AMENDED AND RESTATED CREDIT AGREEMENT
Among
TESORO PETROLEUM CORPORATION
as the Company
and
BANQUE PARIBAS
Individually, as an Issuing Bank and as Administrative Agent,
THE BANK OF NOVA SCOTIA
Individually and as Documentation Agent
and
FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO
$150,000,000 Revolving Credit Facility
June 7, 1996
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Definitions . . . . . . . . . . . . . . . . .1
Section 1.02 Accounting Terms and Determinations . . . . 21
Section 1.03 Other Definitional Terms. . . . . . . . . . 21
ARTICLE II
AMOUNT AND TERMS OF LOANS
Section 2.01 Commitments . . . . . . . . . . . . . . . . 21
Section 2.02 Borrowing Requests. . . . . . . . . . . . . 22
Section 2.03 Letters of Credit . . . . . . . . . . . . . 23
Section 2.04 Disbursement of Funds . . . . . . . . . . . 27
Section 2.05 Notes.. . . . . . . . . . . . . . . . . . . 27
Section 2.06 Interest. . . . . . . . . . . . . . . . . . 28
Section 2.07 Interest Periods. . . . . . . . . . . . . . 29
Section 2.08 Repayment of Loans. . . . . . . . . . . . . 29
Section 2.09 Termination or Reduction of Revolving
Credit Commitments . . . . . . . . . . . 30
Section 2.10 Prepayments . . . . . . . . . . . . . . . . 30
Section 2.11 Continuation and Conversion Options . . . . 31
Section 2.12 Fees. . . . . . . . . . . . . . . . . . . . 32
Section 2.13 Payments, etc . . . . . . . . . . . . . . . 33
Section 2.14 Interest Rate Not Ascertainable, etc. . . . 33
Section 2.15 Illegality. . . . . . . . . . . . . . . . . 34
Section 2.16 Increased Costs . . . . . . . . . . . . . . 34
Section 2.17 Change of Lending Office. . . . . . . . . . 36
Section 2.18 Funding Losses. . . . . . . . . . . . . . . 36
Section 2.19 Sharing of Payments, etc. . . . . . . . . . 36
Section 2.20 E&P Borrowing Base. . . . . . . . . . . . . 37
Section 2.21 Taxes . . . . . . . . . . . . . . . . . . . 38
Section 2.22 Pro Rata Treatment. . . . . . . . . . . . . 40
Section 2.23 Disposition of Proceeds . . . . . . . . . . 41
Section 2.24 Senior Debt . . . . . . . . . . . . . . . . 41
ARTICLE III
CONDITIONS TO BORROWINGS AND TOPURCHASE, RENEWAL AND RE
Section 3.01 Closing . . . . . . . . . . . . . . . . . . 41
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Section 3.02 Conditions Precedent to Initial Loan. . . . 41
Section 3.03 Conditions Precedent to Each Loan . . . . . 44
Section 3.04 Recordings. . . . . . . . . . . . . . . . . 44
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Corporate Existence . . . . . . . . . . . . 45
Section 4.02 Corporate Power and Authorization . . . . . 45
Section 4.03 Binding Obligations . . . . . . . . . . . . 45
Section 4.04 No Legal Bar or Resultant Lien. . . . . . . 45
Section 4.05 No Consent. . . . . . . . . . . . . . . . . 45
Section 4.06 Financial Information . . . . . . . . . . . 45
Section 4.07 Investments and Guaranties. . . . . . . . . 46
Section 4.08 Litigation. . . . . . . . . . . . . . . . . 46
Section 4.09 Use of Proceeds . . . . . . . . . . . . . . 46
Section 4.10 Compliance with ERISA . . . . . . . . . . . 46
Section 4.11 Taxes; Governmental Charges . . . . . . . . 46
Section 4.12 Titles, etc . . . . . . . . . . . . . . . . 47
Section 4.13 Defaults. . . . . . . . . . . . . . . . . . 47
Section 4.14 Casualties; Taking of Properties. . . . . . 47
Section 4.15 Compliance with the Law . . . . . . . . . . 47
Section 4.16 No Material Misstatements . . . . . . . . . 47
Section 4.17 Investment Company Act. . . . . . . . . . . 48
Section 4.18 Public Utility Holding Company Act. . . . . 48
Section 4.19 Subsidiaries. . . . . . . . . . . . . . . . 48
Section 4.20 Insurance . . . . . . . . . . . . . . . . . 48
Section 4.21 Mortgaged Property. . . . . . . . . . . . . 48
Section 4.22 Gas Imbalances. . . . . . . . . . . . . . . 48
Section 4.23 Environmental Matters . . . . . . . . . . . 48
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01 Maintenance and Compliance, etc.. . . . . . 50
Section 5.02 Payment of Taxes and Claims, etc. . . . . . 50
Section 5.03 Further Assurances. . . . . . . . . . . . . 50
Section 5.04 Performance of Obligations. . . . . . . . . 51
Section 5.05 Insurance.. . . . . . . . . . . . . . . . . 51
Section 5.06 Accounts and Records. . . . . . . . . . . . 51
Section 5.07 Right of Inspection.. . . . . . . . . . . . 51
Section 5.08 Operation and Maintenance of Mortgaged
Property and Compliance with Leases. . . 52
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Section 5.09 Stock of Subsidiaries.. . . . . . . . . . . 52
Section 5.10 Certain Additional Assurances Regarding
Maintenance and Operation of Properties. 52
Section 5.11 Designation of Subsidiaries as Additional
Guarantors . . . . . . . . . . . . . . . 52
Section 5.12 Minimum Capital Expenditures. . . . . . . . 52
Section 5.13 Payment of Charters and Tariffs.. . . . . . 52
Section 5.14 Title Opinions. . . . . . . . . . . . . . . 52
Section 5.15 Reporting Covenants . . . . . . . . . . . . 52
ARTICLE V
INEGATIVE COVENANTS
Section 6.01 Consolidated Tangible Net Worth.. . . . . . 56
Section 6.02 Consolidated Current Ratio. . . . . . . . . 56
Section 6.03 Consolidated Cash Flow Coverage Ratio.. . . 56
Section 6.04 Consolidated Interest Coverage Ratio. . . . 57
Section 6.05 Indebtedness. . . . . . . . . . . . . . . . 57
Section 6.06 Liens.. . . . . . . . . . . . . . . . . . . 59
Section 6.07 Mergers, Sales, etc.. . . . . . . . . . . . 61
Section 6.08 Restricted Payments.. . . . . . . . . . . . 61
Section 6.09 Investments, Loans, etc.. . . . . . . . . . 62
Section 6.10 Lease Payments. . . . . . . . . . . . . . . 64
Section 6.11 Sales and Leasebacks. . . . . . . . . . . . 64
Section 6.12 Nature of Business. . . . . . . . . . . . . 64
Section 6.13 ERISA Compliance. . . . . . . . . . . . . . 64
Section 6.14 Sale or Discount of Receivables.. . . . . . 65
Section 6.15 Negative Pledge Agreements. . . . . . . . . 65
Section 6.16 Transactions with Affiliates. . . . . . . . 65
Section 6.17 Unconditional Purchase Obligations. . . . . 66
Section 6.18 Stock.. . . . . . . . . . . . . . . . . . . 66
Section 6.19 Non-Recourse Indebtedness . . . . . . . . . 66
ARTICLE VII
EVENTS OF DEFAULT
Section 7.01 Payments. . . . . . . . . . . . . . . . . . 66
Section 7.02 Covenants Without Notice. . . . . . . . . . 66
Section 7.03 Other Covenants . . . . . . . . . . . . . . 66
Section 7.04 Other Financing Document Obligations. . . . 67
Section 7.05 Representations . . . . . . . . . . . . . . 67
Section 7.06 Non-Payments of Other Indebtedness. . . . . 67
Section 7.07 Defaults Under Other Agreements . . . . . . 67
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Section 7.08 Bankruptcy. . . . . . . . . . . . . . . . . 67
Section 7.09 ERISA . . . . . . . . . . . . . . . . . . . 68
Section 7.10 Money Judgment. . . . . . . . . . . . . . . 68
Section 7.11 Discontinuance of Business. . . . . . . . . 68
Section 7.12 Security Instruments. . . . . . . . . . . . 68
Section 7.13 Change of Control . . . . . . . . . . . . . 68
Section 7.14 Mandatory Prepayments . . . . . . . . . . . 68
Section 7.15 Material Adverse Event. . . . . . . . . . . 68
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Section 8.01 Appointment of Administrative Agent . . . . 69
Section 8.02 Nature of Duties of Administrative Agent
and Documentation Agent. . . . . . . . . 69
Section 8.03 Lack of Reliance on the Administrative
Agent and the Documentation Agent. . . . 69
Section 8.04 Certain Rights of the Administrative Agent. 70
Section 8.05 Reliance by Administrative Agent. . . . . . 70
Section 8.06 Indemnification of Administrative Agent
and the Documentation Agent. . . . . . . 70
Section 8.07 The Administrative Agent and Documentation
Agent in their Individual Capacity . . . 70
Section 8.08 Lender as Owner . . . . . . . . . . . . . . 71
Section 8.09 Successor Administrative Agent. . . . . . . 71
ARTICLE IX
MISCELLANEOUS
Section 9.01 Notices . . . . . . . . . . . . . . . . . . 71
Section 9.02 Amendments, etc . . . . . . . . . . . . . . 72
Section 9.03 No Waiver; Remedies Cumulative. . . . . . . 72
Section 9.04 Payment of Expenses, Indemnities, etc . . . 72
Section 9.05 Right of Setoff . . . . . . . . . . . . . . 74
Section 9.06 Benefit of Agreement. . . . . . . . . . . . 75
Section 9.07 Assignments and Participations. . . . . . . 75
Section 9.08 Governing Law; Submission to Jurisdiction;
Etc. . . . . . . . . . . . . . . . . . . 77
Section 9.09 Independent Nature of Lenders' Rights . . . 78
Section 9.10 Invalidity. . . . . . . . . . . . . . . . . 78
Section 9.11 Survival of Agreements. . . . . . . . . . . 78
Section 9.12 Renewal, Extension or Rearrangement . . . . 78
Section 9.13 Interest. . . . . . . . . . . . . . . . . . 78
Section 9.14 Taxes, etc. . . . . . . . . . . . . . . . . 79
Section 9.15 Confidential Information. . . . . . . . . . 79
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Section 9.16 Entire Agreement. . . . . . . . . . . . . . 80
Section 9.17 Attachments . . . . . . . . . . . . . . . . 80
Section 9.18 Counterparts. . . . . . . . . . . . . . . . 80
Section 9.19 Survival of Indemnities . . . . . . . . . . 80
Section 9.20 Headings Descriptive. . . . . . . . . . . . 80
Section 9.21 Satisfaction Requirement. . . . . . . . . . 80
Section 9.22 Effectiveness . . . . . . . . . . . . . . . 81
Section 9.23 Conflict with E&P Mortgage. . . . . . . . . 81
Section 9.24 Exculpation Provisions. . . . . . . . . . . 81
ANNEXES
Annex I - Commitments
Annex II - Eligible Inventory Valuation
SCHEDULES
Schedule 1.01 - Outstanding Letters of Credit
Schedule 4.05 - Consents
Schedule 4.07 - Investment and Guaranties
Schedule 4.08 - Litigation
Schedule 4.10 - ERISA
Schedule 4.12 - Titles
Schedule 4.13 - Defaults
Schedule 4.20 - Insurance
Schedule 4.22 - Gas Imbalances
Schedule 4.23 - Environmental Matters
Schedule 6.05 - Existing Indebtedness
Schedule 6.06 - Liens
Schedule 6.15 - Negative Pledge Agreements
EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Borrowing Request
Exhibit C - Subsidiaries/Guarantors
Exhibit D - Form of Assignment and Acceptance
Exhibit E - Form of Borrowing Base Report
Exhibit F - Form of Letter to Hydrocarbon Purchasers
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CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made and entered into as of
the 7th day of June, 1996, among TESORO PETROLEUM CORPORATION, a Delaware
corporation (the "Company"); BANQUE PARIBAS, individually, as an Issuing Bank
and as Administrative Agent, THE BANK OF NOVA SCOTIA, individually and as
Documentation Agent, and each of the lenders that is a signatory hereto or which
becomes a party hereto as provided in Section 9.07 (individually, a "Lender"
and, collectively, the "Lenders").
RECITALS
A. The Company has requested that the Lenders amend, extend and rearrange
all of the Existing Indebtedness (as defined in Section 1.01) and provide
certain loans to and extensions of credit on behalf of the Company; and
B. The Lenders have agreed to amend, extend and rearrange the Existing
Indebtedness and to make such loans and extensions of credit subject to the
terms and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree to amend and restate the Existing Credit
Agreement (as defined in Section 1.01) as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used herein, the following terms shall have
the meanings herein specified (to be equally applicable to both the singular and
plural forms of the terms defined):
"Account Borrowing Base Parties" shall mean Tesoro Alaska, KPL, Tesoro
Vostok, Tesoro Coastwide and Tesoro R&M, and "Account Borrowing Base Party"
shall mean any one of them.
"Active Facility Amount" shall mean $100,000,000 or such other amount
in excess thereof not to exceed the Aggregate Revolving Credit Commitments
as the Company may from time to time request in writing pursuant to Section
2.01(d).
"Administrative Agent" shall mean Banque Paribas, acting in the manner
and to the extent described in Article VIII.
"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 Administrative Agent
before 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 Administrative 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 Administrative Agent or any Lender has advanced funds
or the Issuing Bank has issued Letters of Credit, absent manifest error.
"Affiliate" of any Person shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Aggregate Revolving Credit Commitments" shall mean the sum of each
Lender's Revolving Credit Commitment.
"Aggregate Revolving Credit Exposure" shall mean the sum of each
Lender's Revolving Credit Exposure.
"Agreement" shall mean this Credit Agreement, as amended, supplemented
or modified from time to time.
"Alaska Deed of Trust" shall mean the Deed of Trust and Security
Agreement covering the Kenai Refinery executed by Tesoro Alaska in favor of
TransAlaska Title Insurance Agency, Inc., as trustee, recorded in Book 0441,
Pages 848 through 873 of the Kenai Recording District, Third Judicial
District, State of Alaska, as security for the Lender Indebtedness, as the
same may be amended, modified or supplemented from time to time.
"Applicable Margin" shall mean (i) .75% per annum with respect to Base
Rate Loans, and (ii) 1.75% per annum with respect to Eurodollar Loans;
provided, however, at any time (a) while the Company's senior unsecured debt
(or implied senior unsecured debt) is rated BB- or better by Standard and
Poors Corporation or Ba3 or better by Moody's Investors Service, Inc. or (b)
from and after the occurrence of the Mandate Event, then the "Applicable
Margin" shall be (i) .50% per annum for Base Rate Loans and (ii) 1.5% per
annum for Eurodollar Loans; and, further provided, however, that during any
Deficiency Period, the "Applicable Margin" as would otherwise be in effect
shall be increased by 2.0% per annum for both Base Rate Loans and Eurodollar
Loans.
Application" shall mean an "Application and Agreement for Letters of
Credit," or similar instruments or agreements, entered into between the
Company and the Issuing Bank in connection with any Letter of Credit.
"Assignment and Acceptance" shall have the meaning assigned such term
in Section 9.07(b).
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"BB Properties" shall mean at any time the Oil and Gas Properties and
other assets of the Company or a Subsidiary of the Company evaluated by the
Lenders and to which the Lenders gave loan value in determining the most
recent E&P Borrowing Base.
"Bankruptcy Code" shall have the meaning provided in Section 7.08.
"Base Rate" shall have the meaning provided in Section 2.06(a).
"Base Rate Loan" shall mean a Revolving Credit Loan bearing interest at
the rate provided in Section 2.06(a).
"Borrowing" shall mean a borrowing pursuant to a Borrowing Request or a
continuation or a conversion pursuant to Section 2.11 consisting, in each
case, of the same Type of Loans having, in the case of Eurodollar Loans, the
same Interest Period (except as otherwise provided in Sections 2.16 and
2.18) and made previously or being made concurrently by all of the Lenders.
"Borrowing Base" shall mean at any time the amount equal to the sum of
(i) eighty percent (80%) of Eligible Accounts plus (ii) sixty percent (60%)
of the Loan Value of Eligible Inventory; plus (iii) one hundred percent
(100%) of the E&P Borrowing Base.
"Borrowing Base Report" shall mean the report of the Company concerning
the amount of the Borrowing Base, to be delivered pursuant to Section
5.15(h), substantially in the form attached as Exhibit E.
"Borrowing Request" shall mean a request for a Borrowing pursuant to
Section 2.02, substantially in the form attached as Exhibit B.
"BP" shall mean Banque Paribas, in its individual capacity or as an
Issuing Bank, as the case may be and not as Administrative Agent.
"Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which banks are required or authorized to close in New York,
New York or Houston, Texas and, if the applicable Business Day relates to
Eurodollar Loans, on which trading is carried on by and between banks in
Dollar deposits in the applicable interbank Eurodollar market.
"Capital Expenditures" shall mean capital expenditures for capital or
fixed assets, whether by way of acquisition or otherwise.
"Capital Lease Obligations" shall mean, as to any Person, the
obligations of such person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property
which obligations are required to be classified and accounted for as a
liability for a capital lease on a balance sheet of such Person in
accordance with GAAP.
"Cash Flow" shall mean, as to any Person, the sum of the net income of
such Person after taxes for any period plus, to the extent deducted from net
income, all non-cash items, including, but not limited to, depreciation,
depletion and impairment, amortization of leasehold and intangibles,
deferred taxes and write-offs of exploration costs and producing lease
abandonments and write-offs
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of original issue discount and deferred financing costs on existing
Indebtedness that has been retired or replaced by Indebtedness permitted by
Section 6.05(b), minus, to the extent included in the net income of Tesoro
E&P, revenues (net of deferred taxes) attributable to the supersedeas bond
posted pursuant to the Memorandum of Binding Agreement relating to Lenape
Resources Corp. v. Tennessee Gas Pipeline Company, 39 Tex Sup. Ct. J. 496
(April 18, 1996), as the same may be amended, supplemented, modified or
replaced from time to time, provided that such revenues may be included in
the net income of Tesoro E&P at the time of the Collection Event; in each
case for such period and determined as to such Person.
"Change of Control" shall mean either (i) a change resulting when any
Unrelated Person or any Unrelated Persons acting together which would
constitute a Group together with any Affiliates thereof (in each case also
constituting Unrelated Persons) shall at any time Beneficially Own more than
40% of the aggregate voting power of all classes of Voting Stock of the
Company. As used herein (a) "Beneficially Own" means "beneficially own" as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, or
any successor provision thereto; provided, however, that, for purposes of
this definition, a Person shall not be deemed to Beneficially Own securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates until such tendered securities are
accepted for purchase or exchange; (b) "Group" means a "group" for purposes
of Section 13(d) of the Securities Exchange Act of 1934, as amended; (c)
"Unrelated Person" means at any time any Person other than the Company or
any Subsidiary and other than any trust for any employee benefit plan of the
Company or any Subsidiary of the Company; and (d) "Voting Stock" of any
Person shall mean capital stock of such Person which ordinarily has voting
power for the election of directors (or persons performing similar
functions) of such Person, whether at all times or only so long as no senior
class of securities has such voting power by reason of any contingency or
(ii) during any consecutive 12 month period, Continuing Directors cease to
constitute a majority of the Board of Directors then in office.
"Closing Date" shall mean the as of date of this Agreement set forth in
the first paragraph hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute.
"Collection Event" shall mean the receipt by the Company or Tesoro E&P
from or on behalf of Tennessee Gas Pipeline Company (or its successor) of at
least $59,000,000 cash (whether in one or more payments) in payment for past
tenders, which funds the Company or Tesoro E&P should previously have
received under the terms of the gas purchase agreement with Tennessee Gas
Pipeline Company.
"Commitment" shall mean, with respect to each Lender, the obligation of
such Lender to make loans to the Company under Section 2.01, up to the
maximum amount set forth opposite such Lender's name on Annex I under the
caption "Revolving Credit Commitment."
"Company" shall mean Tesoro Petroleum Corporation, a Delaware
corporation.
"Continuing Directors" shall mean any member of the Board of Directors
of the Company on the Closing Date, any director elected since the date
thereof in an annual meeting of the
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stockholders upon the recommendation of the Board of Directors of the
Company and any other member of the Board of Directors of the Company who
will be recommended or elected to succeed to a Continuing Director by a
majority of Continuing Directors who are then members of the Board of
Directors of the Company.
"Consolidating Statement Entities" shall mean, for the purpose of
identifying the Persons or groups of Persons for whom consolidating
financial statements shall be prepared, all of the consolidated Subsidiaries
of the Company reported as a single consolidated group.
"Consolidated Tangible Net Worth" shall mean, at any time and from time
to time, the sum of preferred or common stock not subject to a mandatory
redemption obligation (other than a mandatory redemption obligation that can
be satisfied by the tendering of common stock of the Company) as of the date
of determination, par value of common stock, additional paid-in capital of
common stock and retained earnings less treasury stock (if any), less
goodwill, cost in excess of net assets acquired and all other assets as are
properly classified as intangible assets, all as determined as to the
Company and its Subsidiaries on a consolidated basis.
"Cover" for Letter of Credit Liabilities shall be effected by paying to
the Administrative Agent in immediately available funds, to be held by the
Administrative Agent in a collateral account maintained by the
Administrative Agent at its Payment Office and collaterally assigned as
security pursuant to the Cash Collateral Account Agreement dated as of the
Closing Date between the Company and the Administrative Agent, an amount
equal to the maximum amount of each applicable Letter of Credit available
for drawing at any time. Such amount shall be retained by the
Administrative Agent in such collateral account until such time as the
applicable Letter of Credit shall have expired and Reimburse- ment
Obligations, if any, with respect thereto shall have been fully satisfied.
"Cumulative Amount Available for Restricted Payments" shall mean:
(i) prior to the occurrence of the Mandate Event the difference
of (a) the sum, since December 31, 1995, of (A) $5,000,000, (B) ten
percent of consolidated net income up to $25,000,000 and (C) twenty
percent of consolidated net income in excess of $25,000,000 of the
Company and its Subsidiaries in any calendar year (provided, however
consolidated net income shall not include any revenues (net of deferred
taxes) attributable to the supersedeas bond posted pursuant to the
Memorandum of Binding Agreement relating to Lenape Resources Corp. v.
Tennessee Gas Pipeline Company, 39 Tex Sup. Ct. J. 496 (April 18,
1996), as the same may be amended, supplemented, modified or replaced
from time to time, provided that such revenues may be included in the
net income of Tesoro E&P at the time of the Collection Event) and (b)
any amount previously paid, prepaid, redeemed or repurchased as
permitted by the terms of clause (ii) and subclause (D) of clause (iii)
of Section 6.08 since the Closing Date; or
(ii) after the occurrence of the Mandate Event, the difference of
(a) the sum, since December 31, 1995, of (A) $5,000,000 and (B) fifty
percent of consolidated net income of the Company and its Subsidiaries
in any calendar year and (b) any amount previously paid, prepaid,
redeemed or repurchased as permitted by the terms of clause (ii) and
subclause (D) of clause (iii) of Section 6.08 since the Closing Date.
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"Default" shall mean an Event of Default or any condition or event
which, with notice or lapse of time or both, would constitute an Event of
Default.
"Deficiency Period" shall have the meaning assigned to such term in
Section 2.10(d).
"Developed" shall mean Proved Hydrocarbon reserves recoverable through
existing wells.
"Documentary Letter of Credit" shall mean a letter of credit
denominated in Dollars issued pursuant to this Credit Agreement (i) the
terms of which are in the reasonable judgment of the Issuing Bank for such
letter of credit, standard in the petroleum industry, and (ii) which
supports payment or performance for a single identified purchase or exchange
of crude oil, condensate and/or other petroleum products.
"Documentation Agent" shall mean The Bank of Nova Scotia.
"Dollar" and the sign "$" shall mean lawful money of the United States
of America.
"E&P Borrowing Base" shall mean at any time an amount equal to the
amount determined, pursuant to Section 2.20.
"E&P Mortgage" shall mean the Mortgage, Deed of Trust, Assignment of
Production, Security Agreement and Financing Statement dated as of April 20,
1994 granted by Tesoro Exploration and Production Company, to Stephen H.
Field, as trustee, recorded in Volume 0692, Page 523 of the Real Property
Records of Starr County, Texas and Volume 497, Page 340 of the Real Property
Records of Zapata County, Texas granting a Lien on the Oil and Gas
Properties of Tesoro LP, as security for the indebtedness defined therein as
"Indebtedness", as the same has been or may from time to time be amended,
supplemented or otherwise modified and the Mortgage Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement dated
as of the Closing Date granted by Tesoro LP, to Brian Malone as trustee,
granting a Lien on the Oil and Gas Properties of Tesoro LP situated in the
Lopeno Field and Tea Jay Field, as security for the indebtedness defined
therein as "Indebtedness", as the same may from time to time be amended,
supplemented or otherwise modified.
"EBITDA" shall mean, as to the Company and its Subsidiaries on a
consolidated basis and, for each Rolling Period, the amount equal to net
income of the Company and its Subsidiaries, less any non-cash income
included in net income to the extent the applicable cash was not received at
any time during such Rolling Period, plus, to the extent deducted from net
income, interest expense, depreciation, depletion and impairment,
amortization of leasehold and intangibles, other non-cash expenses
(including, but not limited to, write-offs of original issue discount and
deferred financing costs on existing Indebtedness that has been retired or
replaced by Indebtedness permitted by Section 6.05(b), and taxes (excluding
Bolivian taxes paid in kind), provided, that, gains or losses on the
disposition of assets shall not be included in EBITDA.
"Effective Date" shall mean the date on which (i) each of the
conditions precedent set forth in Article III have been satisfied or waived
by each of the Lenders, (ii) the conditions to effectiveness set forth in
Section 9.22 have been satisfied and (iii) the initial Loans have been made,
-6-
the Outstanding Letters of Credit have been assumed, or the initial Letter
of Credit has been issued. Subject to Section 3.01, the Effective Date and
Closing Date may be the same date.
"Eligible Account" shall mean at any time the net invoice or ledger
amount owing on each account (which shall mean any "account" as such term is
defined in Section 9-106 of the UCC and any "chattel paper" as such term is
defined in Section 9-105(b) of the UCC) of any Account Borrowing Base Party
(net of any credit balance, returns, trade discounts, or unbilled amounts or
retention) for which each of the following statements is accurate and
complete (and the Company by including such account in any computation of
the Borrowing Base shall be deemed to represent and warrant to the
Administrative Agent, the Issuing Banks and the Lenders the accuracy and
completeness of such statements):
(a) Said account is a binding and valid obligation of the obligor
thereon in full force and effect;
(b) Said account is genuine as appearing on its face or as
represented in the books and records of the applicable Account
Borrowing Base Party;
(c) Said account is free from claims regarding rescission,
cancellation or avoidance, whether by operation of law or otherwise;
(d) Payment of said account is not more than 90 days past the
invoice date thereof and is less than 60 days past due;
(e) Said account is net of concessions, offset (excluding any
accounts payable offset supported by a Letter of Credit) or
understandings with the obligor thereon of any kind;
(f) Said account is, and at all times will be, free and clear of
all Liens, except in favor of the Administrative Agent, and the
Administrative Agent has a first priority, perfected security interest
in such account;
(g) Said account is derived from goods sold or leased or services
rendered to the obligor in the ordinary course of the applicable
Account Borrowing Base Party's business (other than the sale of
minerals or the like, including oil and gas, at the wellhead or
minehead);
(h) Said account is not (i) carried on the books of such Account
Borrowing Base Party as an "exchange account receivable" or (ii)
subject to an exchange agreement with another Person except for cash
exchange account receivables net of any corresponding payables;
(i) Said account is not payable by an obligor who is more than 60
days past due with regard to 20% or more of the total accounts owed by
such obligor;
(j) The account debtor has sent an invoice within 10 days after
said account has been entered on the financial records of the
appropriate Account Borrowing Base Party;
-7-
(k) All consents, licenses, approvals or authorizations of, or
registrations or declarations with, any Governmental Authority required
to be obtained, effected or given in connection with the execution,
delivery and performance of said account by each party obligated
thereunder have been duly obtained, effected or given and are in full
force and effect;
(l) The obligor on said account (i) is not the subject of any
bankruptcy or insolvency proceeding, has not had a trustee or receiver
appointed for all or a substantial part of its property, has not made
an assignment for the benefit of creditors, admitted its inability to
pay its debts as they mature or suspended its business; and (ii) is not
affiliated, directly or indirectly, with the Company, as a Subsidiary
or other Affiliate, employee or otherwise;
(m) The obligor on said account may be the United States of
America or any branch or agency thereof; provided that no Default has
occurred and is continuing and the Administrative Agent, in its sole
discretion, has determined that said account has been properly assigned
to the Administrative Agent pursuant to the Federal Assignment of
Claims Act;
(n) The goods sold or leased or services rendered resulting in
the right to payment in connection with said account were sold, leased
or rendered in a state or territory of the United States of America
(excluding however, such goods which are sold or leased for export
outside of the United States of America), which is payable in the
United States of America, and the obligor of which is subject to the
jurisdiction of federal or state courts in the United States of
America, unless said account is backed by a letter of credit in form
and substance, and issued by an issuer, acceptable to the
Administrative Agent;
(o) If said account, when added to all other accounts that are
obligations of the same obligor, results in a total sum that exceeds
10% of the total balance then due on all of the applicable Account
Borrowing Base Party's accounts, the amount of said account in excess
of 10% of such total balance then due shall be excluded from Eligible
Accounts; provided, however, if the obligor of said account is Texaco
Inc., Exxon Corporation, Chevron U.S.A. Inc. Shell, Amoco, Arco,
Unocal, Federal Express and Mapco or any wholly owned Subsidiary of any
one of them, or other obligors approved for such purpose by the
Administrative Agent and Documentation Agent in writing (with such
approval being reported to the Lenders), and so long as such obligor
maintains a rating of Baa3 or better with Moody's Investor Services,
Inc., or BBB- or better with Standard & Poors Corporation, then said
account shall be included as an Eligible Account; provided, however,
with respect to any such obligor whose rating drops below the limits
stated above, then during such time, said account shall be included as
an Eligible Account to the extent that the total sum due to any of such
obligors is less than 15% of the total balance then due on all
applicable Account Borrowing Base Party's accounts, and the amount of
said account in excess of 15% of such total balance then due shall be
excluded from Eligible Accounts; and
(p) Said account has not been otherwise determined by the
Administrative Agent or Documentation Agent, in its good faith
discretion, to be unacceptable in accordance with its customary
practices for facilities of this nature.
-8-
"Eligible Inventory" shall mean, at any time, all inventory (as such
term is defined in Section 9-109(4) of the UCC) of the Inventory Borrowing
Base Parties, including, without limitation, but without duplication, the In
Transit Inventory, inventory in the Tesoro Terminals, and inventory at the
KPL Facility (as defined in clause (x) below) for which each of the
following statements is accurate and complete (and the Company by including
such inventory in any computation of the Borrowing Base shall be deemed to
represent and warrant to the Administrative Agent, each Issuing Bank and
each Lender the accuracy and completeness of such statements):
(a) Said inventory is, and at all times will be, free and clear
of all Liens (except for perfected Liens in favor of the Administrative
Agent and, in the case of In Transit Inventory described in the
definition of In Transit Inventory below, Liens securing the payment of
tariffs owed by Tesoro Alaska to a common carrier transporting
feedstocks or blendstocks through the Trans-Alaska Pipeline System or
the KPL Facility, as defined below), and the Administrative Agent has a
first priority, perfected security interest in such inventory;
(b) Said inventory does not include capitalized goods which are
part of inventory of any Inventory Borrowing Base Party;
(c) Said inventory is located in Alaska, California, Texas,
Louisiana or Washington, or to the extent that it qualifies as In
Transit Inventory, is located in the territorial waters of Alaska,
California, Oregon, Texas, Louisiana, Washington or British Columbia,
Canada (and not in international waters); and
(d) Said inventory is not stored at any terminal other than a
Tesoro Terminal.
For purposes of this definition, "In Transit Inventory" shall mean, at any
time, feedstocks, blendstocks or refined products, including asphalt, solely
owned by an Inventory Borrowing Base Party that are in transit:
(x) to the Kenai Refinery (i) from Pump Station No. 1 on the
Trans-Alaska Pipeline System, including feedstocks or blendstocks in
storage at the Valdez Terminal in Valdez, Alaska, (ii) in a tanker or
barge located within Alaska, California, Washington or British
Columbia, Canada or their respective territorial waters (and not in
international waters) that has been time chartered by any Inventory
Borrowing Base Party, (iii) in or on any pipeline, terminal, dock or
storage tank of the KPL in the area of Cook Inlet, Alaska (the "KPL
Facility"), or (iv) in the Cook Inlet Pipeline Company System in the
area of Cook Inlet, Alaska, including feedstocks or blendstocks in
storage at the Drift River Terminal in Drift River, Alaska;
(y) from the Kenai Refinery (i) in a tanker or barge located
within Alaska, California, Oregon, Washington or British Columbia,
Canada or their respective territorial waters (and not in international
waters) that has been time chartered by any Inventory Borrowing Base
Party, (ii) in the Anchorage Pipeline owned by Tesoro Alaska Pipeline
Company (formerly known as the Nikiski Alaska Pipeline), or (iii) in
the KPL Facility (as defined in Clause (x) above); or
-9-
(z) between Alaska, California, Washington, Texas, Louisiana
Oregon or British Columbia, Canada and in their respective territorial
waters (and not in international waters) and is inventory in which the
Administrative Agent has been granted a first priority perfected Lien
which is in effect at such time.
"Eligible Transferee" shall mean any financial institution which is a
Lender as of the Effective Date or which is a commercial bank, a financial
institution or an "accredited investor" (as defined in Regulation D) which
makes loans in the ordinary course of its business and that makes or
acquires Loans for its own account in the ordinary course of its business
and which has capital, surplus and undivided profits aggregating at least
$250,000,000 (as of the date of its most recent financial statements).
"Environmental Laws" shall mean any and all laws, statutes, ordinances,
rules, regulations, orders, or determinations of any Governmental Authority
pertaining to health or the environment in effect in any and all
jurisdictions in which the Company or its Subsidiaries are conducting or at
any time have conducted business, or where any Property of the Company or
its Subsidiaries is located, or where any hazardous substances generated by
or disposed of by the Company or its Subsidiaries are located, including but
not limited to the Oil Pollution Act of 1990 ("OPA"), the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 ("RCRA"), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances
Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, and other environmental conservation or protection laws.
The term "oil" shall have the meaning specified in OPA; the terms "hazardous
substance," "release" and "threatened release" have the meanings specified
in CERCLA, and the terms "solid waste" and "disposal" (or "disposed") have
the meanings specified in RCRA; provided, however, in the event either
CERCLA or RCRA is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the effective date
of such amendment, and provided, further, that, to the extent the laws of
the state in which any Property of the Company or its Subsidiaries is
located establish a meaning for "oil," "hazardous substance," "release,"
"solid waste" or "disposal" which is broader than that specified in either
OPA, CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company or a Subsidiary of the Company
would be deemed to be a "single employer" within the meaning of Section
4001(b)(1) of ERISA or Subsections 414(b), (c), (m) or (o) of the Code.
"ERISA Termination Event" shall mean (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (other than a
"Reportable Event" not subject to the provision for 30-day notice to the
PBGC under Subsections .14, .18, .19 or .20 of Part 2615 of the PBGC
regulations), (ii) the withdrawal of the Company, a Subsidiary of the
Company or any ERISA Affiliate from a Plan during a plan year in which it
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA,
(iii) the filing of a notice of intent to terminate a Plan or the treatment
-10-
of a Plan amendment as a termination under Section 4041 of ERISA, (iv) the
institution of proceedings to terminate a Plan by the PBGC, or (v) any other
event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any Plan.
"Eurodollar Loan" shall mean a Revolving Credit Loan bearing interest
at the rate provided in Subsection 2.06(b).
"Eurodollar Rate" shall mean the offered quotation, if any, to
first-class banks in the Eurodollar market by the Administrative Agent for
Dollar deposits of amounts in funds comparable to the principal amount of
the Eurodollar Loan to which such Eurodollar Rate is to be applicable with
maturities comparable to the Interest Period for which such Eurodollar Rate
will apply as of approximately 10:00 a.m. (Houston time) two Business Days
prior to the commencement of such Interest Period.
"Event of Default" shall have the meaning provided in Article VII.
"Exchange Notes" shall mean the 13% Exchange Notes due December 1,
2000, issued by the Company.
"Existing Credit Agreement" shall mean the Credit Agreement dated as of
April 20, 1994 among the Company, Texas Commerce Bank National Association,
as agent, Banque Paribas, as co-agent, and the lenders party thereto, as
amended.
"Existing Indebtedness" shall mean the outstanding Indebtedness under
the Existing Credit Agreement.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is
not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing selected by
it.
"Financial Statements" shall mean the consolidated financial statements
of the Company and its Subsidiaries described or referred to in Section
4.06.
"Financing Documents" shall mean this Agreement, the Notes, the
Guaranty Agreement, the Security Instruments, the Applications, the Letters
of Credit, Borrowing Requests, Borrowing Base Reports, and the other
documents, instruments or agreements described in Subsection 3.02(d),
together with any other document, instrument or agreement (other than
participation, agency or similar agreements among the Lenders or between any
Lender and any other bank or creditor with respect to any indebtedness or
obligations of the Company hereunder) now or hereafter entered into in
connection with the Loans, the Indebtedness or the Mortgaged Properties, as
such documents, instruments or agreements may be amended, modified or
supplemented from time to time.
-11-
"Form 1001 Certification" shall have the meaning provided in Section
2.21(f).
"Form 4224 Certification" shall have the meaning provided in Section
2.21(f).
"Funded Indebtedness" shall mean all Indebtedness for borrowed money,
any Capital Lease Obligations and any guaranty with respect to Funded
Indebtedness of another Person, excluding any intercompany Indebtedness
between Consolidating Statement Entities.
"GAAP" shall mean generally accepted accounting principles as applied
in accordance with Section 1.02.
"Governmental Authority" shall mean any (domestic or foreign) federal,
state, province, county, city, municipal or other political subdivision or
government, department, commission, board, bureau, court, agency or any
other instrumentality of any of them, which exercises jurisdiction over the
Company or any of its Property or any Subsidiary of the Company or any of
such Subsidiary's Property.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other direction or
requirement (including but not limited to any of the foregoing which relate
to Environmental Laws, energy regulations and occupational, safety and
health standards or controls) of any Governmental Authority.
"Guaranty Agreement" shall mean the Amended and Restated Guaranty
Agreement dated as of even date herewith executed by the Guarantors.
"Guarantors" shall mean those Subsidiaries designated as Guarantors on
Exhibit C and any other Subsidiary of the Company, other than a
Non-Guarantor Subsidiary, designated as a Guarantor by (i) the Company with
the approval of the Administrative Agent or (ii) the Majority Lenders, in
each case pursuant to Section 5.11.
"Hedge Agreement" shall mean (i) any Hydrocarbon Swap Agreement or (ii)
any Interest Rate Swap Agreement.
"Highest Lawful Rate" shall mean, with respect to each Lender, the
maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the
Notes or on other Lender Indebtedness, as the case may be, owed to it under
the law of any jurisdiction whose laws may be mandatorily applicable to such
Lender notwithstanding other provisions of this Agreement, or law of the
United States of America applicable to such Lender and the Transactions
which would permit such Lender to contract for, charge, take, reserve or
receive a greater amount of interest than under such jurisdiction's law.
"Hydrocarbon Interests" shall mean all rights, titles, leasehold and
other interests and estates in and to oil and gas leases, oil, gas and
mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee
interests, overriding royalty and royalty interests, net profit interests
and production payment interests, including any reserve or residual interest
of whatever nature.
-12-
"Hydrocarbon Swap Agreement" shall mean any contract for sale for
future delivery of Hydrocarbons (whether or not the subject Hydrocarbons are
to be delivered), hedging contract, forward contract, swap agreement,
futures contract or other hydrocarbon pricing protection agreement or option
with respect to any such transaction, designed to hedge against fluctuations
in Hydrocarbon prices.
"Hydrocarbons" shall mean oil, gas, casinghead gas, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products
refined therefrom.
"Improvements" shall mean all improvements owned by Tesoro Alaska now
or hereafter attached to or placed, erected, constructed or developed on the
Refinery Premises (excluding the Property leased pursuant to the Solar
Turbine Lease).
"Indebtedness" of any Person shall mean:
(i) all obligations of such Person which, in accordance with
GAAP, are or should be shown on the balance sheet of such Person as a
liability (including, but not limited to, obligations for borrowed
money and for the deferred purchase price of property or services, and
obligations evidenced by bonds, debentures, notes or other similar
instruments);
(ii) all Capital Lease Obligations;
(iii) all guaranties (direct or indirect), all contingent
reimbursement obligations under undrawn letters of credit and other
contingent obligations of such Person in respect of, or obligations to
purchase or otherwise acquire or to assure payment of, Indebtedness of
others;
(iv) Indebtedness of others secured by any Lien upon Property
owned by such Person, whether or not assumed; and
(v) obligations of such Person under agreements of the types
described in the definitions of Hydrocarbon Swap Agreement and Interest
Rate Swap Agreement.
"Interest Period" shall mean, with respect to each Borrowing of
Eurodollar Loans, an interest period complying with the terms and provisions
of Section 2.07.
"Interest Rate Swap Agreement" shall mean any rate swap, rate cap, rate
floor, rate collar, forward rate agreement or other rate protection
agreement or option with respect to any such transaction, designed to hedge
against fluctuations in interest rates.
"Interior Fuels" shall mean Interior Fuels Company, an Alaska
corporation.
"Inventory Borrowing Base Parties" shall mean Tesoro Alaska, KPL,
Tesoro Coastwide and Tesoro R&M, and "Inventory Borrowing Base Party" shall
mean any one of them.
-13-
"Issuing Bank" shall mean, for each Letter of Credit, BP or The First
National Bank of Chicago as the issuing bank for such Letter of Credit at
the option of the Company.
"Kenai Refinery" shall mean the refinery of Tesoro Alaska located in
the area of Kenai, Alaska, consisting of the Refinery Premises and the Kenai
Refinery Related Property.
"Kenai Refinery Related Property" shall mean (i) all Improvements; (ii)
all Refinery Personal Property; (iii) all water and water rights pertaining
to the Refinery Premises; (iv) all building materials and equipment now or
hereafter delivered to and intended to be installed in or on the Refinery
Premises or on the Improvements; (v) all plans and specifications for the
Improvements; (vi) all rights of Tesoro Alaska (but not its obligations)
under any contracts relating to the Refinery Premises, the Improvements or
the Refinery Personal Property, including without limitation, the Solar
Turbine Lease, but excluding contract rights under contracts containing
prohibitions against assignment of or the granting of a security interest in
the rights of a party thereunder; (vii) all rights of Tesoro Alaska (but not
its obligations) under any accounts, construction contracts, architectural
agreements and general intangibles, other than contract rights under
contracts containing prohibitions against assignment of or the granting of a
security interest in the rights of a party thereunder, (but excluding
trademarks, trade names and symbols) arising from or by virtue of any
transactions related to the Refinery Premises, Improvements or Refinery
Personal Property; (viii) all permits, licenses, franchises, certificates,
and other rights and privileges obtained in connection with the Refinery
Premises, the Improvements and the Refinery Personal Property; (ix) all
proceeds arising from or by virtue of the sale, lease or other disposition
of the Refinery Premises, the Improvements or the Refinery Personal
Property; (x) all proceeds of each policy of insurance relating to the
Refinery Premises, the Improvements or the Refinery Personal Property; (xi)
all proceeds from the taking of any of the Refinery Premises, the
Improvements, the Refinery Personal Property or any rights appurtenant
thereto by right of eminent domain or by private or other purchase in lieu
thereof, including change of grade of streets, curb cuts or other rights of
access, for any public or quasi-public use under any Governmental
Requirement; (xii) all right, title and interest of Tesoro Alaska in and to
all streets, roads, public places, easements and rights-of-way, existing or
proposed, public or private, adjacent to or used in connection with,
belonging or pertaining to the Refinery Premises; (xiii) all of the leases,
rents, royalties, bonuses, issues, profits, revenues or other benefits of
the Refinery Premises, the Improvements or the Refinery Personal Property,
including without limitation, cash or securities deposited pursuant to
leases to secure performance by the lessees of their obligations thereunder;
(xiv) all consumer goods located in, on or about the Refinery Premises or
the Improvements or used in connection with the use or operation thereof;
(xv) all rights, hereditaments and appurtenances pertaining to the
foregoing; and (xvi) all other interests of every kind and character that
Tesoro Alaska now has or at any time hereafter acquires in and to the
Refinery Premises, Improvements and Refinery Personal Property described
herein and all Property that is used or useful in connection therewith,
including, without limitation, rights of ingress and egress and all
reversionary rights or interests of Tesoro Alaska with respect to such
Refinery Premises, Improvements or Refinery Personal Property.
"KPL" shall mean Kenai Pipe Line Company, a Delaware corporation.
"Lender Indebtedness" shall mean any and all amounts owing or to be
owing by the Company to the Administrative Agent, the Issuing Banks or the
Lenders with respect to or in
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connection with the Loans, any Letter of Credit Liabilities, the Notes,
Hedge Agreements permitted hereby with any Lenders or their Affiliates, this
Agreement, or any other Financing Document.
"Lender" shall have the meaning assigned such term in the opening
paragraph of this Agreement.
"Lending Office" shall mean for each Lender the office specified
opposite such Lender's name on the signature pages hereof, or in the
Assignment and Acceptance pursuant to which it became a Lender, with respect
to each Type of Loan, or such other office as such Lender may designate in
writing from time to time to the Company and the Administrative Agent with
respect to such Type of Loan.
"Letters of Credit" shall have the meaning assigned such term in
Section 2.03(a) and shall include the Outstanding Letters of Credit which
are hereby deemed to be issued under this Agreement.
"Letter of Credit Liabilities" shall mean, at any time and in respect
of any Letter of Credit, the sum of (i) the amount available for drawings
under such Letter of Credit as of the date of determination plus (ii) the
aggregate unpaid amount of all Reimbursement Obligations due and payable as
of the date of determination in respect of previous drawings made under such
Letter of Credit.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute or contract, and including
but not limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease, consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting Property. For the purposes of this Agreement,
the Company or any Subsidiary of the Company shall be deemed to be the owner
of any Property which it has acquired or holds subject to a conditional sale
agreement, financing lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for
security purposes.
"Loan" shall mean a Revolving Credit Loan.
"Loan Parties" shall mean the Company and the Guarantors and "Loan
Party" shall mean any one of them.
"Loan Value of Eligible Inventory" shall mean, at a particular date, an
amount equal to the Eligible Inventory at such date, valued at current
market as described on Annex II of the Credit Agreement or valued at current
market as may otherwise be mutually agreed upon from time to time between
the Company and the Administrative Agent.
"Majority Lenders" shall mean at any time (a) prior to the Commitments
expiring or being terminated in full, Lenders holding at least 66-2/3% of
the Commitments in effect at such time, or (b) thereafter, Lenders holding
at least 66-2/3% of the then Aggregate Revolving Credit Exposure.
-15-
"Mandate Event" shall mean the issuance of a mandate favorable to the
Company by the Texas Supreme Court in the case of Lenape Resources Corp. v.
Tennessee Gas Pipeline Company, 39 Tex Sup. Ct. J. 496 (April 18, 1996)
after denying the request, if any, for rehearing requested by Tennessee Gas
Pipeline Company.
"Margin Stock" shall have the meaning provided in Regulation U and
Regulation X.
"Material Adverse Effect" shall mean any material and adverse effect on
the business, financial condition, results of operations or prospects of the
Company and its Subsidiaries taken as a whole.
"Maximum Available Amount" shall mean, at any date, an amount equal to
the lesser of (a) the Borrowing Base as of such date or (b) the Active
Facility Amount as of such date.
"Maximum Revolving Credit Loan Available Amount" shall mean:
(i) prior to the occurrence of both the Mandate Event and the
Collection Event, at any date, an amount equal to the lesser of (a)
fifty percent (50%) of the Active Facility Amount as of such date and
(b) the E&P Borrowing Base as of such date plus $10,000,000; or
(ii) from and after the occurrence of both the Mandate Event and
the Collection Event, $100,000,000.
"Mortgaged Property" shall mean the Company's and the Guarantors'
Properties described in and subject to the Liens, privileges, priorities and
security interests existing and to exist under the terms of the Security
Instruments, including but not limited to the Kenai Refinery and the Oil and
Gas Properties owned by the Company or the Guarantors which have been or are
hereafter mortgaged to the Administrative Agent for the benefit of the
Lenders pursuant to the Security Instruments.
"Non-Guarantor Subsidiary" shall mean a Subsidiary of the Company that
is not indicated as a Guarantor on Exhibit C.
"Non-Recourse Indebtedness" shall mean Indebtedness of a Subsidiary
which is non-recourse to the Company and the other Subsidiaries on terms
satisfactory to the Majority Lenders.
"Notes" shall mean the Revolving Credit Notes.
"Oil and Gas Properties" shall mean Hydrocarbon Interests; the
properties now or hereafter pooled or unitized with Hydrocarbon Interests;
all presently existing or future unitization, pooling agreements and
declarations of pooled units and the units created thereby (including, but
not limited to, units created under orders, regulations and rules of any
Governmental Authority having jurisdiction) which may affect all or any
portion of the Hydrocarbon Interests; all operating agreements, contracts
and other agreements which relate to any of the Hydrocarbon Interests or the
production, sale, purchase, exchange or processing of Hydrocarbons from or
attributable to such Hydrocarbon Interests; all Hydrocarbons in and under
and which may be produced and saved or
-16-
attributable to the Hydrocarbon Interests, the lands covered thereby and all
oil in tanks and all rents, issues, profits, proceeds, products, revenues
and other incomes from or attributable to the Hydrocarbon Interests; all
tenements, hereditaments, appurtenances and Properties in anywise
appertaining, belonging, affixed or incidental to the Hydrocarbon Interests,
Properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or
hereafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such
Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment or other personal property which may be on such premises for the
purpose of drilling a well or for other similar temporary uses) and
including any and all oil wells, gas wells, injection wells or other wells,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements,
cables, wires, towers, casing, tubing and rods, surface leases,
rights-of-way, easements and servitudes together with all additions,
substitutions, replacements, accessions and attachments to any and all of
the foregoing.
"Other Taxes" shall have the meaning provided in Subsection 2.21(b).
"Outstanding Letters of Credit" shall mean the Letters of Credit set
forth on Schedule 1.01.
"Payment Office" shall mean the Administrative Agent's office located
at 1200 Smith, Suite 3100, Houston, Texas, 77002; Attention: Ms. Leah
Evans-Hughes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Percentage Share" shall mean, as to any Lender, the fraction,
expressed as a percentage, the numerator of which is the amount of such
Lender's Revolving Credit Commitment and the denominator of which is the
amount of the Aggregate Revolving Credit Commitments.
"Permitted Dividends" shall mean those dividends that the Company is
permitted to declare and pay pursuant to Section 6.08.
"Person" shall mean any individual, partnership, firm, corporation
(including, but not limited to the Company), association, joint venture,
trust or other entity, or any government or political subdivision or agency,
department or instrumentality thereof; provided, however, for the purpose of
the definition of "Change of Control," "Person" shall mean a "person" or
group of persons within the meaning of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended.
"Plan" shall mean any employee pension benefit plan, as defined in
Section 3(2) of ERISA, which (i) is currently or hereafter sponsored,
maintained or contributed to by the Company, a Subsidiary or an ERISA
Affiliate, or (ii) was at any time during the six calendar years preceding
the date of this Agreement sponsored, maintained or contributed to by the
Company, a Subsidiary or an ERISA Affiliate.
"Prime Rate" shall mean the rate which the Documentation Agent
announces from time to time as its prime rate. Without notice to the
Company or any other Person, the Prime Rate shall change automatically from
time to time as and in the amount by which such prime rate shall
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fluctuate. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer. The
Documentation Agent may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Proved" shall mean Hydrocarbon reserves which geological and
engineering data demonstrate with reasonable certainty to be economically
recoverable in future years with present operating methods and expenses.
"Proved Undeveloped Hydrocarbon Reserves" shall mean Proved Hydrocarbon
reserves which are not Developed.
"Quarterly Dates" shall mean the last day of each March, June,
September, and December, in each year, the first of which shall be June 30,
1996; provided, however, that if any such day is not a Business Day, such
Quarterly Date shall be the next succeeding Business Day.
"Refinery Personal Property" shall mean all equipment, fixtures,
furnishings, inventory and articles of personal property of Tesoro Alaska
(excluding from the foregoing the Property leased pursuant to the Solar
Turbine Lease) now or hereafter attached to or used in or about the
Improvements or that are necessary or useful for the complete and
comfortable use and occupancy of the Improvements for the purposes for which
they were or are to be attached, placed, erected, constructed or developed,
or which are or may be used in or related to the planning, development,
financing or operation of the Improvements, and all renewals of or
replacements or substitutions for any of the foregoing, whether or not the
same are or shall be attached to the Refinery Premises or the Improvements.
"Refinery Premises" shall mean the real property owned by Tesoro Alaska
described on Exhibit A attached to the Alaska Deed of Trust.
"Register" shall mean the register maintained by the Administrative
Agent at its Payment Office showing the name and address of each Lender, its
Commitment, and the principal amount of the Loans owing to each Lender from
time to time.
"Regulation D", "Regulation U" and "Regulation X" shall mean Regulation
D, Regulation U, and Regulation X, respectively, of the Board of Governors
of the Federal Reserve System as from time to time in effect and any
successor thereto.
"Reimbursement Obligations" shall mean, at any date, the obligations of
the Company then outstanding in respect of the Letters of Credit, to
reimburse the Administrative Agent for the account of the Issuing Bank for
the amount paid by the Issuing Bank in respect of any drawings under the
Letters of Credit.
"Reserve Report" shall mean an engineering report meeting the
requirements set forth in Subsection 5.15(e) (and as to scheduled
redeterminations, provided on the dates set forth in such Subsection) and
such other reports, data and supplemental information as may from time to
time be
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reasonably requested by the Administrative Agent in connection with any
redetermination of the E&P Borrowing Base.
"Responsible Officer" shall mean the Chief Executive Officer, the Chief
Financial Officer, the Treasurer, the Controller, the Secretary or the
Assistant Treasurer in each case of the Company.
"Revolving Credit Commitment" shall mean for any Lender, the amount set
forth opposite such Lender's name on Annex I under the caption "Revolving
Credit Commitment", as such amount may be reduced pursuant to Section 2.09
or otherwise from time to time modified pursuant to Section 9.07(b).
"Revolving Credit Exposure" shall mean, at any time and as to each
Lender, the sum of (a) the aggregate principal amount of the Revolving
Credit Loans made by such Lender as of such date plus (b) such Lender's
Percentage Share of the aggregate amount of all Letter of Credit Liabilities
as of such date.
"Revolving Credit Loan" shall have the meaning provided in Subsection
2.01(a); the Revolving Credit Loans shall not include any Letter of Credit
Liabilities.
"Revolving Credit Maturity Date" shall mean June 30, 1999; provided,
however, upon the occurrence of the Mandate Event, it shall mean April 30,
2000.
"Revolving Credit Note" shall mean a promissory note of the Company
described in Section 2.05(a) payable to any Lender and being substantially
in the form of Exhibit A, evidencing the aggregate Indebtedness of the
Company to such Lender resulting from Revolving Credit Loans made by such
Lender.
"Rolling Period" shall mean for each calendar quarter, such quarter and
the three preceding calendar quarters.
"Scheduled Redetermination Date" shall have the meaning assigned to
such term in Section 2.20(d).
"Scotiabank" shall mean The Bank of Nova Scotia, in its individual
capacity and not as Documentation Agent.
"Security Instruments" shall mean the agreements or instruments
described or referred to in Subsections 3.02(d)(ii) through (vii) and any
and all other agreements or instruments now or hereafter executed and
delivered by the Company, any Subsidiary of the Company or any other Person
as security for the payment or performance of the Lender Indebtedness or
previously executed in connection with the Existing Indebtedness.
"Simple Majority Lenders" shall mean at any time (a) prior to the
Commitments expiring or being terminated in full, Lenders holding at least
51% of the Commitments in effect at such time, or (b) thereafter, Lenders
holding at least 51% of the then Aggregate Revolving Credit Exposure.
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"Solar Turbine Lease" shall mean that certain Lease Agreement dated as
of October 1, 1987, from Solar Turbines Incorporated, as lessor, to the
Company, as lessee.
"Standby Letter of Credit" shall mean a letter of credit denominated in
Dollars (i) the terms of which are in the reasonable judgment of the Issuing
Bank for such Letter of Credit standard in the petroleum industry, (ii)
which is used in lieu or in support of performance guarantees or
performance, surety or other similar bonds (but expressly excluding stay and
appeal bonds) arising in the ordinary course of business, (iii) which is
used in lieu or in support of stay or appeal bonds; provided all such
letters of credit used in lieu or in support of stay or appeal bonds shall
not exceed $5,000,000 in aggregate amount at any time outstanding, (iv)
which supports the payment of insurance premiums for reasonably necessary
casualty insurance carried by the Company or any of its consolidated
Subsidiaries, or (v) which supports payment or performance for identified
purchases or exchanges of crude oil, condensate and/or petroleum products.
"Subordinated Debentures" shall mean the 12 % Subordinated Debentures
due March 15, 2001, issued by the Company.
"Subsidiary" of any Person shall mean (a) a corporation of which a
majority of the outstanding shares of stock of each class having ordinary
voting power is owned by such Person, by one or more Subsidiaries of such
Person, or by such Person and one or more of its Subsidiaries and (b) Tesoro
LP.
"TAPL" shall mean Tesoro Alaska Pipeline Company, a Delaware
corporation.
"Taxes" shall have the meaning provided in Subsection 2.21(a).
"Tesoro Alaska" shall mean Tesoro Alaska Petroleum Company, a Delaware
corporation.
"Tesoro Bolivia" shall mean Tesoro Bolivia Petroleum Company, a Texas
corporation.
"Tesoro Coastwide" shall mean collectively, Tesoro Coastwide Services
Company, a Delaware corporation and Coastwide Marine Services, Inc., a Texas
corporation.
"Tesoro E&P" shall mean Tesoro Exploration and Production Company,
Tesoro LP and Tesoro Gas Resources Company, Inc., a Delaware corporation, as
a single consolidated group.
"Tesoro Environmental" shall mean Tesoro Environmental Resources
Company, a Delaware corporation.
"Tesoro LP" shall mean Tesoro E&P Company, L.P., a Delaware limited
partnership.
"Tesoro Northstore" shall mean Tesoro Northstore Company, an Alaska
corporation.
"Tesoro R&M" shall mean Tesoro Refining, Marketing & Supply Company, a
Delaware corporation.
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"Tesoro Terminals" shall mean the Vancouver Terminal located in the
area of Vancouver, Washington, the Sacramento Terminal located in the area
of Sacramento, California, the Stockton Terminal located in the area of
Stockton, California, the Port Hueneme Terminal located in the area of Port
Hueneme, California and such other terminals which Tesoro Alaska or any
other Inventory Borrowing Base Party owns or has possession of pursuant to a
long-term lease.
"Tesoro Vostok" shall mean Tesoro Vostok Company, a Delaware
corporation.
"Transactions" shall mean the transactions provided for in and
contemplated by this Agreement and the other Financing Documents.
"Type" of Loan shall mean a Base Rate Loan or Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Texas or, where applicable as to specific Mortgaged
Property, any other relevant state.
Section 1.02 Accounting Terms and Determinations. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared and all financial records
shall be maintained in accordance with GAAP applied on a basis consistent with
the financial statements referred to in Subsection 4.06(a).
Section 1.03 Other Definitional Terms. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, schedule, exhibit and like references are to
this Agreement unless otherwise specified.
ARTICLE II
AMOUNT AND TERMS OF LOANS
Section 2.01 Commitments.
(a) Loans. Subject to and upon the terms and conditions herein set
forth, each Lender severally agrees on any Business Day prior to the
Revolving Credit Maturity Date, to make Revolving Credit Loans (each a
"Revolving Credit Loan") to the Company.
(b) Types of Loans. The Revolving Credit Loans made pursuant hereto
by each Lender shall, at the option of the Company, be either Base Rate
Loans or Eurodollar Loans and may be continued or converted pursuant to
Section 2.11, provided that, except as otherwise specifically provided
herein, all Loans made pursuant to the same Borrowing shall be of the same
Type.
(c) Revolving Credit Commitments. Each Lender's Revolving Credit
Exposure shall not exceed at any one time its Revolving Credit Commitment;
provided, however, that the Aggregate Revolving Credit Exposure at any one
time outstanding shall not exceed the Maximum Available Amount in effect at
such time; and, provided, further, the aggregate principal amount of all
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Revolving Credit Loans at any one time outstanding shall not exceed the
Maximum Revolving Credit Loan Available Amount in effect at such time.
There may be more than one Borrowing with respect to Revolving Credit Loans
on any day. Within the foregoing limits and subject to the conditions set
out in Article III, the Company may obtain Borrowings of Revolving Credit
Loans, repay or prepay such Revolving Credit Loans, and reborrow such
Revolving Credit Loans.
(d) Active Facility Amount. The Company may from time to time, by
written notice to the Administrative Agent, the Issuing Bank and each
Lender, designate the Active Facility Amount as any amount (in integral
multiples of $1,000,000) not less than $100,000,000 and not in excess of the
Aggregate Revolving Credit Commitments. As of the Closing Date, the Active
Facility Amount shall be $100,000,000 until such time as a new Active
Facility Amount is designated pursuant to the terms of this Section.
(e) Amounts of Borrowings, etc. The aggregate principal amount of
each Borrowing (i) of Eurodollar Loans shall be not less than $5,000,000 and
shall be in an integral multiple of $1,000,000, and (ii) of Base Rate Loans
hereunder shall be not less than $1,000,000 and shall be in an integral
multiple of $100,000, except that any Borrowing of Revolving Credit Loans
that are Base Rate Loans may be in the aggregate amount of the unused
Maximum Revolving Credit Loan Amount in effect at such time. Borrowings of
more than one Type may be outstanding at the same time; provided, however,
that the Company shall not be entitled to request any Borrowing that, if
made, would result in an aggregate of more than four separate Borrowings of
Eurodollar Loans being outstanding at any one time. For purposes of the
foregoing, Borrowings having different Interest Periods, regardless of
whether they commence on the same date, shall be considered separate
Borrowings.
Section 2.02 Borrowing Requests.
(a) Borrowing Requests. Whenever the Company desires to make a
Borrowing hereunder, it shall give Advance Notice in the form of a Borrowing
Request, specifying, subject to the provisions hereof, (i) the aggregate
principal amount of the Loans to be made pursuant to such Borrowing, (ii)
the date of Borrowing (which shall be a Business Day), (iii) whether the
Loans being made pursuant to such Borrowing are to be Base Rate Loans or
Eurodollar Loans, and (iv) in the case of Eurodollar Loans, the Interest
Period to be applicable thereto.
(b) Notice by Administrative Agent. The Administrative Agent shall
promptly give each Lender telecopy or telephonic notice (and, in the case of
telephonic notices, confirmed by telecopy or otherwise in writing) of the
proposed Borrowing, of such Lender's proportionate share thereof and of the
other matters covered by the Advance Notice. Without in any way limiting
the Company's obligation to confirm in writing any telephonic notice, the
Administrative Agent may act without liability upon the basis of telephonic
notice believed by the Administrative Agent in good faith to be from the
Company prior to receipt of written confirmation. In each such case, the
Company hereby waives the right to dispute the Administrative Agent's record
of the terms of such telephonic notice, absent manifest error.
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Section 2.03 Letters of Credit.
(a) Issuance of Letters of Credit. Subject to the terms and
conditions hereof, the Company shall have the right, in addition to
Revolving Credit Loans provided for in Section 2.01, to utilize the
Revolving Credit Commitments from time to time prior to the Revolving Credit
Maturity Date by obtaining the issuance of either Documentary Letters of
Credit or Standby Letters of Credit for the account of any Loan Party by the
Issuing Bank if the Company shall so request in the notice referred to in
Subsection 2.03(b)(i) (such letters of credit being collectively referred to
as the "Letters of Credit"); provided, however, that the Aggregate Revolving
Credit Exposure at any one time outstanding shall not exceed the Maximum
Available Amount in effect at such time. The Letters of Credit may be
issued to support the obligations of the Company or any of its Subsidiaries.
Upon the date of the issuance of a Letter of Credit, the applicable Issuing
Bank shall be deemed, without further action by any party hereto, to have
sold to each Lender, and each Lender shall be deemed, without further action
by any party hereto, to have purchased from the Issuing Bank, a
participation, to the extent of such Lender's Percentage Share, in such
Letter of Credit and the related Letter of Credit Liabilities. No Letter of
Credit issued pursuant to this Agreement shall have an expiry date later
than one year from date of issuance (except for Letters of Credit issued to
support performance bonds on behalf of Tesoro Bolivia), provided that any
Letter of Credit having an expiry date after the Revolving Credit Maturity
Date shall have been fully Covered or shall be backed by a letter of credit
in form and substance, and issued by an issuer, acceptable to each of the
Administrative Agent and the Issuing Bank in their sole discretion,
provided, further, that, subject to the immediately preceding proviso, any
Letter of Credit may give the beneficiary thereof the right to draw such
Letter of Credit unless the expiry date thereof is extended for periods of
up to one year per extension. The Company and the Lenders agree that, as of
the Effective Date, the Outstanding Letters of Credit shall for all purposes
of this Agreement be deemed to be Letters of Credit issued under and
pursuant to the terms of this Agreement.
(b) Additional Letter of Credit Provisions. The following additional
provisions shall apply to each Letter of Credit:
(i) The Company shall give the Administrative Agent and the Issuing
Bank at least one Business Days' prior notice (effective upon receipt), or
in each case, such shorter period as may be agreed to by the Issuing Bank,
specifying the date such Letter of Credit is to be issued (which shall be a
Business Day) and the Issuing Bank and describing: (A) the face amount of
the Letter of Credit, (B) the expiration date of the Letter of Credit, (C)
the name and address of the beneficiary, (D) information concerning the
transaction proposed to be supported by such Letter of Credit as the
Administrative Agent or the Issuing Bank may reasonably request, (E) such
other information and documents relating to the Letter of Credit as the
Administrative Agent or the Issuing Bank may reasonably request, and (F) a
precise description of documents and the verbatim text of any certificate to
be presented by the beneficiary, which, if presented prior to the expiry
date of the Letter of Credit, would require the Issuing Bank to make payment
under the Letter of Credit; provided that the Issuing Bank, in its
reasonable judgment, may require changes in such documents and certificates;
and provided further that the Issuing Bank shall not be required to issue
any Letter of Credit that on its terms requires payment thereunder prior to
the next Business Day following receipt by the Issuing Bank of such
documents and certificates. Each such notice shall be accompanied by the
Issuing Bank's Application and by a certificate executed by a Responsible
Officer setting forth calculations evidencing availability for such Letter
of Credit pursuant to
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Subsection 2.03(b)(ii) and stating that all conditions precedent to such
issuance have been satisfied. Each Letter of Credit shall, to the extent
not inconsistent with the express terms hereof or the applicable
Application, be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500 (together with any subsequent revisions thereof approved by a Congress
of the International Chamber of Commerce and adhered to by the Issuing
Lender, the "UCP"), and shall, as to matters not governed by the UCP, be
governed by, and construed and interpreted in accordance with, the laws of
the State of Texas. In determining whether to pay any Letter of Credit, the
Issuing Bank shall be responsible only to use reasonable care to determine
that the documents and certificates required to be delivered under that
Letter of Credit have been delivered and that they comply on their face with
the requirements of that Letter of Credit.
(ii) No Letter of Credit may be issued if after giving effect thereto
the Aggregate Revolving Credit Exposure would exceed the Maximum Available
Amount. On each day during the period commencing with the issuance of any
Letter of Credit and until such Letter of Credit shall have expired or have
been terminated, the Revolving Credit Commitment of each Lender shall be
deemed to be utilized for all purposes hereof in an amount equal to such
Lender's Percentage Share of the amount of the Letter of Credit Liabilities
related to such Letter of Credit.
(iii) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment thereunder, the Issuing Bank shall promptly notify the
Company and the Administrative Agent of such demand (provided that the
failure of an Issuing Bank to give such notice shall not affect the
Reimbursement Obligations of the Company hereunder) and the Company shall
immediately, and in any event no later than 11:00 a.m. (Houston, Texas
time) on the date of such drawing, reimburse the Administrative Agent for
the account of the Issuing Bank for any amount paid by the Issuing Bank upon
any drawing under any Letter of Credit, without presentment, demand, protest
or other formalities of any kind in an amount, in same day funds, equal to
the amount of such drawing. Unless prior to 11:00 a.m. (Houston, Texas
time) on the date of such drawing, the Company shall have either notified
the Issuing Bank and the Administrative Agent that the Company intends to
reimburse the Administrative Agent for the account of the Issuing Bank for
the amount of such drawing with funds other than the proceeds of a Revolving
Credit Loan or delivered to the Administrative Agent a Borrowing Request for
Revolving Credit Loans in an amount equal to such drawing, the Company will
be deemed to have given a Borrowing Request to the Administrative Agent
requesting that the Lenders make Revolving Credit Loans which shall be Base
Rate Loans on the date on which such drawing is honored in an amount equal
to the amount of such drawing. Such Loans shall be subject to satisfaction
of the conditions in Article III and to existence of Maximum Revolving
Credit Loan Available Amount. Subject to the preceding sentence, if so
requested by the Administrative Agent, the Lenders shall, on the date of
such drawing, make such Revolving Credit Loans in an amount equal to such
Lender's Percentage Share of such drawing, the proceeds of which shall be
applied directly by the Administrative Agent to reimburse the Issuing Bank
for the amount of such drawing.
(iv) If the Company fails to reimburse the Issuing Bank as provided in
clause (iii) above, the Issuing Bank shall promptly notify the
Administrative Agent and the Administrative Agent shall notify each Lender
of the unreimbursed amount of such drawing and of such Lender's respective
participation therein based on such Lender's Percentage Share. Each Lender
will pay to the Administrative Agent for the account of the applicable
Issuing Bank on the date of such notice an
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amount equal to such Lender's Percentage Share of such unreimbursed drawing
(or, if such notice is made after 11:00 a.m. (Houston, Texas time) on such
date, on the next succeeding Business Day). If any Lender fails to make
available to the Issuing Bank the amount of such Lender's participation in
such Letter of Credit as provided in this clause (iv), the Issuing Bank
shall be entitled to recover such amount on demand from such Lender together
with interest at the Federal Funds Rate for one Business Day and thereafter
at the Base Rate. Nothing in this clause (iv) shall be deemed to prejudice
the right of any Lender to recover from the Issuing Bank any amounts made
available by such Lender to the Issuing Bank pursuant to this clause (iv) if
it is determined by a court of competent jurisdiction that the payment with
respect to a Letter of Credit by the Issuing Bank was wrongful and such
wrongful payment was the result of gross negligence or willful misconduct on
the part of the Issuing Bank. The Issuing Bank shall pay to the
Administrative Agent and the Administrative Agent to each Lender such
Lender's Percentage Share of all amounts received from the Company for
payment, in whole or in part, of the Reimbursement Obligation in respect of
any Letter of Credit, but only to the extent such Lender has made payment to
the Issuing Bank in respect of such Letter of Credit pursuant to this clause
(iv).
(v) The issuance by the Issuing Bank of each Letter of Credit shall,
in addition to the conditions precedent set forth in Article III, be subject
to the conditions precedent that such Letter of Credit shall be in such form
and contain such terms as shall be reasonably satisfactory to the Issuing
Bank, and that the Company shall have executed and delivered such other
instruments and agreements relating to such Letter of Credit as the Issuing
Bank shall have reasonably requested and that are not inconsistent with the
terms of this Agreement including the Issuing Bank's Application therefor.
In the event of a conflict between the terms of this Agreement and the terms
of any Application, the terms of this Agreement shall control.
(vi) As between the Company and the Issuing Bank, the Company assumes
all risks of the acts and omissions of or misuse of the Letters of Credit
issued by the Issuing Bank by the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, the
Issuing Bank shall not be responsible: (A) for the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted
by any Person in connection with the application for or issuance of such
Letters of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (B) for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason; (C) for failure of the
beneficiary of any such Letter of Credit to comply fully with conditions
required in order to draw upon such Letter of Credit, which failure is not
the result of gross negligence or willful misconduct of the Issuing Bank as
determined by a court of competent jurisdiction; (D) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex or otherwise, whether or not they are in
cipher; (E) for errors in interpretation of technical terms; (F) for any
loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (G) for the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; and (H)
for any consequences arising from
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causes beyond the control of the Issuing Bank, including, without
limitation, the actions of any governmental authority. None of the above
shall affect, impair, or prevent the vesting of any of the Issuing Bank's
rights or powers hereunder. Notwithstanding anything to the contrary
contained in this clause (vi), the Company shall have no obligation to
indemnify an Issuing Bank in respect of any liability incurred by the
Issuing Bank arising solely out of the gross negligence or willful
misconduct of the Issuing Bank, as determined by a court of competent
jurisdiction.
(vii) The Issuing Bank will send to the Company and the Administrative
Agent immediately upon issuance of any Letter of Credit, or an amendment
thereto, a true and complete copy of such Letter of Credit, or such
amendment thereto. Upon issuance of any Letter of Credit or an amendment
thereto, the Administrative Agent shall promptly notify each Lender of the
terms of such Letter of Credit or amendment thereto, the Issuing Bank for
such Letter of Credit or amendment thereto, and of such Lender's Percentage
Share of the amount of such Letter of Credit or amendment thereto, and the
Administrative Agent shall provide to each Lender a copy of such Letter of
Credit or such amendment thereto. Upon cancellation or termination of any
Letter of Credit, the Issuing Bank shall promptly notify the Administrative
Agent and the Company, and the Administrative Agent will then promptly
notify each Lender, of such cancellation or termination.
(viii) The obligation of the Company to reimburse each Issuing Bank
for Reimbursement Obligations with regard to the Letters of Credit issued by
it and the obligations of Lenders under clause (iv) shall be unconditional
and irrevocable and shall be paid strictly in accordance with the terms of
this Agreement and under all circumstances including, without limitation,
the following circumstances:
(A) any lack of validity or enforceability of any Letter of
Credit;
(B) the existence of any claim, set-off, defense or other right
that the Company may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying transaction between the
Company or one of its Subsidiaries and the beneficiary for which the Letter
of Credit was procured) other than a defense based on the gross negligence
or willful misconduct of the Issuing Bank, as determined by a court of
competent jurisdiction;
(C) any draft, demand, certificate or any other document
presented under any Letter of Credit is proved to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein is untrue or
inaccurate in any respect;
(D) payment by the Issuing Bank under any Letter of Credit
against presentation of a demand, draft or certificate or other document
that does not comply with the terms of such Letter of Credit, provided that
such payment does not occur as a result of the gross negligence or willful
misconduct of the Issuing Bank, as determined by a court of competent
jurisdiction;
(E) any adverse change in the condition (financial or otherwise)
of the Company;
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(F) any breach of this Agreement or any other Financing Document
by the Company, Administrative Agent or any Lender (other than the Issuing
Bank);
(G) any other circumstance or happening whatsoever which is
similar to any of the foregoing; provided that such other occurrence or
happening is not the result of the gross negligence or willful misconduct of
the Issuing Bank, as determined by a court of competent jurisdiction; or
(H) the fact that a Default shall have occurred and be
continuing.
Section 2.04 Disbursement of Funds.
(a) Availability. No later than 2:00 p.m. (Houston time) on the date
of each Borrowing, each Lender will make available its pro rata portion of
the amount (if any) by which the principal amount of the Borrowing requested
to be made on such date exceeds the principal amount of Loans (if any)
maturing or Reimbursement Obligations (if any) due and owing on such date,
in Dollars and in immediately available funds at the Payment Office. The
Administrative Agent will make available to the Company at the Payment
Office the aggregate of the amounts (if any) so made available by the
Lenders by depositing the same, in immediately available funds, to an
account of the Company at the Administrative Agent designated by the Company
for such purpose. To the extent that Loans mature or Reimbursement
Obligations are due and owing on the date of a requested Borrowing of
Revolving Credit Loans, the Lenders shall apply the proceeds of the
Revolving Credit Loans then being made, to the extent thereof, to the
repayment of such maturing Loans or Reimbursement Obligations, such
Revolving Credit Loans and repayments intended to be a contemporaneous
exchange.
(b) Funds to the Administrative Agent. Unless the Administrative
Agent shall have been notified by any Lender prior to the date of a
Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of the Borrowing to be made on
such date, the Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent on such date, and the
Administrative Agent may make available to the Company a corresponding
amount. If such corresponding amount is not in fact made available to the
Administrative Agent by such Lender on the date of a Borrowing, the
Administrative Agent shall be entitled to recover such corresponding amount
on demand from such Lender together with interest at the Federal Funds Rate.
If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall
promptly notify the Company, and the Company shall immediately pay such
corresponding amount to the Administrative Agent together with interest at
the rate specified for the Borrowing which includes such amount paid.
Nothing in this Section shall be deemed to relieve any Lender from its
obligation to fulfill its Commitment hereunder or to prejudice any rights
which the Company may have against any Lender as a result of any default by
such Lender hereunder.
(c) Lenders' Responsibilities. No Lender shall be responsible for any
default by any other Lender in its obligation to make Loans hereunder, and
each Lender shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to fulfill its
Commit- ment hereunder.
Section 2.05 Notes.
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(a) Revolving Credit Notes. The Company's obligation to pay the
principal of, and interest on, the Revolving Credit Loans made by each
Lender shall be further evidenced by the Company's issuance, execution and
delivery of a Revolving Credit Note payable to the order of each such Lender
in the amount of the sum of such Lender's Revolving Credit Commitment and
shall be dated as of the date of issuance of such Revolving Credit Note.
The principal amount of each Revolving Credit Note shall be payable on or
before the Revolving Credit Maturity Date.
(b) Right to Collect on the Notes. The Company and the Guarantors are
personally obligated and fully liable for the amounts due under the Notes.
The Lenders have the right to sue on the Notes and obtain a personal
judgment against the Company and the Guarantors for satisfaction of the
amounts due under the Notes either before or after a judicial foreclosure of
the Alaska Deed of Trust under Alaska Statute 09.45.170 - 09.45.220.
Section 2.06 Interest. In all cases subject to Section 9.13:
(a) Base Rate Loans. Subject to Section 2.06(c), the Company agrees
to pay interest in respect of the unpaid principal amount of each Base Rate
Loan from the date thereof until payment in full thereof at a rate per annum
which shall be, for any day, equal to the sum of the Applicable Margin plus
the Base Rate in effect on such day, but in no event to exceed the Highest
Lawful Rate. The term "Base Rate" shall mean the higher of (i) the Prime
Rate in effect on such day or (ii) one-half of one percent (1/2%) plus the
Federal Funds Rate in effect for such day (rounded upwards, if necessary, to
the nearest 1/16th of 1%), but in no event to exceed the Highest Lawful
Rate. For purposes of this Agreement, any change in the Base Rate due to a
change in the Federal Funds Rate or the Prime Rate shall be effective on the
effective date of such change in the Federal Funds Rate or the Prime Rate,
as the case may be. If for any reason the Administrative Agent shall have
determined (which determination shall be conclusive and binding, absent
manifest error) that it is unable to ascertain the Federal Funds Rate for
any reason, including but not limited to the inability of the Administrative
Agent to obtain sufficient bids or publications in accordance with the terms
hereof, the Base Rate shall be the Prime Rate until the circumstances giving
rise to such inability no longer exist.
(b) Eurodollar Loans. Subject to Section 2.06(c), the Company agrees
to pay interest in respect of the unpaid principal amount of each Eurodollar
Loan from the date thereof until payment in full thereof at a rate per annum
which shall be the sum of the Applicable Margin plus the relevant Eurodollar
Rate, but in no event to exceed the Highest Lawful Rate.
(c) Default Interest. Overdue principal and, to the extent permitted
by law, overdue interest in respect of each Loan and all other amounts owing
hereunder shall bear interest for each day that such amounts are overdue at
a rate per annum equal to three percent (3%) in excess of the Base Rate in
effect for each such day.
(d) Miscellaneous. Interest on each Loan shall accrue from and
including the date of such Loan to but excluding the date of payment in full
thereof. Interest on each Eurodollar Loan shall be payable on the last day
of each Interest Period applicable thereto and, in the case of an Interest
Period in excess of three months, on each day which occurs every three
months after the initial date of such Interest Period, and on any prepayment
(on the amount prepaid), at maturity
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(whether by acceleration or otherwise) and, after maturity, on demand.
Interest on Base Rate Loans shall be payable on each Quarterly Date,
commencing on the first of such days to occur after such Loan is made, at
maturity (whether by acceleration or otherwise) and, after maturity, on
demand.
(e) Notice by the Administrative Agent. The Administrative Agent,
upon determining the Eurodollar Rate for any Interest Period, shall promptly
notify by telephone (confirmed in writing) or in writing the Company and the
Lenders thereof.
Section 2.07 Interest Periods. In connection with each Borrowing of
Eurodollar Loans, the Company shall elect an Interest Period to be applicable to
such Borrowing, which Interest Period shall begin on and include, as the case
may be, the date selected by the Company pursuant to Section 2.02(a), the
conversion date or the date of expiration of the then current Interest Period
applicable thereto, and end on but exclude the date which is either one, two,
three or six months thereafter, as selected by the Company; provided that:
(a) Business Days. If any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day, provided, further, that if any Interest Period
(other than in respect of a Borrowing of Eurodollar Loans the Interest
Period of which is expiring pursuant to Section 2.15(b) hereof) would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(b) Month End. Any Interest Period which begins on the last Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to Subsection (c) below, end on the last Business Day of a
calendar month;
(c) Payment Limitations. No Interest Period shall extend beyond any
date that any principal payment or prepayment is scheduled to be due unless
the aggregate principal amount of Borrowings which are Borrowings of Base
Rate Loans or which have Interest Periods which will expire on or before
such date, less the aggregate amount of any other principal payments or
prepayments due during such Interest Period, is equal to or in excess of the
amount of such principal payment or prepayment; and
(d) Maturity Dates. No Interest Period shall extend beyond the
Revolving Credit Maturity Date.
Section 2.08 Repayment of Loans. Subject to the provisions of Sections
2.09, 2.10 and 2.11, the Company shall pay to the Administrative Agent for the
ratable benefit of the Lenders the unpaid principal amount of (i) each
Eurodollar Loan made by such Lender hereunder on the last day of the Interest
Period in respect of such Loan and (ii) each Base Rate Loan on or before the
Revolving Credit Maturity Date.
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Section 2.09 Termination or Reduction of Revolving Credit Commitments.
The Company may, upon at least three Business Days' notice to the Administrative
Agent, terminate entirely at any time, or proportionately reduce from time to
time by an aggregate amount of $5,000,000 or any larger multiple of $1,000,000,
the unused portions of the Revolving Credit Commitments, provided that any such
reduction shall apply proportionately to the Revolving Credit Commitment of each
Lender. If the Revolving Credit Commitments are terminated in their entirety,
all accrued commitment fees with respect thereto shall be payable on the
effective date of such termination.
Section 2.10 Prepayments.
(a) Mandatory Revolving Credit Loan Prepayments. If, after giving
effect to any reduction of the Maximum Revolving Credit Loan Available
Amount as a result of a redetermination of the E&P Borrowing Base as
provided in Section 2.20 or decrease in the Active Facility Amount, the
outstanding aggregate principal amount of the Revolving Credit Loans exceeds
the amount of the Maximum Revolving Credit Loan Available Amount as so
reduced, the Company shall pay or prepay the Revolving Credit Loans in the
amount of such excess, together with interest on the principal amount paid
accrued to the date of such prepayment, pursuant to Section 2.10(d).
(b) Mandatory Borrowing Base Prepayments. If at any time the
Aggregate Revolving Credit Exposure is in excess of the Maximum Available
Amount, the Company shall make a prepayment of Revolving Credit Loans or
provide Cover for Letter of Credit Liabilities, or a combination thereof, in
an amount equal to such excess. Any such Cover shall be provided in full
within five Business Days of the earlier of (i) the date of the Borrowing
Base Report first reporting such excess or (ii) the date on which the
Administrative Agent provides notice thereof to the Company and any such
prepayment, together with interest on the principal amount paid accrued to
the date of such prepayment, shall be made pursuant to Section 2.10(d).
(c) Voluntary Prepayments. The Company may, at its option, at any
time and from time to time, prepay Loans, in whole or in part, without
premium or penalty (other than funding losses, if any, resulting from such
prepayment being made other than on the last day of an Interest Period with
respect to any Eurodollar Loan as provided in Section 2.18), upon giving, in
the case of a Eurodollar Loan, three Business Days' prior written notice to
the Administrative Agent, and, in the case of a Base Rate Loan, on the same
Business Day's with prior written notice by 11:00 a.m. of such day to the
Administrative Agent. Such notice shall specify the date and amount of
prepayment and the Loan or Loans (including the Type thereof) to which such
prepayment is to be applicable. Upon receipt of such notice, the
Administrative Agent shall promptly notify each Lender of the contents
thereof and of such Lender's ratable share of such prepayment. The payment
amount specified in the such notice shall be due and payable on the date
specified. Each prepayment of Base Rate Loans shall be in the minimum
principal amount of $1,000,000 and in integral multiples of $100,000 and
each prepayment of Eurodollar Loans shall be in the minimum principal amount
of $5,000,000 and in integral multiples of $1,000,000 or, in the case of
either Base Rate Loans or Eurodollar Loans, or the aggregate balance
outstanding on the applicable Notes. Each prepayment of Term Loans made
pursuant to this Section shall be accompanied by any funding losses
resulting from such prepayment being made other than on the last day of an
Interest Period with respect to any Eurodollar Loan as provided in Section
2.18. Each prepayment shall be applied ratably to prepay the Loans of the
several Lenders.
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(d) Payment Procedure. Any prepayment required pursuant to Sections
2.10(a) or (b) other than as a result of elections by the Company to
decrease the Active Facility Amount or the Aggregate Revolving Credit
Commitments, if not otherwise paid promptly upon determination of such
required prepayment, shall be paid in full from cash flow available during
the six month period from and after the date that the deficiency requiring
such prepayment is determined (the "Deficiency Period"). All prepayments
pursuant to this Section 2.10 shall be applied first to such Base Rate Loans
which are Revolving Credit Loans as the Company may designate and second to
such Eurodollar Loans which are Revolving Credit Loans as the Company may
designate.
(e) Notice by Administrative Agent. Upon receipt of a notice of
prepayment pursuant to this Section, the Administrative Agent shall promptly
notify each Lender of the contents thereof and of such Lender's ratable
share of such prepayment.
Section 2.11 Continuation and Conversion Options.
(a) Continuation. The Company may elect to continue all or any part
of any Borrowing of Eurodollar Loans beyond the expiration of the then
current Interest Period relating thereto by giving Advance Notice to the
Administrative Agent of such election, specifying the Eurodollar Loan or
portion thereof to be continued and the Interest Period therefor. In the
absence of such a timely and proper election with regard to Eurodollar
Loans, the Company shall be deemed to have elected to convert such
Eurodollar Loan to a Base Rate Loan pursuant to Subsection 2.11(d).
(b) Amounts of Continuations. All or part of any Eurodollar Loan may
be continued as provided herein, provided that any continuation of such Loan
shall not be (as to each Loan as continued for an applicable Interest
Period) less than $5,000,000 and shall be in an integral multiple of
$1,000,000.
(c) Continuation or Conversion Upon Default. If no Default shall have
occurred and be continuing, each Eurodollar Loan may be continued or
converted as provided in this Section. If a Default shall have occurred and
be continuing, the Company shall not have the option to elect to continue
any such Eurodollar Loan pursuant to Subsection 2.11(a) or to convert Base
Rate Loans pursuant to Subsection 2.11(e).
(d) Conversion to Base Rate. The Company may elect to convert any
Eurodollar Loan on the last day of the then current Interest Period relating
thereto to a Base Rate Loan by giving Advance Notice to the Administrative
Agent of such election.
(e) Conversion to Eurodollar Rate. The Company may elect to convert
any Base Rate Loan at any time or from time to time to a Eurodollar Loan by
giving Advance Notice to the Administrative Agent of such election,
specifying each Interest Period therefor.
(f) Amounts of Conversions. All or any part of the outstanding Loans
may be converted as provided herein, provided that any conversion of such
Loans shall not result in a Borrowing of Eurodollar Loans in an amount less
than $5,000,000 and in integral multiples of $1,000,000.
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Section 2.12 Fees.
(a) Revolving Credit Commitments. The Company shall pay to the
Administrative Agent for the account of and distribution to each Lender in
accordance with its Percentage Share a commitment fee for the period
commencing on the Closing Date to and including the Revolving Credit
Maturity Date (or such earlier date as the Revolving Credit Commitments
shall have been terminated entirely) computed at a rate equal to .375% per
annum on the average daily unused amount of the Active Facility Amount,
payable in arrears on the Quarterly Dates, commencing on the first Quarterly
Date to occur after the Closing Date.
(b) Commitments. The Company shall pay to the Administrative Agent
for the account of and distribution to each Lender in accordance with its
Percentage Share a commitment fee for the period commencing on the Closing
Date to and including the Revolving Credit Maturity Date computed at a rate
equal to .1875% per annum on the average daily amount by which the Aggregate
Revolving Credit Commitments exceed the Active Facility Amount, payable in
arrears on the Quarterly Dates, commencing on the first Quarterly Date to
occur after the Closing Date. In the event that the Company elects, at any
time, to increase the Active Facility Amount pursuant to Section 2.01(d),
the Company shall pay to the Administrative Agent for the account of and
distribution to each Lender in accordance with its Percentage Share an
additional commitment fee for the period commencing on the date six months
prior to the date such increase is designated (but in no event earlier than
the later to have occurred of the Closing Date or the date of the last
increase of the Active Facility Amount) to and including such date of
designation computed at a rate equal to .375% per annum on the amount of the
increase so designated. Payment of such additional commitment fee shall be
due and payable upon delivery of the notice of designating the increase as
provided to the Administrative Agent pursuant to Section 2.01(d).
(c) Letters of Credit. (i) As consideration for the issuance of any
Letter of Credit, the Company will pay to the Issuing Bank the greater of
(A) $300 or (B) a fee on the daily average amount available for drawings
under each Letter of Credit, in each case for the period from and including
the date of issuance of such Letter of Credit (or in the case of the
Outstanding Letters of Credit, from and including the Effective Date) to and
excluding the date of expiration or termination thereof computed at a rate
equal to one-fourth of one percent (1/4%) per annum, payable in arrears on
each Quarterly Date. The Company shall pay to the Issuing Bank in arrears
on each Quarterly Date, with respect to any amendment or transfer of any
Letter of Credit and for each drawing made thereunder, documentary and
processing charges in accordance with the Issuing Bank's standard schedule
for such charges in effect at the time of such amendment, transfer or
drawing, as the case may be. All fees payable pursuant to this clause (i)
shall be retained by the applicable Issuing Bank.
(ii) The Company will pay to the Administrative Agent for the account
of and pro rata distribution to each Lender a fee on the daily average
amount available for drawings under each Letter of Credit, in each case for
the period from and including the date of issuance of such Letter of Credit
(or in the case of the Outstanding Letters of Credit, from and including the
Effective Date) to and excluding the date of expiration or termination
thereof computed at a per annum rate for each day equal to the Applicable
Margin for Eurodollar Loans in effect from time to time less one-fourth of
one percent (1/4%) per annum, payable in arrears on each Quarterly Date.
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(d) Administrative Agent and Documentation Agent Fees. The Company
shall pay to the Administrative Agent such fees as are set forth in the
letter agreement between the Administrative Agent and the Company dated as
of March 15, 1996, as the same has been or may be hereafter amended or
supplemented, on the dates specified therein. The Company shall pay to the
Administrative Agent and Documentation Agent such fees as are set forth in
the letter agreement, dated as of March 18, 1996, among the Administrative
Agent, the Documentation Agent and the Company as the same has been or may
be hereafter amended or supplemented, on the dates specified therein.
Section 2.13 Payments, etc.
(a) Without Setoff, etc. Except as otherwise specifically provided
herein, all payments under this Agreement shall be made to the
Administrative Agent on behalf of the Lenders without defense, set-off or
counterclaim to the Administrative Agent not later than 11:00 a.m. Houston
time on the date when due and shall be made in Dollars in immediately
available funds at the Payment Office. The Administrative Agent will
promptly thereafter distribute funds in the form received relating to the
payment of principal or interest or commitment fees ratably to the Lenders
for the account of their respective Lending Offices, and funds in the form
received relating to the payment of any other amount payable to any Lender
to such Lender for the account of its Lending Office.
(b) Non-Business Days. Whenever any payment to be made hereunder or
under any Note shall be stated to be due on a day which is not a Business
Day, the due date thereof shall be extended to the next succeeding Business
Day (except as otherwise provided in Section 2.07 hereof) and, with respect
to payments of principal, interest thereon shall be payable at the
applicable rate during such extension.
(c) Computations. All computations of interest shall be made on the
basis of a year of 360 days (unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be) in the case of Eurodollar
Loans, and 365 or 366 days (as the case may be) in the case of Base Rate
Loans, and all computations of fees shall be made on the basis of a year of
360 days (unless such calculation would result in a usurious rate, in which
case interest shall be calculated on the basis of a year of 365 or 366 days,
as the case may be), in each case for the actual number of days (including
the first day but excluding the last day) occurring in the period for which
such interest or fees are payable. Each determination by the Administrative
Agent of an interest rate or fee hereunder shall, except for manifest error,
be final, conclusive and binding for all purposes, provided that such
determination shall be made in good faith in a manner generally consistent
with the Administrative Agent's standard practice. If the Administrative
Agent and the Company determine that manifest error exists, said parties
shall correct such error by way of an adjustment to the payment due on the
next Quarterly Date.
Section 2.14 Interest Rate Not Ascertainable, etc. In the event that the
Administrative Agent shall have determined (which determination shall be
reasonably exercised and shall, absent manifest error, be final, conclusive and
binding upon all parties) that on any date for determining the Eurodollar Rate
for any Interest Period, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, or any Lender's position in
such market, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
Eurodollar Rate, then,
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and in any such event, the Administrative Agent shall forthwith give notice (by
telephone confirmed in writing) to the Company and to the Lenders of such
determination. Until the Administrative Agent notifies the Company that the
circumstances giving rise to the suspension described herein no longer exist,
the obligations of the Lenders to make Eurodollar Loans shall be immediately
suspended; any Eurodollar Loan that is requested (by continuation, conversion or
otherwise) shall instead be made as a Base Rate Loan, and any outstanding
Eurodollar Loan shall be converted, on the last day of the then current Interest
Period applicable thereto, to a Base Rate Loan.
Section 2.15 Illegality.
(a) Determinations of Illegality. In the event that any Lender shall
have determined (which determination shall be reasonably exercised and
shall, absent manifest error, be final, conclusive and binding upon all
parties) at any time that the making or continuance of any Eurodollar Loan
has become unlawful by compliance by such Lender in good faith with any
applicable law, governmental rule, regulation, guideline or order (whether
or not having the force of law and whether or not failure to comply
therewith would be unlawful), then, in any such event, the Lender shall give
prompt notice (by telephone confirmed in writing) to the Company and to the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to the other Lenders).
(b) Eurodollar Loans Suspended. Upon the giving of the notice to the
Company referred to in Subsection (a) above, (i) the Company's right to
request (by continuation, conversion or otherwise) and such Lender's
obligation to make Eurodollar Loans shall be immediately suspended, and any
such requested Eurodollar Loan shall instead be made as a Base Rate Loan,
and (ii) if the affected Eurodollar Loan or Loans are then outstanding, the
Company shall immediately, or if permitted by applicable law, no later than
the date permitted thereby, upon at least one Business Day's written notice
to the Administrative Agent and the affected Lender, convert each such
Eurodollar Loan into a Base Rate Loan, provided that if more than one Lender
is affected at any time, then all affected Lenders must be treated the same
pursuant to this Subsection.
Section 2.16 Increased Costs.
(a) Eurodollar Regulations, etc. If, by reason of (x) after the date
hereof, the introduction of or any change (including, but not limited to,
any change by way of imposition or increase of reserve requirements) in or
in the interpretation of any law or regulation, or (y) the compliance with
any guideline or request from any central bank or other governmental
authority or quasi-governmental authority exercising control over banks or
financial institutions generally (whether or not having the force of law):
(i) any Lender (or its applicable Lending Office) shall be
subject to any tax, duty or other charge with respect to its Eurodollar
Loans or its obligation to make Eurodollar Loans, or shall change the
basis of taxation of payments to any Lender of the principal of or
interest on its Eurodollar Loans or its obligation to make Eurodollar
Loans (except for changes in the rate of tax on the overall net income
or gross receipts of such Lender or its applicable Lending Office
imposed by the jurisdiction in which such Lender's principal executive
office or applicable Lending Office is located); or
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(ii) any reserve (including, but not limited to, any imposed by
the Board of Governors of the Federal Reserve System), special deposit
or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender's applicable Lending
Office shall be imposed or deemed applicable or any other condition
affecting its Eurodollar Loans or its obligations to make Eurodollar
Loans shall be imposed on any Lender or its applicable Lending Office
or the interbank Eurodollar market or the secondary certificate of
deposit market;
and as a result thereof there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining Eurodollar
Loans (except to the extent already included in the determination of the
applicable Eurodollar Rate) or there shall be a reduction in the amount
received or receivable by such Lender or its applicable Lending Office, then
the Company shall from time to time, upon written notice from and demand by
such Lender (with a copy of such notice and demand to the Administrative
Agent), pay to such Lender, within 30 days after the date specified in such
notice and demand, additional amounts determined by such Lender in a
reasonable manner to be sufficient to indemnify such Lender against such
increased cost. A certificate as to the amount of such increased cost and
the calculation thereof, submitted to the Company and the Administrative
Agent by such Lender, shall, except for manifest error, be final, conclusive
and binding for all purposes, provided that the determination of such amount
shall be made in good faith in a manner generally consistent with such
Lender's standard practice.
(b) Costs. If any Lender shall advise the Administrative Agent that
at any time, because of the circumstances described in clauses (x) or (y) in
Subsection 2.16(a) or any other circumstances arising after the Effective
Date affecting such Lender or the interbank Eurodollar market or such
Lender's position in such market, the Eurodollar Rate, as determined in good
faith by the Administrative Agent, will not adequately and fairly reflect
the cost to such Lender of funding its Eurodollar Loans, then, and in any
such event:
(i) the Administrative Agent shall forthwith give notice (by
telephone confirmed in writing) to the Company and to the Lenders of
such advice;
(ii) the Company's right to request and such Lender's obligation
to make Eurodollar Loans shall be immediately suspended, any such
Eurodollar Loan that is requested (by continuation, conversion or
otherwise) shall instead be made as a Base Rate Loan, and any such
outstanding Eurodollar Loan shall be converted, on the last day of the
then current Interest Period applicable thereto, to a Base Rate Loan.
(c) Capital Adequacy. If, by reason of (i) after the date hereof, the
introduction of or any change (including, but not limited to, any change by
way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
or quasi-governmental authority exercising control over banks or financial
institutions generally (whether or not having the force of law) affects or
would affect the amount of capital required to be maintained by any Lender
or any corporation controlling such Lender, and the amount of such capital
is increased by or based upon the existence of such Lender's Commitment to
lend hereunder and other commitments of this Type or of the Letters of
Credit (or similar contingent obligations), then, within 30 days after
written request therefor by such Lender (with a copy of such request to the
Administrative Agent), the
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Company shall pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender for the
increased cost of such additional capital in light of such circumstances, to
the extent that such Lender reasonably determines such increase in capital
to be allocable to the existence of such Lender's Commitment to lend
hereunder or to the issuance or maintenance of the Letters of Credit. A
certificate as to such amounts and the calculation thereof, submitted to the
Company and the Administrative Agent by such Lender, shall be conclusive and
binding for all purposes, absent manifest error, provided that the
determination of such amount shall be made in good faith in a manner
generally consistent with such Lender's standard practice.
(d) Issuing Bank. The rights and benefits of the Lenders under this
Section 2.16 shall also apply to the Issuing Bank in its capacity as such.
(e) Notice. The Company shall not be obligated to compensate any
Lender pursuant to this Section 2.16 for any amounts attributable to a
period more than 90 days prior to the giving of notice by such Lender to the
Company of its intention to seek compensation under this Section 2.16.
Section 2.17 Change of Lending Office. Each Lender agrees that it will
use reasonable efforts to designate an alternate Lending Office with respect to
any of its Eurodollar Loans affected by the matters or circumstances described
in Sections 2.14, 2.15 or 2.16 to reduce the liability of the Company or avoid
the results provided thereunder, so long as such designation is not
disadvantageous to such Lender as determined by such Lender in its sole
discretion; provided that such Lender shall have no obligation to so designate
an alternate Lending Office located in the United States.
Section 2.18 Funding Losses. The Company shall compensate each Lender,
upon its written request (which request shall set forth the basis for requesting
such amounts and which request shall be reasonably exercised and shall, absent
manifest error, be final, conclusive and binding upon all of the parties
hereto), for all losses, expenses and liabilities (including, but not limited
to, any interest paid by such Lender to lenders of funds borrowed by it to make
or carry its Eurodollar Loans to the extent not recovered by the Lender in
connection with the re-employment of such funds and including loss of
anticipated profits), which the Lender may sustain: (i) if for any reason
(other than a default by such Lender) a Borrowing of Eurodollar Loans does not
occur on the date specified therefor in a Borrowing Request (whether or not
withdrawn), (ii) if any repayment (or conversion pursuant to Section 2.16) of
any of its Eurodollar Loans occurs on a date which is not the last day of an
Interest Period applicable thereto, or (iii) if, for any reason, the Company
defaults in its obligation to repay its Eurodollar Loans when required by the
terms of this Agreement.
Section 2.19 Sharing of Payments, etc. If any Lender shall obtain any
payment or reduction (including, but not limited to, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code) of any obligation of the Company hereunder (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its ratable share of payments or reductions on account of such
obligations obtained by all the Lenders, such Lender shall forthwith (i) notify
each of the other Lenders and the Administrative Agent of such receipt, and (ii)
purchase from the other Lenders such participations in the affected obligations
as shall be necessary to cause such purchasing Lender to share the excess
payment or reduction, net of costs incurred in connection therewith, ratably
with each of them, provided that if all or any portion of such excess payment or
reduction is thereafter recovered from such purchasing Lender or additional
costs are incurred, the purchase shall be
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rescinded and the purchase price restored to the extent of such recovery or such
additional costs, but without interest. The Company agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Company in the amount of such
participation.
Section 2.20 E&P Borrowing Base.
(a) Redetermination Date; Initial E&P Borrowing Base. The E&P
Borrowing Base shall be determined in accordance with Section 2.20(b) by the
Administrative Agent with the concurrence of the Majority Lenders and is
subject to redetermination in accordance with Section 2.20(d). Upon any
redetermination of the E&P Borrowing Base, such redetermination shall remain
in effect until the next successive Redetermination Date. "Redetermination
Date" shall mean the date that the redetermined E&P Borrowing Base becomes
effective subject to the notice requirements specified in Section 2.20(e)
both for scheduled redeterminations and unscheduled redeterminations.
During the period from and after the Closing Date until the next
Redetermination Date, unless redetermined pursuant to any unscheduled
redeterminations, the amount of the E&P Borrowing Base shall be $45,000,000;
provided, however, if both the Mandate Event and the Collection Event occur
prior to the next Redetermination Date, the amount of the E&P Borrowing Base
shall be increased to $70,000,000.
(b) Redetermination. Upon receipt of the Reserve Reports by the
Administrative Agent, the Administrative Agent will redetermine the E&P
Borrowing Base. Such redetermination by the Administrative Agent, in its
sole discretion, will be in accordance with its normal and customary
procedures for evaluating oil and gas reserves and other related assets as
such exist at that particular time. The Administrative Agent shall propose
to the Lenders a new E&P Borrowing Base within 15 days following receipt by
the Administrative Agent and the Lenders of the complete Reserve Reports.
After having received notice of such proposal by the Administrative Agent,
the Majority Lenders shall have 15 days to agree or disagree with such
proposal. If at the end of the 15 days, the Majority Lenders have not
communicated their approval or disapproval, such silence shall be deemed to
be an approval and the Administrative Agent's proposal shall be the new E&P
Borrowing Base. If however, the Majority Lenders notify Administrative
Agent within 15 days of their disapproval, the Majority Lenders shall,
within a reasonable period of time, agree on a new E&P Borrowing Base.
(c) Exclusion of Certain Property. The Administrative Agent in its
reasonable discretion, may exclude any Oil and Gas Property or portion of
production therefrom or any income from any other Property from the E&P
Borrowing Base, at any time and for any reason, including, but not limited
to, the following: the title information for such Property is not
satisfactory, such Property is not Mortgaged Property, such Property is
located outside of the United States of America, or such Property is not
assignable.
(d) Time of Redetermination, etc. So long as any of the Commitments
are in effect and so long as there remains any Revolving Credit Exposure as
to any Lender, on or around the first Business Day of each October 1 and
April 1, commencing October 1, 1996 (each being a "Scheduled Redetermi-
nation Date"), the Administrative Agent, the Documentation Agent and the
Lenders shall redetermine the amount of the E&P Borrowing Base in accordance
with Section 2.20(b). In
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addition, the Simple Majority Lenders may elect to initiate, at any other
time as they so elect, one unscheduled redetermi- nation of the E&P
Borrowing Base during any consecutive twelve (12) month period by specifying
in writing to the Company the date on which the Company is to furnish a
Reserve Report and the date on which such redetermination is to occur. The
Company may initiate up to two additional redeterminations of the E&P
Borrowing Base in any calendar year. Each such request shall be accompanied
by a Reserve Report and a $10,000 redetermination fee for the account of the
Administrative Agent. In the event of any such unscheduled redetermination,
the Administrative Agent, the Documentation Agent and the Lenders shall
redetermine the amount of the E&P Borrowing Base in accordance with Section
2.20(b).
(e) Notice by Administrative Agent. The Administrative Agent shall
promptly notify in writing the Company and the Lenders of the new E&P
Borrowing Base. Any redetermination of the E&P Borrowing Base shall not be
in effect until written notice is received by the Company.
Section 2.21 Taxes.
(a) Payments Free and Clear. Any and all payments by the Company
under this Agreement or any other Financing Document shall be made, in
accordance with Section 2.13, free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the
case of each Lender, the Administrative Agent and each Issuing Bank, taxes
imposed on its income, and franchise or similar taxes imposed on it, by (i)
any jurisdiction (or political subdivision thereof) of which the
Administrative Agent, the Issuing Bank or such Lender, as the case may be,
is a citizen or resident or in which such Lender has a permanent
establishment (or is otherwise engaged in the active conduct of its banking
business through an office or a branch) which is such Lender's applicable
Lending Office, (ii) the jurisdiction (or any political subdivision thereof)
in which the Administrative Agent, the Issuing Bank or such Lender is
organized, or (iii) any jurisdiction (or political subdivision thereof) in
which such Lender, the Issuing Bank or the Administrative Agent is presently
doing business which taxes are imposed solely as a result of doing business
in such jurisdiction (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities so arising out of payments
by the Company being hereinafter referred to as "Taxes"). If the Company
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders, the Issuing Banks or the Administrative
Agent (i) the sum payable shall be increased by the amount necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.21) such Lender, the Issuing
Bank or the Administrative Agent (as the case may be) shall receive an
amount equal to the sum it would have received had no such deductions been
made, (ii) the Company shall make such deductions and (iii) the Company
shall pay the full amount deducted to the relevant taxing authority or other
Governmental Authority in accordance with applicable law.
(b) Other Taxes. In addition, the Company agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to,
this Agreement, any Assignment and Acceptance or any other Financing
Document (hereinafter referred to as "Other Taxes").
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(c) Indemnification. The Company will indemnify each Lender, each
Issuing Bank and the Administrative Agent for the full amount of Taxes and
Other Taxes (including, but not limited to, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.21) paid by such
Lender or the Issuing Bank or the Administrative Agent (on their behalf or
on behalf of any Lender), as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Any payment pursuant to such indemnification shall be made within 30 days
after the date any Lender, the Issuing Bank or the Administrative Agent, as
the case may be, makes written demand therefor. If any Lender, the Issuing
Bank or the Administrative Agent receives a refund or credit in respect of
any Taxes or Other Taxes for which such Lender, the Issuing Bank or the
Administrative Agent has received payment from the Company hereunder it
shall promptly notify the Company of such refund or credit and shall, within
30 days after receipt of a request by the Company (or promptly upon receipt,
if the Company has requested application for such refund or credit pursuant
hereto), pay an amount equal to such refund or credit to the Company without
interest (but with any interest so refunded or credited), provided that the
Company, upon the request of such Lender, the Issuing Bank or the
Administrative Agent, agrees to return such refund or credit (plus
penalties, interest or other charges) to such Lender, the Issuing Bank or
the Administrative Agent in the event such Lender, the Issuing Bank or the
Administrative Agent is required to repay such refund or credit.
(d) Receipts. Within 30 days after the date of any payment of Taxes
or Other Taxes withheld by the Company in respect of any payment to any
Lender, the Issuing Bank or the Administrative Agent, the Company will
furnish to the Administrative Agent the original or a certified copy of a
receipt evidencing payment thereof.
(e) Survival. Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations contained in this
Section 2.21 shall survive the payment in full of principal and interest
hereunder.
(f) Lender Representations. Each Lender represents that it is either
(i) a corporation organized under the laws of the United States of America
or any state thereof or (ii) it is entitled to complete exemption from
United States withholding tax imposed on or with respect to any payments,
including fees, to be made to it pursuant to this Agreement (A) under an
applicable provision of a tax convention to which the United States of
America is a party or (B) because it is acting through a branch, agency or
office in the United States of America and any payment to be received by it
hereunder is effectively connected with a trade or business in the United
States of America. Each Lender that is not a corporation organized under
the laws of the United States of America or any state thereof agrees to
provide to the Company and the Administrative Agent on the Effective Date,
or on the date of its delivery of the Assignment and Acceptance pursuant to
which it becomes a Lender, and at such other times as required by United
States law or as the Company or the Administrative Agent shall reasonably
request, two accurate and complete original signed copies of either (A)
Internal Revenue Service Form 4224 (or successor form) certifying that all
payments to be made to it hereunder will be effectively connected to a
United States trade or
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business (the "Form 4224 Certification") or (B) Internal Revenue Service
Form 1001 (or successor form) certifying that it is entitled to the benefit
of a provision of a tax convention to which the United States of America is
a party which completely exempts from United States withholding tax all
payments to be made to it hereunder (the "Form 1001 Certification"). In
addition, each Lender agrees that if it previously filed a Form 4224
Certification it will deliver to the Company and the Administrative Agent a
new Form 4224 Certification prior to the first payment date occurring in
each of its subsequent taxable years; and if it previously filed a Form 1001
Certification, it will deliver to the Company and the Administrative Agent a
new certification prior to the first payment date falling in the third year
following the previous filing of such certification. Each Lender also
agrees to deliver to the Company and the Administrative Agent such other or
supplemental forms as may at any time be required as a result of changes in
applicable law or regulation in order to confirm or maintain in effect its
entitlement to exemption from United States withholding tax on any payments
hereunder, provided that the circumstances of the Lender at the relevant
time and applicable laws permit it to do so. If a Lender determines, as a
result of any change in either (i) applicable law, regulation or treaty, or
in any official application thereof or (ii) its circumstances, that it is
unable to submit any form or certificate that it is obligated to submit
pursuant to this Section, or that it is required to withdraw or cancel any
such form or certificate previously submitted, it shall promptly notify the
Company and the Administrative Agent of such fact. If a Lender is organized
under the laws of a jurisdiction outside the United States of America,
unless the Company and the Administrative Agent have received a Form 1001
Certification or Form 4224 Certification satisfactory to them indicating
that all payments to be made to such Lender hereunder are not subject to
United States withholding tax, the Company shall withhold taxes from such
payments at the applicable statutory rate, provided that such withholding
shall not increase the amount of payments for the account of such Lender to
be made by the Company pursuant to Subsection 2.21(a). Each Lender agrees
to indemnify and hold harmless from any United States taxes, penalties,
interest and other expenses, costs and losses incurred or payable by (i) the
Administrative Agent as a result of such Lender's failure to submit any form
or certificate that it is required to provide pursuant to this Section or
(ii) the Company or the Administrative Agent as a result of their reliance
on any such form or certificate which it has provided to them pursuant to
this Section.
(g) Efforts to Avoid or Reduce. Any Lender claiming any additional
amounts payable pursuant to this Section 2.21 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate
or document requested by the Company or the Administrative Agent or to
change the jurisdiction of its applicable Lending Office or to contest any
tax imposed if the making of such a filing or change or contesting such tax
would avoid the need for or reduce the amount of any such additional amounts
that may thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
Section 2.22 Pro Rata Treatment. Except as required under Section 2.15 or
2.16, each Borrowing, each payment or prepayment of principal of any Borrowing,
each payment of interest on the Loans, each payment of the fees, each reduction
of the Commitments, and each refinancing of any Borrowing with, conversion of
any Borrowing to or continuation of any Borrowing as a Borrowing of any Type
shall be allocated ratably and pro rata among the Lenders in accordance with
their respective Percentage Share. Each Lender agrees that in com- puting such
Lender's portion of any Borrowing to be made hereunder, the Administrative Agent
may, in its discretion, round each Lender's portion of such Borrowing to the
next higher or lower whole dollar amount.
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Section 2.23 Disposition of Proceeds. The E&P Mortgage contains an
assignment by Tesoro E&P to the Administrative Agent of all production and all
proceeds attributable thereto which may be produced from or allocated to the Oil
and Gas Properties described therein, and the E&P Mortgage further provides in
general for the application of such proceeds to the satisfaction of the
indebtedness, liabilities and obligations described therein and secured thereby.
Notwithstanding such assignment in such E&P Mortgage, the Administrative Agent,
the Issuing Banks and the Lenders hereby grant to Tesoro E&P a license to
receive, collect and use the proceeds attributable to such production and agree
not to notify the purchaser or purchasers of such production and not to take any
other action to cause such proceeds to be remitted to the Administrative Agent,
the Issuing Banks or the Lenders, in each case unless and until an Event of
Default has occurred and is continuing; provided that so long as no Default has
occurred and is continuing, the Administrative Agent shall execute and deliver a
letter in the form of Exhibit F to such Persons as the Company may direct;
provided, further, if the Administrative Agent, the Issuing Bank or any Lender
shall receive any such proceeds directly from any such purchaser prior to the
occurrence and continuation of a Default, then such Person so receiving such
proceeds shall notify the Company thereof and upon request of the Company and
pursuant to its written instructions shall promptly remit such proceeds to the
Company for the account of Tesoro E&P.
Section 2.24 Senior Debt. The Lender Indebtedness is Senior Debt as such
term is defined in that certain Subordination Agreement dated December 15, 1993,
among the Company, Tesoro Alaska, and the State of Alaska, attached as Exhibit 7
to the Settlement Agreement dated December 15, 1992, among the Company, Tesoro
Alaska, and the State of Alaska.
ARTICLE III
CONDITIONS TO BORROWINGS AND TO
PURCHASE, RENEWAL AND REARRANGEMENT
The obligation of each Lender to make a Loan or an Issuing Bank to issue a
Letter of Credit hereunder is subject to the satisfaction of the following
conditions:
Section 3.01 Closing. The Company shall have delivered to the
Administrative Agent on or before the Closing Date all instruments, certificates
and opinions referred to in Section 3.02 not theretofore delivered.
Section 3.02 Conditions Precedent to Initial Loan. At the time of the
making by such Lender of its initial Loan hereunder or the issuance by the
Issuing Bank of the initial Letter of Credit (including, but not limited to, the
assumption by the Lenders of the Outstanding Letters of Credit), all obligations
of the Company hereunder to the Administrative Agent or any Lender incurred
prior to such initial Loan or Letter of Credit (including, but not limited to,
the Company's obligation to reimburse the reasonable fees and disbursements of
counsel to the Administrative Agent for which the Company has been provided an
invoice and any fees payable to the Lenders or the Administrative Agent on or
before the Effective Date), shall have been paid in full, and the Administrative
Agent shall have received the following, each dated as of the Closing Date, in
form and substance satisfactory to the Administrative Agent, with an original
thereof for the Administrative Agent and with sufficient copies thereof for each
Lender (except that in the case of the Notes, the originals thereof will be
delivered to the respective Lenders):
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(a) Notes - A duly completed and executed Revolving Credit Note for
each Lender and in each case payable to the order of the Administrative
Agent for the benefit of such Lender.
(b) Resolutions and Incumbency Certificates -
(i) certified copies of the resolutions of the Board of
Directors of the Company and its Subsidiaries that are parties to any
Financing Document approving, as appropriate, the Loans, the Notes,
this Agreement and the other Financing Documents, and all other
documents, if any, to which the Company or such Subsidiary is a party
evidencing corporate authorization with respect to such documents;
(ii) a certificate of the Secretary or an Assistant Secretary of
the Company certifying (A) the name, title and true signature of each
officer of such Person authorized to execute the Notes, this Agreement,
Applications and the other Financing Documents to which it is a party,
(B) the name, title and true signature of each officer of such Person
authorized to provide the certifications required pursuant to this
Agreement including, but not limited to, certifications required
pursuant to Section 5.15, Borrowing Requests, and Borrowing Base
Reports, and (C) that attached thereto is a true and complete copy of
the articles of incorporation and bylaws of the Company, as amended to
date, and a recent good standing certificate; and
(iii) a certificate of the Secretary or an Assistant Secretary of
each Subsidiary that is a party to any Financing Document certifying
(x) the name, title and true signature of each officer of each
Subsidiary authorized to execute each such Financing Document to which
it is a party, and (y) that attached thereto is a true and complete
copy of the articles of incorporation and bylaws of such Subsidiary, as
amended to date, and a recent good standing certificate.
(c) Opinions of Counsel - Favorable written opinions of Fulbright &
Jaworski L.L.P., counsel to the Company and its Subsidiaries, James C. Reed,
Jr., special counsel to the Company, and Groh, Eggers & Price, local Alaska
counsel to the Company, in each case addressed to the Administrative Agent,
the Issuing Bank and each of the Lenders, in form and substance satisfactory
to the Administrative Agent, as to such matters incident to the Transactions
as any Lender through the Administrative Agent, the Issuing Bank or the
Administrative Agent may reasonably request.
(d) The Security Instruments -
(i) Guaranty Agreement;
(ii) Security Agreements or Amended and Restated Security
Agreements, as applicable, dated as of the Closing Date executed by
each of the Company, Tesoro Alaska, Tesoro R&M, KPL, Tesoro Coastwide
and Tesoro Vostok, granting to the Administrative Agent a first
priority security interest in all personal Property described therein
of each such Person, as security for the indebtedness respectively
defined therein as the "Obligations;"
(iii) Pledge Agreements dated as of the Closing Date executed by
the Company granting to the Administrative Agent a first priority
security interest in 100% of the capital
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stock of Tesoro Alaska, Tesoro R&M, Tesoro Exploration and Production
Company, Tesoro Gas Resources Company, Inc., Tesoro Natural Gas Company
and TAPL, as security for the Lender Indebtedness;
(iv) Amendment of the Alaska Deed of Trust;
(v) the E&P Mortgage and any amendments thereto;
(vi) Financing Statements, as appropriate, to perfect the
security interests created by the instruments delivered under clauses
(ii) through (v) above;
(vii) Stock certificates and corresponding stock powers to
perfect the Administrative Agent's security in the stock pledged by the
instrument delivered under clause (iv) above;
(viii) all Property in which the Administrative Agent shall, at
such time, be entitled to have a Lien pursuant to this Agreement or any
other Financing Document shall have been physically delivered to the
possession of the Administrative Agent or any bailee accepted by the
Administrative Agent to the extent that such possession is necessary
for the purpose of perfecting the Administrative Agent's Lien in such
collateral security;
(ix) the Cash Collateral Account Agreement described in the
definition of "Cover";
(x) Assignment and Acceptance Agreement from each of the
lenders in the Existing Credit Agreement to the Lenders;
(xi) Assignment of Liens;
(xii) Confirmation letter acknowledged by State of Alaska
regarding subordinate states; and
(xiii) Notice to National Bank of Alaska in connection with
intercreditor agreement.
(e) Insurance. A certificate of insurance coverage of the Company and
its Subsidiaries evidencing that the Company is carrying insurance in
accordance with Section 5.05 hereof. In addition, the Administrative Agent
shall have received evidence satisfactory to the Administrative Agent that
the Kenai Refinery and Tesoro Terminals are not situated in an area that has
been identified by the Director of the Federal Emergency Management Agency
or any other Governmental Authority as an area having special flood hazards.
Should it be determined, however, that the Kenai Refinery is situated in an
area identified as having special flood hazards, the Administrative Agent
shall have received a copy of the applicable flood insurance policy (or
policy applications), in form and substance satisfactory to the
Administrative Agent, indicating that the maximum limits of coverage have
been obtained and that the full premium therefor has been paid in full.
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(f) Title Opinions. Title opinions as the Administrative Agent may
require from attorneys satisfactory to the Administrative Agent setting
forth the status of title to the Oil and Gas Properties that constitute a
part of the Mortgaged Property.
(g) Title Insurance; Survey. An endorsement to the existing
Mortgagee's Policy of Title Insurance, in form and substance satisfactory to
the Administrative Agent, insuring the lien granted pursuant to the Alaska
Deed of Trust and the most recent survey covering the Refinery Premises.
(h) Miscellaneous. Such other documents or conditions precedent which
the Administrative Agent may reasonably have requested or require in its
sole discretion.
Section 3.03 Conditions Precedent to Each Loan. At the time of the making
by such Lender of each Loan, including the initial Loan but not including
continuations or conversions pursuant to Section 2.11 (before as well as after
giving effect to such Loan and to the proposed use of the proceeds thereof):
(a) Notes. The Company shall have issued, executed and delivered the
Notes;
(b) No Default. There shall exist no Default or Event of Default;
(c) Representations and Warranties. Except for facts timely disclosed
to the Administrative Agent from time to time in writing, not materially
more adverse to the Company and its Subsidiaries than those existing on the
Effective Date, all representations and warranties contained herein and in
the other Financing Documents executed and delivered on or after the date
hereof shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as
of the date of such Loan; and
(d) Documentation. The Administrative Agent shall have received such
other documents as the Administrative Agent or any Lender or special counsel
to the Administrative Agent may reasonably request, all in form and
substance satisfactory to the Administrative Agent.
Each Borrowing Request submitted by the Company, and the acceptance by the
Company of the proceeds of such Borrowing (but not including continuations or
conversions pursuant to Section 2.11), shall constitute a representation and
warranty by the Company, as of the date of the Loans comprising such Borrowing,
that the conditions specified in Subsections 3.03(b) and (c) have been
satisfied.
Section 3.04 Recordings. The Security Instruments and accompanying
financing statements covering the Mortgaged Property, or other notices related
thereto if necessary or appropriate, shall have been duly delivered by the
Administrative Agent to the appropriate offices for filing or recording.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement, the Company
represents and warrants to the Lenders (which representations and warranties
will survive the delivery of the Notes) that:
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Section 4.01 Corporate Existence. The Company and each of its
Subsidiaries are corporations duly organized, legally existing and in good
standing under the laws of the jurisdictions in which they are incorporated and
are duly qualified as foreign corporations in all jurisdictions wherein the
Property owned or the business transacted by them makes such qualification
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect.
Section 4.02 Corporate Power and Authorization. The Company is authorized
and empowered to create and issue the Notes; the Company and each of its
Subsidiaries are duly authorized and empowered to execute, deliver and perform
the Financing Documents, including this Agreement, to which they respectively
are parties; and all corporate action on the Company's part requisite for the
due creation and issuance of the Notes on the Company's and each of its
Subsidiaries' respective part requisite for the due execution, delivery and
performance of the Financing Documents, including this Agreement, to which the
Company and each of its Subsidiaries respectively are parties has been duly and
effectively taken.
Section 4.03 Binding Obligations. This Agreement does, and the Notes and
other Financing Documents to which the Company and each of its Subsidiaries
respectively are parties upon their creation, issuance, execution and delivery
will, when issued and delivered under this Agreement, constitute valid and
binding obligations of the Company and each such Subsidiary that is a party
thereto, respectively, and will be enforceable in accordance with their
respective terms (except that enforcement may be subject to any applicable
bankruptcy, insolvency or similar laws generally affecting the enforcement of
creditors' rights and subject to the availability of equitable remedies).
Section 4.04 No Legal Bar or Resultant Lien. The Notes and the other
Financing Documents, including this Agreement, to which the Company or any of
its Subsidiaries is a party do not and will not violate or create a default
under any provisions of the articles or certificate of incorporation or bylaws
of the Company or any of its Subsidiaries, or any contract, agreement,
instrument or Governmental Requirement to which the Company or any of its
Subsidiaries is subject, or result in the creation or imposition of any Lien
upon any Properties of the Company or any of its Subsidiaries, other than those
violations and defaults that would not affect the Company's or such
Subsidiaries' use of such Properties or those permitted by this Agreement.
Section 4.05 No Consent. Except as set forth on Schedule 4.05, the
Company's and each of its Subsidiaries' respective execution, delivery and
performance of the Notes and the other Financing Documents, including this
Agreement, to which the Company and each such Subsidiary respectively are
parties do not require notice to or filing or registration with, or the
authorization, consent or approval of or other action by any other Person,
including, but not limited to, any Governmental Authority.
Section 4.06 Financial Information.
(a) Annual Financial Statements. The consolidated balance sheet of
the Company and its Subsidiaries as of December 31, 1995, and the related
consolidated statements of income, retained earnings and cash flows for the
12-month period then ended, including in each case the related schedules and
notes, reported on by Deloitte & Touche, true copies of which have been
previously delivered to each of the Lenders, fairly present the consolidated
financial condition of the Company and its Subsidiaries as at the date
thereof and the consolidated results of operations and the cash flows for
such period, in accordance with generally accepted accounting principles
applied on a consistent basis. The unaudited consolidating balance sheet of
the Consolidating
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Statement Entities as of December 31, 1995, and the related unaudited
consolidating statements of income and cash flows, form the basis of the
Company's consolidated financial statements and are fairly stated in all
material respects when considered in relation thereto.
(b) No Material Adverse Effect. Since December 31, 1995, there has
been no event or occurrence that could reasonably be expected to have a
Material Adverse Effect.
Section 4.07 Investments and Guaranties. At the date of this Agreement,
neither the Company nor any of its Subsidiaries has made investments in or
advances to any Person or guaranties of the obligations of any Person that is
not a Subsidiary of the Company, except those permitted by Subsections 6.09(b)
through (f), those reflected in the Financial Statements or described in
Schedule 4.07.
Section 4.08 Litigation. Except as set forth in Schedule 4.08, there is
no action, suit or proceeding, or any governmental investigation or any
arbitration, in each case pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or any material
Property of any thereof before any court or arbitrator or any Governmental
Authority which (i) challenges the validity of this Agreement, any Note, any
Application, the Guaranty Agreement, or any of the other Financing Documents or
(ii) if adversely determined would have a Material Adverse Effect.
Section 4.09 Use of Proceeds. The proceeds of the Revolving Credit Loans
will be used only to refinance the Existing Indebtedness, provide working
capital and for general corporate purposes of the Loan Parties, and to the
extent specifically permitted hereunder, Non-Guarantors and after the occurrence
of both the Mandate Event and the Collection Event pay-off up to $15,000,000 of
principal outstanding under the Subordinated Debentures and the Exchange Notes
in the aggregate. The Letters of Credit shall be used only for the purposes
provided in Section 2.03. Neither the Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying Margin Stock (within the meaning of Regulation U or X) and no
part of the proceeds of any Loan hereunder will be used to buy or carry any
Margin Stock. Neither the Company nor any Person acting on behalf of the
Company has taken or will take any action which might cause the Notes or any of
the Financing Documents, including this Agreement, to violate Regulation U or X
or any other regulation of the Board of Governors of the Federal Reserve System
or to violate Section 7 of the Securities and Exchange Commission (or any
successor thereto) or any rule or regulation thereunder, in each case as now in
effect or as the same may hereinafter be in effect.
Section 4.10 Compliance with ERISA. Neither the Company, any of its
Subsidiaries nor any ERISA Affiliate sponsors, maintains or contributes to, or
has at any time in the six-year period preceding the date of this Agreement
sponsored, maintained or contributed to, any Plan, including, but not limited
to, any Plan which is a "multi-employer plan" as such term is defined in Section
3(37) or 4001(a)(3) of ERISA. Except as set forth in Schedule 4.10, each Plan
described in such schedule has been terminated with no resulting liability to
the PBGC. No act, omission or transaction has occurred which could result in
imposition on the Company, any of its Subsidiaries or any ERISA Affiliate
(whether directly or directly) of (i) either a civil penalty assessed pursuant
to Sections 502(c) or 502(i) of ERISA or a tax imposed pursuant to Section 4975
of the Code, or (ii) breach of fiduciary duty liability damages under Section
409 of ERISA, which in each case would have a Material Adverse Effect.
Section 4.11 Taxes; Governmental Charges. The Company and its
Subsidiaries have filed all tax returns and reports required to be filed and
have paid all taxes, assessments, fees and other governmental
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charges levied upon any of them or upon any of their respective Properties or
income which are due and payable, including interest and penalties, or have
provided adequate reserves for the payment thereof if required in accordance
with generally accepted accounting principles for the payment thereof, except
such interest and penalties as are being contested in good faith by appropriate
actions or proceedings and for which adequate reserves for the payment thereof
as required by general accepted accounting principles have been provided.
Section 4.12 Titles, etc. The Company and its Subsidiaries have
indefeasible title to their respective material (individually or in the
aggregate) Properties, free and clear of all Liens except (i) Liens referred to
in the Financial Statements, (ii) Liens disclosed to the Lenders in Schedule
4.12, (iii) Liens and minor irregularities in title which do not materially
interfere with the occupation, use and enjoyment by the Company or any
Subsidiary of the Company of any of their respective Properties in the normal
course of business as presently conducted or materially impair the value thereof
for such business, or (iv) Liens otherwise permitted or contemplated by this
Agreement or the other Financing Documents.
Section 4.13 Defaults. Neither the Company nor any of its Subsidiaries is
in default nor has any event or circumstance occurred which, but for the passage
of time or the giving of notice, or both, would constitute a default (in any
respect that would have a Material Adverse Effect) under any loan or credit
agreement, indenture, mortgage, deed of trust, security agreement or other
instrument or agreement evidencing or pertaining to any Indebtedness of the
Company or any of its Subsidiaries, or under any material agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound, except as disclosed to
the Lenders in Schedule 4.13. No Default hereunder has occurred and is
continuing.
Section 4.14 Casualties; Taking of Properties. Since the date of the
Financial Statements, neither the business nor the Properties of the Company or
any of its Subsidiaries have been affected in a manner that has had or would
have a Material Adverse Effect as a result of any fire, explosion, earthquake,
flood, drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property or cancellation of contracts, permits or
concessions by any domestic or foreign government or any agency thereof, riot,
activities of armed forces or acts of God or of any public enemy.
Section 4.15 Compliance with the Law. Neither the Company nor any of its
Subsidiaries:
(a) is in violation of any Governmental Requirement; or
(b) has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of their
respective Properties or the conduct of their respective business;
which violation or failure would have (in the event that such a violation or
failure were asserted by any Person through appropriate action) a Material
Adverse Effect.
Section 4.16 No Material Misstatements. No information, exhibit or report
furnished to the Administrative Agent or the Lenders by or at the direction of
the Company or any of its Subsidiaries in connection with the negotiation of
this Agreement contained any material misstatement of fact or, when such
statement is considered with all other written statements furnished to the
Lenders in that connection, omitted to state a material fact or any fact
necessary to make the statement contained therein not misleading.
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Section 4.17 Investment Company Act. The Company is not an "investment
company" or a company "controlled" by an "investment company" that is
incorporated in or organized under the laws of the United States or any "State,"
as those terms are defined in the Investment Company Act of 1940, as amended.
The execution and delivery by the Company and its Subsidiaries of this Agreement
and the other Financing Documents to which they respectively are parties and
their respective performance of the obligations provided for therein, will not
result in a violation of the Investment Company Act of 1940, as amended.
Section 4.18 Public Utility Holding Company Act. The Company is not a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 4.19 Subsidiaries. The Company has no Subsidiaries except those
shown in Exhibit C hereto, which exhibit is complete and accurate. The Company
owns 100% of all stock of the Subsidiaries listed in such Exhibit, except as set
forth therein.
Section 4.20 Insurance. Schedule 4.20 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation, casualty, flood, business interruption and other forms
of insurance owned or held by the Company and each of its Subsidiaries. All
such policies are in full force and effect, all premiums with respect thereto
have been paid in accordance with their respective terms, and no notice of
cancellation or termination has been received with respect to any such policy.
Such policies are sufficient for compliance with all requirements of law and of
all agreements to which the Company or any of its Subsidiaries is a party; are
valid, outstanding and enforceable policies; provide adequate insurance coverage
in at least such amounts and against at least such risks (but including in any
event public liability) as are usually insured against in the same general area
by companies engaged in the same or a similar business for the assets and
operations of the Company and each of its Subsidiaries; and will not in any way
be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Schedule 4.20 identifies all material risks, if
any, which the Company and its Subsidiaries and their respective Board of
Directors or officers have designated as being self insured. Neither the
Company nor any of its Subsidiaries has been unable to obtain any insurance with
respect to its assets or operations, nor has its coverage been limited below
usual and customary policy limits during the last three years.
Section 4.21 Mortgaged Property. Substantially all of the Mortgaged
Property is described in and covered by the engineering or other written reports
which have previously been delivered to and relied upon by the Lenders in
connection with this Agreement.
Section 4.22 Gas Imbalances. Except as disclosed to the Administrative
Agent in Schedule 4.22, there are no gas imbalances, take or pay or other
prepayments owed by the Company in excess of $5,000,000 in the aggregate with
respect to the Mortgaged Property (or in the case of any of the Mortgaged
Property operated by a Person other than the Company or its Subsidiaries, to the
best of the Company's knowledge) which would require the Company or its
Subsidiaries to deliver Hydrocarbons produced from any of the Mortgaged Property
at some future time without then or thereafter receiving full payment therefor.
Section 4.23 Environmental Matters.
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(a) Environmental Laws, etc. Neither any Property of the Company or
its Subsidiaries nor the operations conducted thereon violate any applicable
order of any court or Governmental Authority or Environmental Laws, which
violation could reasonably be expected to have a Material Adverse Effect or
which could reasonably be expected to result in remedial obligations having
a Material Adverse Effect assuming disclosure to the applicable Governmental
Authority of all relevant facts, conditions and circumstances, if any,
pertaining to the relevant Property.
(b) No Litigation. Without limitation of Subsection (a) above, except
as set forth on Schedule 4.23, no Property of the Company or its
Subsidiaries nor the operations currently conducted thereon or by any prior
owner or operator of such Property or operation, are in violation of or
subject to any existing, pending or threatened action, suit, investigation,
inquiry or proceeding by or before any court or Governmental Authority or to
any remedial obligations under Environmental Laws, which violation, action,
suit, investigation, inquiry or proceeding could reasonably be expected to
have a Material Adverse Effect or which could reasonably be expected to
result in remedial obligations having a Material Adverse Effect assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to the relevant Property.
(c) Notices, Permits, etc. All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed by the Company or
its Subsidiaries in connection with the operation or use of any and all
Property of the Company or its Subsidiaries, including but not limited to
past or present treatment, storage, disposal or release of a hazardous
substance or solid waste into the environment, have been duly obtained or
filed except to the extent the failure to obtain or file such notices,
permits, licenses or similar authorizations could not reasonably be expected
to have a Material Adverse Effect or which could reasonably be expected to
result in remedial obligations having a Material Adverse Effect assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to the relevant Property.
(d) Hazardous Substances Carriers. All hazardous substances or solid
waste generated at any and all Property of the Company or its Subsidiaries
have in the past been transported, treated and disposed of only by carriers
maintaining valid permits under RCRA and any other Environmental Law, except
to the extent the failure to have such substances or waste transported,
treated or disposed by such carriers could not reasonably be expected to
have a Material Adverse Effect, and only at treatment, storage and disposal
facilities maintaining valid permits under RCRA and any other Environmental
Law, which carriers and facilities have been and are operating in compliance
with such permits, except to the extent the failure to have such substances
or waste treated, stored or disposed at such facilities, or the failure of
such carriers or facilities to so operate, could not reasonably be expected
to have a Material Adverse Effect or which could reasonably be expected to
result in remedial obligations having a Material Adverse Effect assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to the relevant Property.
(e) Hazardous Substances Disposal. The Company and its Subsidiaries
have taken all reasonable steps necessary to determine and have determined
that no hazardous substances or solid waste have been disposed of or
otherwise released and there has been no threatened release of any hazardous
substances on or to any Property of the Company or its Subsidiaries except
in compliance with Environmental Laws, except to the extent the failure to
do so could not reasonably be expected
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to have a Material Adverse Effect or which could reasonably be expected to
result in remedial obligations having a Material Adverse Effect assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to the relevant Property.
(f) OPA Requirements. Except to the extent the failure to so comply
would not have a Material Adverse Effect, to the extent applicable, the
Company and its Subsidiaries have complied with all design, operation and
equipment requirements imposed by OPA or scheduled to be imposed by OPA
during the term of this Agreement, and the Company does not have reason to
believe that either it or its Subsidiaries will not be able to maintain such
compliance with OPA requirements during the term of this Agreement.
(g) No Contingent Liability. The Company and its Subsidiaries have no
material contingent liability in connection with any release or threatened
release of any hazardous substance or solid waste into the environment other
than such contingent liabilities at any one time and from time to time which
could reasonably be expected to exceed $1,500,000 in excess of applicable
insurance coverage and for which adequate reserves for the payment thereof
as required by GAAP have not been provided, or which could reasonably be
expected to result in remedial obligations having a Material Adverse Effect
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions and circumstances, if any, pertaining to such release or
threatened release.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Lender has any Commitment hereunder or any Loan remains
unpaid or any Revolving Credit Exposure remains outstanding, the Company will at
all times comply with the following covenants:
Section 5.01 Maintenance and Compliance, etc. The Company will and will
cause each of its Subsidiaries to observe and comply in all material respects
with all Governmental Requirements, except where failure to do so could not
reasonably be expected to have a Material Adverse Effect. The Company will and
will cause each Guarantor to, except as permitted by Section 6.07(c), preserve
and maintain its corporate existence, rights and franchises.
Section 5.02 Payment of Taxes and Claims, etc. The Company will pay, and
cause each of its Subsidiaries to pay, (i) all taxes, assessments and
governmental charges imposed upon it or upon its Property, and (ii) all claims
(including, but not limited to, claims for labor, materials, supplies or
services) which might, if unpaid, become a Lien upon its Property, unless, in
each case, the validity or amount thereof is being contested in good faith by
appropriate action or proceedings and the Company has established adequate
reserves in accordance with GAAP with respect thereto.
Section 5.03 Further Assurances. The Company will and will cause each
Guarantor to cure promptly any defects in the creation and issuance of the
Notes, and the execution and delivery of the Financing Documents, including this
Agreement, to which it is a party. The Company at its expense will, as promptly
as practical, execute and deliver to the Administrative Agent or the applicable
Issuing Bank
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upon request all such other and further documents, agreements and instruments
(or cause any of its Subsidiaries to take such action) in compliance with or
performance of the covenants and agreements of the Company or any of its
Subsidiaries in the Financing Documents, including this Agreement, or to further
evidence and more fully describe the collateral intended as security for the
Notes or other Lender Indebtedness, or to correct any omissions in the Financing
Documents, or more fully to state the security obligations set out herein or in
any of the Financing Documents, or to perfect, protect or preserve any Liens
created pursuant to any of the Financing Documents, or to make any recordings,
to file any notices, or obtain any consents, all as may be necessary or
appropriate in connection therewith.
Section 5.04 Performance of Obligations. The Company will pay the Notes
according to the reading, tenor and effect thereof; and the Company will do and
perform every act and discharge all of the obligations provided to be performed
and discharged by the Company under the Financing Documents, including this
Agreement, at the time or times and in the manner specified, and cause each of
the Guarantors to take such action with respect to their obligations to be
performed and discharged under the Financing Documents to which they
respectively are parties.
Section 5.05 Insurance. The Company and its Subsidiaries will maintain or
cause to be maintained, with financially sound and reputable insurers, insurance
with respect to their respective Properties and business against such
liabilities, casualties, risks and contingencies and in such types (including
business interruption insurance and flood insurance) and amounts as is customary
in the case of Persons engaged in the same or similar businesses and similarly
situated or in accordance with any Governmental Requirement. Upon request of
the Administrative Agent, the Company will furnish or cause to be furnished to
the Administrative Agent from time to time a summary of the insurance coverage
of the Company and its Subsidiaries in form and substance reasonably
satisfactory to the Administrative Agent and if requested will furnish the
Administrative Agent copies of the applicable policies. In the case of any
fire, accident or other casualty causing loss or damage to any Properties of the
Company or its Subsidiaries (other than Tesoro Coastwide), the proceeds of such
policies shall be used, in the Company's sole discretion, (i) to reasonably
promptly repair or replace the damaged Property, or (ii) to prepay the Lender
Indebtedness. The Company will obtain endorsements to the policies pertaining
to all physical Properties in which the Administrative Agent or the Lenders
shall have a Lien under the Financing Documents, naming the Administrative Agent
as a loss payee and containing provisions that such policies will not be
canceled without 30 days prior written notice having been given by the insurance
company to the Administrative Agent.
Section 5.06 Accounts and Records. The Company will keep and will cause
each of its Subsidiaries to keep proper books of record and account in which
full, true and correct entries will be made of all financial or business
dealings or transactions in relation to their respective business and
activities.
Section 5.07 Right of Inspection. The Company will permit and will cause
each of its Subsidiaries to permit any officer, employee or agent of the
Administrative Agent or any of the Lenders to visit and inspect any of the
Properties of the Company or any of its Subsidiaries, examine the Company's or
any such Subsidiary's books of record and accounts, take copies and extracts
therefrom, and discuss the affairs, finances and accounts of the Company or any
of its Subsidiaries with the Company's or such Subsidiary's officers,
accountants and auditors, as often and all at such reasonable times during
normal business hours as may be reasonably requested by the Administrative Agent
or any of the Lenders.
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Section 5.08 Operation and Maintenance of Mortgaged Property and
Compliance with Leases. Subject to Section 5.10, the Company will, and will
cause each of its Subsidiaries to, operate its Properties or cause its
Properties to be operated in accordance with prudent industry practice and in
compliance with all material terms and provisions of all applicable leases,
contracts and agreements and in compliance with all applicable proration and
conservation laws of the jurisdiction in which such Properties may be situated,
and all applicable laws, rules and regulations of every other agency and
authority from time to time constituted to regulate the development and
operation of such Properties, and as to any Oil and Gas Properties, the
production and sale of Hydrocarbons and other minerals therefrom.
Section 5.09 Stock of Subsidiaries. The Company will at all times own,
directly or indirectly, 100% of all stock of all Guarantors, except as otherwise
permitted pursuant to Section 6.07.
Section 5.10 Certain Additional Assurances Regarding Maintenance and
Operation of Properties. With respect to those Properties of the Company or a
Subsidiary of the Company which are being operated by operators other than the
Company or such Subsidiary, the Company or such Subsidiary shall not be
obligated, itself, to perform any undertakings contemplated by the covenants and
agreements contained in Sections 5.02, 5.05, and 5.08 which are performable only
by such operators and are beyond the control of the Company or such Subsidiary;
however, the Company agrees to promptly take and to cause such Subsidiary to
promptly take all reasonable actions available under any operating agreements or
otherwise to bring about the performance of any such undertakings required to be
performed under such Subsections.
Section 5.11 Designation of Subsidiaries as Additional Guarantors. If at
any time the Majority Lenders, in their sole discretion, or the Company, with
the approval of the Administrative Agent, designate any one or more Subsidiaries
of the Company (other than a Non-Guarantor Subsidiary) to be additional
Guarantors, the Company shall cause any such newly designated Guarantor to
execute, within 30 days of such designation, a guaranty agreement in
substantially the same form as the Guaranty Agreement executed by the Guarantors
in connection with this Agreement.
Section 5.12 Minimum Capital Expenditures. The Company and each of its
Subsidiaries shall make capital expenditures in accordance with prudent industry
practice for the development of their Proved Undeveloped Hydrocarbon Reserves.
Section 5.13 Payment of Charters and Tariffs. The Company will pay, and
will cause each of its Subsidiaries to pay before or when due (i) the amount
owed for the time charter of any tanker or barge used to transport feedstocks,
blendstocks or refined products and (ii) the tariff owed by any Inventory
Borrowing Base party for the transport or storage of any inventory, including
but not limited to, the tariff owed by Tesoro Alaska to the Trans-Alaska
Pipeline System, unless in each case, the validity or amount thereof is being
contested in good faith by appropriate action or proceedings and the Company has
established appropriate reserves in accordance with GAAP.
Section 5.14 Title Opinions. Within 90 days after the Closing Date, the
attorneys who furnished the title opinions required pursuant to Section 3.02(f)
will provide to the Administrative Agent a supplemental opinion stating that
there has been no change in the status of title from that reflected in such
opinions through the filing and recordation of the E&P Mortgage and that,
subject only to the liens referenced in such earlier title opinions, the Liens
granted by the E&P Mortgage are first priority.
Section 5.15 Reporting Covenants. The Company will furnish to each
Lender:
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(a) Annual Financial Statements. As soon as available and in any
event within 105 days after the end of each calendar year of the Company, a
consolidated balance sheet of the Company and its Subsidiaries as at the end
of such year and the related consolidated statements of income, retained
earnings and cash flows of the Company and its Subsidiaries for such
calendar year, setting forth in each case in comparative form the figures
for the previous calendar year, all in reasonable detail and accompanied by
a report thereon of Deloitte & Touche or other independent public
accountants of comparable recognized national standing, which such report
shall state that such consolidated financial statements present fairly the
consolidated financial condition as at the end of such calendar year, and
the consolidated results of operations and cash flow for such calendar year,
of the Company and its Subsidiaries in accordance with GAAP, applied on a
consistent basis. At the same time, a consolidating balance sheet of the
Consolidating Statement Entities as at the end of such year and related
consolidating statements of income and a schedule of consolidating EBITDA
for such calendar year, accompanied by a certification thereon of a
Responsible Officer, stating that such consolidating financial statements
and EBITDA schedule form the basis of the Company's consolidated financial
statements and EBITDA calculations, and are fairly stated in all material
respects when considered in relation thereto.
(b) Quarterly Financial Statements. As soon as available and in any
event within 60 days after the end of each of the first three calendar
quarters of the Company, a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter and the related consolidated
statements of income, retained earnings and cash flows of the Company and
its Subsidiaries for such calendar quarter and for the portion of the
Company's calendar year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter and
the corresponding portion of the Company's previous calendar year and, in
the case of the balance sheet only, the last day of the immediately
preceding fiscal year, all in reasonable detail and certified by a
Responsible Officer that such financial statements are complete and correct
and fairly present the consolidated financial condition as at the end of
such calendar quarter, and the consolidated results of operations and cash
flows for such calendar quarter and such portion of the Company's calendar
year, of the Company and its Subsidiaries in accordance with GAAP (subject
to normal, year-end adjustments). At the same time, a consolidating balance
sheet of the Consolidating Statement Entities at the end of such calendar
quarter and related consolidating statements of income and a schedule of
consolidating EBITDA, for the portion of the Company's calendar year ended
at such quarter accompanied by a certification from a Responsible Officer
that such consolidating financial statements and EBITDA schedule form the
basis of the Company's consolidated financial statements and EBITDA
calculations, and are fairly stated in all material respects when considered
in relation thereto.
(c) No Default/Compliance Certificate. Together with the financial
statements required pursuant to subsections (a) and (b) above, a certificate
of a Responsible Officer (i) stating that a review of such financial
statements during the period covered thereby and of the activities of the
Company and its Subsidiaries has been made under such Responsible Officer's
supervision with a view to determining whether the Company and its
Subsidiaries have fulfilled all of their obligations under this Agreement,
the other Financing Documents, and the Notes; (ii) stating that the Company
and its Subsidiaries have fulfilled their obligations under such instruments
and that all representations made in this Agreement continue to be true and
correct (or specifying the nature of any change), or if there shall be a
Default or Event of Default, specifying the nature and status thereof and
the Company's proposed response thereto; (iii) demonstrating in reasonable
detail
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compliance (including, but not limited to, showing all material
calculations) as at the end of such calendar year or such calendar quarter
with Sections 6.01, 6.02, 6.03 and 6.04; and (iv) containing or accompanied
by such financial or other details, information and material as the
Administrative Agent may reasonably request to evidence such compliance.
(d) Auditors' No Default Certificate; Management Letters. Together
with the financial statements required pursuant to subsection (a) above, a
certificate of the independent public accountants who audited the annual
report referred to therein to the effect that their audit has not disclosed
the existence of an Event of Default or a Default under this Agreement, or
if there exists an Event of Default or a Default hereunder, specifying the
nature thereof; and if there exists an Event of Default or Default
hereunder, copies of each management letter issued to the Company by such
accountants promptly following consideration or review by the Board of
Directors of the Company, or any committee thereof (together with any
response thereto prepared by the Company).
(e) Engineering Reports. Promptly after December 31st and June 30th
of each year, but in no event later than 60 days after such date, a report
(the "Reserve Report") in form and substance satisfactory to the Majority
Lenders and in the case of the December 31 Reserve Report prepared by
Netherland, Sewell & Associates or other independent petroleum consultant(s)
acceptable to the Majority Lenders (the previous acceptability of an
independent petroleum consultant satisfactory to the Majority Lenders shall
have no bearing on such consultant's present or future acceptability), which
Reserve Report shall evaluate the Hydrocarbon reserves included in the
Mortgaged Property as of each such date and which shall, together with any
other information reasonably requested by any Lender, set forth the total
Proved Hydrocarbon reserves by accepted and customary reserve category
attributable to such Mortgaged Property, together with a projection of the
rate of production and future net income with respect thereto as of each
such date. The June 30 Reserve Report shall be prepared by the engineering
staff of the Company and shall update the most recent Reserve Report.
(f) Title Information. Within a reasonable time after a request by
the Administrative Agent, additional title information in form and substance
acceptable to the Majority Lenders as is reasonably necessary covering the
Mortgaged Property so that the Lenders shall have received, together with
the title information previously received by the Lenders, satisfactory title
information covering all of the Mortgaged Property.
(g) Events or Circumstances with respect to Mortgaged Property.
Promptly after the occurrence of any event or circumstance (other than as
known to affect oil and gas prices generally) concerning or changing any of
the Mortgaged Property that would have a Material Adverse Effect, notice of
such event or circumstance in reasonable detail.
(h) Bi-Weekly Borrowing Base Reports.
(i) As soon as available and in any event by the Thursday
following the close of each two calendar week period, a Borrowing Base
Report dated and reflecting amounts as of the close of business on
Thursday of the preceding calendar week.
(ii) As soon as available and in any event by the 105th day after
the end of the fourth calendar quarter of each year and the 60th day
after the end of each of the first three
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calendar quarters of each year of the Company, a quarterly Borrowing
Base Report dated and reflecting amounts as of the last day of such
calendar year or quarter, as the case may be, which have been
reconciled to the financial statements delivered pursuant to Subsection
5.15(a) or (b), as the case may be.
(i) Notice of Certain Events. Promptly after the Company learns of
the receipt or occurrence of any of the following, a certificate of a
Responsible Officer specifying (i) any official notice of any violation,
possible violation, non-compliance or possible non-compliance, or claim made
by any Governmental Authority pertaining to all or any part of the
Properties of the Company or any of its Subsidiaries which, if adversely
determined, would have a Material Adverse Effect; (ii) any event which
constitutes a Default or Event of Default, together with a detailed
statement specifying the nature thereof and the steps being taken to cure
such Default or Event of Default; (iii) the receipt of any notice from, or
the taking of any other action by, the holder of any promissory note,
debenture or other evidence of indebtedness in excess of $1,000,000 of the
Company or any of its Subsidiaries with respect to a claimed default,
together with a detailed statement specifying the notice given or other
action taken by such holder and the nature of the claimed default and what
action the Company or its Subsidiary is taking or proposes to take with
respect thereto; (iv) any default or noncompliance of any party to any of
the Financing Documents with any of the terms and conditions thereof or any
notice of termination or other proceedings or actions which could reasonably
be expected to adversely affect any of the Financing Documents; (v) the
creation, dissolution, merger or acquisition of any Subsidiary of the
Company with material operations; (vi) any event or condition which violates
any Environmental Law and which could potentially have a Material Adverse
Effect or which could potentially result in remedial obligations having a
Material Adverse Effect, assuming disclosure to the applicable Governmental
Authority of all relevant facts, conditions and circumstances, if any,
pertaining to such event or condition; or (vii) any event or condition which
may reasonably be expected to have a Material Adverse Effect.
(j) Shareholder Communications, Filings, etc. Promptly upon the
mailing or filing thereof, copies of all financial statements, reports and
proxy statements mailed to the Company's shareholders, and copies of all
registration statements, periodic reports and other documents (excluding the
related exhibits except to the extent expressly requested by the
Administrative Agent) filed with or received by the Company in connection
therewith from the Securities and Exchange Commission (or any successor
thereto) or any national securities exchange.
(k) Litigation. Promptly after (i) the occurrence thereof, notice of
the institution of or any material adverse development in any action, suit
or proceeding or any governmental investigation or any arbitration, before
any court or arbitrator or any governmental or administrative body, agency
or official, against the Company, any Guarantor or any material Property of
any thereof; or (ii) actual knowledge thereof, notice of the threat of any
such action, suit, proceeding, investigation or arbitration, in either case
in which the amount involved is material and is not covered by insurance or
which, if adversely determined, would have a Material Adverse Effect.
(l) ERISA. Promptly after (i) the Company's obtaining knowledge of
the occurrence thereof, notice that an ERISA Termination Event or a
"prohibited transaction," as such term is defined in Section 406 of ERISA or
Section 4975 of the Code, with respect to any Plan has occurred, which such
notice shall specify the nature thereof, the Company's proposed response
thereto and, where known, any action taken or proposed by the Internal
Revenue Service, the Department of
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Labor or the PBGC with respect thereto, and (ii) the Company's obtaining
knowledge thereof, copies of any notice of the PBGC's intention to terminate
or to have a trustee appointed to administer any Plan.
(m) Borrowing Base Audit. Each calendar year, as of a date to be
designated by the Agent, at the cost of the Company, a report of an
independent collateral field examiner approved by the Administrative Agent
in writing and reasonably acceptable to the Company (which may be the
Administrative Agent or an affiliate thereof) with respect to the Eligible
Accounts and Eligible Inventory components included in the Borrowing Base,
and the Administrative Agent shall have the option to receive such
additional reports as the Administrative Agent or the Majority Lenders shall
reasonably request; provided, however, that so long as no Default has
occurred and is continuing, neither the Administrative Agent nor the
Majority Lenders shall request more than one such additional report (for a
total of two such reports) per calendar year.
(n) Other Information. With reasonable promptness, such other
information about the business and affairs and financial condition of the
Company or its Subsidiaries as any Lender may reasonably request from time
to time.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Lender has any Commitment hereunder or any Loan remains unpaid or
any Revolving Credit Exposure remains outstanding, the Company will not:
Section 6.01 Consolidated Tangible Net Worth. Permit Consolidated
Tangible Net Worth as of the end of any calendar quarter to be less than
$125,000,000 plus 75% of the Company's consolidated net income aggregated for
each of the calendar quarters from and after April 1, 1996 in which consolidated
net income is positive; provided if at any time the Company issues equity
securities of any kind, such minimum amount of Consolidated Tangible Net Worth
shall be permanently increased by an amount equal to 75% of the net cash
proceeds from the issuance of such equity securities, except that to the extent
such proceeds are used as permitted in clause (iii) of Section 6.08, such amount
shall not so increase the minimum Consolidated Tangible Net Worth; and provided
further, that such amount of minimum Consolidated Tangible Net Worth shall be
adjusted so as to remove the effect of any accounting adjustments that would
otherwise result from the retirement of the Subordinated Debentures and Exchange
Notes due to write-offs of original issue discount or deferred financing costs.
Section 6.02 Consolidated Current Ratio. Permit the ratio of (i)
consolidated current assets to (ii) consolidated current liabilities (excluding
current maturities of the Notes) to be less than 1.3 to 1.0 at any time. As
used in this Section 6.02 "consolidated current assets" shall mean assets which
would, in accordance with GAAP, be included as current assets on a consolidated
balance sheet of the Company and its Subsidiaries and "consolidated current
liabilities" shall mean liabilities which would, in accordance with GAAP, be
included as current liabilities on a consolidated balance sheet of the Company
and its Subsidiaries.
Section 6.03 Consolidated Cash Flow Coverage Ratio. Permit a cash flow
coverage ratio for itself and its Subsidiaries on a consolidated basis as of any
Quarterly Date to be less than 1.10 to 1.00 for
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the Rolling Period ending on the applicable Quarterly Date. As used in this
Section 6.03, "cash flow coverage ratio" shall mean, as to the Company, and for
the Rolling Period ending on such Quarterly Date, the ratio of (i) the sum of
(A) Cash Flow of the Company and its Subsidiaries on a consolidated basis, plus
(B) the difference between the Maximum Revolving Credit Loan Available Amount on
the last day of the applicable Rolling Period and the outstanding principal
amount of the Revolving Credit Loans on the first day of the last calendar
quarter of such Rolling Period, plus (C) interest expense of the Company and its
Subsidiaries on a consolidated basis to (ii) the sum of (A) regularly scheduled
principal payments of Funded Indebtedness paid in cash, plus (B) cash interest
expense of the Company and its Subsidiaries on a consolidated basis, plus (C)
capital expenditures by the Company and its Subsidiaries on a consolidated
basis, excluding capital expenditures made by way of exchanges of equity, plus
(D) cash dividends actually paid by the Company and its Subsidiaries on a
consolidated basis.
Section 6.04 Consolidated Interest Coverage Ratio. Permit its
consolidated interest coverage ratio as of the end of any Rolling Period to be
less than 2.5 to 1.0. As used in this Section 6.04, "consolidated interest
coverage ratio" shall mean the ratio of (i) EBITDA for the Rolling Period to
(ii) cash payments made by the Company and its Subsidiaries for interest for
such Rolling Period.
Section 6.05 Indebtedness. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Indebtedness, other than:
(a) the Lender Indebtedness;
(b) Indebtedness outstanding on the date hereof which is set out in
the Company's financial statements referred to in Section 4.06(a) or on
Schedule 6.05 and any renewal, extension, refinancing or refunding of such
Indebtedness; provided that (A) the principal amount of such Indebtedness
that renews, extends, refinances or refunds any such Indebtedness shall not
exceed the principal amount of such renewed, extended, refunded or
refinanced Indebtedness, plus up to 5% to cover the costs associated with
such renewal, extension, refinancing or refunding of such Indebtedness and
(B) the Indebtedness that renews, extends, refinances or refunds such
Indebtedness is scheduled to mature no earlier and shall be upon
substantially the same or no less favorable terms than the Indebtedness
being renewed, extended, refinanced or refunded; provided further, that for
purposes of this Section 6.05(b) only, if the Subordinated Debentures and/or
the Exchange Notes are prepaid in full, the Borrower may issue subordinated
notes upon substantially the same or no less favorable terms than the
Subordinated Debentures or Exchange Notes and in an aggregate amount not to
exceed $100,000,000 less the amount, if any, on either the Subordinated
Debentures or Exchange Notes, if both are not prepaid;
(c) accounts payable (for the deferred purchase price of Property or
services) from time to time incurred in the ordinary course of business and
which are not in excess of 90 days past the invoice or billing date, or if
in excess of 90 days past the invoice or billing date are being currently
contested in good faith by appropriate actions or proceedings diligently
conducted;
(d) guaranties issued by the Company or any Subsidiary in the ordinary
course of its business of obligations of others (other than for borrowed
money) incurred in oil and gas drilling, oil and gas production, oil and gas
transportation, crude oil and refined products purchasing, oil and gas
exploration or other similar programs or operations;
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(e) obligations whether current or long term incurred in the normal
course of business under or pursuant to customary oil, gas and mineral
leases, royalties and oil and gas operating agreements, farm-out and farm-in
agreements, development agreements and other agreements which are customary
in the oil and gas industry;
(f) Indebtedness created, incurred, assumed or guaranteed after the
date hereof not otherwise permitted pursuant to this Section 6.05, provided
that the aggregate outstanding principal amount of such Indebtedness shall
not exceed $10,000,000 at any one time outstanding;
(g) Indebtedness owing by (A) the Company to Non-Guarantor
Subsidiaries not to exceed $5,000,000 in the aggregate, (B) any Subsidiary
of the Company to the Company, (C) the Company to any Guarantor, and (D) any
Guarantor to any other Guarantor;
(h) obligations for current taxes, assessments and other governmental
charges and taxes, assessments or other governmental charges which are not
yet due or are being contested in good faith by appropriate action or
proceeding promptly initiated and diligently conducted, if such reserve as
shall be required by GAAP shall have been made therefor;
(i) Capital Lease Obligations not to exceed $7,500,000 at any one
time;
(j) Indebtedness relating to personal injury or property claims
against the Company or any of its Subsidiaries in an amount not to exceed
$5,000,000 in the aggregate unless and to the extent such claims are covered
by insurance;
(k) Indebtedness, not to exceed (i) $15,000,000 in the aggregate
outstanding at any one time, in respect of letters of credit (other than the
Letters of Credit) or bank guaranties provided by the Company or any of its
Subsidiaries in the ordinary course of business and used in lieu or in
support of performance guarantees, performance, surety or other similar
bonds, or bankers acceptances, and (ii) $5,000,000 in the aggregate
outstanding at any one time, in respect of letters of credit (other than
Letters of Credit) or bank guaranties provided by the Company or any of its
Subsidiaries used in lieu or in support of stay or appeal bonds; provided,
however, to the extent Letters of Credit are used in lieu or in support of
stay or appeal bonds, such $5,000,000 maximum amount shall be reduced by an
amount equal to the aggregate amount of any such Letters of Credit used in
lieu or support of stay or appeal bonds;
(l) Indebtedness existing in connection with Hedge Agreements,
provided that such Hedge Agreements are entered into by the Company or its
Subsidiaries in the ordinary course of business and for the purpose of
hedging against fluctuations in price or interest rates.
(m) Non-Recourse Indebtedness of Tesoro Bolivia; and
(n) Indebtedness, not to exceed $15,000,000, incurred by Tesoro
Northstore, to be used for the purchase (in fee or leasehold), construction,
and/or upgrading of retail outlet stores, subject, however, to the execution
of an intercreditor agreement satisfactory in form and substance to the
Administrative Agent and Documentation Agent.
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Section 6.06 Liens. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Lien on
any of its Property now owned or hereafter acquired to secure any Indebtedness
of any Person, other than:
(a) Liens existing on the date hereof and set out on Schedule 6.06;
(b) Liens securing the Lender Indebtedness;
(c) Liens for taxes, assessments or other governmental charges or
levies not yet due or which are being contested in good faith by appropriate
action or proceedings and with respect to which adequate reserves are being
maintained;
(d) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen, repairmen, workmen, and other Liens imposed by law
created in the ordinary course of business for amounts which are not past
due for more than 30 days or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves in
accordance with GAAP are being maintained;
(e) Liens (other than any inchoate Lien imposed by ERISA) incurred or
deposits or pledges made in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other types of social
security, old age or other similar obligations, 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);
(f) easements, rights-of-way, restrictions, servitudes, permits,
reservations, exceptions, conditions, covenants and other similar charges or
encumbrances not interfering with the ordinary conduct of the business of
the Company or any of its Subsidiaries;
(g) any Lien securing Indebtedness, neither assumed nor guaranteed by
the Company or any of its Subsidiaries nor on which it customarily pays
interest, existing upon real estate or rights in or relating to real estate
acquired by the Company for substation, metering station, pump station,
storage, gathering line, transmission line, transportation line,
distribution line or for right-of-way purposes, and any Liens reserved in
leases for rent and for compliance with the terms of the leases in the case
of leasehold estates, to the extent that any such Lien referred to in this
clause (vii) does not materially impair the use of the Property covered by
such Lien for the purposes of which such Property is held by the Company or
any of its Subsidiaries;
(h) inchoate Liens arising under ERISA;
(i) any Lien on any Property securing Indebtedness incurred, assumed
or guaranteed as permitted by Section 6.05(f);
(j) Liens reserved in customary oil, gas and/or mineral leases for
bonus or rental payments and for compliance with the terms of such leases
and Liens reserved in customary operating agreements, farm-out and farm-in
agreements, exploration agreements, development agreements and other similar
agreements for compliance with the terms of such agreements;
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(k) any obligations or duties affecting any of the Property of the
Company or its Subsidiaries to any municipality or public authority with
respect to any franchise, grant, license or permit which do not materially
impair the use of such Property for the purposes for which it is held;
(l) defects, irregularities and deficiencies in title of any rights of
way or other Property of the Company or any Subsidiary which in the
aggregate do not materially impair the use of such rights of way or other
Property for the purposes for which such rights of way and other Property
are held by the Company or any Subsidiary, and defects, irregularities and
deficiencies in title to any Property of the Company or its Subsidiaries,
which defects, irregularities or deficiencies have been cured by possession
under applicable statutes of limitation;
(m) royalties, overriding royalties, revenue interests, net revenue
interests, production payments (other than production payments granted or
created by the Company in connection with the borrowing of money), advance
payment obligations (other than obligations in respect of advance payment
received by the Company in connection with the borrowing of money) and other
similar burdens now existing on Oil and Gas Properties now owned or, as to
Properties hereafter acquired, at the time of acquisition by the Company or
any of its Subsidiaries;
(n) Liens arising out of all presently existing and future division
and transfer orders, advance payment agreements, processing contracts, gas
processing plant agreements, operating agreements, gas balancing or deferred
production agreements, pooling, unitization or communitization agreements,
pipeline, gathering or transportation agreements, platform agreements,
drilling contracts, injection or repressuring agreements, cycling
agreements, construction agreements, salt water or other disposal
agreements, leases or rental agreements (but only as otherwise permitted by
this Agreement), farm-out and farm-in agreements, exploration and
development agreements, and any and all other contracts or agreements
covering, arising out of, used or useful in connection with or pertaining to
the exploration, development, operation, production, sale, use, purchase,
exchange, storage, separation, dehydration, treatment, compression,
gathering, transportation, processing, improvement, marketing, disposal or
handling of any Property of the Company or its Subsidiaries, provided such
agreements are entered into in the ordinary course of business and contain
terms customary for such agreements in the industry;
(o) Liens securing up to $15,000,000 of the Indebtedness permitted by
Section 6.05(k) to the extent such Indebtedness is issued in support of the
Company's (or its Subsidiaries') Bolivian operations;
(p) Liens securing up to $15,000,000 of Indebtedness permitted by
Section 6.05(n);
(q) Liens securing the Indebtedness permitted by Section 6.05(i) and
Liens of equipment lessors, but only covering the Property under lease; and
(r) extensions, renewals or replacements of any Lien referred to in
Subsections 6.06(a) through (q), provided that the principal amount of the
Indebtedness or obligation secured thereby is not increased and that any
such extension, renewal or replacement is limited to the Property originally
encumbered thereby.
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Section 6.07 Mergers, Sales, etc. Merge into or with or consolidate with,
or permit any of its Subsidiaries to merge into or with or consolidate with, any
other Person, or sell, lease or otherwise dispose of, or permit any of its
Subsidiaries to sell, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or any part of its Property to any other
Person, other than (i) (A) a merger of any Guarantor into the Company or into
another Guarantor other than Tesoro Bolivia, Tesoro Environmental, or any
Subsidiary thereof, (B) a merger of any Guarantor with any Person other than the
Company or another Guarantor if immediately thereafter and giving effect thereto
the Company or a Guarantor, other than Tesoro Bolivia, Tesoro Environmental, or
any Subsidiary thereof, shall own 100% of the stock of the surviving corporation
and (C) a merger of the Company with any other Person if the Company is the
surviving corporation, provided, however, that in each such case, immediately
thereafter and giving effect thereto, no event shall have occurred and be
continuing which constitutes a Default, (ii) a sale, lease or other disposition
of all or any part of its Property by any Guarantor to the Company or another
Guarantor other than Tesoro Bolivia, Tesoro Environmental, or any Subsidiary
thereof, (iii) sales, leases or other dispositions of all or any part of its
Property by the Company or any of its Subsidiaries to any other Person not in
excess of $2,000,000 in any 12-month period and not to exceed $5,000,000
cumulatively from the Closing Date and provided further, that the Company or any
such Subsidiary of the Company receives fair market consideration for any such
sale, lease or disposition of such Properties, or (iv) a sale, lease or other
disposition of Tesoro R&M's interest in the Tesoro Terminals, the proceeds of
which will not be included in the limitation amounts set forth in clause (iii)
above. Notwithstanding the foregoing limitations, the Company and its
Subsidiaries may (A) sell inventory, Hydrocarbon production and other similar
assets in the ordinary course of business, (B) sell, transfer or otherwise
dispose of personal property (including, but not limited to, pipe, equipment,
machinery and vehicles) in the ordinary course of business or when, in the
reasonable judgment of the Company, such property is no longer used or useful in
the conduct of its business or the business of its Subsidiaries, (C) farm-out in
the ordinary course of business any Oil and Gas Properties owned by the Company
or its Subsidiaries which do not constitute a portion of the Mortgaged Property,
(D) sell Properties of the Non-Guarantor Subsidiaries, and (E) sell the Property
of or stock issued by Tesoro Bolivia, Tesoro Environmental, or any of their
respective Subsidiaries, provided, that, in connection with any sale of property
or stock pursuant to this clause (E), any Letter of Credit issued for the
account of, or to support the assets or operations of the Guarantor whose
Properties or stock is being sold, shall be terminated or backed by a letter of
credit in form and substance, and issued by an issuer, acceptable to each of the
Administrative Agent and the applicable Issuing Bank in their sole discretion.
Section 6.08 Restricted Payments. Declare or pay any dividend on its
capital stock, make any payment to purchase, redeem, retire or acquire any of
its capital stock or any option, warrant, or other right to acquire such capital
stock, return any capital to its stockholders, make any distribution of its
assets to its stockholders as such, or permit any of its Subsidiaries to
purchase or otherwise acquire for value any stock of the Company, or pay,
prepay, repurchase or redeem the Subordinated Debentures or Exchange Notes,
except that the Company may
(i) declare and deliver stock dividends,
(ii) declare and pay cash dividends on common stock or preferred
stock issued by the Company or repurchase its common stock, in amounts not
to exceed the Cumulative Amount Available for Restricted Payments; provided,
however, after the occurrence of the Mandate Event, any payments made
pursuant to this clause (ii) shall not, on an annual basis, exceed an amount
equal to $5,000,000 less the amount used pursuant to clause (vi) to purchase
outstanding stock of the Company,
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(iii) redeem the Subordinated Debentures and/or Exchange Notes with
the proceeds from (A) equity offerings, (B) Indebtedness permitted by
Sections 6.05(b) and (f) and (C) cash proceeds received in connection with
Lenape Resources Corp. v. Tennessee Gas Pipeline Company, 39 Tex Sup. Ct.
J. 496 (April 18, 1996), (D) the Cumulative Amount Available for Restricted
Payments, (E) after the occurrence of the Collection Event, cash on hand and
(F) after the occurrence of [both the Mandate Event and] the Collection
Event, Loans not to exceed $15,000,000 in the aggregate,
(iv) purchase stock as permitted by Section 6.09(i),
(v) after the occurrence of the Mandate Event and in an aggregate
amount not to exceed $5,000,000, repurchase the common stock issued by the
Company from (A) shareholders owning 100 shares or less pursuant to an
oddlot buyback program and (B) the open market for employee benefit plans,
and
(vi) after the occurrence of the Mandate Event, repurchase common
stock (other than as permitted in Section 6.08(v)) issued by the Company in
an annual amount not to exceed $5,000,000 less the amount of any dividends
paid pursuant to clause (ii);
provided that both before and after giving effect to any such restricted payment
permitted by clauses (i) through (vi) above, a Default shall not have occurred
and be continuing and the Aggregate Revolving Credit Exposure shall not exceed
the Maximum Available Amount.
Section 6.09 Investments, Loans, etc. Make or permit any loans to or
investments in any Person, or permit any of its Subsidiaries to make or permit
any loans to or investments in any Person, other than:
(a) investments, loans or advances, the material details of which have
been set forth in the Financial Statements or are disclosed to the
Administrative Agent in Schedule 4.07 hereto;
(b) investments in direct obligations of the United States of America
or any agency thereof;
(c) investments in certificates of deposit of maturities less than one
year, issued by commercial banks in the United States having capital and
surplus in excess of $500,000,000; provided, however, the Company may, with
the written approval of the Administrative Agent, invest in such
certificates of deposit issued by commercial banks in the United States
having capital and surplus in excess of $200,000,000 and a Thomson's Bank
Watch rating of B or better;
(d) investments in commercial paper of maturities less than one year
rated A1 or P1 by Standard & Poors Corporation or Moody's Investors
Services, Inc., respectively, or any equivalent rating from any other rating
agency satisfactory to the Administrative Agent;
(e) routine loans or advances to employees made in the ordinary course
of business not to exceed (A) $250,000 at any one time outstanding to any
one employee and (B) $1,500,000 in the aggregate;
(f) investments in securities purchased by the Company or any
Subsidiary of the Company under repurchase obligations pursuant to which
arrangements are made with selling
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financial institutions (being (A) a financial institution having unimpaired
capital and surplus of not less than $500,000,000 and with a rating of A1 or
P1 by Standard & Poors Corporation or Moody's Investors Services, Inc.,
respectively; or (B) with the written approval of the Administrative Agent,
a financial institution having unimpaired capital and surplus of not less
than $200,000,000 and a Thomson's Bank Watch rating of B or better) for such
financial institutions to repurchase such securities within 30 days from the
date of purchase by the Company or such Subsidiary, and other similar
short-term investments made in connection with the Company's or any of its
Subsidiary's cash management practices;
(g) the purchase, redemption or acquisition of capital stock of the
Company as permitted by Section 6.08;
(h) entering into a joint venture or partnership in connection with
the sale to such joint venture or partnership of the assets of Tesoro
Bolivia or Tesoro Environmental;
(i) the purchase of stock issued by the Company from participants in
the incentive stock plans of the Company made for the purpose of satisfying
federal withholding tax obligations of such participants as provided for
under the terms of such incentive stock plans or stock incentive grants
thereunder;
(j) investments in eurodollar obligations with maturities not
exceeding three (3) months, issued by (and supported by the full faith and
credit and representing direct obligations of) any Lender or any office
located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least $500,000,000.00
(as of the date of such Lender's or bank or trust company's most recent
financial reports) and has a short term deposit rating of no lower than A1
or P1, as such rating is set forth from time to time, by Standard & Poors
Corporation or Moody's Investors Service, Inc., respectively; provided,
however, the Company may, with the written approval of the Administrative
Agent, invest in such eurodollar obligations issued by (and supported by the
full faith and credit and representing direct obligations of) any bank or
trust company with an office located in the United States having capital,
surplus and undivided profits aggregating at least $200,000,000 and a
Thomson's Bank Watch rating of B or better;
(k) purchases, in the aggregate not to exceed $10,000,000, of all or
substantially all of the stock of corporations principally in the business
of exploration and production of oil and gas as a means of acquiring any
such corporation, but in no event in contravention of Section 4.09; and
(l) purchases, in the aggregate not to exceed $10,000,000, of all or
substantially all of the stock of corporations principally in the business
of marine services as a means of acquiring any such corporation, but in no
event in contravention of Section 4.09.
(m) investments, loans or advances to Guarantors and to Tesoro
Environmental Resources Company; provided, however, the aggregate amount of
all investments, loans or advances after the Closing Date directly or
indirectly by the Company in Tesoro Environmental Resources Company shall
not exceed $1,500,000; provided further, however, that the Company may
settle claims against Non-Guarantor Subsidiaries in an amount not to exceed
$3,000,000, in the aggregate.
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Section 6.10 Lease Payments. Except for (i) oil and gas lease obligations
permitted under Section 6.05, (ii) lease obligations (excluding Capital Lease
Obligations) existing under leases for oil field equipment and tools rented in
the ordinary course of business for a duration of less than one year and (iii)
time charter payments with regard to barges or tankers used to transport
feedstocks, blendstocks or refined products in the ordinary course of business;
create, incur, assume or suffer to exist, nor permit any of its Subsidiaries to
create, incur, assume or suffer to exist, any obligation for the payment of rent
or hire of Property of any kind whatsoever (real or personal), whether directly
or as a guarantor, if, after giving effect thereto, the aggregate amount of all
payments required to be made by the Company and its Subsidiaries on a
consolidated basis pursuant to such leases or lease agreements (excluding
Capital Lease Obligations) would exceed $8,000,000 in any calendar year.
Section 6.11 Sales and Leasebacks. Enter into, or permit any of its
Subsidiaries to enter into, any arrangement, directly or indirectly, with any
Person whereby the Company or any such Subsidiary shall sell or transfer any
Property, whether now owned or hereafter acquired, and whereby the Company or
any such Subsidiary shall then or thereafter rent or lease as lessee such
Property or any part thereof or other Property which the Company or any such
Subsidiary intends to use for substantially the same purpose or purposes as the
Property sold or transferred.
Section 6.12 Nature of Business. Permit any material change to be made in
the character of its business or the business of any Guarantor as carried on at
the date hereof, except as may be permitted pursuant to this Agreement.
Section 6.13 ERISA Compliance.
(a) Engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Company, a Subsidiary of the
Company or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to Sections 502(c) or 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, except where such assessment or imposition would
not have Material Adverse Effect;
(b) Terminate, or permit any ERISA Affiliate to terminate, any Plan in
a manner, or take any other action with respect to any Plan, which could
result in any liability of the Company, a Subsidiary of the Company or any
ERISA Affiliate to the PBGC, except where such termination would not have a
Material Adverse Effect;
(c) Fail to make, or permit any ERISA Affiliate to fail to make, full
payment when due of all amounts which, under the provisions of any Plan,
agreement relating thereto or applicable law, the Company, a Subsidiary of
the Company or any ERISA Affiliate is required to pay as contributions
thereto, except where the failure to make such payments would not have
Material Adverse Effect;
(d) Permit to exist, or allow any ERISA Affiliate to permit to exist,
any accumulated funding deficiency within the meaning of Section 302 of
ERISA or Section 412 of the Code, whether or not waived, with respect to any
Plan, except where the existence of such a deficiency would not have a
Material Adverse Effect;
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(e) Contribute to or assume an obligation to contribute to, or permit
any ERISA Affiliate to contribute to or assume an obligation to contribute
to, any "multiemployer plan" as such term is defined in Section 3(37) or
4001(a)(3) of ERISA;
(f) Acquire, or permit any ERISA Affiliate to acquire, an interest in
any Person that causes such Person to become an ERISA Affiliate with respect
to the Company or a Subsidiary of the Company or with respect to any ERISA
Affiliate of the Company or a Subsidiary of the Company if such Person
sponsors, maintains or contributes to, or at any time in the six-year period
preceding such acquisition has sponsored, maintained, or contributed to, (1)
any "multiemployer plan" as such term is defined in Section 3(37) or
4001(a)(3) of ERISA, or (2) any other Plan that is subject to Title IV of
ERISA under which the actuarial present value of the benefit liabilities
under such Plan exceeds the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan
allocable to such benefit liabilities;
(g) Fail to pay, or cause to be paid, to the PBGC in a timely manner,
and without incurring any late payment or underpayment charge or penalty,
all premiums required pursuant to Sections 4006 and 4007 of ERISA, except
where such failure would not have a Material Adverse Effect; or
(h) Amend, or permit any ERISA Affiliate to amend, a Plan resulting in
an increase in current liability such that the Company, a Subsidiary of the
Company or any ERISA Affiliate is required to provide security to such Plan
under Section 401(a)(29) of the Code.
Section 6.14 Sale or Discount of Receivables. Discount or sell (with or
without recourse), or permit any of its Subsidiaries to discount or sell (with
or without recourse), any of its or its Subsidiaries' notes receivable or
accounts receivable; provided that the Company may discount or sell (with or
without recourse) up to $3,000,000 in the aggregate of its accounts receivables
that are more than 60 days past due.
Section 6.15 Negative Pledge Agreements. Create, incur, assume or suffer
to exist, or permit any of its Subsidiaries to create, incur, assume or suffer
to exist, any contract, agreement or understanding (other than this Agreement,
the other Financing Documents or as set forth on Schedule 6.15 hereof) which in
any way prohibits or restricts the granting, conveying, creation or imposition
of any Lien on any Property of the Company or its Subsidiaries, or which
requires the consent of or notice to other Persons in connection therewith.
Section 6.16 Transactions with Affiliates. Enter into any transaction or
series of transactions, or permit any of its Subsidiaries to enter into any
transaction or series of transactions, with Affiliates of the Company or its
Subsidiaries which involve an outflow of money or other Property from the
Company or its Subsidiaries to an Affiliate of the Company or its Subsidiaries,
including but not limited to repayment of Indebtedness, management fees,
compensation, salaries, asset purchase payments or any other type of fees or
payments similar in nature, other than on terms and conditions substantially as
favorable to the Company and its Subsidiaries as would be obtainable by the
Company and its Subsidiaries in a reasonably comparable arm's-length transaction
with a Person other than such an Affiliate of the Company or its Subsidiaries.
Notwithstanding the foregoing, the restrictions set forth in this Section 6.16
shall not apply to: (i) the payment of reasonable and customary fees to
directors of the Company who are not employees of the Company, (ii) routine
loans or advances to employees made in the ordinary course of business not to
exceed $250,000 at any one time outstanding to any one employee, or (iii) any
other transaction with any employee,
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officer or director of the Company or any of its Subsidiaries pursuant to
employee benefit plans and compensation arrangements in amounts customary for
corporations similarly situated to the Company or any such Subsidiary and
entered into the ordinary course of business and approved by the Board of
Directors of the Company or any committee thereof or the Board of Directors of
such Subsidiary.
Section 6.17 Unconditional Purchase Obligations. Enter into or be a party
to, or permit any of its Subsidiaries to enter into or be a party to, any
contract for the purchase of materials, supplies or other property or services,
if such contract requires that payment be made by it regardless of whether or
not delivery is ever made of such materials, supplies or other property or
services.
Section 6.18 Stock. Authorize or issue any preferred stock (except for
the issuance of non-redeemable preferred stock to replace one or more of the
Company's outstanding issues of preferred stock, provided, that the issuance of
such preferred stock does not otherwise result in a Default under this
Agreement) or permit any of its Subsidiaries to authorize or issue any preferred
or common stock to be held by any Person other than the Company or any of its
wholly-owned Subsidiaries.
Section 6.19 Non-Recourse Indebtedness. The Company shall not permit any
Subsidiary to incur any Non-Recourse Indebtedness otherwise permitted hereunder
except upon terms and conditions and pursuant to documentation, in form and
substance, reasonably satisfactory to the Administrative Agent and Documentation
Agent.
ARTICLE VII
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each an "Event of Default"):
Section 7.01 Payments. (a) The Company shall fail to pay when due
(including, but not limited to, by mandatory prepayment) any principal of any
Loan or any Note, or any Reimbursement Obligation; or (b) the Company shall fail
to pay when due any interest on any Loan or Note, any fee or any other amount
payable hereunder, and such failure to pay shall continue unremedied for a
period of three Business Days;
Section 7.02 Covenants Without Notice. The Company shall fail to observe
or perform any covenant or agreement contained in Sections 5.05, 5.09 and
Article VI (excluding Subsections 6.05(c) and (h), and Section 6.16 hereof);
Section 7.03 Other Covenants. The Company shall fail to observe or
perform any covenant or agreement contained in (a) Section 5.11, Section
5.15(a), (b), (c), (d), (g), (h), (i), or (k), Subsections 6.05(c) or (h) or
Section 6.16 and, if capable of being remedied, such failure shall remain
unremedied for 10 days after the earlier of (i) the Company's obtaining
knowledge thereof, or (ii) written notice thereof shall have been given to the
Company by any Lender, the Issuing Bank or the Administrative Agent; and (b)
this Agreement, other than those referred to in Sections 7.01, 7.02, or clause
(a) of this Section 7.03, and, if capable of being remedied, such failure shall
remain unremedied for 30 days after the earlier of (i) the Company's obtaining
knowledge thereof, or (ii) written notice thereof shall have been given to the
Company by any Lender, the Issuing Bank or the Administrative Agent;
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Section 7.04 Other Financing Document Obligations. Default is made in the
due observance or performance by the Company or any Subsidiary of the Company of
any of the covenants or agreements contained in any Financing Document other
than this Agreement, and such default continues unremedied beyond the expiration
of any applicable grace period which may be expressly allowed under such
Financing Document;
Section 7.05 Representations. Any representation, warranty or statement
made or deemed to be made by the Company or any Subsidiary of the Company or any
of such Company's, or Subsidiary's officers herein or in any other Financing
Document, or in any certificate, request or other document furnished pursuant to
or under this Agreement or any other Financing Document, shall have been
incorrect in any material respect as of the date when made or deemed to be made;
Section 7.06 Non-Payments of Other Indebtedness. The Company or any of
its Subsidiaries shall fail to make any payment or payments of principal of or
interest on any Indebtedness of the Company or such Subsidiary in excess of
$3,000,000 in the aggregate (other than (i) the Lender Indebtedness and (ii) any
trade account subject to a bona fide dispute and the trade creditor has neither
filed a lawsuit nor caused a Lien to be placed upon any Property of the Company
or such Subsidiary) when due (whether at stated maturity, by acceleration, on
demand or otherwise) after giving effect to any applicable grace period;
Section 7.07 Defaults Under Other Agreements. The Company or any of its
Subsidiaries shall fail to observe or perform any covenant or agreement
contained in any agreement(s) or instrument(s) relating to Indebtedness of
$3,000,000 or more in the aggregate within any applicable grace period, or any
other event shall occur, if the effect of such failure or other event is to
accelerate, or to permit the holder of such Indebtedness or any other Person to
accelerate, the maturity of $3,000,000 or more in the aggregate of such
Indebtedness; or $3,000,000 or more in the aggregate of any such Indebtedness
shall be, or if as a result of such failure or other event may be, required to
be prepaid (other than by a regularly scheduled required prepayment) in whole or
in part prior to its stated maturity;
Section 7.08 Bankruptcy. The Company or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy" as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is commenced against the
Company or any of its Subsidiaries and the petition is not controverted within
10 days, or is not stayed or dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or any substantial part of the property of the Company or
any of its Subsidiaries; or the Company or any of its Subsidiaries commences any
other proceeding 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 the Company or such
Subsidiary or there is commenced against the Company or any of its Subsidiaries
any such proceeding which remains unstayed or undismissed for a period of 60
days; or the Company or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Company or any of its Subsidiaries 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; or the
Company or any of its Subsidiaries makes a general assignment for the benefit of
creditors; or the Company or any of its Subsidiaries 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; or the Company or any of its Subsidiaries shall by any act
or failure to act indicate its consent to, approval of or acquiescence in any of
the foregoing; or any corporate action is taken by the Company or any of its
Subsidiaries for the purpose of effecting any of the foregoing;
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Section 7.09 ERISA. A Plan shall fail to maintain the minimum funding
standard required by Section 412 of the Code for any plan year or a waiver of
such standard is sought or granted under Section 412(d), or a Plan is, shall
have been or is likely to be, terminated or the subject of termination
proceedings under ERISA, or the Company or an ERISA Affiliate has incurred or is
likely to incur a liability to or on account of a Plan under Section 515, 4062,
4063, 4064, 4201 or 4204 of ERISA, and there shall result from any such event or
events either a liability or a material risk of incurring a liability to the
PBGC or a Plan, which will have a Material Adverse Effect;
Section 7.10 Money Judgment. A judgment or order for the payment of money
in excess of $3,000,000 or that would otherwise have a Material Adverse Effect
shall be rendered against the Company or any of it Subsidiaries and such
judgment or order shall continue unsatisfied in accordance with the terms of
such judgment or order (in the case of a money judgment) and in effect for a
period of 30 days during which execution shall not be effectively stayed or
deferred (whether by action of a court, by agreement or otherwise);
Section 7.11 Discontinuance of Business. The Company or any Guarantor
shall cease to carry on its business as currently conducted or as contemplated
to be conducted, except for the discontinuance of Tesoro R&M;
Section 7.12 Security Instruments. The material terms of the Security
Instruments after delivery thereof shall for any reason, except to the extent
permitted by the terms thereof, cease to be in full force and effect and valid,
binding and enforceable (except as enforceability may be limited as stated in
Section 4.03) in accordance with their terms, or cease to create a valid and
perfected Lien of the priority contemplated thereby on any of the collateral
purported to be covered thereby, or the Company or any of its Subsidiaries (or
any other Person who may have granted or purported to grant such Lien) shall so
state in writing;
Section 7.13 Change of Control. The occurrence of a Change of Control;
Section 7.14 Mandatory Prepayments. The Company shall fail to make any
mandatory prepayment required by Section 2.10; or
Section 7.15 Material Adverse Event. The occurrence of any event or
condition that the Majority Lenders believe in good faith to have resulted in a
Material Adverse Effect;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written or telex
request of the Majority Lenders, shall, by written notice to the Company, take
any or all of the following actions, without prejudice to the rights of the
Administrative Agent, any Lender or the holder of any Note, to enforce its
claims against the Company: (i) declare the Revolving Credit Commitment, and
other lending obligations, if any, terminated, whereupon the Revolving Credit
Commitment and other lending obligations, if any, of each Lender shall terminate
immediately; or (ii) declare the entire principal amount of and all accrued
interest on all Lender Indebtedness then outstanding to be, whereupon the same
shall become, forthwith due and payable without presentment, demand, protest,
notice of protest or dishonor, notice of acceleration, notice of intent to
accelerate or other notice of any kind, all of which are hereby expressly waived
by the Company, and thereupon take such action as it may deem desirable under
and pursuant to the Financing Documents; provided, that, if an Event of Default
specified in Section 7.08 shall occur, the result which would occur upon the
giving of written notice
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by the Administrative Agent to the Company, as specified in clauses (i) and (ii)
above, shall occur automatically without the giving of any such notice.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
Section 8.01 Appointment of Administrative Agent. Each Lender and the
Issuing Bank hereby designate Banque Paribas, as Administrative Agent to act as
herein specified. Each Lender and the Issuing Bank hereby irrevocably
authorizes the Administrative Agent to take such action on its behalf under the
provisions of this Agreement, the Notes, and the other Financing Documents and
to exercise such powers and to perform such duties hereunder and thereunder as
are specifically delegated to or required of the Administrative Agent by the
terms hereof and thereof and such other powers as are reasonably incidental
thereto. The Administrative Agent may perform any of its duties hereunder by or
through its Administrative Agents or employees.
Section 8.02 Nature of Duties of Administrative Agent and Documentation
Agent. The Administrative Agent and the Documentation Agent shall have no
duties or responsibilities except those expressly set forth with respect to each
of the Administrative Agent or the Documentation Agent in this Agreement.
Neither the Administrative Agent, the Documentation Agent nor any of their
respective officers, directors, employees or Administrative Agents shall be
liable for any action taken or omitted by it as such hereunder or in connection
herewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Administrative Agent and the Documentation Agent shall be
mechanical and administrative in nature; the Administrative Agent and the
Documentation Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Agreement, expressed
or implied, is intended to or shall be so construed as to impose upon the
Administrative Agent or the Documentation Agent any obligations in respect of
this Agreement except as expressly set forth herein.
Section 8.03 Lack of Reliance on the Administrative Agent and the
Documentation Agent.
(a) Independent Investigation. Independently and without reliance
upon the Administrative Agent or the Documentation Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i) its
own independent investigation of the financial condition and affairs of the
Company in connection with the taking or not taking of any action in
connection herewith, and (ii) its own appraisal of the creditworthiness of
the Company, and, except as expressly provided in this Agreement, the
Administrative Agent and the Documentation Agent shall have no duty or
responsibility, either initially or on a continuing basis, to provide any
Lender with any credit or other information with respect thereto, whether
coming into its possession before the consummation of the transactions
contemplated herein or at any time or times thereafter.
(b) Agent Not Responsible. The Administrative Agent and the
Documentation Agent shall not be responsible to any Lender or the Issuing
Bank for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing delivered
in connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of this
Agreement, the Notes, the Letters of Credit or the other Financing Documents
or the financial condition of the Company or be required to make any inquiry
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concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement, the Notes or the other Financing
Documents, or the financial condition of the Company, or the existence or
possible existence of any Default or Event of Default.
Section 8.04 Certain Rights of the Administrative Agent. If the
Administrative Agent shall request instructions from the Majority Lenders with
respect to any act or action (including the failure to act) in connection with
this Agreement, the Notes and the other Financing Documents, the Administrative
Agent shall be entitled to refrain from such act or taking such action unless
and until the Administrative Agent shall have received instructions from the
Majority Lenders; and the Administrative Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting under this
Agreement, the Notes and the other Financing Documents in accordance with the
instructions of the Majority Lenders.
Section 8.05 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other documentary,
teletransmission or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person. The Administrative
Agent may consult with legal counsel (including counsel for the Company),
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 8.06 Indemnification of Administrative Agent and the Documentation
Agent. To the extent the Administrative Agent or the Documentation Agent is not
reimbursed and indemnified by the Company, each Lender will reimburse and
indemnify the Administrative Agent or the Documentation Agent, as applicable, in
proportion to its Percentage Share, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including counsel fees and disbursements) or disbursements of any kind
or nature whatsoever which may be imposed on, incurred by or asserted against
the Administrative Agent or the Documentation Agent in performing its duties
hereunder, in any way relating to or arising out of this Agreement; provided
that no Lender shall be liable to the Administrative Agent or the Documentation
Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from, as to the Administrative Agent, the Administrative Agent's gross
negligence or willful misconduct or, as to the Documentation Agent, the
Documentation Agent's gross negligence or willful misconduct.
Section 8.07 The Administrative Agent and Documentation Agent in their
Individual Capacity. With respect to their obligations under this Agreement,
the Loans made by it and the Note issued to it, the Administrative Agent and
Documentation Agent shall have the same rights and powers hereunder as any other
Lender or holder of a Note and may exercise the same as though it were not
performing the duties, if any, specified herein; and the terms "Lenders,"
"Majority Lenders," "holders of Notes" or any similar terms shall, unless the
context clearly otherwise indicates, include the Administrative Agent and
Documentation Agent in their individual capacity. The Administrative Agent and
Documentation Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust, financial advisory or other business
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with the Company or any affiliate of the Company as if it were not performing
the duties, if any, specified herein, and may accept fees and other
consideration from the Company for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
Section 8.08 Lender as Owner. The Administrative Agent and the
Documentation Agent may deem and treat each Lender as the owner of such Lender's
Note for all purposes hereof unless and until a written notice of the assignment
or transfer thereof shall have been filed with the Administrative Agent. Any
request, authority or consent of any Person who at the time of making such
request or giving such authority or consent is the owner of a Note shall be
conclusive and binding on any subsequent owner, transferee or assignee of such
Note or any promissory note or notes issued in exchange therefor.
Section 8.09 Successor Administrative Agent.
(a) Agent Resignation. The Administrative Agent may resign at any
time by giving written notice thereof to the Lenders, the Issuing Bank and
the Company and may be removed at any time with or without cause by the
Majority Lenders. Upon any such resignation or removal, the Majority
Lenders shall have the right, upon five days' notice to the Company, to
appoint a successor Administrative Agent. If no successor Administrative
Agent shall have been so appointed by the Majority Lenders, and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent's giving of notice of resignation or the Majority Lenders' removal of
the retiring Administrative Agent, then, upon five days' notice to the
Company, the retiring Administrative Agent may, on behalf of the Lenders,
appoint a successor Administrative Agent, which shall be a bank which
maintains an office in the United States, or a commercial bank organized
under the laws of the United States of America or of any State thereof, or
any Affiliate of such bank, having a combined capital and surplus of at
least $250,000,000.
(b) Rights, Powers, etc. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including, telecopy or similar
teletransmission or writing) and shall be given to such party at its address or
telecopy number set forth on the signature pages hereof or such other address or
telecopy number as such party may hereafter specify by notice to the
Administrative Agent and the Company; provided that a copy of all notices to the
Administrative Agent (a) which are Advance Notices shall also be sent to Banque
Paribas, 1200 Smith Street, Suite 3100, Houston, Texas 77002, Telecopier No.
(713) 659-5305, Attention: Leah Evans-Hughes, and (b) which are requests for
the issuance of a Letter of Credit by
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Banque Paribas shall also be sent to Banque Paribas, 1200 Smith Street, Suite
3100, Houston, Texas 77002, Telecopier No. (713) 659-3832, Attention: Cheryl
Johnson. Each such notice, request or other communication shall be effective
(i) if given by mail, 72 hours after such communication is deposited in the
mails with first class postage prepaid, addressed as aforesaid, or (ii) if given
by any other means (including, but not limited to, by air courier), when
delivered at the address specified in this Section; provided that notices to the
Administrative Agent shall not be effective until received.
Section 9.02 Amendments, etc. Any provision of this Agreement or any
other Financing Document may be amended, modified or waived with the Company's
and the Majority Lenders' prior written consent; provided that (a) no amendment,
modification or waiver which extends the due date or maturity of the Loans, the
Revolving Credit Maturity Date, releases all or substantially all of the
Collateral, reduces the interest rate applicable to the Loans or the fees
payable to the Lenders generally, releases the Company or any material Guarantor
from its respective obligation to pay principal or interest on the Loans,
affects this Section 9.02 or Section 9.04 or modifies the definition of
"Majority Lenders", shall be effective without consent of all Lenders; (b) no
amendment, modification or waiver which increases the Commitment of any Lender
shall be effective without the consent of such Lender; (c) no amendment,
modification or waiver which modifies the rights, duties or obligations of the
Administrative Agent shall be effective without the consent of the
Administrative Agent; (d) no amendment, modification or waiver which modifies
the rights, duties or obligations of the Documentation Agent shall be effective
without the consent of the Documentation Agent; and (e) no amendment,
modification or waiver which modifies the rights, duties or obligations of
either Issuing Bank shall be effective without the consent of the applicable
Issuing Bank. Notwithstanding anything in this Section to the contrary, unless
instructed to the contrary by the Majority Lenders, the applicable Issuing Bank
shall extend each Letter of Credit prior to any expiration date thereof pursuant
to the terms of such Letter of Credit or its related Application if a failure to
so extend such Letter of Credit would result in entitling the beneficiary
thereof to draw thereon.
Section 9.03 No Waiver; Remedies Cumulative. No failure or delay on the
part of the Company or the Administrative Agent or any Lender or any holder of
any Note in exercising any right or remedy under this Agreement or any other
Financing Document and no course of dealing between the Company and the
Administrative Agent or any Lender or any holder of any Note shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or remedy
under the Notes, this Agreement or any other Financing Document preclude any
other or further exercise thereof or the exercise of any other right or remedy
under the Notes, this Agreement or any other Financing Document. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the Company, the Administrative Agent or any Lender
would otherwise have. No notice to or demand on the Company not required under
the Notes, this Agreement or any other Financing Document in any case shall
entitle the Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Administrative Agent
or the Lenders to any other or further action in any circumstances without
notice or demand.
Section 9.04 Payment of Expenses, Indemnities, etc. The Company agrees to
(and shall be liable for):
(a) Expenses. Whether or not the transactions hereby contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Administrative Agent and each Issuing Bank in the administration (both
before and after the execution hereof and including advice of counsel as to
the rights and duties of the Administrative Agent and the Lenders with
respect thereto)
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of, and in connection with the preparation, execution and delivery of,
recording or filing of, preservation of rights under, enforcement of, and,
after a Default, refinancing, renegotiation or restructuring of, this
Agreement, the Notes, and the other Financing Documents and any amendment,
waiver or consent relating thereto (including, but not limited to, the
reasonable fees and disbursements of counsel for the Administrative Agent
and in the case of enforcement for any of the Lenders) and promptly
reimburse the Administrative Agent for all amounts expended, advanced, or
incurred by the Administrative Agent or the Lenders to satisfy any
obligation of the Company or the Guarantors under this Agreement or any
other Financing Document;
(b) Indemnification. Indemnify the Administrative Agent, the
Documentation Agent, the Issuing Banks and each Lender, each of their
respective officers, directors, employees, representatives, agents and
Affiliates from, hold each of them harmless against, and promptly upon
demand pay or reimburse each of them for, any and all actions, suits,
proceedings (including any investigations, litigation or inquiries), claims,
costs, losses, liabilities, damages or expenses of any kind or nature
whatsoever which may be incurred by or asserted against or involve any of
them (whether or not any of them is designated a party thereto) as a result
of, arising out of or in any way related to (i) any actual or proposed use
by the Company or any Subsidiary of the Company of the proceeds of any of
the Loans; or (ii) any other aspect of this Agreement, the Notes, and the
Financing Documents, including but not limited to the reasonable fees and
disbursements of counsel (including allocated costs of internal counsel) and
all other expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any
investigations, litigation or inquiries) or claim, and including all
actions, suits, proceedings (including any investigations, litigation or
inquiries), claims, costs, losses, liabilities, damages or expenses arising
by reason of ordinary negligence of any of the Administrative Agent, the
Documentation Agent, the Issuing Banks and each Lender, each of their
respective officers, directors, employees, representatives, agents and
Affiliates; provided, however, the provisions of this Section 9.04(b) shall
not apply to any action, suits, proceedings, claims, costs, losses,
liabilities, damages, or expenses to the extent, but only to the extent,
caused by the gross negligence or willful misconduct of the party seeking
indemnification;
(c) Environmental Indemnification. Indemnify and hold harmless from
time to time the Administrative Agent, the Documentation Agent, the Issuing
Banks and the Lenders, each Person claiming by, through, under or on account
of any of the foregoing and the respective directors, officers, counsel,
employees, agents, successors and assigns of each of the foregoing from and
against any and all losses, claims, cost recovery actions, administrative
orders or proceedings, damages and liabilities (which relate to or arise as
a result of the Loans, the Letters of Credit or any Financing Document) to
which any such Person may become subject and including any and all losses,
claims, cost recovery actions, administrative orders or proceedings, damages
and liabilities (which relate to or arise as a result of the Loans, the
Letters of Credit or any Financing Document) arising by reason of the
ordinary negligence of the Administrative Agent, the Documentation Agent and
the Lenders, each Person claiming by, through, under or on account of any of
the
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foregoing and the respective directors, officers, counsel, employees,
agents, successors and assigns of each of the foregoing (1) under any
Environmental Law applicable to the Company or any of its Subsidiaries or
any of their respective Properties, including without limitation, the
treatment or disposal of Hazardous Substances on any of their respective
Properties, (2) as a result of the breach or non-compliance by the Company
or any of its Subsidiaries with any Environmental Law applicable to the
Company or any of its Subsidiaries, (3) due to past ownership by the Company
or any of its Subsidiaries of any of their respective Properties or past
activity on any of their respective Properties or past activity on any of
their respective Properties which, though lawful and fully permissible at
the time, could result in present liability, (4) the presence, use, release,
storage, treatment or disposal of Hazardous Substances on or at any of the
Properties owned or operated by the Company or any of its Subsidiaries, or
(5) any other environmental, health or safety condition in connection with
this Agreement, the Notes or any other Financing Document; provided,
however, no indemnity shall be afforded under this Section 9.04(c) in
respect of any Property for any occurrence arising solely and directly from
the acts or omissions of the Administrative Agent or any Lender during the
period after which such Person, its successors or assigns shall have
obtained possession of such Property (whether by foreclosure or deed in lieu
of foreclosure, as mortgagee-in-possession or otherwise); and
(d) Environmental Waiver. Without limiting the foregoing provisions,
and hereby does waive, release and covenant not to bring against any of the
Persons identified in this Section 9.04 any demand, claim, cost recovery
action or lawsuit they may now or hereafter have or accrue (which relate to
or arise as a result of the Loans, the Letters of Credit or any Financing
Document) arising from (1) any Environmental Law now or hereafter enacted
(including those applicable to the Company or any of its Subsidiaries)
unless the acts or omissions of any such person or their respective
successors and assigns are the sole and direct cause of the circumstances
giving rise to such demand, cost recovery action or lawsuit, (2) the
presence, use, release, storage, treatment or disposal of Hazardous
Substances on or at any of the Properties owned or operated by the Company
or any of its Subsidiaries, or (3) the breach or non-compliance by the
Company with any Environmental Law or environmental covenant applicable to
the Company or any of its Subsidiaries, unless the acts or omissions of such
Person, its successors and assigns are the sole and direct cause of the
circumstances giving rise to such demand, claim, cost recovery action or
lawsuit.
If and to the extent that the obligations of the Company under this Section are
unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law. The Company's obligations under this Section
shall survive any termination of this Agreement and the payment of the Notes.
Section 9.05 Right of Setoff. In addition to and not in limitation of all
rights of offset that any Lender or either Issuing Bank may have under
applicable law, each Lender or other holder of a Note, or any other Lender
Indebtedness shall, upon the occurrence of any Event of Default and at any time
during the continuance thereof and whether or not such Lender, the Issuing Bank
or such holder has made any demand
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or the Company's obligations are matured, have the right at any time and from
time to time, without notice to the Company (any such notice being expressly
waived by the Company) to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by any Lender or the Issuing Bank to or for the
credit or the account of the Company against any and all of the Lender
Indebtedness then outstanding.
Section 9.06 Benefit of Agreement.
(a) Benefit of Parties. The Notes, this Agreement and the other
Financing Documents shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
provided that the Company may not assign or transfer any of its interest
hereunder or thereunder without the prior written consent of the Lenders.
In the event that any Lender sells participations in the Notes or other
Lender Indebtedness of the Company incurred or to be incurred pursuant to
this Agreement, to other banks or entities, each of such other banks or
entities shall have the rights of set-off against such Lender Indebtedness
and similar rights or Liens to the same extent as may be available to the
Administrative Agent or the Lenders.
(b) Branch Offices, Affiliates. Any Lender may make, carry or
transfer Loans at, to or for the account of, any of its branch offices or
the office of an Affiliate of such Lender.
Section 9.07 Assignments and Participations.
(a) No Company Assignments. The Company may not assign its rights and
obligations hereunder or under the Notes.
(b) Assignment by Lenders. Each Lender may, upon the written consent
of the Administrative Agent and, so long as no Default exists, the Company
(which consent shall not be unreasonably withheld), assign to one or more
Eligible Transferees all or a portion of its rights and obligations under
this Agreement pursuant to an Assignment and Acceptance Agreement
substantially in the form of Exhibit D (an "Assignment and Acceptance")
provided, however, that (i) any such assignment shall be in the aggregate
amount of at least $5,000,000 or such lesser amount to which the Company has
consented (or if the aggregate amount of any Lender's Loans and Commitments
is less than $5,000,000, then the entire amount of such Lender's Loans and
Commitments), and (ii) the assignee shall pay to the Administrative Agent a
processing and recordation fee of $2,500; and, further provided, however,
any Lender may assign its rights and obligations hereunder to an Affiliate
pursuant to the foregoing terms and conditions, except that (i) no consent
from the Administrative Agent and the Company shall be required and (ii) no
processing and recordation fee shall be required. Any such assignment will
become effective upon the recording by the Administrative Agent of such
assignment in the Register of the resultant effects thereof on the
Commitment of the assignor and assignee, and the principal amount
outstanding of the Loans owed to the assignor and assignee, the
Administrative Agent hereby agreeing to effect such recordation no later
than five Business Days after its receipt of an Assignment and Acceptance
executed by all parties thereto. Promptly after receipt of an Assignment
and Acceptance executed by all parties thereto, the Administrative Agent
shall send to the Company a copy of such executed Assignment and Acceptance.
Upon receipt of such executed Assignment and Acceptance, the Company, will,
at its own expense, execute and deliver new Notes to the assignor and/or
assignee, as appropriate, in accordance with their respective interests as
they appear on the Register. Upon
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the effectiveness of any assignment pursuant to this subsection, the
assignee shall be deemed automatically to have become a party hereto, if not
already a party hereto, and shall become a "Lender," if not already a
"Lender," for all purposes of this Agreement and the other Financing
Documents. The assignor shall be relieved of its obligations hereunder to
the extent of such assignment (and if the assigning Lender no longer holds
any rights or obligations under this Agreement, such assigning Lender shall
cease to be a "Lender" hereunder). The Administrative Agent will prepare on
the last Business Day of each month during which an assignment has become
effective pursuant to this subsection a new schedule giving effect to all
such assignments effected during such month, and will promptly provide the
same to the Company, the Issuing Banks and each of the Lenders.
(c) Participations. Each Lender may transfer, grant or assign
participations in all or any part of such Lender's interests hereunder
pursuant to this subsection to any Person, provided that: (i) such Lender
shall remain a "Lender" for all purposes of this Agreement and the
transferee of such participation shall not constitute a "Lender" hereunder;
and (ii) no participant under any such participation shall have rights to
approve any amendment to or waiver of this Agreement, the Notes or any
Financing Document except to the extent such amendment or waiver would (x)
extend the Revolving Credit Maturity Date of any of the Commitments or Loans
in which such participant is participating, (y) reduce the interest rate
(other than as a result of waiving the applicability of any post-default
increases in interest rates) or fees applicable to any of the Commitments or
Loans in which such participant is participating, or postpone the payment of
any thereof, or (z) release all or substantially all of the collateral or
guaranties (except as expressly provided in the Financing Documents)
supporting any of the Commitments or Loans in which such participant is
participating. In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the Financing Documents
(the participant's rights against the granting Lender in respect of such
participation to be those set forth in the agreement with such Lender
creating such participation), and all amounts payable by the Company
hereunder shall be determined as if such Lender had not sold such
participation, provided that such participant shall be entitled to receive
additional amounts under Sections 2.16 and 2.18 on the same basis as if it
were a Lender. In addition, each agreement creating any participation must
include an agreement by the participant to be bound by the provisions of
Section 9.15. Notwithstanding anything in this Section 9.07(c) to the
contrary, the purchase by each Lender of a participation in the Letters of
Credit on the Effective Date and any subsequent assignment of all or any
part of any such Lender's Percentage Share in any Letter of Credit and its
related Letter of Credit Liabilities pursuant to Section 9.07(b) shall not
be considered a participation pursuant to this Section 9.07(c).
(d) Registration Statements; Blue Sky Laws. Notwithstanding any other
provisions of this Section 9.07, no transfer or assignment of the interests
or obligations of any Lender hereunder or any grant of participations
therein shall be permitted if such transfer, assignment or grant would
require the Company or any Guarantor to file a registration statement with
the Securities and Exchange Commission or to qualify the Loans under the
"Blue Sky" laws of any state.
(e) Certain Representations. Each Lender initially party to this
Agreement hereby represents, and each Person that becomes a Lender pursuant
to an assignment permitted by subsection (b) above will, upon its becoming
party to this Agreement, represent that it is an Eligible Transferee, and
that it will make or acquire Loans only for its own account in the ordinary
course of its business; provided, however, that subject to the preceding
Subsections (b) through (d), the
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disposition of any promissory notes or other evidences of or interests in
Lender Indebtedness held by such Lender shall at all times be within its
exclusive control.
(f) Assignees Treated as Lenders. The entries in the Register shall
be conclusive in the absence of manifest error and the Company, the
Administrative Agent, the Issuing Bank and the Lenders may treat each person
whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement and the other Financing
Documents. The Register shall be available for inspection by the Company
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(d) The Lenders may furnish any information concerning the Company and
the Subsidiaries in the possession of the Lenders from time to time to
assignees and participants (including prospective assignees and
participants); provided that, such Persons agree to be bound by the
provisions of Section 9.15 hereof.
(e) Notwithstanding anything in this Section 9.07 to the contrary, any
Lender may assign and pledge its Note to any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve System and/or such Federal Reserve
Bank. No such assignment and/or pledge shall release the assigning and/or
pledging Lender from its obligations hereunder.
Section 9.08 Governing Law; Submission to Jurisdiction; Etc.
(a) Governing Law. This Agreement and the rights and obligations of
the parties hereunder and under the Notes shall be construed in accordance
with and be governed by the laws of the State of Texas and to the extent
controlling, laws of the United States of America. Tex. Rev. Civ. Stat.
Ann. Art. 5069, Ch. 15 (which regulates certain revolving credit loan
accounts and revolving tri-party accounts) shall not apply to this Agreement
or the other Financing Documents.
(b) Submission to Jurisdiction. Any legal action or proceeding with
respect to this Agreement, the Notes or the other Financing Documents may be
brought in the courts of the State of Texas or of the United States of
America for the Southern District of Texas, and, by execution and delivery
of this Agreement, the Company hereby accepts for itself and in respect of
its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The company hereby irrevocably waives any objection,
including, but not limited to, any objection to the laying of venue or based
on the grounds of forum non conveniens, which it may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdictions.
(c) Waiver of Jury Trial, etc. The Company and each Lender hereby (i)
irrevocably and unconditionally waive, to the fullest extent permitted by
law, trial by jury in any legal action or proceeding relating to this
Agreement or any Financing Document and for any counterclaim therein; (ii)
certify that no party
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hereto nor any representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not,
in the event of litigation, seek to enforce the foregoing waivers, and (iii)
acknowledge that it has been induced to enter into this Agreement, the
Financing Documents and the transactions contemplated hereby and thereby by,
among other things, the mutual waivers and certifications contained in this
section 9.08.
(d) Designation of Administrative Agent. The Company hereby
irrevocably designates its General Counsel, currently designated as James C.
Reed, Jr., as the designee, appointee and agent of the Company to receive,
for and on behalf of the Company, service of process in such respective
jurisdictions in any legal action or proceeding with respect to this
Agreement, the Notes, or the other Financing Documents. It is understood
that a copy of such process served on such agent will be promptly forwarded
by mail to the Company at its address set forth opposite its signature
below, but the failure of the Company to receive such copy shall not affect
in any way the service of such process. The Company further irrevocably
consents to the service of process of any of the aforementioned courts in
any such action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, to the Company at its said address, such
service to become effective 30 days after such mailing.
(e) Service of Process. Nothing herein shall affect the right of the
Administrative Agent or any Lender or any holder of a Note to serve process
in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Company in any other jurisdiction.
Section 9.09 Independent Nature of Lenders' Rights. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and each Lender shall be entitled to protect and enforce its rights arising out
of this Agreement, and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
Section 9.10 Invalidity. In the event that any one or more of the
provisions contained in the Notes, this Agreement or in any other Financing
Document shall, for any reason, be held invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of the Notes, this Agreement or any other Financing Document.
Section 9.11 Survival of Agreements. All representations and warranties
of the Company or its Subsidiaries or any other Person herein or in the other
Financing Documents, and all covenants and agreements herein not fully performed
before the Effective Date, shall survive such date or dates.
Section 9.12 Renewal, Extension or Rearrangement. All provisions of this
Agreement and of any other Financing Documents relating to the Notes or other
Lender Indebtedness shall apply with equal force and effect to each and all
promissory notes hereafter executed which in whole or in part represent a
renewal, extension for any period, increase or rearrangement of any part of the
Lender Indebtedness originally represented by the Notes, or of any part of such
other Lender Indebtedness.
Section 9.13 Interest. It is the intention of the parties hereto to
conform strictly to usury laws applicable to the Administrative Agent, the
Documentation Agent, the Issuing Banks and the Lenders (collectively, the
"Financing Parties") and the Transactions. Accordingly, if the Transactions
would be usurious as to any Financing Party under laws applicable to it, then,
notwithstanding anything to the contrary
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in the Notes, this Agreement or in any other Financing Document or agreement
entered into in connection with the Transactions or as security for the Notes,
it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to any Financing Party that is
contracted for, taken, reserved, charged or received by such Financing Party
under the Notes, this Agreement or under any of such other Financing Documents
or agreements or otherwise in connection with the Transactions shall under no
circumstances exceed the maximum amount allowed by such applicable law, (ii) in
the event that the maturity of the Notes is accelerated for any reason, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest under law applicable to any Financing Party may never
include more than the maximum amount allowed by such applicable law, and (iii)
excess interest, if any, provided for in this Agreement or otherwise in
connection with the Transactions shall be canceled automatically by such
Financing Party and, if theretofore paid, shall be credited by such Financing
Party on the principal amount of such Financing Party's Indebtedness (or, to the
extent that the principal amount of such Financing Party's Indebtedness shall
have been or would thereby be paid in full, refunded by such Financing Party to
the Company). The right to accelerate the maturity of the Notes does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and the Financing Parties do not intend to
collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to the Financing Parties for the use, forbearance or detention
of sums included in the Lender Indebtedness shall, to the extent permitted by
law applicable to such Financing Party, be amortized, prorated, allocated and
spread throughout the full term of the Notes until payment in full so that the
rate or amount of interest on account of the Lender Indebtedness does not exceed
the applicable usury ceiling, if any. As used in this Section, the terms
"applicable law" or "laws applicable to any Financing Party" shall mean the law
of any jurisdiction whose laws may be mandatorily applicable notwithstanding
other provisions of this Agreement, or law of the United States of America
applicable to any Financing Party and the Transactions which would permit such
Financing Party to contract for, charge, take, reserve or receive a greater
amount of interest than under such jurisdiction's law. To the extent that
Article 5069-1.04 of the Texas Revised Civil Statutes is relevant to any
Financing Party for the purpose of determining the Highest Lawful Rate, such
Financing Party hereby elects to determine the applicable rate ceiling under
such Article by the indicated (weekly) rate ceiling from time to time in effect,
subject to such Financing Party's right subsequently to change such method in
accordance with applicable law.
Section 9.14 Taxes, etc. Any taxes (excluding income taxes) payable or
ruled payable by federal or state authority in respect of the Notes, this
Agreement or the other Financing Documents shall be paid by the Company,
together with interest and penalties, if any.
Section 9.15 Confidential Information. The Administrative Agent and each
Lender agree that all documentation and other information made available by the
Company to the Administrative Agent or such Lender under the terms of this
Agreement shall (except to the extent such documentation or other information is
publicly available or hereafter becomes publicly available other than by action
of the Administrative Agent or such Lender, or was theretofore known or
hereinafter becomes known to the Administrative Agent or such Lender independent
of any disclosure thereto by the Company) be held in the strictest confidence by
the Administrative Agent or such Lender and used solely in the administration
and enforcement of the Loans from time to time outstanding from such Lender to
the Company and in the prosecution of defense of legal proceedings arising in
connection herewith; provided that (i) the Administrative Agent or such Lender
may disclose documentation and information to the Administrative Agent and/or to
any other Lender which is a party to this Agreement or any Affiliates thereof
and (ii) the Administrative Agent or such Lender may disclose such documentation
or other information to any other bank or other Person to which such Lender
sells or proposes to make an assignment or sell a participation
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in its Loans hereunder if such other bank or Person, prior to such disclosure,
agrees in writing to be bound by the terms of the confidentiality statement
customarily employed by the Administrative Agent in connection with such
potential transfers. Notwithstanding the foregoing, nothing contained herein
shall be construed to prevent the Administrative Agent or a Lender from (a)
making disclosure of any information (i) if required to do so by applicable law
or regulation or accepted banking practice, (ii) to any governmental agency or
regulatory body having or claiming to have authority to regulate or oversee any
aspect of such Lender's business or that of such Lender's corporate parent or
affiliates in connection with the exercise of such authority or claimed
authority, (iii) pursuant to any subpoena or if otherwise compelled in
connection with any litigation or administrative proceeding, (iv) to correct any
false or misleading information which may become public concerning such Person's
relationship to the Company, or (v) to the extent the Administrative Agent or
such Lender or its counsel deems necessary or appropriate to effect or preserve
its security for any Lender Indebtedness or to enforce any remedy provided in
the Financing Documents, the Notes or this Agreement or otherwise available by
law; or (b) making, on a confidential basis, such disclosures as such Lender
reasonably deems necessary or appropriate to its legal counsel or accountants
(including outside auditors). If the Administrative Agent or such Lender is
compelled to disclose such confidential information in a proceeding requesting
such disclosure, the Administrative Agent or such Lender shall seek to obtain
assurance that such confidential treatment will be accorded such information;
provided, however, that the Lender shall have no liability for the failure to
obtain such treatment.
Section 9.16 Entire Agreement. The Notes, this Agreement and the other
Financing Documents embody the entire agreement and understanding between the
Administrative Agent, the Documentation Agent, the Issuing Bank or the Lenders
and the other respective parties hereto and thereto and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof and may not be contradicted by evidence of prior,
contemporaneous or subsequent agreements of the parties. There are no unwritten
oral agreements between the parties.
Section 9.17 Attachments. The exhibits, schedules and annexes attached to
this Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein, except that in the event of any
conflict between any of the provisions of such exhibits and the provisions of
this Agreement, the provisions of this Agreement shall prevail.
Section 9.18 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original but all of
which shall together constitute one and the same instrument.
Section 9.19 Survival of Indemnities. The Company's obligations under
Sections 2.16, 2.18, 2.21 and 9.04 shall survive the payment in full of the
Loans and the Letter of Credit Liabilities.
Section 9.20 Headings Descriptive. The headings of the several sections
and subsections of this Agreement, and the Table of Contents, are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
Section 9.21 Satisfaction Requirement. If any agreement, certificate,
instrument or other writing, or any action taken or to be taken, is by the terms
of this Agreement required to be satisfactory to any party, the determination of
such satisfaction shall be made by such party in its sole and exclusive judgment
exercised reasonably and in good faith.
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Section 9.22 Effectiveness. This Agreement shall not be effective until
executed by all signatories hereto and delivered to the Administrative Agent in
the State of Texas and accepted by the Administrative Agent in such state.
Section 9.23 Conflict with E&P Mortgage. In the event of a conflict
between the terms of the E&P Mortgage and the terms of this Agreement, the terms
of this Agreement shall control.
Section 9.24 Exculpation Provisions. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement and the other
Financing Documents and agrees that it is charged with notice and knowledge of
the terms of this Agreement and the other Financing Documents; that it has in
fact read this Agreement and is fully informed and has full notice and knowledge
of the terms, conditions and effects of this Agreement; that it has been
represented by legal counsel of its choice throughout the negotiations preceding
its execution of this Agreement and the other Financing Documents; and has
received the advice of its attorneys in entering into this Agreement and the
other Financing Documents; and that it recognizes that certain of the terms of
this Agreement and the other Financing Documents result in one party assuming
the liability inherent in some aspects of the transaction and relieving the
other party of its responsibility for such liability. Each party hereto agrees
and covenants that it will not contest the validity or enforceability of any
exculpatory provision of this Agreement and the other Financing Documents on the
basis that the party had no notice or knowledge of such provision or that the
provision is not "conspicuous."
[SIGNATURES BEGIN ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed as of the date first above written.
COMPANY: TESORO PETROLEUM CORPORATION
By: /s/ G. A. Wright
Name: G. A. Wright
Address: Title: Vice President, Corporate
Communications and Treasurer
8700 Tesoro Drive
San Antonio, Texas 78217
Telecopier No. (210) 283-2003
ADMINISTRATIVE AGENT,
DOCUMENTATION AGENT,
ISSUING BANKS
AND THE LENDERS: BANQUE PARIBAS
Individually, as an Issuing Bank and as
Administrative Agent
By: /s/ Brian Malone
Address: Name: Brian Malone
Title: Vice President
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: Mr. Brian Malone By: /s/ Barton D. Schouest
Telecopier No. (713) 659-6915 Name: Barton D. Schouest
Title: Group Vice President
S-1
THE BANK OF NOVA SCOTIA
Individually and as Documentation Agent
By: /s/ A.S. Norsworthy
Address: Name: F.C.H. Ashby
Title: Senior Manager
Loan Operations
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308 A.S. Norsworthy
Attention: Mr. Claude Ashby Sr. Team Leader-Loan Operations
Telecopier No. (404) 888-8998
With Copy To:
1100 Louisiana Street, Suite 3000
Houston, Texas 77002
Attention: Mr. Michael W. Nepveux
Telecopier No. (713) 752-2425
Address: BANK OF SCOTLAND
565 5th Avenue
New York, New York 10017
Attention: Ms. Catherine Oniffrey By: /s/ Catherine Oniffrey
Telecopier No. (212) 557-9460 Name:
Title:
With Copy To:
1200 Smith Street
1750 Two Allen Center
Houston, Texas 77002
Attention: Ms. Janna Blanter
Telecopier No. (713) 651-9714
S-2
CHRISTIANIA BANK OG KREDITKASSE
By: /s/ Peter M. Dodge
Address: Name: Peter M. Dodge
Title: Vice President
11 West 42nd Street, 7th Floor
New York, New York 10036
Attention: Mr. Steve Phillips By: /s/ Carl-Petter Svendsen
Telecopier No. (212) 827-4888 Name: Carl-Petter Svendsen
Title: First Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as an Issuing Bank
By: /s/ George R. Schanz
Address: Name: George R. Schanz
Title: Vice President
One First National Plaza
Chicago, Illinois 60670
Attention: Mr. George R. Schanz
Telecopier No. (312) 732-3055
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: /s/ Michael J. Kolosowsky
Address: Name: Michael J. Kolosowsky
Title: Vice President
1001 Fannin Street, Suite 2255
Houston, Texas 77002
Attention: Mr. Paul N. Riddle
Telecopier No. (713) 650-6354
S-3
NATIONAL BANK OF CANADA
By: /s/ Larry L. Sears
Address: Name: Larry L. Sears
Title: Group Vice President
125 West 55th Street
New York, New York 10019-5366
Attention: Mr. Wayne Rosen By: /s/ Doug Clark
Telecopier No. (212) 632-8736 Name: Doug Clark
Title: Vice President
With Copy To:
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Attention: Mr. Doug Clark
Telecopier No. (214) 871-2015
S-4
THE FROST NATIONAL BANK
By: /s/ James B. Crosby
Address: Name: James B. Crosby
Title: Senior Vice President
100 W. Houston Street
P. O. Box 1600
San Antonio, Texas 78296
Attention: Ms. Jenny Crabtree
Telecopier No. (210) 220-4626
DEN NORSKE BANK ASA
By: /s/ Haakon Sandborg
Address: Name: Haakon Sandborg
Title: Senior Vice President
Three Allen Center
333 Clay Street, Suite 4890
Houston, Texas 77002 By: /s/ Byron L. Cooley
Attention: Mr. Byron Cooley Name: Byron L. Cooley
Telecopier No. (713) 757-1167 Title: First Vice President
S-5
ANNEX I
Commitments
Revolving
Credit
Banks Commitment
----- ----------
($'s)
Banque Paribas 24,000,000
The Bank of Nova Scotia 24,000,000
Bank of Scotland 20,000,000
Christiania Bank OG Kreditkasse 20,000,000
The First National Bank of Chicago 20,000,000
National Bank of Canada 12,000,000
First Union National Bank of
North Carolina 10,000,000
The Frost National Bank 10,000,000
Den norske Bank ASA 10,000,000
-----------
Total 150,000,000
Annex I-1
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
$__________ June 7, 1996
TESORO PETROLEUM CORPORATION, a Delaware corporation (the "Company"), for
value received, promises and agrees to pay to the order of (the "Lender") at the
Payment Office of BANQUE PARIBAS (the "Administrative Agent"), at
_________________________, the principal sum of
___________________________________ DOLLARS ($___________________), or such
lesser amount as shall equal the aggregate unpaid principal amount of the
Revolving Credit Loans made by Lender hereunder to the Company under the Credit
Agreement, as hereafter defined, in lawful money of the United States of America
and in immediately available funds, on the dates and in the principal amounts
provided in the Credit Agreement referred to below, and to pay interest on the
unpaid principal amount as provided in the Credit Agreement for such Revolving
Credit Loans made by the Lender to the Company under the Credit Agreement, at
such office, in like money and funds, for the period commencing on the date of
each such Revolving Credit Loan until such Revolving Credit Loan shall be paid
in full, at the rates per annum and on the dates provided in the Credit
Agreement.
In addition to and cumulative of any payments required to be made against
this note pursuant to the Credit Agreement, this note, including all principal
and accrued interest then unpaid, shall be due and payable on April ________,
1999, its final maturity. All payments shall be applied first to accrued
interest and the balance to principal, except as otherwise expressly provided in
the Credit Agreement. Prepayments on this note shall be applied in the manner
set forth in the Credit Agreement.
This note is one of the Revolving Credit Notes referred to in the Credit
Agreement dated as of the 7th day of June, 1996, by and among the Company and
Banque Paribas, individually, as Issuing Bank and as Administrative Agent, The
Bank of Nova Scotia, individually and as Documentation Agent and financial
institutions parties thereto (including the Lender) (such Credit Agreement,
together with all amendments or supplements thereto, being the "Credit
Agreement"). This note evidences the Revolving Credit Loans made by the Lender
thereunder and shall be governed by the Credit Agreement. Capitalized terms
used in this note and not defined in this note, but which are defined in the
Credit Agreement, have the respective meanings herein as are assigned to them in
the Credit Agreement.
The Lender is hereby authorized by the Company to endorse on Schedule A (or
a continuation thereof) attached to this note, the Type of each Revolving Credit
Loan, the amount and date of each payment or prepayment of principal of each
such Revolving Credit Loan received by the Lender and the Interest Periods and
interest rates applicable to each Revolving Credit Loan, provided that any
failure by the Lender to make any such endorsement shall not affect the
obligations of the Company under the Credit Agreement or under this note in
respect of such Revolving Credit Loans.
Except only for any notices which are specifically required by the Credit
Agreement or the other Financing Documents, the Company and any and all
co-makers, endorsers, guarantors and sureties severally waive notice (including
but not limited to notice of intent to accelerate and notice of acceleration,
notice of protest and notice of dishonor), demand, presentment for payment,
protest, diligence in collecting and the filing of suit for the purpose of
fixing liability, and consent that the time of payment hereof may be extended
and re-extended from time to time without notice to any of them. Each such
person agrees that his, her or its liability on or with respect to this note
shall not be affected by any release of or change in any guaranty
A-1
or security at any time existing or by any failure to perfect or maintain
perfection of any lien against or security interest in any such security or the
partial or complete enforceability of any guaranty or other surety obligation,
in each case in whole or in part, with or without notice and before or after
maturity.
The Credit Agreement provides for the acceleration of the maturity of this
note upon the occurrence of certain events and for prepayment of Revolving
Credit Loans upon the terms and conditions specified therein. Reference is made
to the Credit Agreement for all other pertinent purposes.
This note is issued pursuant to and is entitled to the benefits of the
Credit Agreement and is secured by the Security Instruments.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW
OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN
EFFECT.
TESORO PETROLEUM CORPORATION
By:______________________________
Name:
Title:
A-2
EXHIBIT B
FORM OF BORROWING REQUEST
__________________, 199__
TESORO PETROLEUM CORPORATION, a Delaware corporation (the "Company"), hereby
requests a Borrowing on the date and in the amount as follows:
$___________________ under the Revolving Credit Notes
Requested funding date: ________________, 199__
Type of Borrowing: ______ Base Rate Loans
______ Eurodollar Loans
If Eurodollar Loans, length of Interest Period:
______ one month
______ two months
______ three months
______ six months
pursuant to the Credit Agreement dated as of June 7, 1996 (as the same may be
amended or supplemented, the "Credit Agreement") among the Company, Banque
Paribas, individually, as Issuing Bank, and as Administrative Agent, The Bank of
Nova Scotia, individually, and as Documentation Agent and the financial
institutions now or hereafter parties thereto. Capitalized terms used herein
and not defined herein shall have the meaning given such term in the Credit
Agreement. The undersigned certifies that he is the __________________ of the
Company, and that as such he is authorized to execute this certificate on behalf
of the Company. The undersigned further certifies, represents and warrants on
behalf of the Company that (i) the Company is entitled to receive the requested
Revolving Credit Loan under the terms and conditions of the Credit Agreement and
(ii) after giving effect to any requested Revolving Credit Loan, the aggregate
principal amount of outstanding Revolving Credit Loans will not exceed the
Maximum Revolving Credit Loan Available Amount.
TESORO PETROLEUM CORPORATION
By:___________________________________
Name:
Title:
B-1
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
Kenai Pipe Line Company X
Tesoro Vostok Company X
Coastwide Marine Services, Inc. X
Tesoro Coastwide Services Company X
Tesoro Environmental Resources Company
Tesoro Environmental Products Company
Tesoro Indonesia Petroleum Company
Tesoro Tarakan Petroleum Company
Tesoro Equipment Company
Tesoro Crude Oil Company
Tesoro Gasoline Marketing Company
Tesoro Pump & Valve Company
Tesoro Petroleum (Singapore) Pte. Ltd.
C-1
EXHIBIT D
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated: __________, 199__
Reference is made to the Credit Agreement dated as of April ______, 1996 (as
restated, amended, modified, supplemented and in effect from time to time, the
"Credit Agreement"), among TESORO PETROLEUM CORPORATION, a Delaware corporation,
BANQUE PARIBAS, individually, as Issuing Bank and as Administrative Agent, THE
BANK OF NOVA SCOTIA, individually and as Documentation Agent, and the financial
institutions parties thereto (the "Lenders"). Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement. This Assignment and Acceptance, between the Assignor (as
defined and set forth on Schedule I hereto and made a part hereof) and the
Assignee (as defined and set forth on Schedule I hereto and made a part hereof)
is dated as of the Effective Date (as set forth on Schedule I hereto and made a
part hereof).
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date, an undivided interest (the "Assigned Interest") in and to all
the Assignor's rights and obligations under the Credit Agreement respecting the
credit facilities contained in the Credit Agreement as set forth on Schedule I
(herein referred to as the "Assigned Loans"), in a principal amount for each
Assigned Loan as set forth on Schedule I.
2. The Assignor (i) represents and warrants that it owns the Assigned
Interest free and clear from any lien or adverse claim; (ii) other than the
representation and warranty set forth in clause (i) above, makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other instrument, document or agreement delivered in
connection therewith, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, or any other
instrument or document furnished pursuant thereto, other than that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Company or its Subsidiaries or the performance or
observance by the Company or its Subsidiaries of any of its respective
obligations under the Credit Agreement, or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Notes held by it evidencing
the Assigned Loans and requests that the Administrative Agent exchange such
Note(s) for a new Note or Notes payable to the Assignor (if the Assignor has
retained any interest in the Assigned Loans) and new Notes payable to the
Assignee in the respective amounts which reflect the assignment being made
hereby (and after giving effect to any other assignments which have become
effective on the Effective Date).
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance and that it is an Eligible
Transferee under of the Credit Agreement; (ii) confirms that it has received a
copy of the Credit Agreement, together with copies of the financial statements
referred to in Section 4.06, or if later, the most recent financial statements
delivered pursuant to Section 5.15 thereof, and such other documents and
information as it has deemed appropriate to make its own credit analysis; (iii)
agrees that it will, independently and without reliance upon the Administrative
Agent, the Assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement;
D-1
(iv) appoints and authorizes the Administrative Agent to take such action as
Administrative Agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (v) agrees that
it will be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender and hereby makes the
Lender representations set forth in Section 2.21(f) of the Credit Agreement; and
(vi) if the Assignee is organized under the laws of a jurisdiction outside the
United States, attaches the forms prescribed by the Internal Revenue Service of
the United States and required pursuant to Section 2.21 of the Credit Agreement
certifying as to the Assignee's exemption from United States withholding taxes
with respect to all payments to be made to the Assignee under the Credit
Agreement or such other documents as are necessary to indicate that all such
payments are subject to such tax at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent and the Company for acceptance by each of
them and recording by the Administrative Agent pursuant to Section 9.07(b) of
the Credit Agreement, effective as of the Effective Date (which Effective Date
shall, unless otherwise agreed to by the Administrative Agent, be at least five
Business Days after the execution of this Assignment and Acceptance).
5. Upon acceptance and recording by the Administrative Agent, all payments
under the Credit Agreement in respect of the Assigned Interest (including
without limitation, all payments of principal, interest and fees with respect
thereto) for the period up to, but not including, the Effective Date, shall be
made to the Assignor, and for the period from and after the Effective Date shall
be made to the Assignee. Assignor and Assignee hereby agree that if Assignor
receives any of the payments referred to in the preceding sentence which should
have been made to Assignee, or if Assignee receives any of the payments referred
to in the previous sentence which should have been made to Assignor, such
payments shall promptly be paid by Assignor to Assignee, or by Assignee to
Assignor, as the case may be, in full.
6. From and after the Effective Date, (i) the Assignee shall be a party to
the Credit Agreement and, to the extent provided in this Assignment and
Acceptance and Section 9.07 of the Credit Agreement, have the rights and
obligations of a Lender thereunder, and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance and Section 9.07 of the Credit
Agreement, relinquish its rights and be released from its obligations under the
Credit Agreement.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective duly authorized officers on
Schedule I hereto.
as Assignor
By: _____________________________________________
Name:
Title:
D-2
as Assignee
By: _____________________________________________
Name:
Title:
ACCEPTED:
TESORO PETROLEUM CORPORATION
By: _____________________________________________
Name:
Title:
BANQUE PARIBAS, as Administrative Agent
By: _____________________________________________
Name:
Title:
By: _____________________________________________
Name:
Title:
D-3
SCHEDULE I TO ASSIGNMENT AND ACCEPTANCE
RESPECTING THE CREDIT AGREEMENT,
DATED AS OF JUNE 7, 1996 AMONG
TESORO PETROLEUM CORPORATION AND
BANQUE PARIBAS,
INDIVIDUALLY, AS Administrative Agent AND AS ISSUING BANK,
AND THE BANK OF NOVA SCOTIA INDIVIDUALLY AND AS Documentation Agent
AND THE LENDERS PARTIES THERETO
Assignor: _________________________________________________
Assignee: _________________________________________________
Effective Date of Assignment: _________________, 199__
Percentage Assigned (to at
Principal Amount (sum least 8 decimals) shown as a
Assigned Loans of Commitment and percentage of aggregate
and outstanding amounts) original principal amount
Commitments Assigned of all Lenders
- ----------- -------- --------------
Revolving Credit Loans
and Commitments $____________________ _______%
Assignee's Base Rate Address for Notice:
Lending Office
__________________________ ___________________________
__________________________ ___________________________
__________________________ ___________________________
Assignee's Eurodollar Telex No.:_______________________
Lending Office
___________________________ Telecopy No.:____________________
___________________________
___________________________
D-4
EXHIBIT E
FORM OF BORROWING BASE REPORT
Pursuant to subsection 5.15(h) of the Credit Agreement dated as of June 7, 1996,
among Tesoro Petroleum Corporation, Banque Paribas, individually, as Issuing
Bank and as Administrative Agent, The Bank of Nova Scotia, individually, and as
Documentation Agent, and the other financial institutions parties thereto (as
amended, restated, modified or supplemented and in effect from time to time the
"Credit Agreement", defined terms from which being used herein with the meanings
assigned to such terms in the Credit Agreement), the undersigned hereby
certifies to the Administrative Agent and the Lenders that the inventory and
accounts have been valued in accordance with the terms of the Credit Agreement.
I. The Borrowing Base as of __________________________ was $___________________
computed as follows:
A. Eligible Accounts
1. Eligible Accounts
(see Schedule I) $______________
2. 80% of Line I.A.1 $______________
B. Eligible Inventory
1. Loan Value of Eligible Inventory
(see Schedule II) $______________
2. 60% of Line I.B.1. $______________
C. E&P Borrowing Base $______________
BORROWING BASE (Sum of Lines 1.A.2, I.B.2 and
I.C.1) $______________
Certified as of the ______ day of _________________________.
TESORO PETROLEUM CORPORATION
By:_____________________________________
Printed Name:___________________________
Title:___________________________________
E-1
SCHEDULE I
SUMMARY OF ELIGIBLE ACCOUNTS
[DATE]
Loan Party Eligible Accounts
---------- -----------------
Tesoro Alaska Petroleum Company $______________
Tesoro Refining, Marketing &
Supply Company _______________
Kenai Pipe Line Company _______________
Tesoro Vostok Company _______________
TOTAL OF ELIGIBLE ACCOUNTS $_______________
E-2
SCHEDULE II
LOAN VALUE OF ELIGIBLE INVENTORY
[DATE]
A. TESORO ALASKA PETROLEUM COMPANY
State Volume Market Market
Product Location Bls. Price/Bbl. Value
--------------------------------------------------
________ _________ ______ $__________ $________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
TOTAL LOAN VALUE OF TESORO ALASKA PETROLEUM COMPANY'S
ELIGIBLE INVENTORY $________ (1)
B. KENAI PIPE LINE COMPANY
State Volume Market Market
Product Location Bls. Price/Bbl. Value
--------------------------------------------------
________ _________ ______ $__________ $________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
TOTAL LOAN VALUE OF KENAI PIPELINE COMPANY'S
ELIGIBLE INVENTORY $________ (2)
E-3
C. TESORO REFINING, MARKETING & SUPPLY COMPANY
State Volume Market Market
Product Location Bls. Price/Bbl. Value
--------------------------------------------------
________ _________ ______ $__________ $________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
________ _________ ______ ___________ _________
TOTAL LOAN VALUE OF TESORO REFINING, MARKETING
& SUPPLY COMPANY'S ELIGIBLE INVENTORY $________ (3)
D. TOTAL LOAN VALUE OF ELIGIBLE INVENTORY
(Sum of Lines (1), (2) and (3)) $________ (4)
E-4
EXHIBIT F
FORM OF LETTER TO HYDROCARBON PURCHASERS
[Letterhead of Mortgagor]
________________, 19___
[Purchaser of Hydrocarbons]
Re: [Descriptions of Field and Division Order Identification Number]
Gentlemen:
You are currently paying for purchases of hydrocarbons from
________________________ ("_______________") with respect to the above property.
By instrument entitled ______________________ (the "Mortgage"), ______________
has mortgaged its interest in this property to ____________________________ (the
"Bank "). The Mortgage provides for an assignment to the Bank of the proceeds
arising from the purchases of hydrocarbons from the properties mortgaged
thereby, which properties include the above property. Notwithstanding the
foregoing, you are directed to continue to make checks, wire transfers and other
remittances and payments (collectively, the "Payments") payable and to mail,
wire transfer or otherwise direct all Payments to Tesoro E&P Company, L.P., or
its designee, unless and until you should receive from the Bank contrary written
instructions.
____________________________________
By: ________________________________
Name:
Title:
____________________________________
[Name of Bank]
By: ________________________________
Name:
Title:
F-1