THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT TO CREDIT AGREEMENT ("Third Amendment") effective as of
October 24, 1995 (the "Third Amendment Effective Date") is made and entered into
by and among TESORO PETROLEUM CORPORATION (the "Company"), a Delaware
corporation, TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("TCB"), individually, as
an Issuing Bank and as Agent (the "Agent") and BANQUE PARIBAS ("BP"),
individually, and as an Issuing Bank and as Co-Agent and the other financial
institutions (collectively, with TCB and BP, the "Lenders") parties to the
Credit Agreement (as hereinafter defined) as amended by this Third Amendment.
RECITALS
WHEREAS, the Company has entered into a Credit Agreement, dated as of
April 20, 1994, among the Company, TCB, individually, as an Issuing Bank and as
Agent, BP, individually, as an Issuing Bank and as Co-Agent, and the other
financial institutions parties thereto as amended by the First Amendment to
Credit Agreement dated effective as of December 31, 1994 and the Second
Amendment and Supplement to Credit Agreement dated effective as of September 1,
1995 (as amended, the "Credit Agreement");
WHEREAS, the Company, the Agent, the Co-Agent, the Guarantors and the
Lenders have agreed, on the terms and conditions herein set forth, that the
Credit Agreement be amended in certain respects;
NOW, THEREFORE, IT IS AGREED:
Section 1. Definitions. Capitalized terms used but not otherwise defined
herein shall have the meaning assigned such terms in the Credit Agreement.
Section 2. Amendments to the Credit Agreement. On and after the Third
Amendment Effective Date, the Credit Agreement shall be amended as follows:
(a) The following new definitions are hereby added to Section 1.01 of the
Credit Agreement:
"Availability Adjustment Amount" shall mean $90,000,000 unless
reduced or otherwise modified pursuant to Section 2.25.
"PEDCO EBITDA" shall mean, as to PEDCO, and for any Rolling
Period, the amount equal to net income of PEDCO less any non-cash
income included in such net income, plus, to the extent deducted from
such net income, interest expense, depreciation, depletion and
impairment, amortization of leasehold and intangibles, other non-cash
expenses, and taxes; provided, that, gains or losses on the disposition
of assets shall not be included in PEDCO EBITDA.
"Tesoro Refining and Marketing Group EBITDA" shall mean, as to the
Tesoro Refining and Marketing Group, and for any Rolling Period, the
amount equal to consolidated net income of the Tesoro Refining and
Marketing Group less any
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non-cash income included in such net income, plus, to the extent
deducted from such net income, interest expense, depreciation,
depletion and impairment, amortization of leasehold and intangibles,
other non-cash expenses, and taxes; provided, that, gains or losses on
the disposition of assets shall not be included in Tesoro Refining and
Marketing Group EBITDA.
(b) The definition of "Advance Notice" set forth in Section 1.01 of the
Credit Agreement is hereby amended in its entirety to read as follows:
"Advance Notice" shall mean written or telecopy notice (or
telephonic notice promptly confirmed in writing), which in each case
shall be irrevocable, from the Company to be received by the Agent, in
the case of Base Rate Loans, before 10:00 a.m. (Houston time) or, in
the case of Eurodollar Loans, 11:00 a.m. (Houston time), by the number
of Business Days in advance of any borrowing, conversion, continuation
or prepayment of any Loan pursuant to this Agreement as respectively
indicated below:
(i) Eurodollar Loans - 3 Business Days; and
(ii) Base Rate Loans - same Business Day.
For the purpose of determining the respectively applicable Loan in the
case of the conversion from one type of Loan into another, the Loan
into which there is to be a conversion shall control. The Agent, each
Issuing Bank and each Lender are entitled to rely upon and act upon
telecopy notice made or purportedly made by the Company, and the
Company hereby waives the right to dispute the authenticity and
validity of any such transaction once the Agent or any Lender has
advanced funds or any Issuing Bank has issued Letters of Credit, absent
manifest error.
(c) The definition of "Maximum Available Amount" set forth in Section 1.01
of the Credit Agreement is hereby amended in its entirety to read as
follows:
"Maximum Available Amount" shall mean, at any date, an amount
equal to the lesser of (a) the aggregate Revolving Credit Commitments
as of such date, (b) the Borrowing Base as of such date and (c) the
Availability Adjustment Amount as of such date.
(d) The definition of "Tesoro Refining and Marketing Group" set forth in
Section 1.01 of the Credit Agreement is hereby amended in its entirety
to read as follows:
"Tesoro Refining and Marketing Group" shall mean Tesoro Alaska,
Tesoro R&M, Tesoro Alaska Pipeline Company, a Delaware corporation,
Tesoro Northstore Company, an Alaska corporation, Interior Fuels
Company, an Alaska corporation, Kenai Pipeline Company, a Delaware
corporation, and Tesoro Vostok Company, a Delaware corporation.
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(e) The following new Section 2.25 is hereby added to the Credit Agreement:
Section 2.25. Availability Adjustment Amount.
(a) Mandatory Financial Test Reductions: If either (i) the Tesoro
Refining and Marketing Group fails to maintain the Tesoro Refining and
Marketing Group EBITDA in an amount equal to or greater than the amount
set forth below or (ii) the Company fails to maintain a cash flow
coverage ratio for itself and its Subsidiaries on a consolidated basis
equal to or greater than the ratio set forth below:
For the Rolling Minimum Tesoro Refining Minimum Cash
Period Ending and Marketing Group EBITDA Flow Coverage Ratio
------------- -------------------------- -------------------
December 31, 1995 $10,600,000 1.45 to 1.00
March 31, 1996 $17,700,000 1.67 to 1.00
June 30, 1996 $23,900,000 1.69 to 1.00
then the Availability Adjustment Amount shall be reduced no later than
45 days following each applicable Quarterly Date by an amount of
$5,000,000; provided that the aggregate amount of such reductions shall
not exceed $10,000,000 in the aggregate.
(b) Optional Increases: If at any time on or after September 30,
1996, (i) the sum of the Tesoro Refining and Marketing Group EBITDA
plus the PEDCO EBITDA is greater than or equal to $35,000,000 and (ii)
the Company is maintaining a cash flow coverage ratio for itself and
its Subsidiaries on a consolidated basis equal to or greater than 1.37
to 1.00, then the Company may, to the extent (but only to the extent)
the Availability Adjustment Amount shall have been reduced pursuant to
Subsection 2.25(a), increase the Availability Adjustment Amount.
(c) Mandatory Reductions Based on E&P Loan Value: During any
period when the E&P Loan Value is less than $30,000,000, the Maximum
Available Amount shall be reduced by an amount equal to the difference
between $30,000,000 and the then current E&P Loan Value.
(f) Section 5.03(d) of the Credit Agreement is hereby amended in its
entirety as follows:
(d) Tesoro Refining and Marketing Group EBITDA. Cause the Tesoro
Refining and Marketing Group to maintain the Tesoro Refining and
Marketing Group EBITDA in an amount equal to or greater than:
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For the Rolling Minimum Tesoro Refining
Period Ending and Marketing Group EBITDA
------------- --------------------------
September 30, 1995 $5,000,000
December 31, 1995 $5,000,000
March 31, 1996 $12,000,000
June 30, 1996 $20,000,000
September 30, 1996 $20,000,000
December 31, 1996 $25,000,000
March 31, 1997
and thereafter $30,000,000
(g) Section 5.04(e) of the Credit Agreement is hereby amended by deleting
the reference to "and" at the end of clause (x), by changing the period
at the end of clause (xi) to read "; and" and by adding the following
new clause (xii):
(xii) the purchase of up to 100% of the shares of common stock of
Coastwide Energy Services, Inc., a Delaware corporation, for
consideration (including, without limitation, equity securities of the
Company and cash) in an amount not to exceed $24,000,000 in the
aggregate.
(h) Section 5.04(p) of the Credit Agreement is hereby amended in its
entirety as follows:
(p) Proceeds of Coastal Sale. Permit the Company and its
Subsidiaries to use the proceeds received by Tesoro LP from the sale of
Oil & Gas Properties pursuant to the Coastal Purchase and Sale
Agreement for repayment of debt incurred pursuant to the Subordinated
Debentures or in any other manner except (i) to redeem a portion of the
Subordinated Debentures in an aggregate principal amount not to exceed
$34,700,000.00 plus interest accrued through the redemption date of
such Subordinated Debentures, (ii) $12,000,000 in the aggregate of such
proceeds may be used to purchase up to 100% of the shares of common
stock of Coastwide Energy Services, Inc., a Delaware corporation, or
(iii) for general corporate purposes other than the repayment of the
Subordinated Debentures.
(i) Annex I to the Credit Agreement is hereby amended to be identical to
Exhibit A attached hereto, which Annex sets forth the Commitment of
each Lender as of the Third Amendment Effective Date.
(j) Exhibit C to the Credit Agreement is hereby amended to be identical to
Exhibit B attached hereto, which sets forth the Subsidiaries of the
Company.
Section 3. Amendment Fee. As a condition precedent to the effectiveness
of this Third Amendment, the Company shall pay on or before the Third Amendment
Effective Date to the Agent for the account of and distribution to each Lender
in accordance with its Percentage Share an amendment fee of $156,250 computed at
a rate equal to one-eighth of one percent (1/8%) per annum on the original
Commitments.
Section 4. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Credit Agreement or any
of the other Financing Documents, or (b) except as
4
expressly set forth herein, prejudice any right or rights which the Lenders may
now have or may have in the future under or in connection with the Credit
Agreement, the Financing Documents or any of the other documents referred to
therein. Except as expressly modified hereby or by express written amendments
thereof, the terms and provisions of the Credit Agreement, the Notes, and any
other Financing Documents or any other documents or instruments executed in
connection with any of the foregoing are and shall remain in full force and
effect. In the event of a conflict between this Third Amendment and any of the
foregoing documents, the terms of this Third Amendment shall be controlling.
Section 5. Representations and Warranties. Except as affected by the
transactions contemplated in the Credit Agreement and this Third Amendment, each
of the representations and warranties made by the Company and the Guarantors in
or pursuant to the Financing Documents, including the Credit Agreement, shall be
true and correct in all material respects as of the Third Amendment Effective
Date, as if made on and as of such date.
Section 6. No Default. No Default or Event of Default shall have
occurred and be continuing as of the Third Amendment Effective Date.
Section 7. Adoption, Ratification and Confirmation of Credit Agreement.
Each of the Company, the Guarantors, the Agent, the Co-Agent, the Issuing Banks
and the Lenders does hereby adopt, ratify and confirm the Credit Agreement, as
amended hereby, and acknowledges and agrees that the Credit Agreement, as
amended hereby, is and remains in full force and effect.
Section 8. Ratification and Affirmation of Guaranty. Each of the
Guarantors hereby expressly (i) acknowledges the terms of this Third Amendment,
(ii) ratifies and affirms its obligations under the Guaranty Agreement dated as
of April 20, 1994, in favor of the Agent, the Co-Agent, the Issuing Banks and
the Lenders, as amended, supplemented or otherwise modified, (iii) acknowledges,
renews and extends its continued liability under the Guaranty Agreement and
agrees that such Guaranty Agreement remains in full force and effect; and (iv)
guarantees to the Agent, the Co-Agent, each Issuing Bank and each Lender to
promptly pay when due all amounts owing or to be owing by it under the Guaranty
pursuant to the terms and conditions thereof.
Section 9. Payment of Expenses. The Company agrees, whether or not the
transactions hereby contemplated shall be consummated, to reimburse and save the
Agent harmless from and against liability for the payment of all reasonable
substantiated out-of-pocket costs and expenses arising in connection with the
preparation, execution, delivery, amendment, modification, waiver and
enforcement of, or the preservation of any rights under this Third Amendment,
including, without limitation, the reasonable fees and expenses of any local or
other counsel for the Agent, and all stamp taxes (including interest and
penalties, if any), recording taxes and fees, filing taxes and fees, and other
charges which may be payable in respect of, or in respect of any modification
of, the Credit Agreement and the other Financing Documents. The provisions of
this Section shall survive the termination of the Credit Agreement and the
repayment of the Loans.
Section 10. Governing Law. This Third Amendment and the rights and
obligations of the parties hereunder and under the Credit Agreement shall be
construed in accordance with and be governed by the laws of the State of Texas
and the United States of America.
Section 11. Descriptive Headings, etc. The descriptive headings of the
several Sections of this Third Amendment are inserted for convenience only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
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Section 12. Entire Agreement. This Third Amendment and the documents
referred to herein represent the entire understanding of the parties hereto
regarding the subject matter hereof and supersede all prior and contemporaneous
oral and written agreements of the parties hereto with respect to the subject
matter hereof, including, without limitation, any commitment letters regarding
the transactions contemplated by this Third Amendment.
Section 13. Counterparts. This Third Amendment may be executed in any
number of counterparts and by different parties on separate counterparts and all
of such counterparts shall together constitute one and the same instrument.
Section 14. Amended Definitions. As used in the Credit Agreement
(including all Exhibits thereto) and all other instruments and documents
executed in connection therewith, on and subsequent to the Third Amendment
Effective Date the term "Agreement" shall mean the Credit Agreement as amended
by this Third Amendment.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE 26.02
This Third Amendment and the other Financing Documents executed by any of
the parties before or substantially contemporaneously with the execution hereof
together constitute a written Loan Agreement and represent the Final Agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be duly executed and delivered by their respective duly authorized officers as
of the date first above written.
TESORO PETROLEUM CORPORATION
By: /s/ William T. Van Kleef
Name: William T. Van Kleef
Title: Vice President and Chief
Financial Officer
[Signature Page - 1]
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
Individually, as an Issuing Bank and
as Agent
By: /s/ P. Stan Burge
P. Stan Burge
Vice President
[Signature Page - 2]
BANQUE PARIBAS
Individually, as an Issuing Bank and
as Co-Agent
By: /s/ Brian Malone
Name: Brian Malone
Title: Vice Predident
By: /s/ Barton D. Schouest
Name: Barton D. Schouest
Title: Group Vice President
[Signature Page - 3]
BANK OF SCOTLAND
By: /s/ Catherine M. Oniffrey
Name: Catherine M. Oniffrey
Title: Vice President
[Signature Page - 4]
CHRISTIANIA BANK
By: /s/ Justin F. McCarty, III
Name: Justin F. McCarty, III
Title: Vice President
By: /s/ Carl-Petter Svendsen
Name: Carl-Petter Svendsen
Title: First Vice President
[Signature Page - 5]
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
Name: F.C.H. Ashby
Title: Senior Manager Loan Operations
[Signature Page - 6]
NBD BANK
By: /s/ Russell H. Liebetrau, Jr.
Name: Russell H. Liebetrau, Jr.
Title: Vice President
[Signature Page - 7]
BANK OF AMERICA ILLINOIS
By:
Name:
Title:
[Signature Page - 8]
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: /s/ Michael J. Kolosowsky
Name: Michael J. Kolosowsky
Title: Vice President
[Signature Page - 9]
NATIONAL BANK OF CANADA
By: /s/ Larry L. Sears
Name: Larry L. Sears
Title: Group Vice President
By: /s/ Douglas G. Clark
Name: Douglas G. Clark
Title: Vice President
[Signature Page - 10]
THE FROST NATIONAL BANK
By: /s/ Phil Dudley
Name: Phil Dudley
Title: Vice President
[Signature Page - 11]
GUARANTORS: TESORO ALASKA PETROLEUM COMPANY
TESORO EXPLORATION AND PRODUCTION COMPANY
TESORO PETROLEUM COMPANIES, INC.
DIGICOMP, INC.
TESORO TECHNOLOGY PARTNERS COMPANY
INTERIOR FUELS COMPANY
TESORO ALASKA PIPELINE COMPANY
TESORO NORTHSTORE COMPANY
TESORO REFINING, MARKETING & SUPPLY COMPANY
TESORO NATURAL GAS COMPANY
TESORO BOLIVIA PETROLEUM COMPANY
TESORO PETROLEUM DISTRIBUTING COMPANY
TESORO LOUISIANA DISTRIBUTING COMPANY
TESORO ENVIRONMENTAL RESOURCES COMPANY
By: /s/ William T. Van Kleef
Name: William T. Van Kleef
Title: Vice President and Chief Financial Officer
TESORO E&P COMPANY, L.P.
By: TESORO EXPLORATION AND PRODUCTION COMPANY, as
its general partner
By: /s/ William T. Van Kleef
Name: William T. Van Kleef
Title: Vice President and Chief Financial
Officer
TESORO GAS RESOURCES COMPANY, INC
By: /s/ George L. Dodgen
Name: George L. Dodgen
Title: President
[Signature Page - 12]
EXHIBIT A TO THIRD AMENDMENT
ANNEX I
Commitments
Revolving
Credit Unavailable Total Term Loan
Banks Commitments Commitments Commitments Commitment<F1>
- ----- ----------- ----------- ----------- --------------
Texas Commerce Bank $11,520,000.00 $ 0.00 $11,520,000.00
Banque Paribas $11,520,000.00 0.00 $11,520,000.00
Bank of Scotland $9,360,000.00 0.00 $9,360,000.00
Christiania Bank $9,360,000.00 0.00 $9,360,000.00
The Bank of Nova Scotia $9,360,000.00 0.00 $9,360,000.00
NBD Bank $9,360,000.00 0.00 $9,360,000.00
Bank of America Illinois $7,920,000.00 0.00 $7,920,000.00
First Union National
Bank of North Carolina $7,920,000.00 0.00 $7,920,000.00
National Bank of Canada $7,920,000.00 0.00 $7,920,000.00
The Frost National Bank $5,760,000.00 $ 0.00 $5,760,000.00
-------------- ---------- --------------
Total $90,000,000.00 $ 0.00 $90,000,000.00
<FN>
<F1> The Term Loan Commitments have expired.
Annex I - 1
EXHIBIT B TO THIRD AMENDMENT
EXHIBIT C
SUBSIDIARIES GUARANTORS
------------ ----------
Tesoro Petroleum Companies, Inc. X
Digicomp, Inc. X
Tesoro Technology Partners Company X
Tesoro Alaska Petroleum Company X
Interior Fuels Company X
Tesoro Alaska Pipeline Company X
Tesoro Northstore Company X
Tesoro Refining, Marketing & Supply Company X
Tesoro Exploration and Production Company X
Tesoro E&P Company, L.P. X
Tesoro Gas Resources Company, Inc. X
Tesoro Natural Gas Company X
Tesoro Bolivia Petroleum Company X
Tesoro Petroleum Distributing Company X
Tesoro Louisiana Distributing Company X
Tesoro Environmental Resources Company X
Tesoro Environmental Products Company
Sabinal Insurance Company Limited
Tesoro Indonesia Petroleum Company
Tesoro Tarakan Petroleum Company
Tesoro Java Petroleum Company
Tesoro Equipment Company
Tesoro Drilling Company
Tesoro Crude Oil Company
Tesoro Fleet Service Company
Tesoro Gasoline Marketing Company
Tesoro Pump & Valve Company
Kenai Pipeline Company
Tesoro Vostok Company
B - 1