4(a) (or any successor
provision) to the Federal Deposit Insurance Corporation (or any
successor) for such Corporation's (or such successor's) insuring time
deposits at offices of such institution in the United States. The
Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) The unpaid principal amount of each Euro-Dollar Loan shall
bear interest on the outstanding principal amount thereof, for each day
during each Interest Period applicable thereto, at a rate per annum
equal to the sum of the Euro-Dollar Margin for such day plus the London
Interbank Offered Rate applicable to such Interest Period. Such interest
shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of
three months after the first day thereof.
The "Euro-Dollar Margin" means .235%.
The "London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of the respective rates per annum at which deposits
in dollars are offered to each of the Euro-Dollar Reference Banks in the
London interbank market at approximately 11:00 A.M. (London time) two
Euro-Dollar Business Days before the first day of such Interest Period
in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Euro-Dollar Reference Bank to which such
Interest Period is to apply and for a period of time comparable to such
Interest Period.
(d) Any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day until paid at a
rate per annum equal to the sum of 1% plus the Euro-Dollar Margin for
such day plus the higher of (i) the London Interbank Offered Rate
applicable to such Loan at the date such payment was due and (ii) the
quotient obtained (rounded upwards, if necessary, to the next higher
1/100 of 1%) by dividing (x) the average (rounded upwards, if necessary,
to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not longer
than six months as the Agent may select) deposits in dollars in an
amount approximately equal to such overdue payment due to each of the
Euro-Dollar Reference Banks are offered to such Euro-Dollar Reference
Bank in the London interbank market for the applicable period determined
as provided above by (y) 1.00 minus the Euro-Dollar Reserve Percentage
(or, if the circumstances described in clause (a) or (b) of Section 9.1
shall exist, at a rate per annum equal to the sum of 1% plus the rate
applicable to Base Rate Loans for such day).
(e) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall promptly notify the Borrower and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest
error.
(f) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Agent shall
determine the relevant interest rate on the basis of the quotation or
quotations furnished by the remaining Reference Bank or Banks or, if
none of such quotations is available on a timely basis, the provisions
of Section 9.1 shall apply.
Section 2.7. Fees. (a) The Borrower shall pay to the Agent,
for the account of the Banks, a facility fee of .09%. Such facility
fee shall accrue (i) from and including the Effective Date to but
excluding the date on which the Commitments terminate in their entirety,
on the daily aggregate amount of the Commitments and (ii) from and
including such date of termination to but excluding the date on which
the Loans shall be repaid in their entirety, on the daily aggregate
outstanding principal amount of the Loans. Such facility fee shall be
allocated among the Banks ratably in proportion to their Commitments;
provided that any facility fee accruing after the Commitments terminate
in their entirety shall be allocated among the Banks ratably in
proportion to the unpaid principal amounts of their respective Loans.
(b) Fees accrued under this Section shall be payable quarterly in
arrears on each Quarterly Payment Date and on the date on which the
Commitments terminate in their entirety (and, if later, the date on
which the Loans shall be repaid in their entirety).
Section 2.8. Optional Termination or Reduction of Commitments.
(a) The Borrower may, upon at least three Domestic Business Days' notice
to the Agent, terminate the Commitments at any time or ratably reduce
the Commitments from time to time by an amount of $5,000,000 or a larger
multiple thereof. Promptly after receiving a notice pursuant to this
subsection, the Agent shall notify each Bank of the contents thereof.
Section 2.9. Mandatory Termination and Reduction of Commitments;
Mandatory Prepayments. (a) The Commitments shall terminate at the
close of business on the earlier of the date of the Borrowing hereunder
and September 30, 1997.
(b) If a Reduction Event shall occur, an amount equal to the Net
Cash Proceeds thereof shall be applied (i) to the reduction of the
Commitments if still in existence until the Commitments shall have been
reduced to zero or (ii) to the prepayment of the Loans until the Loans
shall have been prepaid in full. Each such reduction and/or prepayment
shall be made within five-Euro-Dollar Business Days of receipt by the
Borrower or any of its Subsidiaries, as the case may be, of such Net
Cash Proceeds; provided that
(x) if the Net Cash Proceeds in respect of any reduction
Event are less than $5,000,000, such reduction and/or prepayment
shall be effective upon receipt of proceeds such that, together
with all other such amounts not previously applied, the Net Cash
Proceeds are equal to at least $5,000,000; and
(y) if any prepayment would otherwise require prepayment
of Fixed Rate Loans or portions thereof prior to the last day of
the then current Interest Period, then such prepayment shall,
unless the Agent otherwise notifies the Borrower upon
instructions of the Required Banks, be deferred to the last day
of such Interest Period.
The Borrower shall give the Administrative Agent at least three
Euro-Dollar Business Days' notice of each prepayment required to be
made pursuant to this subsection (b).
Section 2.10. Optional Prepayments. (a) Subject in the case
of any Fixed Rate Loans to Section 2.13, the Borrower may, upon at least
one Domestic Business Day's notice to the Agent, without penalty or
premium except as specified herein, prepay any Group of Base Rate Loans
or upon at least three Euro-Dollar Business Days' notice to the Agent,
prepay any Group of Fixed Rate Loans, in each case in whole at any time,
or from time to time in part in amounts aggregating $5,000,000 or any
larger multiple of $1,000,000, by paying the principal amount to be
prepaid together with interest accrued thereon to the date of
prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Group of Loans.
(b) Promptly upon receiving a notice of prepayment pursuant to
Section 2.10(b) or pursuant to this Section, the Agent shall notify each
Bank of the contents thereof and of such Bank's ratable share of such
prepayment, and such notice shall not thereafter be revocable by the
Borrower.
Section 2.11. Method of Electing Interest Rates. (a) The Loans
shall bear interest initially at the type of rate specified by the
Borrower in the Notice of Borrowing. Thereafter, the Borrower may from
time to time elect to change or continue the type of interest rate borne
by each Group of Loans (subject to subsection (d) of this Section and
the provisions of Article 9), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to CD Loans as of any Domestic Business Day
or to Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect
to continue such Loans as CD Loans for an additional Interest
Period, subject to Section 2.13 if any such conversion is effective
on any day other than the last day of the then current Interest
Period applicable to such Loans; and
(iii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or CD Loans or elect
to continue such Loans as Euro-Dollar Loans for an additional
Interest Period, subject to Section 2.13 if any such conversion is
effective on any day other than the last day of the then current
Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of
Interest Rate Election") to the Agent not later than 10:30 A.M. (New
York City time) on the third Euro-Dollar Business Day before the
conversion or continuation selected in such notice is to be effective
(unless the relevant Loans are to be converted from Domestic Loans of
one type to Domestic Loans of the other type or are CD Loans to be
continued as CD Loans for an additional Interest Period, in which case
such notice shall be delivered to the Agent not later than 10:30 A.M.
(New York City time) on the second Domestic Business Day before such
conversion or continuation is to be effective). A Notice of Interest
Rate Election may, if it so specifies, apply to only a portion of the
aggregate principal amount of the relevant Group of Loans; provided that
(i) such portion is allocated ratably among the Loans comprising such
Group and (ii) the portion to which such Notice applies, and the
remaining portion to which it does not apply, are each $5,000,000 or any
larger multiple of $1,000,000. If no such notice is timely received
before the end of an Interest Period for any Group of CD Loans or
Euro-Dollar Loans, the Borrower shall be deemed to have elected that
such Group of Loans be converted to Base Rate Loans at the end of such
Interest Period.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which
such notice applies;
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply with
the applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if the Loans resulting from such
conversion are to be CD Loans or Euro-Dollar Loans, the duration of
the next succeeding Interest Period applicable thereto; and
(iv) if such Loans are to be continued as CD Loans or
Euro-Dollar Loans for an additional Interest Period, the duration
of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election
shall comply with the provisions of the definition of Interest Period.
(c) Promptly after receiving a Notice of Interest Rate Election
from the Borrower pursuant to subsection (a) above, the Agent shall
notify each Bank of the contents thereof and such notice shall not
thereafter be revocable by the Borrower.
(d) The Borrower shall not be entitled to elect to convert any
Loans to, or continue any Loans for an additional Interest Period as, CD
Loans or Euro-Dollar Loans if a Default shall have occurred and be
continuing when the Borrower delivers notice of such election to the
Agent.
Section 2.12. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the
Loans and of fees hereunder, not later than 1:00 P.M. (New York City
time) on the date when due, in Federal or other funds immediately
available in New York City, to the Agent at its address referred to in
Section 10.1. The Agent will promptly distribute to each Bank its
ratable share of each such payment received by the Agent for the account
of the Banks. Whenever any payment of principal of, or interest on, the
Domestic Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of,
or interest on, the Euro-Dollar Loans shall be due on a day which is not
a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case
the date for payment thereof shall be the next preceding Euro-Dollar
Business Day.
(b) Unless the Borrower notifies the Agent before the date on
which any payment is due to the Banks hereunder that the Borrower will
not make such payment in full, the Agent may assume that the Borrower
has made such payment in full to the Agent on such date and the Agent
may, in reliance on such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank.
If and to the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each
day from the date such amount is distributed to such Bank until the date
such Bank repays such amount to the Agent, at the Federal Funds Rate.
Section 2.13. Funding Losses. If the Borrower makes any
payment of principal with respect to any Fixed Rate Loan or any Fixed
Rate Loan is converted (pursuant to Article 2 or 7 or Section 9.2) on
any day other than the last day of an Interest Period applicable
thereto, or the last day of an applicable period fixed pursuant to
Section 2.6(d), or if the Borrower fails to borrow, prepay, convert or
continue any Fixed Rate Loans after notice has been given to any Bank in
accordance with Section 2.3(a), 2.11(c) or ?, by reason of a failure to
satisfy a condition thereto or otherwise, the Borrower shall reimburse
each Bank within 15 days after demand for any resulting loss or expense
incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after such payment or conversion
or failure to borrow, prepay, convert or continue; provided that such
Bank shall have delivered to the Borrower a certificate as to the amount
of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
Section 2.14. Computation of Interest and Fees. Interest
based on the Prime Rate hereunder shall be computed on the basis of a
year of 365 days (or 366 days in a leap year) and paid for the actual
number of days elapsed (including the first day but excluding the last
day). All other interest and fees shall be computed on the basis of a
year of 360 days and paid for the actual number of days elapsed
(including the first day but excluding the last day).
Section 2.15. Regulation D Compensation. Each Bank may require
the Borrower to pay, contemporaneously with each payment of interest on
the Euro-Dollar Loans, additional interest on the related Euro-Dollar
Loan of such Bank at a rate per annum determined by such Bank up to but
not exceeding the excess of (i) (A) the applicable London Interbank
Offered Rate divided by (B) one minus the Euro-Dollar Reserve Percentage
over (ii) the applicable London Interbank Offered Rate. Any Bank wishing
to require payment of such additional interest (x) shall so notify the
Borrower and the Agent, in which case such additional interest on the
Euro-Dollar Loans of such Bank shall be payable to such Bank at the
place indicated in such notice with respect to each Interest Period
commencing at least three Euro-Dollar Business Days after such Bank
gives such notice and (y) shall notify the Borrower at least five
Euro-Dollar Business Days before each date on which interest is payable
on the Euro-Dollar Loans of the amount then due it under this Section.
ARTICLE 3
Conditions
Section 3.1. Closing. The closing hereunder shall occur
when the Agent has received all the following documents, each dated the
Closing Date unless otherwise indicated:
(a) a duly executed Note for the account of each Bank dated on or
before the Closing Date and complying with the provisions of Section
2.4;
(b) an opinion of the General Counsel of the Borrower,
substantially in the form of Exhibit E hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request;
(c) an opinion of Davis Polk & Wardwell, special counsel for the
Agent, substantially in the form of Exhibit F hereto and covering such
additional matters relating to the transactions contemplated hereby as
the Required Banks may reasonably request; and
(d) all documents the Agent may reasonably request relating to the
existence of the Borrower, the corporate authority for and the validity
of this Agreement and the Notes, and any other matters relevant hereto,
all in form and substance satisfactory to the Agent.
Promptly after the Closing Date occurs, the Agent shall notify the
Borrower and the Banks thereof, and such notice shall be conclusive and
binding on all parties hereto.
Section 3.2. Borrowings. The obligation of any Bank to make a
Loan on the occasion of the Borrowing is subject to the satisfaction of
the following conditions;
(a) the fact that a Closing Date shall have occurred on or before
September 30, 1997;
(b) receipt by the Agent of a Notice of Borrowing as required by
Section 2.2 or 2.3;
(c) the fact that, immediately before and after the Borrowing, no
Default shall have occurred and be continuing; and
(d) the fact that the representations and warranties of the
Borrower contained in this Agreement shall be true on and as of the date
of the Borrowing.
The Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of the Borrowing as to the facts
specified in clauses (c) and (d) of this Section.
ARTICLE 4
Representations and Warranties
In order to induce the Agent and the Banks to enter into this
Agreement and to make the Loans, the Borrower makes the following
representations and warranties:
Section 4.1. Existence and Business; Power and Authorization;
Enforceable Obligations. (a) The Borrower is a corporation duly
organized in accordance with the Laws of the State of Delaware. The
Borrower (i) has the corporate power and authority to own its property
and assets and to transact the business in which it is engaged or
presently proposes to engage and (ii) is authorized to do business as a
corporation and is in good standing in each jurisdiction in which it is
required to be authorized to do business, except where the failure to be
so authorized or in good standing could not reasonably be expected to
have a Material Adverse Effect. No Governmental Approval (other than
those already obtained) is necessary in connection with the formation
and continued existence of the Borrower, except where the failure to
obtain such Governmental Approval could not reasonably be expected to
have a Material Adverse Effect.
(b) The Borrower has the corporate power and authority to execute,
deliver, and perform its obligations under this Agreement and the other
Loan Documents. The Borrower has corporate power and authority to borrow
hereunder.
(c) The Borrower has taken all necessary corporate action to
authorize the execution, delivery and performance of the Loan Documents.
No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority or other Person is required in
connection with the execution, delivery and performance by the Borrower
of the Loan Documents or the validity and enforceability of the Loan
Documents.
(d) This Agreement and each other Loan Document has been duly
executed and delivered on behalf of the Borrower and is a legal, valid
and binding obligation of the Borrower enforceable in accordance with
its terms except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency or similar Laws affecting the enforcement of
rights of creditors generally and except to the extent that enforcement
of rights and remedies set forth therein may be limited by equitable
principles (regardless of whether enforcement is considered in a court
of law or a proceeding in equity).
Section 4.2. No Violation. Neither the execution, delivery and
performance by the Borrower of the Loan Documents, nor compliance by it
with the terms and provisions thereof nor the consummation of the
transactions contemplated thereby, (i) will contravene in any material
respect any applicable provision of Law, (ii) will conflict with or
result in any breach of any of the terms and conditions of, or result in
the creation or imposition of (or the obligation to create or impose)
any Lien upon any of the property or assets of the Borrower pursuant to
the terms of, any material agreement or instrument to which the Borrower
is a party or by which it or any of its property or assets is bound, or
(iii) will violate any provision of the certificate of incorporation or
by-laws or other organizational documents of the Borrower.
Section 4.3. Litigation. There are no actions, suits,
investigations or proceedings by or before any Governmental Authority or
arbitrator pending or, to the best knowledge of the Borrower, threatened
which could reasonably be expected to have a Material Adverse Effect.
Section 4.4. Financial Information. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of
December 31, 1996 and the related consolidated statements of income and
cash flows for the fiscal year then ended, reported on by Ernst & Young
LLP and set forth in the Borrower's 1996 Annual Report on Form 10-K, a
copy of which has been delivered to each of the Banks, fairly present,
in conformity with GAAP the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) The unaudited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of June 30, 1997 and the related
unaudited consolidated statements of income and cash flows for the six
months then ended, set forth in the Borrower's Quarterly Report on Form
10-Q for the quarter then ended, a copy of which has been delivered to
each of the Banks, fairly present, in conformity with GAAP or SEC
regulation, the consolidated financial position of the Borrower as of
such date and its consolidated results of operations and cash flows for
such six month period (subject to year-end adjustments).
Section 4.5. Material Adverse Change. Since December 31, 1996,
there has occurred no event, act or condition which has had, or could
reasonably be expected to have, a Material Adverse Effect.
Section 4.6. Use of Proceeds; Margin Regulations. All
proceeds of each Loan will be used by the Borrower only in accordance
with the provisions of Section 6.4.
Section 4.7. Governmental Approvals. All Governmental
Approvals which under applicable Law are required to have been obtained
prior to the date this representation is made or deemed made in
connection with the due execution, delivery and performance by the
Borrower of the Loan Documents to which it is a party have been
obtained.
Section 4.8. Investment Company Act; Public Utility Holding
Company Act. The Borrower is not (i) an "investment company" or a
company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended, or (ii) a "holding
company" or a company controlled by a "holding company" within the
meaning of PUHCA.
Section 4.9. No Default. No Default has occurred and is
continuing.
Section 4.10. U.S. Taxes. The Borrower and each of its
Subsidiaries have filed all United States Federal income tax returns and
all other material United States tax returns which to their knowledge
are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by them, except as
are being contested in good faith or which could not reasonably be
expected to have a Material Adverse Effect.
Section 4.11. Foreign Taxes. The Borrower and each of its
Subsidiaries have filed or caused to be filed all income tax returns in
all relevant foreign jurisdictions and all other material foreign tax
returns which are to their knowledge required to be filed by them and
have paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Borrower or any of its Subsidiaries, except
as are being contested in good faith or which could not reasonably be
expected to have a Material Adverse Effect.
Section 4.12. ERISA. As of the Closing Date, the Borrower is
responsible for funding no Plans other than those listed on the Schedule
having the same number as this Section. No accumulated funding
deficiency (as defined in Section 412 of the Code or Section 302 of
ERISA) or Reportable Event has occurred with respect to any Plan which
could reasonably be expected to have a Material Adverse Effect. There
are no Unfunded Liabilities under any Plan which when added to the
aggregate amount of Unfunded Liabilities with respect to all other Plans
at such time could reasonably be expected to have a Material Adverse
Effect. The Borrower and each member of the ERISA Controlled Group have
not failed to comply with the requirements of Section 515 of ERISA
with respect to any Multiemployer Plan and are not in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan to an extent which could reasonably be expected to
have a Material Adverse Effect. The aggregate potential total withdrawal
liability payments of the Borrower and the members of the ERISA
Controlled Group as determined in accordance with Title IV of ERISA as
if the Borrower and the members of the ERISA Controlled Group had
completely withdrawn from all Multiemployer Plans is not equal to or
greater than an amount which could reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Borrower and each
member of the ERISA Controlled Group, no Multiemployer Plan is or is
likely to be in reorganization (as defined in Section 4241 or ERISA or
Section 418 of the Code) or is insolvent (as defined in Section 4245 of
ERISA). No liability to the PBGC (other than required premium payments),
the Internal Revenue Service, any Plan or any trust established under
Title IV of ERISA has been, or is expected by the Borrower or any member
of the ERISA Controlled Group to be, incurred by the Borrower or any
member of the ERISA Controlled Group which could reasonably be expected
to have a Material Adverse Effect. No Lien under Section 412(n) of the
Code or 302(f) of ERISA or requirement to provide security under Section
401(a)(29) of the Code or Section 307 of ERISA has been or is reasonably
expected by the Borrower or any member of the ERISA Controlled Group to
be imposed on the assets of the Borrower or any member of the ERISA
Controlled Group. With respect to any employee benefit plan covered
under Title IV of ERISA that is excluded from the definition of Plan by
the proviso at the end of such definition, no liability, penalty, Lien
or security interest has been incurred or is expected to be incurred
which could reasonably be expected to have a Material Adverse Effect,
and to the Borrower's knowledge no other event or condition has occurred
or exists which could reasonably be expected to have a Material Adverse
Effect.
Section 4.13. Ownership of Property; Liens. The Borrower and
each of its Consolidated Subsidiaries has good and marketable title to
all of its property except for any defects which could not reasonably be
expected to have a Material Adverse Effect, subject to no Lien of any
kind except Liens permitted pursuant to Section 6.3 hereof.
Section 4.14. Accuracy and Completeness of Information. All
historical information heretofore or contemporaneously furnished by the
Borrower in writing to the Agent or any Bank for purposes of or in
connection with this Agreement is, to the knowledge of the Borrower,
true and accurate in all material respects on the date as of which such
information is dated and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time.
Section 4.15. Environmental Matters. (a) Except in each case
as could not reasonably be expected to have a Material Adverse Effect
(i) the Borrower and its Significant Subsidiaries are in compliance with
all applicable Environmental Laws, (ii) the Borrower and its Significant
Subsidiaries have all Environmental Approvals required to operate its
business as presently conducted and is in compliance with the terms and
conditions thereof, (iii) the Borrower and its Significant Subsidiaries
have not received any communication (written or oral) from a
Governmental Authority that alleges that the Borrower is not in
compliance with all Environmental Laws and Environmental Approvals
and (iv) to the Borrower's knowledge there are no circumstances that may
prevent or interfere with such compliance in the future.
(b) There is no Environmental Claim pending or, to the Borrower's
knowledge, threatened against the Borrower or any Significant Subsidiary
which could reasonably be expected to have a Material Adverse Effect.
(c) Without in any way limiting the generality of the foregoing,
except in each case as could not reasonably be expected to have a
Material Adverse Effect (i) there are no on-site or off-site locations
in which the Borrower or any Significant Subsidiary have stored,
disposed or arranged for the disposal of Materials of Environmental
Concern in violation of any Environmental Law (ii) there are no
underground storage tanks located on property owned or leased by the
Borrower or any Significant Subsidiary in violation of any Environmental
Law, (iii) there is no asbestos contained in or forming part of any
building, building component, structure or office space owned or leased
by the Borrower or any Significant Subsidiary and (iv) no
polychlorinated biphenyls (PCBs) are used or stored at any property or
leased by the Borrower or any Significant Subsidiary in violation of any
Environmental Law.
Section 4.16. Significant Subsidiaries. Each of the Borrower's
Significant Subsidiaries is a corporation, partnership, limited
liability company, association or other entity duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization, and has all powers and all material government licenses,
authorizations, consents and approvals required to carry on its business
as now conducted except for such powers, licenses, authorizations,
consents or approvals the absence of which could not reasonably be
expected to have a Material Adverse Effect.
ARTICLE 5
Affirmative Covenants
The Borrower covenants and agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any Note remains
unpaid unless otherwise agreed by the Required Banks:
Section 5.1. Information Covenants. The Borrower will furnish
to each Bank:
(a) Quarterly Financial Statements. Within 60 days after the
close of each fiscal quarter (other than the fourth fiscal quarter) in
each fiscal year of the Borrower, the unaudited consolidated balance
sheet of the Borrower as at the end of such quarterly period and the
related consolidated statements of income and cash flows for such
quarterly period and for the elapsed portion of the fiscal year ended
with the last day of such quarterly period, and in each case setting
forth comparative figures for the related periods in the prior fiscal
year;
(b) Annual Financial Statements. Within 120 days after the close
of each fiscal year of the Borrower, the audited consolidated balance
sheet of the Borrower as at the end of such fiscal year and the related
consolidated statements of income and cash flows for such fiscal year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on in a manner acceptable to the SEC
by independent public accountants of nationally recognized standing;
(c) Officer's Certificate. At the time of the delivery of the
financial statements referred to in clauses (a) and (b) above, a
certificate of an Authorized Officer of the Borrower which certifies (x)
that such financial statements fairly present the financial condition
and the results of operations of the Borrower on the dates and for the
period indicated, except as disclosed in the notes thereto, in
accordance with GAAP, subject, in the case of interim financial
statements, to normally recurring year-end adjustments, (y) the detailed
calculations made pursuant to Sections 6.6 and 6.7 as of the last day of
such period and (z) that such Authorized Officer has reviewed the terms
of the Loan Documents and has made, or caused to be made under his or
her supervision, a review in reasonable detail of the business and
financial condition of the Borrower during the accounting period covered
by such financial statements, and that as a result of such review such
Authorized officer has concluded that no Default has occurred and is
continuing as of the date of such certificate or, if any Default has
occurred and is continuing, specifying the nature and extent thereof and
the action the Borrower proposes to take in respect thereof;
(d) Notice of Default, Litigation or Other Event. Promptly and in
any event within three Domestic Business Days after the Borrower obtains
knowledge thereof, notice of (i) the occurrence of any Event of Default
and (ii) any litigation or governmental proceeding pending or threatened
against the Borrower or any Significant Subsidiary which could
reasonably be expected to have a Material Adverse Effect;
(e) ERISA.
(i) Except as could not reasonably be expected to have a
Material Adverse Effect, as soon as possible and in any event
within twenty days after the Borrower or any member of its ERISA
Controlled Group knows, or has reason to know, that:
(A) any Termination Event with respect to a Plan has
occurred or will occur, or
(B) any condition exists with respect to a Plan
which presents a material risk of termination of the Plan (if
such Plan has Unfunded Liabilities) or imposition of an excise
tax or other material liability on the Borrower or any member
of the ERISA Controlled Group, or
(C) the Borrower or any member of the ERISA
Controlled Group has applied for a waiver of the minimum
funding standard under Section 412 of the Code or Section 302
of ERISA or an accumulated funding deficiency has been
incurred, or
(D) the Borrower or any member of the ERISA
Controlled Group has engaged in a "prohibited transaction," as
defined in Section 4975 of the Code or as described in Section
406 of ERISA, that is not exempt under Section 4975 of the
Code and Section 408 of ERISA, or
(E) there exists any Unfunded Liabilities under any Plan
giving rise to a Lien under ERISA or the Code, or
(F) any condition exists with respect to a Multiemployer
Plan which presents a material risk of a partial or complete
withdrawal (as described in Section 4203 or 4205 of ERISA) by
the Borrower or any member of the ERISA Controlled Group from
a Multiemployer Plan, or
(G) the Borrower or any member of the ERISA Controlled
Group is in "default" (as defined in Section 4219(c)(5) of
ERISA) with respect to payments to a Multiemployer Plan, or
(H) a Multiemployer Plan is in "reorganization" (as
defined in Section 418 of the Code or Section 4241 of ERISA)
or is "insolvent" (as defined in Section 4245 of ERISA), or
(I) the Borrower and/or any member of the ERISA
Controlled Group have incurred any withdrawal liability (as
determined in accordance with Title IV of ERISA), or
(J) there is an action brought against the
Borrower or any member of the ERISA Controlled Group under
Section 502 of ERISA with respect to its failure to comply
with Section 515 of ERISA,
a certificate of an Authorized Officer of the Borrower setting
forth the details of each of the events described in clauses (A)
through (J) above, as applicable, and the action which the
Borrower or the applicable member of the ERISA Controlled Group
proposes to take with respect thereto, together with a copy of any
notice or filing from the PBGC or which may be required by the
PBGC or other agency of the United States government with respect
to each of the events described in clauses (A) through (J) above,
as applicable.
(ii) As soon as possible and in any event within ten
days after the receipt by the Borrower or any member of its ERISA
Controlled Group of a demand letter from the PBGC notifying the
Borrower or such member of the ERISA Controlled Group of its final
decision finding liability which, if remaining unpaid, could
reasonably be expected to have a Material Adverse Effect and the
date by which such liability must be paid, a copy of such letter,
together with a certificate an Authorized Officer of the Borrower
setting forth the action which the Borrower or such member of the
ERISA Controlled Group proposes to take with respect thereto.
(iii) With respect to any employee benefit plan covered by
Title IV of ERISA that is excluded from the definition of Plan by
the proviso at the end of such definition, as soon as possible
and in any event within ten days after the receipt by the Borrower
or any member of the ERISA Controlled Group of any notice, whether
or not in writing, that any material liability, penalty or Lien has
been or could reasonably be expected to be asserted against it with
respect to such plan, a certificate of an Authorized Officer of the
Borrower setting forth the relevant details and the action which
the Borrower or the applicable member of its ERISA Controlled Group
proposes to take with respect thereto, together with a copy of such
notice, if any.
(f) Environmental Matters. Promptly and in any event within ten
Domestic Business Days after the existence of any of the following
conditions, a certificate of an Authorized Officer of the Borrower
specifying in detail the nature of such condition and the Borrower's
proposed response thereto, in each case if the occurrence of such event
could reasonably be expected to have a Material Adverse Effect: (i) the
receipt by the Borrower of any communication (written or oral), whether
from a Governmental Authority or other Person that alleges that the
Borrower or any Significant Subsidiary is not in compliance with
applicable Environmental Laws or Environmental Approvals, (ii) any
Authorized Officer of the Borrower shall obtain actual knowledge that
there exists any Environmental Claim pending or threatened against the
Borrower or any Significant Subsidiary, or (iii) any release, emission,
discharge or disposal of any Material of Environmental Concern that
could reasonably be expected to form the basis of any Environmental
Claim against the Borrower or any Significant Subsidiary. The Borrower
will also maintain and make available for inspection by the Agent and
the Banks and their agents and employees accurate and complete records
of all investigations, studies, sampling and testing conducted, and any
and all remedial actions taken, by the Borrower or, to its knowledge and
to the extent obtained by the Borrower, by any Governmental Authority or
other Person in respect of Materials of Environmental Concern on or
affecting the properties of the Borrower and its Subsidiaries.
(g) Other Information. From time to time, such other information
or documents (financial or otherwise) as the Agent or any Bank may
reasonably
request.
Section 5.2. Books, Records and Inspections. The Borrower will
keep proper books of record and account in which full, true and correct
entries in conformity with GAAP and all requirements of Law shall be
made of all dealings and transactions in relation to its business and
activities. The Borrower will permit officers and designated
representatives of the Agent or any Bank to visit and inspect any of the
properties of the Borrower, and to examine the books of record and
account of the Borrower, and discuss the affairs, finances and accounts
of the Borrower with, and be advised as to the same by, its and their
officers and independent accountants, all upon reasonable notice and at
such reasonable times and intervals as the Agent or such Bank may
desire.
Section 5.3. Payment of Taxes. The Borrower will, and will
cause its Subsidiaries to, pay and discharge all material taxes,
assessments and governmental charges or levies imposed on it or on its
income or profits or on any of its property prior to the date on which
penalties attach hereto, except that neither the Borrower nor any such
Subsidiary will be required hereby to pay any such tax, assessment,
charge or levy the payment of which is the subject of a Contest.
Section 5.4. Compliance with Law. (a) The Borrower will own,
operate and maintain its business in compliance with all Laws, except
such noncompliance as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower will keep each of its property and assets free of
any Lien imposed pursuant to Environmental Laws which could reasonably
be expected to have a Material Adverse Effect and is not the subject of
a Contest, and will pay or cause to be paid when due any and all costs
necessary to accomplish the foregoing, including, without limitation,
the cost of identifying the nature and extent of the presence of any
such Materials of Environmental Concern on any real property owned or
leased by the Borrower, and the cost of delineation, removal, treatment
and disposal of any such Materials of Environmental Concern.
Section 5.5. Existence, Etc. The Borrower will preserve and
maintain its corporate existence, and all material rights and material
franchises, and cause each of its Subsidiaries to preserve and maintain
its material rights and material franchises except as permitted under
Section 6.1; provided that neither the Borrower not any of its
Subsidiaries shall be required to maintain any such rights or
franchises, the maintenance of which is determined by it in good faith
not to be in its best interest in the conduct of business.
Section 5.6. Insurance. The Borrower will maintain or cause
to be maintained with financially sound and reputable insurers,
insurance with respect to its properties and business, and the
properties and business of its Subsidiaries, against loss or damages of
the kinds customarily insured against by reputable companies in the same
or similar businesses, such insurance to be of such types and in such
amounts (with such deductible amounts or other forms of self-insurance)
as is customary for such companies under similar circumstances.
Section 5.7. Maintenance of Property. The Borrower will keep,
and cause each of its Subsidiaries to keep, all property necessary to
their respective businesses in good working order and condition
(ordinary wear and tear excepted); provided that neither the Borrower
nor any of its Subsidiaries shall be required to maintain any property,
the maintenance of which is determined by it in good faith not to be in
its best interest in the conduct of business.
Section 5.8. Ownership of Subsidiaries. The Borrower will own,
directly or indirectly, 100% of the outstanding voting securities of
each of its Significant Subsidiaries.
ARTICLE 6
Negative Covenants
The Borrower covenants and agrees that, so long as any Bank has
any Commitment hereunder or any amount payable under any Note remains
unpaid, unless otherwise agreed by the Required Banks:
Section 6.1. Restriction on Fundamental Changes. (a) The
Borrower will not enter into any merger or consolidation, liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution),
discontinue substantially all of its business or convey, lease, sell,
transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of its business or property,
provided that the Borrower may effect such a merger, consolidation or
sale (a "Permitted Transaction") so long as after giving effect to such
transaction, (x) no Default shall exist, (y) the surviving entity or
purchaser, if other than the Borrower, assumes, pursuant to the terms of
such transaction, each of the obligations of the Borrower under the Loan
Documents and (z) such assumption is expressly evidenced by an agreement
executed and delivered to the Banks within 30 days of such transaction
in a form reasonably satisfactory to the Agent. Without limiting the
generality of the foregoing, the transfer of more than 50% of the
Borrower's Consolidated Net Tangible Assets shall be deemed, for the
purposes of this Section 6.01(a), a transfer of all or substantially all
of the assets of the Borrower.
(b) No transaction permitted by this Section 6.01 shall result in
a discharge or novation of the Borrower under the Loan Documents. The
Agent may require as a condition to any transaction permitted by this
Section 6.01 evidence (including legal opinions) reasonably satisfactory
to the Agent establishing satisfaction of the conditions set forth in
this Section 6.01.
Section 6.2. Transactions with Affiliates. Neither the
Borrower nor any Subsidiary will enter into any transaction or series of
related transactions, whether or not in the ordinary course of business,
with any Affiliate (other than in any such Affiliate's capacity as a
director or executive officer of the Borrower) on terms that are less
favorable to the Borrower than those terms that might be obtained in a
comparable arms-length transaction at the time from a Person who is not
an Affiliate, in each case excluding transactions among the Borrower and
its Subsidiaries.
Section 6.3. Liens. Neither the Borrower nor any Subsidiary
will create, incur, assume or suffer to exist, directly or indirectly,
any Lien on any of its assets now owned or hereinafter acquired, other
than the following:
(i) Liens existing on the date hereof which are not otherwise
permitted under paragraphs (ii) through (xi) below and which Liens
secure Indebtedness outstanding on the date hereof in an aggregate
principal amount not exceeding $10,000,000;
(ii) Liens for taxes not yet due or which are subject
to a Contest;
(iii) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen, and other similar Liens and
any other Liens imposed by Law (other than any Lien imposed by
ERISA or pursuant to any Environmental Law) created in the ordinary
course of business for amounts not yet due or which are subject to
a Contest;
(iv) Liens (other than any Lien imposed by ERISA or pursuant to
any Environmental Law) incurred or deposits made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, leases, government contracts, performance
and return-of-money bonds, and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(v) Easements, rights-of-way, zoning, and similar restrictions
and other similar charges or encumbrances that do not materially
interfere with the conduct of the business of the Borrower or any
of its Subsidiaries and which do not detract materially from the
value of the property to which they attach or impair materially the
use thereof by the Borrower or any of its Subsidiaries or have a
Material Adverse Effect;
(vi) purchase money Liens not to exceed 100% of the applicable
purchase price; provided that such Lien shall attach within 180
days of the acquisition of the related asset and in no event shall
such Lien attach to current assets of the Borrower or any of its
Significant Subsidiaries;
(vii) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or any of its Subsidiaries, whether by
purchase, consolidation, merger, exchange or otherwise and not
created in contemplation of such acquisition; provided that in no
event shall such Lien attach to current assets of the Borrower or
any of its Significant Subsidiaries;
(viii) Liens securing Environmental Claims (which, for the
purposes of this paragraph (viii) shall be limited to undetermined
or inchoate Liens arising pursuant to applicable Environmental
Laws, arising in the ordinary course of business of the Borrower,
and in respect of which no steps or proceedings have been taken to
enforce such Lien);
(ix) Liens imposed by ERISA which could not reasonably be
expected to have a Material Adverse Effect;
(x) Liens on time deposit, demand, custodial or other banking
accounts of the Borrower or any Subsidiary, if such accounts exist
for the purpose of funding or securing insurance obligations of any
Subsidiary engaged in the business of providing commercial
insurance or reinsurance and which are in accordance with prudent
business practices and industry standards;
(xi) Liens on commingled stored crude oil and product
inventory existing to secure obligations of parties with which the
Borrower or its Subsidiaries have entered into crude oil processing
and crude oil and product storage agreements;
(xii) extensions, renewals and replacements of Liens
referred to in paragraphs (i) through (x); provided, that any such
extension, renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed or
replaced and that the obligations secured by any such extension,
renewal or replacement Lien shall be in an amount not greater than
the amount of the obligations secured by the Lien extended, renewed
or replaced; and
(xiii) Liens other than those described in paragraphs (i) through
(xii) above; provided that the aggregate outstanding principal
amount of Indebtedness secured by such Liens shall at no time
exceed 10% of Consolidated Net Worth.
Section 6.4. Use of Proceeds; Margin Regulations. No part of
the proceeds of any Loan will be used by the Borrower to purchase or
carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock. The Borrower shall not use the
proceeds of any Loan in a manner that will violate or be inconsistent
with the provisions of Regulations G, T, U or X.
Section 6.5. Environmental Matters. Except in each case where
such activity could not reasonably be expected to have a Material
Adverse Effect, the Borrower shall not permit (a) any underground
storage tanks to be located on any property owned or leased by the
Borrower in violation of any Environmental Law, (b) any asbestos to be
contained in or form part of any building, building component, structure
or office space owned or leased by the Borrower, and (c) any
polychlorinated biphenyls (PCB's) to be used or stored at any property
owned or leased by the Borrower.
Section 6.6. Leverage Ratio. Adjusted Consolidated Debt will
at no time exceed 60% of the sum of Adjusted Consolidated Debt and
Consolidated Net Worth.
Section 6.7. Interest Coverage Ratio. The ratio (the "Interest
Coverage Ratio") of (x) Consolidated EBITDA to (y) Consolidated Cash
Interest Expense will not, for any period of four consecutive Fiscal
Quarters, be less than 2.5:1.0.
ARTICLE 7
Events of Default; Remedies
Section 7.1. Events of Default. Each of the following events,
acts, occurrences or conditions shall constitute an Event of Default
under this Agreement, regardless of whether such event, act, occurrence
or condition is voluntary or involuntary or results from the operation
of Law or pursuant to or as a result of compliance by any Person with
any judgment, decree, order, rule or regulation of any Governmental
Authority:
(a) Failure to Make Payments. The Borrower shall (i) default
in the payment when due of any principal on the Loans or (ii) default in
the payment when due of any interest or fees hereunder for a period of
five Domestic Business Days after such interest or fees are due and
payable.
(b) Breach of Representation or Warranty. Any representation or
warranty made in any Loan Document or in any certificate or statement
delivered pursuant thereto shall prove to be false or misleading in any
material respect on the date as of which made or deemed made.
(c) Breach of Covenants. (i) The Borrower shall fail to perform
or observe any covenant or obligation arising under Section 6.1, 6.4,
6.6 or 6.7, or (ii) the Borrower shall fail to perform or observe any
other covenant or obligation arising under this Agreement or under any
other Loan Document and, in the case of this clause (ii), such failure
shall continue for a period of 30 days.
(d) Default Under Other Agreements. The Borrower or any
Significant Subsidiary shall default in the payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) of any amount owing in respect of principal or interest
(subject, in the case of interest, to any applicable grace period) in
respect of any Material Financial Obligation; or the Borrower or any
Significant Subsidiary shall default in the performance or observance of
any other obligation or condition with respect to any Material Financial
Obligation or any other event shall occur or condition exist, if, as a
result, such Material Financial Obligation has become or can then be
declared to be due and payable prior to its stated maturity other than
as a result of a regularly scheduled payment.
(e) Bankruptcy, Etc. Any Event of Bankruptcy shall occur with
respect to the Borrower or any Significant Subsidiary.
(f) Dissolution. Any order, judgment, or decree shall be
entered against the Borrower or any Significant Subsidiary decreeing its
involuntary dissolution or split up and such order shall remain
undischarged and unstayed for a period in excess of 30 days; or the
Borrower shall otherwise dissolve or cease to exist (except as permitted
by Section 6.1).
(g) ERISA. (i) Any Termination Event shall occur, or (ii) any
Plan shall incur an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived
or (iii) the Borrower or a member of its ERISA Controlled Group shall
have engaged in a transaction which is prohibited under Section 4975 of
the Code or Section 406 of ERISA which could result in the imposition of
liability on the Borrower or any member of its ERISA Controlled Group,
or (iv) the Borrower or any member of its ERISA Controlled Group shall
fail to pay when due an amount which it shall have become liable to pay
to the PBGC, any Plan or a trust established under Title IV of ERISA, or
(v) a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that an ERISA Plan must be
terminated or have a trustee appointed to administer any ERISA Plan, or
(vi) the Borrower or a member of its ERISA Controlled Group suffers a
partial or complete withdrawal from a Multiemployer plan or is in
"default" (as defined in Section 4219(c)(5) of ERISA) with respect to
payments to a Multiemployer Plan, or (vii) a proceeding shall be
instituted against the Borrower or any member of its ERISA Controlled
Group to enforce Section 515 of ERISA, or (viii) any other event or
condition shall occur or exist with respect to any Plan which could
subject the Borrower or any member of its ERISA Controlled Group to any
tax, penalty or other liability, and in each case in clauses (i) through
(viii) of this Section 7.01(g), such event or condition, together with
all other such events or conditions, if any, could reasonably be
expected to result in a lien, security interest, liability or penalty
which in the aggregate could reasonably be expected to have a Material
Adverse Effect.
(h) Judgments. Any judgment or decree shall be entered by a court
or courts of competent jurisdiction against the Borrower or any
Significant Subsidiary and such judgment or decree (i) shall be in an
amount greater than or equal to $25,000,000 and (ii) has not been
discharged, bonded, or vacated within thirty days from entry.
(i) Change of Control. A Change of Control shall occur.
Section 7.2. Rights and Remedies. (a) Upon the occurrence of
any Event of Default described in Section 7.1(e), the Commitments shall
automatically and immediately terminate and the unpaid principal amount
of and any and all accrued interest on the Loans and any and all accrued
fees and other Obligations shall automatically become immediately due
and payable, with all additional interest from time to time accrued
thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrower,
and the obligation of each Bank to make any Loan hereunder shall
thereupon terminate.
(b) Upon the occurrence and during the continuance of any Event of
Default (other than an Event of Default described in Section 7.1(e)),
the Agent shall at the request of the Required Banks, by notice to the
Borrower (i) declare that the Commitments are terminated, whereupon the
Commitments and the obligation of each Bank to make any Loan hereunder
shall immediately terminate, and (ii) declare the unpaid principal
amount of and any and all accrued and unpaid Fees and other Obligations
to be, and the same shall thereupon be, immediately due and payable with
all additional interest from time to time accrued thereon and without
presentation, demand, or protest or other requirements of any kind
(including, without limitation, diligence, presentment, notice of intent
to demand or accelerate and notice of acceleration), all of which are
hereby expressly waived by the Borrower.
ARTICLE 8
The Agent
Section 8.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the Notes as
are delegated to the Agent by the terms hereof or thereof, together with
all such powers as are reasonably incidental thereto.
Section 8.2. Agent and Affiliates. Morgan Guaranty Trust Company
of New York shall have the same rights and powers under this Agreement
as any other Bank and may exercise or refrain from exercising the same
as though it were not the Agent, and Morgan Guaranty Trust Company of
New York and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower or any
Subsidiary or affiliate of the Borrower as if it were not the Agent.
Section 8.3. Action by Agent. The obligations of the Agent
hereunder are only those expressly set forth herein. Without limiting
the generality of the foregoing, the Agent shall not be required to take
any action with respect to any Default, except as expressly provided in
Article 7.
Section 8.4. Consultation with Experts. The Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith
in accordance with the advice of such counsel, accountants or experts.
Section 8.5. Liability of Agent. Neither the Agent nor any of
its affiliates nor any of their respective directors, officers, agents
or employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the
Required Banks (or such different number of Banks as any provision
hereof expressly requires for such consent or request) or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the
Agent nor any of its affiliates nor any of their respective directors,
officers, agents or employees shall be responsible for or have any duty
to ascertain, inquire into or verify (A) any statement, warranty or
representation made in connection with this Agreement or any borrowing
hereunder; (B) the performance or observance of any of the covenants or
agreements of the Borrower; (C) the satisfaction of any condition
specified in Article 3, except receipt of items required to be delivered
to the Agent; or (D) the validity, effectiveness or genuineness of this
Agreement, the Notes or any other instrument or writing furnished in
connection herewith. The Agent shall not incur any liability by acting
in reliance upon any notice, consent, certificate, statement or other
writing (which may be a bank wire, telex, facsimile or similar writing)
believed by it to be genuine or to be signed by the proper party or
parties. Without limiting the generality of the foregoing, the use of
the term "agent" in this Agreement with reference to the 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.
Section 8.6. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent, its affiliates and
their respective directors, officers, agents and employees (to the
extent not reimbursed by the Borrower) against any cost, expense
(including counsel fees and disbursements), claim, demand, action, loss
or liability (except such as result from such indemnitees' gross
negligence or willful misconduct) that such indemnitees may suffer or
incur in connection with this Agreement or any action taken or omitted
by such indemnitees hereunder.
Section 8.7. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other
Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Bank also acknowledges that it will, independently
and without reliance upon the Agent or any other Bank, and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any
action under this Agreement.
Section 8.8. Successor Agent. The Agent may resign at any time by
giving notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by
the Required Banks, and shall have accepted such appointment, within 30
days after the retiring Agent gives notice of resignation, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a commercial bank organized or licensed under the Laws of
the United States or of any State thereof and having a combined capital
and surplus of at least $100,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the rights
and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Agent resigns as Agent hereunder, the provisions of this Article shall
inure to its benefit as to actions taken or omitted to be taken by it
while it was Agent.
Section 8.9. Agent's Fee. The Borrower shall pay to the Agent
for its own account fees in the amounts and at the times previously
agreed upon by the Borrower and the Agent.
ARTICLE 9
Change in Circumstances
Section 9.1. Basis for Determining Interest Rate Inadequate or
Unfair. If on or before the first day of any Interest Period for any CD
Loan or Euro-Dollar Loan:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) Banks having 66 2/3% or more of the aggregate principal amount
of the affected Loans advise the Agent that the Adjusted CD Rate or the
London Interbank Offered Rate, as the case may be, as determined by the
Agent will not adequately and fairly reflect the cost to such Banks of
funding their CD Loans or Euro-Dollar Loans, as the case may be, for
such Interest Period, the Agent shall forthwith give notice thereof to
the Borrower and the Banks, whereupon until the Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer
exist, (i) the obligations of the Banks to make CD Loans or Euro-Dollar
Loans, as the case may be, or to continue or convert outstanding Loans
as or into CD Loans or Euro-Dollar Loans, as the case may be, shall be
suspended and (ii) each outstanding CD Loan or Euro-Dollar Loan, as the
case may be, shall be converted into a Base Rate Loan on the last day of
the then current Interest Period applicable thereto.
Section 9.2. Illegality. If, on or after the date hereof, the
adoption of any applicable Law, rule or regulation, or any change in any
applicable Law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Euro-Dollar Lending Office)
with any request or directive (whether or not having the force of Law)
of any such authority, central bank or comparable agency shall make it
unlawful or impossible for any Bank (or its Euro-Dollar Lending Office)
to make, maintain or fund its Euro-Dollar Loans and such Bank shall so
notify the Agent, the Agent shall forthwith give notice thereof to the
other Banks and the Borrower, whereupon until such Bank notifies the
Borrower and the Agent that the circumstances giving rise to such
suspension no longer exist, the obligation of such Bank to make
Euro-Dollar Loans, or to continue or convert outstanding Loans as or
into Euro-Dollar Loans, shall be suspended. Before giving any notice to
the Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the
need for giving such notice and will not, in the judgment of such Bank,
be otherwise disadvantageous to such Bank. If such notice is given, each
Euro-Dollar Loan of such Bank then outstanding shall be converted to a
Base Rate Loan either (a) on the last day of the then current Interest
Period applicable to such Euro-Dollar Loan if such Bank may lawfully
continue to maintain and fund such Loan as a Euro-Dollar Loan to such
day or (b) immediately if such Bank shall determine that it may not
lawfully continue to maintain and fund such Loan as a Euro-Dollar Loan
to such day.
Section 9.3. Increased Cost and Reduced Return. (a) If on or
after the date hereof, the adoption of any applicable Law, rule or
regulation, or any change in any applicable Law, rule or regulation, or
any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank
(or its Applicable Lending Office) with any request or directive
(whether or not having the force of Law) of any such authority, central
bank or comparable agency shall impose, modify or deem applicable any
reserve (including, without limitation, any such requirement imposed by
the Board of Governors of the Federal Reserve System, but excluding
(i) with respect to any CD Loan any such requirement included in an
applicable Domestic Reserve Percentage and (ii) with respect to any
Euro-Dollar Loan any such requirement with respect to which such Bank is
entitled to compensation during the relevant Interest Period under
Section 2.15), special deposit, insurance assessment (excluding, with
respect to any CD Loan, any such requirement reflected in an applicable
Assessment Rate) or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Bank (or its
Applicable Lending Office) or shall impose on any Bank (or its
Applicable Lending Office) or on the United States market for
certificates of deposit or the London interbank market any other
condition affecting its Fixed Rate Loans, its Note or its obligation to
make Fixed Rate Loans and the result of any of the foregoing is to
increase the cost to such Bank (or its Applicable Lending Office) of
making or maintaining any Fixed Rate Loan, or to reduce the amount of
any sum received or receivable by such Bank (or its Applicable Lending
Office) under this Agreement or under its Note with respect thereto, by
an amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Agent), the Borrower shall
pay to such Bank such additional amount or amounts as will compensate
such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof,
the adoption of any applicable Law, rule or regulation regarding capital
adequacy, or any change in any such Law, rule or regulation, or any
change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of
Law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on capital of such
Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could
have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to
the Agent), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank (or its Parent) for such
reduction.
(c) Each Bank will promptly notify the Borrower and the Agent of
any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section
and will designate a different Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation and will
not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. A certificate of any Bank claiming compensation under this Section
and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any reasonable averaging and
attribution methods.
Section 9.4. Taxes. (a) For the purposes of this Section, the
following terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment
by the Borrower pursuant to this Agreement or under any Note, and all
liabilities with respect thereto, excluding (i) in the case of each Bank
and the Agent, taxes imposed on its income, and franchise or similar
taxes imposed on it, by a jurisdiction under the Laws of which such Bank
or the Agent (as the case may be) is organized or in which its principal
executive office is located or, in the case of each Bank, in which its
Applicable Lending Office is located and (ii) in the case of each Bank,
any United States withholding tax imposed on such payment at a rate up
to (but not exceeding) the rate at which United States withholding tax
would have been imposed on such a payment to such Bank under the Laws
and treaties in effect when such Bank first became a party to this
Agreement.
"Other Taxes" means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or
levies, which arise from any payment made pursuant to this Agreement or
under any Note or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note.
(b) All payments by the Borrower to or for the account of any Bank
or the Agent hereunder or under any Note shall be made without deduction
for any Taxes or Other Taxes; provided that, if the Borrower shall be
required by Law to deduct any Taxes or Other Taxes from any such
payment, (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) such Bank or the Agent (as
the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make
such deductions, (iii) the Borrower shall pay the full amount deducted
to the relevant taxation authority or other authority in accordance with
applicable Law and (iv) the Borrower shall furnish to the Agent, at its
address referred to in Section 10.1, the original or a certified copy of
a receipt evidencing payment thereof.
(c) The Borrower agrees to indemnify each Bank and the Agent for
the full amount of Taxes and Other Taxes (including, without limitation,
any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by such Bank or the Agent (as
the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This
indemnification shall be paid within 15 days after such Bank or the
Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the Laws of a jurisdiction outside
the United States, before it signs and delivers this Agreement in the
case of each Bank listed on the signature pages hereof and before it
becomes a Bank in the case of each other Bank, and from time to time
thereafter if requested in writing by the Borrower (but only so long as
such Bank remains lawfully able to do so), shall provide the Borrower
and the Agent with Internal Revenue Service form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that such Bank is entitled to benefits under an
income tax treaty to which the United States is a party which exempts
the Bank from United States withholding tax or reduces the rate of
withholding tax on payments of interest for the account of such Bank or
certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the
United States.
(e) For any period with respect to which a Bank has failed to
provide the Borrower or the Agent with the appropriate form pursuant to
Section 9.04(d) (unless such failure is due to a change in treaty, Law
or regulation occurring after the date on which such form originally was
required to be provided), such Bank shall not be entitled to
indemnification under Section 9.04(b) or (c) with respect to Taxes
imposed by the United States; provided that if a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax,
becomes subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as such Bank
shall reasonably request to assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or
for the account of any Bank pursuant to this Section, then such Bank
will change the jurisdiction of its Applicable Lending Office if, in the
judgment of such Bank, such change (i) will eliminate or reduce any such
additional payment which may thereafter accrue and (ii) is not otherwise
disadvantageous to such Bank.
Section 9.5. Base Rate Loans Substituted for Affected Fixed
Rate Loans. If (i) the obligation of any Bank to make, or to continue
or convert outstanding Loans as or to, Euro-Dollar Loans has been
suspended pursuant to Section 9.2 or (ii) any Bank has demanded
compensation under Section 9.3 with respect to its CD Loans or
Euro-Dollar Loans, and in either case the Borrower shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank through the
Agent, have elected that the provisions of this Section shall apply to
such Bank, then, unless and until such Bank notifies the Borrower that
the circumstances giving rise to such suspension or demand for
compensation no longer exist, all Loans which would otherwise be
made by such Bank as (or continued as or converted into) CD Loans or
Euro-Dollar Loans, as the case may be, shall instead be Base Rate Loans
(on which interest and principal shall be payable contemporaneously with
the related Fixed Rate Loans of the other Banks). If such Bank notifies
the Borrower that the circumstances giving rise to such suspension or
demand for compensation no longer exist, the principal amount of each
such Base Rate Loan shall be converted into a CD Loan or Euro-Dollar
Loan, as the case may be, on the first day of the next succeeding
Interest Period applicable to the related CD Loans or Euro-Dollar Loans
of the other Banks.
ARTICLE 10
Miscellaneous
Section 10.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including
bank wire, telex, facsimile or similar writing) and shall be given to
such party: (a) in the case of the Borrower or the Agent, at its
address, facsimile number or telex number set forth on the signature
pages hereof, (b) in the case of any Bank, at its address, facsimile
number or telex number set forth in its Administrative Questionnaire or
(c) in the case of any party, at such other address, facsimile number or
telex number as such party may hereafter specify for the purpose by
notice to the Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex
is transmitted to the telex number referred to in this Section and
the appropriate answerback is received, (ii) if given by facsimile, when
transmitted to the facsimile number referred to in this Section and
confirmation of receipt is received, (iii) if given by mail, 72 hours
after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iv) if given by any other
means, when delivered at the address referred to in this Section;
provided that notices to the Agent under Article 2 or Article 9 shall
not be effective until received.
Section 10.2. No Waivers. No failure or delay by the Agent or
any Bank in exercising any right, power or privilege hereunder or under
any Note shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Law.
Section 10.3. Expenses; Indemnification. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses of the Agent,
including reasonable fees and disbursements of special counsel for the
Agent, in connection with the preparation and administration of this
Agreement, any waiver or consent hereunder or any amendment hereof or
any Default or alleged Default hereunder and (ii) if an Event of Default
occurs, all reasonable out-of-pocket expenses incurred by the Agent and
each Bank, including the reasonable fees and disbursements of counsel,
in connection with such Event of Default and collection, bankruptcy,
insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Agent and each Bank,
their respective affiliates and the respective directors, officers,
agents and employees of the foregoing (each an "Indemnitee") and hold
each Indemnitee harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may
be incurred by such Indemnitee in connection with any investigative,
administrative or judicial proceeding (whether or not such Indemnitee
shall be designated a party thereto) brought or threatened relating to
or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder; provided that no Indemnitee shall
have the right to be indemnified hereunder for such Indemnitee's own
gross negligence or willful misconduct as determined by a court of
competent jurisdiction.
Section 10.4. Sharing of Set-offs. Each Bank agrees that if
it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount of
principal and interest then due with respect to any Note held by it
which is greater than the proportion received by any other Bank in
respect of the aggregate amount of principal and interest then due with
respect to any Note held by such other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in
the Notes held by the other Banks, and such other adjustments shall be
made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by
the Banks pro rata; provided that nothing in this Section shall impair
the right of any Bank to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the
payment of indebtedness of the Borrower other than its indebtedness
hereunder. The Borrower agrees, to the fullest extent it may effectively
do so under applicable Law, that any holder of a participation in a
Note, whether or not acquired pursuant to the foregoing arrangements,
may exercise rights of set-off or counterclaim and other rights with
respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of
such participation.
Section 10.5. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the
Required Banks (and, if the rights or duties of the Agent are affected
thereby, by the Agent); provided that no such amendment or waiver shall,
unless signed by all the Banks, (i) increase or decrease the Commitment
of any Bank (except for a ratable decrease in the Commitments of all
Banks) or subject any Bank to any additional obligation, (ii) reduce the
principal of or rate of interest on any Loan or any fees hereunder,
(iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for the termination of any
Commitment or (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Banks,
which shall be required for the Banks or any of them to take any action
under this Section or any other provision of this Agreement.
Section 10.6. Successors and Assigns. (a) 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 Borrower may not assign or otherwise transfer (other than pursuant
to a Permitted Transaction) any of its rights under this Agreement
without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans. If a Bank grants any such
participating interest to a Participant, whether or not upon notice to
the Borrower and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Agent
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating
interest shall provide that such Bank shall retain the sole right and
responsibility to enforce the Borrower's obligations hereunder
including, without limitation, the right to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such participation agreement may provide that such Bank will not agree
to any modification, amendment or waiver of this Agreement described in
clause (i), (ii) or (iii) of Section 10.5 without the consent of the
Participant. The Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the
benefits of Section 2.15 and Article 9 with respect to its participating
interest. An assignment or other transfer which is not permitted by
subsection (c) or (d) below shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in
accordance with this subsection.
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part
(equivalent to an initial Commitment of not less than $10,000,000) of
all, of its rights and obligations under this Agreement and the Notes,
and such Assignee shall assume such rights and obligations, pursuant to
an Assignment and Assumption Agreement in substantially the form of
Exhibit G hereto signed by such Assignee and such transferor Bank, with
(and subject to) the subscribed consent of the Borrower, which shall not
be unreasonably withheld, and the Agent; provided that if an Assignee is
an affiliate of such transferor Bank or was a Bank immediately before
such assignment, no such consent of the Borrower or the Agent shall be
required. When such instrument has been signed and delivered by the
parties thereto and such Assignee has paid to such transferor Bank the
purchase price agreed between such transferor Bank and such Assignee,
such Assignee shall be a Bank party to this Agreement and shall have all
the rights and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall be released
from its obligations hereunder to a corresponding extent, and no further
consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection, the transferor Bank, the
Agent and the Borrower shall make appropriate arrangements so that, if
required, a new Note is issued to the Assignee. In connection with any
such assignment, the transferor Bank shall pay to the Agent an
administrative fee for processing such assignment in the amount of
$2,500. If the Assignee is not incorporated under the Laws of the United
States or a state thereof, it shall deliver to the Borrower and the
Agent certification as to exemption from deduction or withholding of any
United States federal income taxes in accordance with Section 9.3.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No
such assignment shall release the transferor Bank from its obligations
hereunder.
(e) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section
9.3 or 9.4 than such Bank would have been entitled to receive with
respect to the rights transferred, unless such transfer is made with the
Borrower's prior written consent or by reason of the provisions of
Section 9.2, 9.3 or 9.4 requiring such Bank to designate a different
Applicable Lending Office under certain circumstances or at a time when
the circumstances giving rise to such greater payment did not exist.
Section 10.7. Collateral. Each of the Banks represents to the
Agent and each of the other Banks that it in good faith is not relying
upon any "margin stock" (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this
Agreement.
Section 10.8. Governing Law; Submission to Jurisdiction. This
Agreement and each Note shall be governed by and construed in accordance
with the Laws of the State of New York. The Borrower hereby submits to
the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York State court
sitting in New York City for purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated
hereby. The Borrower irrevocably waives, to the fullest extent permitted
by Law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
Section 10.9. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement constitutes the
entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof. This Agreement shall
become effective when the Agent has received from each of the parties
hereto a counterpart hereof signed by such party or facsimile or other
written confirmation satisfactory to the Agent confirming that such
party has signed a counterpart hereof.
Section 10.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the
day and year first above written.
ULTRAMAR DIAMOND
SHAMROCK CORPORATION
By /s/ Steven A. Blank
------------------------------
Title: Vice President and Treasurer
Address: 9830 Colonnade Boulevard
San Antonio, TX 78230
Facsimile: 210-641-8484
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By /s/ Kathryn Sayko-Yanes
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Title: Vice President
THE CHASE MANHATTAN BANK
By /s/ Peter M. Ling
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Title: Vice President
CIBC INC.
By /s/ Aleksandra K. Dymanus
------------------------------
Title: Authorized Signatory
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as
Agent
By /s/ Kathryn Sayko-Yanes
------------------------------
Title: Vice President
Address: 60 Wall Street
New York, NY 10260
Facsimile: 212-648-5014
COMMITMENT SCHEDULE
Name of Lender and applicable Bank
Lending Office Commitment
- ----------------------------------------------------- ----------
Morgan Guaranty Trust Company of New York............ $ 50,000,000
CIBC Inc............................................. $ 50,000,000
The Chase Manhattan Bank............................. $ 50,000,000
-----------
Total................................................ $150,000,000
===========
SCHEDULE 1.1
SIGNIFICANT SUBSIDIARIES
Canadian Ultramar Company
Diamond Shamrock Refining and Marketing Company
D-S Venture Company, L.L.C.
Diamond Shamrock Refining Company, L.P.
Ultramar Credit Corporation
Ultramar Inc.
Ultramar Ltee
SCHEDULE 4.12
PLANS
Ultramar Diamond Shamrock Corporation Career Average Retirement Income
Plan
Ultramar Diamond Shamrock Corporation Retirement Income Plan
Ultramar Diamond Shamrock Corporation Employees' Retirement Plan
Ultramar Diamond Shamrock Corporation Employee Stock Ownership Plan I
Ultramar Diamond Shamrock Corporation Employee Stock Ownership Plan II
Ultramar Diamond Shamrock Corporation 401(k) Retirement Savings Plan
Ultramar Diamond Shamrock Corporation U.S. Savings Incentive Plan
Ultramar Energy 401(k) Plan
Ultramar Diamond Shamrock Corporation U.S. Employee's Retirement Plan
Multiemployer Plans
New England Teamsters & Trucking Industry Pension Fund
Automotive Industries Welfare Fund
Western Conference of Teamsters Pension Trust Fund - Northern California
Area
Western Conference of Teamsters Pension Trust Fund - Southern Area
EXHIBIT A - Note
Note
New York, New York
___________ __, 199_
For value received, Ultramar Diamond Shamrock Corporation, a
Delaware corporation (the "Borrower"), promises to pay to the order of
______________________ (the "Bank"), for the account of its Applicable
Lending Office, the unpaid principal amount of each Loan made by the
Bank to the Borrower pursuant to the Loan Agreement referred to below on
the maturity date provided for in the Loan Agreement. The Borrower
promises to pay interest on the unpaid principal amount of each such
Loan on the dates and at the rate or rates provided for in the Loan
Agreement. All such payments of principal and interest shall be made in
lawful money of the United States in Federal or other immediately
available funds at the office of Morgan Guaranty Trust Company of New
York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and,
if the Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing information with
respect to each such Loan then outstanding may be endorsed by the Bank
on the schedule attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided that the failure of the
Bank to make any such recordation or endorsement shall not affect the
Borrower's obligations hereunder or under the Loan Agreement.
This note is one of the Notes referred to in the Loan Agreement
dated as of September 25, 1997 among Ultramar Diamond Shamrock
Corporation, the Banks party thereto and Morgan Guaranty Trust Company
of New York, as Agent (as the same may be amended from time to time, the
"Loan Agreement"). Terms defined in the Loan Agreement are used herein
with the same meanings. Reference is made to the Loan Agreement for
provisions for the prepayment hereof and the acceleration of the
maturity hereof.
Ultramar Diamond Shamrock
Corporation
By
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Name:
Title:
Loans and Payments of Principal
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of of Principal Notation
Date Loan Loan Repaid Made By
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EXHIBIT B - Opinion of Counsel for the Borrower
Opinion of
General Counsel of the Borrower
September 25, 1997
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
I am Executive Vice President, General Counsel and Secretary of
Ultramar Diamond Shamrock Corporation (the "Borrower") and I am familiar
with the Loan Agreement dated as of September 25, 1997 (the "Loan
Agreement") among the Borrower, the Banks party thereto, and Morgan
Guaranty Trust Company of New York, as Agent. Terms defined in the Loan
Agreement are used herein as therein defined. The Loan Agreement and the
Notes are collectively referred to as the "Documents." This opinion is
being rendered to you pursuant to Section 3.01(b) of the Loan Agreement.
I have examined such corporate documents of the Borrower,
certificates of public officials, and other agreements, instruments,
certificates and documents as I have deemed necessary as a basis for the
opinions expressed herein.
In rendering the opinions expressed below, I have assumed, with
your permission and without independent verification, that:
(a) the signatures of all persons (other than the Borrower)
signing documents in connection with which this opinion is rendered are
genuine and authorized;
(b) all documents submitted to me as originals or duplicate
originals are authentic;
(c) all documents submitted to me as copies, whether
certified or not, conform to authentic original documents; and
(d) all parties to the Loan Agreement (other than the
Borrower) have full power and authority to execute, deliver and perform
their obligations under such documents, and all such documents have been
duly authorized by all necessary action on the part of parties thereto
(other than the Borrower), have been duly executed and delivered by such
other parties, and are valid, binding and enforceable obligations of
such other parties.
Subject to the foregoing and to further qualifications and
limitations set forth below, I am of the opinion that:
1. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of Delaware and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now
conducted.
2. The execution, delivery and performance by the Borrower of
the Loan Agreement and the Notes (a) are within the Borrower's corporate
powers, (b) have been duly authorized by all necessary corporate action,
(c) do not require any action by or in respect of, or filing with, any
governmental body, agency or official and (d) do not contravene, or
constitute a default under, any provision of applicable Law or
regulation or of the Borrower's certificate of incorporation or by-laws
or, to the best of my knowledge, of any agreement, judgment, injunction,
order, decree or other instrument binding upon the Borrower or any of
its Subsidiaries or result in the creation or imposition of any Lien on
any asset of the Borrower or any of its Significant Subsidiaries.
3. The Loan Agreement constitutes a valid and binding agreement
of the Borrower and each Note issued thereunder today constitutes a
valid and binding obligation of the Borrower, in each case enforceable
in accordance with its terms.
4. There is no action, suit or proceeding pending against, or
to the best of my knowledge threatened against or affecting, the
Borrower or any of its Subsidiaries before any court or arbitrator or
any governmental body, agency or official which could reasonably be
expected to have a Material Adverse Effect or which in any manner draws
into question the validity of the Loan Agreement or the Notes.
5. Each of the Borrower's corporate Significant Subsidiaries is
a corporation validly existing and in good standing under the laws of
its jurisdiction of incorporation except where the failure to validly
exist or to be in good standing could not reasonably be expected to have
a Material Adverse Effect.
My opinions are subject to the following qualifications:
(i) my opinions are subject to the effect of bankruptcy,
insolvency, reorganization, arrangement, moratorium or
other similar laws affecting creditors' or secured creditors'
rights generally;
(ii) the binding effect and enforceability of the
Documents and the availability of injunctive relief or other
equitable remedies thereunder are subject to the effect of general
principles of equity (regardless of whether enforcement is
considered in proceedings at law or in equity);
(iii) the binding effect and the enforceability of the
Documents are subject to the effect of laws and judicial decisions
which have imposed duties and standards of conduct (including,
without limitation, obligations of good faith, fair dealing and
reasonableness) upon creditors or secured creditors;
(iv) I express no opinion as to the enforceability
of cumulative remedies to the extent such cumulative remedies
purport to or would have the effect of compensating the party
entitled to the benefits thereof in amounts in excess of the actual
loss suffered by such party;
(v) requirements in the Documents specifying that
provisions thereof may only be waived in writing may not be valid,
binding or enforceable to the extent that an oral agreement or an
implied agreement by trade practice or course of conduct has been
created modifying any provision of such documents;
(vi) waivers of equitable rights and defenses may
not be valid, binding or enforceable under state or federal law;
(vii) I express no opinion as to the enforceability
of the indemnification provisions of the Documents insofar as said
provisions contravene public policy; and
(viii) I am admitted to practice law in the State of
New York and as such, I express no opinion as to, or the effect or
applicability of, any laws other than the General Corporation Law
of the State of Delaware, the laws of the State of New York and the
federal laws of the United States of America.
My opinions are limited to the specific issues addressed and
are limited in all respects to laws and facts existing on the date
hereof. By rendering these opinions, I do not undertake to advise you of
any changes in such laws or facts which may occur after the date hereof.
This letter is furnished to you pursuant to the Loan Agreement
and is not to be relied upon by any other person or entity or used,
circulated, quoted or otherwise relied upon for any other purpose except
that it may be relied upon as of the date hereof by persons which become
Banks after the date hereof.
Sincerely,
EXHIBIT C - Opinion of Special Counsel for the Agent
Opinion of
Davis Polk & Wardwell, Special Counsel
for the Agent
September 25, 1997
To the Banks and the Agent
Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260
Dear Sirs:
We have participated in the preparation of the Loan Agreement
dated as of September 25, 1997 (the "Loan Agreement") among Ultramar
Diamond Shamrock Corporation, a Delaware corporation (the "Borrower"),
the Banks party thereto, and Morgan Guaranty Trust Company of New York,
as Agent and have acted as special counsel for the Agent for the purpose
of rendering this opinion pursuant to Section 3.01(c) of the Loan
Agreement. Terms defined in the Loan Agreement are used herein as
therein defined.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have
conducted such other investigations of fact and Law as we have deemed
necessary or advisable for purposes of this opinion.
Upon the basis of the foregoing, we are of the opinion that:
1. The execution, delivery and performance by the Borrower of
the Loan Agreement and the Notes are within the Borrower's corporate
powers, and have been duly authorized by all necessary corporate action.
2. The Loan Agreement constitutes a valid and binding agreement
of the Borrower and each Note issued thereunder today constitutes a
valid and binding obligation of the Borrower, in each case enforceable
in accordance with its terms except as the same may be limited by
bankruptcy, insolvency or similar Laws affecting creditors' rights
generally and by general principles of equity.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the Laws of the State of New York, the
federal Laws of the United States of America and the General Corporation
Law of the State of Delaware. In giving the foregoing opinion, we
express no opinion as to the effect (if any) of any Law of any
jurisdiction (except the State of New York) in which any Bank is located
which limits the rate of interest that such Bank may charge or collect.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other
purpose or relied upon by any other person without our prior written
consent.
Very truly yours,
EXHIBIT D - Assignment and Assumption Agreement
Assignment and Assumption Agreement
AGREEMENT dated as of _________, 19__ among <NAME OF ASSIGNOR>
(the "Assignor"), <NAME OF ASSIGNEE> (the "Assignee"), Ultramar Diamond
Shamrock Corporation (the "Borrower") and MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent (the "Agent").
WHEREAS, this Assignment and Assumption Agreement (the
"Agreement") relates to the Loan Agreement dated as of September 25,
1997 among the Borrower, the Assignor and the other Banks party thereto,
as Banks, and the Agent (as amended from time to time, the "Loan
Agreement");
WHEREAS, as provided under the Loan Agreement, the Assignor has
a Commitment to make Loans to the Borrower in an aggregate principal
amount at any time outstanding not to exceed $____________;
WHEREAS, Loans made to the Borrower by the Assignor under the
Loan Agreement in the aggregate principal amount of $__________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Loan Agreement in respect of a
portion of its Commitment thereunder in an amount equal to $__________
(the "Assigned Amount"), together with a corresponding portion of its
outstanding Loans, and the Assignee proposes to accept assignment of
such rights and assume the corresponding obligations from the Assignor
on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
Section 1. Definitions. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Loan
Agreement.
Section 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Loan
Agreement to the extent of the Assigned Amount, and the Assignee hereby
accepts such assignment from the Assignor and assumes all of the
obligations of the Assignor under the Loan Agreement to the extent of
the Assigned Amount, including the purchase from the Assignor of the
corresponding portion of the principal amount of each of the Loans made
by, the Assignor outstanding at the date hereof. Upon the execution and
delivery hereof by the Assignor, the Assignee, [the Borrower and the
Agent] and the payment of the amounts specified in Section 13 required
to be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the
obligations of a Bank under the Loan Agreement with a Commitment in an
amount equal to the Assigned Amount, and (ii) the Commitment of the
Assignor shall, as of the date hereof, be reduced by a like amount and
the Assignor released from its obligations under the Loan Agreement to
the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the
Assignor.
Section 3. Payments. As consideration for the assignment and
sale contemplated in Section 12 hereof, the Assignee shall pay to the
Assignor on the date hereof in Federal funds the amount heretofore
agreed between them.(1) It is understood that commitment and/or
facility fees accrued before the date hereof are for the account of the
Assignor and such fees accruing on and after the date hereof are for the
account of the Assignee. Each of the Assignor and the Assignee agrees
that if it receives any amount under the Loan Agreement which is for the
account of the other party hereto, it shall receive the same for the
account of such other party to the extent of such other party's interest
therein and promptly pay the same to such other party.
- ------------
(1) Amount should combine principal together with accrued interest
and breakage compensation, if any, to be paid by the Assignee, net of
any portion of any upfront fee to be paid by the Assignor to the
Assignee. It may be preferable in an appropriate case to specify these
amounts generically or by formula rather than as a fixed sum.
Section 4. Consent of the [Borrower and the Agent]. This
Agreement is conditioned upon the consent of [the Borrower and the
Agent] pursuant to Section 9.06(c) of the Loan Agreement. The execution
of this Agreement by such Persons is evidence of their consent.
[Pursuant to Section 9.06(c), the Borrower agrees to execute and deliver
a Note payable to the order of the Assignee to evidence the assignment
and assumption provided for herein.]
Section 5. Non-reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no
responsibility with respect to, the solvency, financial condition, or
statements of the Borrower, or the validity and enforceability of the
Borrower's obligations under the Loan Agreement or any Note. The
Assignee acknowledges that it has, independently and without reliance on
the Assignor, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter
into this Agreement and will continue to be responsible for making its
own independent appraisal of the business, affairs and financial
condition of the Borrower.
Section 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of New York.
Section 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the
date first above written.
<NAME OF ASSIGNOR>
By
------------------------------
Name:
Title:
<NAME OF ASSIGNEE>
By
------------------------------
Name:
Title:
[ULTRAMAR DIAMOND SHAMROCK
CORPORATION
By
------------------------------
Name:
Title:]
[MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Agent
By
------------------------------
Name:
Title:]
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form 8-K of Ultramar Diamond
Shamrock Corporation and into the previously filed Registration
Statements of Ultramar Diamond Shamrock Corporation on Form S-3
(Nos. 33-74162, 33-82662 and 333-28737) and on Form S-8 (Nos. 33-52148,
33-62894, 333-19131, 333-27697, 333-27703, 333-27699 and
333-27701) of our report dated January 21, 1997, included in the
Annual Report on Form 10-K of Total Petroleum (North America)
Ltd. for the year ended December 31, 1996. It should be noted
that we have not audited any financial statements of Total
Petroleum (North America) Ltd. subsequent to December 31, 1996,
or performed any audit procedures subsequent to the date of our
report.
ARTHUR ANDERSEN LLP
/s/ Arthur Andersen LLP
Denver, Colorado
October 3, 1997
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on
Form S-3 (Nos. 33-74162, 33-82662 and 333-28737) and in the
Registration Statements on Form S-8 (Nos. 33-52148, 33-62894,
333-19131, 333-27697, 333-27703, 333-27699 and 333-27701) of
Ultramar Diamond Shamrock Corporation of our report dated January
13, 1995, relating to the consolidated financial statements of
Total Petroleum (North America) Ltd. for the year ended December
31, 1994, which is incorporated by reference in this Current
Report on Form 8-K of Ultramar Diamond Shamrock Corporation dated
September 25, 1997. It should be noted that we have not audited
any financial statements of Total Petroleum (North America) Ltd.
subsequent to December 31, 1994, or performed any audit
procedures subsequent to the date of our report.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
Denver, Colorado
October 3, 1997
