SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "Second
Amendment") is entered into as of May 23, 1997, among GIANT
INDUSTRIES, INC., a Delaware corporation (the "COMPANY"), GIANT
INDUSTRIES ARIZONA, INC., an Arizona corporation ("Arizona"),
GIANT EXPLORATION & PRODUCTION COMPANY, a Texas corporation
("Exploration"), SAN JUAN REFINING COMPANY, a New Mexico
corporation ("San Juan"), GIANT FOUR CORNERS, INC., an Arizona
corporation ("Corners") and CINIZA PRODUCTION COMPANY, a New
Mexico corporation ("Ciniza") (Arizona, Exploration, San Juan,
Corners and Ciniza are individually referred to herein as a
"Guarantor" and collectively as the "Guarantors"), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent (the
"Agent"), BANK OF AMERICA ILLINOIS, as issuing Bank and as a
Bank, THE FIRST NATIONAL BANK OF CHICAGO (successor to NBD
Bank, by assignment), as a Bank and UNION BANK OF CALIFORNIA,
N.A. (formerly known as Union Bank), as a Bank. Capitalized
terms which are used herein without definition and which are
defined in the Credit Agreement referred to below shall have
the meanings ascribed to them in the Credit Agreement.
WHEREAS, the Company, the Agent and the Banks are parties
to a certain Credit Agreement dated as of October 4, 1995 (the
"INITIAL AGREEMENT"); and
WHEREAS, the Company, the Agent and the Banks are parties
to a certain First Amendment to Credit Agreement dated as of
May 15, 1996 (the "FIRST AMENDMENT");
WHEREAS, the Initial Agreement, as amended by the First
Amendment, and as may be further amended and restated from time
to time, is hereinafter called the "CREDIT AGREEMENT;" and
WHEREAS, the Company has requested that the Agent and the
Banks agree to increase the Facility A Commitments to the
aggregate amount of $70,000,000, to extend the Facility A
Termination Date and the Facility B Termination Date and to
further amend the Credit Agreement as herein provided; and
subject to the terms hereof the Agent and the Banks are willing
to agree to the Company s requested modifications;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agrees as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT.
(a) AMENDMENTS TO ARTICLE I. ARTICLE I of the Credit
Agreement is hereby amended in the following respects:
(i) The definition of "CONSOLIDATED FUNDED
INDEBTEDNESS" set forth in ARTICLE I of the Credit Agreement is
hereby amended to read as follows:
"CONSOLIDATED FUNDED INDEBTEDNESS" means, for
the Company and its Consolidated Subsidiaries, at any time,
without duplication, the sum of: (a) liability for borrowed
money or for the deferred purchase price of property or
services, (b) obligations under leases which in accordance
with GAAP should be recorded as Capital Leases, (c)
obligations to redeem or purchase any stock or other equity
security of the Company or a Subsidiary, and (d) any
guaranty obligations in respect of any of the foregoing.
(ii) The definition of "CONSOLIDATED INTEREST
EXPENSE" set forth in ARTICLE I of the Credit Agreement is
hereby amended to read as follows:
"CONSOLIDATED INTEREST EXPENSE" means for the
relevant period, for the Company and its Consolidated
Subsidiaries, without duplication, the sum of: (a) all
interest in respect of Indebtedness and all lease payments
with respect to Capital Leases accrued or capitalized
during such period (whether or not actually paid during
such period and including fees payable in respect of
letters of credit and bankers acceptances), (b) the net
amount payable (or minus the net amount receivable) under
all Swap Contracts during such period (whether or not
actually paid or received during such period), and (c) all
dividends paid, declared or otherwise accrued in respect of
preferred stock.
(iii) The definition of "ELIGIBLE REFINERY
HYDROCARBON INVENTORY" set forth in ARTICLE I of the Credit
Agreement is hereby amended to read as follows:
"ELIGIBLE REFINERY HYDROCARBON INVENTORY" means,
at any date, the aggregate value therefor on a FIFO basis
calculated in accordance with GAAP of all readily
marketable, saleable and useful Feedstocks, Intermediate
Products and Refined Products, owned by the Company and its
Subsidiaries in field production tanks, storage tanks and
lines (including line fills but excluding basic sediment
and water and slop oil) stored on or required for the
Bloomfield Refinery, the Ciniza Refinery, the Portales
Refinery, the Company s or its Subsidiaries service
stations and travel centers, cardlock fueling stations or
bulk plants, the Albuquerque Terminal and other Refined
Products terminals owned or leased by the Company or its
Subsidiaries."
(iv) The definitions of "FACILITY A TERMINATION DATE"
and "Facility B Termination Date" set forth in ARTICLE I of the
Credit Agreement are amended to read as follows:
"FACILITY A TERMINATION DATE" and "FACILITY B
TERMINATION DATE" means the earlier of (a) May 23, 2000, or
(b) the date on which such Facility s Commitment terminates
in accordance with the provisions of this Agreement.
(v) The definition of "INDEX DEBT RATING" set forth
in ARTICLE I of the Credit Agreement is hereby amended to read
as follows:
"INDEX DEBT RATING" means the rating applicable
to the Company s senior, unsecured, non-credit enhanced
public long term indebtedness for borrowed money, or if the
Company has no such rating, the "Index Debt Rating" shall
be developed by adding two debt rating levels to the rating
applicable to the Company s existing Senior Subordinated
Debt.
(vi) The following new definitions are hereby added
to ARTICLE I of the Credit Agreement:
"CAPITAL LEASE" means a capital lease as
determined in accordance with GAAP.
"PHOENIX ACQUISITION" means the acquisition of
stock of Phoenix Fuel Co., Inc. by the Company or by Giant
Industries Arizona, Inc. that complies with the following:
(i) such acquisition is pursuant to the terms of the Stock
Purchase Agreement dated as of April 30, 1997 by and among
Phoenix Fuel Co., Inc., J.W. Wilhoit, Trustee, the other
Trustees and Custodian therein named, and Giant Industries
Arizona, Inc., as may be amended (provided that any
material amendment shall require consent of the Majority
Banks), and (ii) the terms and conditions of such
acquisition shall comply with all material federal, state
and local laws and regulations, including, but not limited
to, compliance with the Hart Scott Rodino Act and all other
applicable laws and regulations.
"SECOND AMENDMENT CLOSING DATE" means May 23, 1997.
"THRIFTWAY ACQUISITION" means the acquisition of
assets by the Company or by Giant Four Corners, Inc. from
Thriftway Marketing Corp. and Clayton Investment Company
and their affiliates and related companies that complies
with the following: (i) such acquisition is pursuant to the
terms of the Definitive Agreement dated April 18, 1997 by
and between Giant Four Corners, Inc., Thriftway Marketing
Corp. and Clayton Investment Company, and the associated
purchase and sale agreements as provided therein, as may be
amended (provided that any material amendment shall require
consent of the Majority Banks), and (ii) the terms and
conditions of such acquisition shall comply with all
material federal, state and local laws and regulations,
including, but not limited to, compliance with the Hart
Scott Rodino Act and all other applicable laws and
regulations.
(b) AMENDMENTS TO ARTICLE II. ARTICLE II of the Credit
Agreement is hereby amended in the following respects:
(i) SECTION 2.05 is hereby deleted therefrom and the
following SECTION 2.05 is substituted in lieu thereof:
"2.05 TERMINATION OR REDUCTION OF COMMITMENTS.
(a) VOLUNTARY TERMINATION OR REDUCTION.
The Company may, upon not less than five Business
Days prior notice to the Agent, terminate the
Commitments, or permanently reduce the Commitments by
an aggregate minimum amount of $2,000,000.00 or any
multiple of $1,000,000.00 in excess thereof; UNLESS,
after giving effect thereto and to any prepayments of
Loans made on the effective date thereof, (i) the
Effective Amount of all Facility A Revolving Loans
exceeds the amount of the combined Facility A
Revolving Commitment, then in effect, or (ii) the
Effective Amount of all Facility B Revolving Loans and
L/C Obligations together would exceed the amount of
the combined Facility B Revolving Commitments then in
effect. Once reduced in accordance with this
subsection, the Commitments may not be increased.
(b) MANDATORY REDUCTION. The Commitment
of each Bank under the Facility A Commitment shall be
automatically reduced on the second anniversary of the
Second Amendment Closing Date, and such reduction
shall be equal to $20,000,000.00 in the aggregate.
(c) ADDITIONAL PROVISIONS. Each reduction
in aggregate Commitments pursuant to paragraph (a) or
(b) above shall be applied to each Bank according to
its Pro Rata Share. All accrued Commitment Fees on the
amount of the Commitments so terminated or reduced,
Letter of Credit Fees, and Fronting Fees to, but not
including, the effective date of any reduction or
termination of Commitments, shall be paid by the
Company on the effective date of such reduction or
termination."
(c) AMENDMENTS TO ARTICLE V. ARTICLE V of the Credit
Agreement is hereby amended in the following respects:
(i) SECTION 5.02 is hereby redesignated as SECTION
5.03; and
(ii) The following shall be inserted as SECTION 5.02:
"5.02 SPECIAL CONDITIONS PRECEDENT FOR FACILITY
A ACQUISITIONS. The obligation of each Bank to make any
Revolving Loan under Facility A, if the proceeds of such
Revolving Loan are to be used to make an Acquisition
involving a purchase price of $10 million or more, is
subject to the satisfaction of the following conditions
precedent on the relevant Borrowing Date:
(a) DUE DILIGENCE. The Agent and the
Banks shall have completed normal and customary due
diligence, review and approval of the environmental
exposures resulting from such acquisition of the
Company and its existing and prospective Subsidiaries.
(b) COMPLIANCE. The Acquisition shall be
permissible under this Agreement. The terms and
conditions of such Acquisition shall comply with all
material federal, state, and local laws and
regulations, including, but not limited to, compliance
with the Hart-Scott-Rodino Antitrust Improvements Act
and all other applicable laws and regulations, and if
requested by the Agent or the Majority Banks, the
Company shall furnish an opinion of counsel reasonably
satisfactory to the Agent and the Majority Banks
confirming the foregoing."
(d) AMENDMENTS TO ARTICLE VI. ARTICLE VI of the Credit
Agreement is hereby amended in the following respect: the
following new sentence shall be added to the end of Section
6.08:
"Margin Stock does not constitute more than 25% of the
value of the consolidated assets of the Company and its
Subsidiaries, and the Company does not have any present
intention that Margin Stock will constitute more than 25%
of the value of such assets."
(e) AMENDMENTS TO ARTICLE VII. ARTICLE VII of the Credit
Agreement is hereby amended in the following respects:
(i) SECTION 7.13 of the Credit Agreement is hereby
deleted therefrom and the following SECTION 7.13 is substituted
in lieu thereof:
"7.13 Use of Proceeds. The Company may use the
proceeds of the Facility A Revolving Loan only for the
following: (a) to make capital contributions or loans to
the Giant Four Corners, Inc. to be used to finance the
purchase of assets pursuant to the Thriftway Acquisition,
and to make a capital contribution or loan to Giant
Industries Arizona, Inc. to finance the purchase of stock
pursuant to the Phoenix Acquisition, (b) to repurchase
shares of capital stock of the Company to the extent such
repurchases are permitted under SECTION 8.09, and (c) to
make capital contributions and loans to the Guarantors for
capital expenditures, for general corporate purposes and
for Acquisitions permitted under this Agreement; provided,
however, that the Facility A Revolving Loan shall not be
used by the Company or by the Guarantors for working
capital expenditures unless all Banks consent. The Company
shall use the proceeds of the Facility B Revolving Loan to
make capital contributions and loans to the Guarantors for
working capital expenditures, and for issuance of standby
letters of credit pursuant to Article III hereof in the
ordinary course of business."
(f) AMENDMENTS TO ARTICLE VIII. ARTICLE VIII of the
Credit Agreement is hereby amended in the following respects:
(i) Section 8.01 of the Credit Agreement is hereby
amended by changing the period (".") at the end of SECTION
8.01(j) to "; and", and adding a new SECTION 8.01(k) as
follows:
"(k) the Master Lease and Option Agreements
described on SCHEDULE 8.05."
(ii) SECTION 8.05(c) of the Credit Agreement is
hereby amended to read as follows:
"(c) Indebtedness described on SCHEDULE 8.05."
(iii) SECTION 8.08 of the Credit Agreement is hereby
amended by changing the period (".") at the end of SECTION
8.08(g) to "; and", and adding the following new SECTION
8.08(h) as follows:
"(h) the guaranties described in SCHEDULE 8.05."
(iv) SECTION 8.09(c) of the Credit Agreement is
hereby deleted therefrom and the following SECTION 8.09(c) is
substituted in lieu thereof:
"(c) notwithstanding the provisions of SECTION
8.07(a)(i), the Company may purchase, redeem or otherwise
acquire shares of its common stock to the extent permitted
by the terms of the NBD Subordinated Indenture, provided,
however, that the Company may not purchase, redeem or
otherwise acquire more than 1,400,000 shares in the
aggregate in addition to shares acquired prior to March 31,
1997."
(v) SECTION 8.12 of the Credit Agreement is hereby
deleted therefrom and the following SECTION 8.12 is substituted
in lieu thereof:
"SECTION 8.12 MINIMUM CONSOLIDATED NET WORTH.
From and after the Closing Date, the Company will maintain
at all times Consolidated Net Worth in an amount not less
than the sum of (i) $109,911,691, plus (ii) 50% of
Consolidated Net Income computed on a cumulative basis for
the period beginning March 31, 1997 and ending on the date
of determination (provided that no negative adjustment will
be made in the event that Consolidated Net Income is a
deficit figure for such period), plus (iii) 75% of the
aggregate amount of the net assets (cash or otherwise)
received by the Company from the issuance of any class of
capital stock after March 31, 1997, less (iv) any allowance
for non-cash write-downs, provided that such allowance on a
cumulative basis shall not exceed $10,000,000.00."
(vi) SECTION 8.14 of the Credit Agreement is hereby
deleted therefrom and the following SECTION 8.14 is substituted
in lieu thereof:
"SECTION 8.14 CAPITALIZATION RATIO. From and after
the Closing Date the Company shall not permit the
Capitalization Ratio to be greater than 65.0% through
June 30, 1998, 62.5% after June 30, 1998 up to and
including June 30, 1999, and thereafter no greater than
60.0%."
(g) AMENDMENT TO SCHEDULE 2.01 (COMMITMENTS). SCHEDULE
2.01 to the Credit Agreement is hereby deleted and SCHEDULE
2.01a (FACILITY A COMMITMENT) and SCHEDULE 2.01(b) (FACILITY B
COMMITMENT) are hereby added to the Credit Agreement, each in
the form attached to this Amendment.
(h) AMENDMENT TO SCHEDULE 2.02 (PRICING). SCHEDULE 2.02
to the Credit Agreement is hereby deleted and a revised
SCHEDULE 2.02 is hereby added to the Credit Agreement, in the
form set forth as SCHEDULE 2.02 to this Amendment.
(i) NEW SCHEDULE 8.05 (CERTAIN PERMITTED INDEBTEDNESS AND
CONTINGENT OBLIGATIONS). A new SCHEDULE 8.05, in the form
attached hereto as SCHEDULE 8.05, is hereby added to the Credit
Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Company
and each of the Guarantors represent and warrant to the Agent
and to each of the Banks that:
(a) This Amendment, the Credit Agreement as amended
hereby and each Guaranty and each Note have been duly
authorized, executed and delivered by the Company and the
Guarantors who are parties thereto and constitute their legal,
valid and binding obligations enforceable in accordance with
their respective terms (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting creditors rights
generally and to general principles of equity).
(b) The representations and warranties set forth in
ARTICLE V of the Credit Agreement are true and correct in all
material respects before and after giving effect to this
Amendment with the same effect as if made on the date hereof.
(c) As of the date hereof, at the time of and immediately
after giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
(d) No material adverse change in the business, assets,
operations, financial condition, liabilities or capitalization
of the Company and its Subsidiaries has occurred since December
31, 1996.
SECTION 3. CONDITIONS OF EFFECTIVENESS. This Amendment
shall be effective on the date (the "Effective Date") of the
delivery by the Company and the Guarantors to the Agent of the
following:
(a) AMENDMENT. This Amendment, signed by the Company,
the Guarantors, the Agent, and each of the Banks;
(b) FACILITY A AND FACILITY B NOTES. A Facility A Note
and a Facility B Note executed by the Company payable to each
Bank, substantially in the form attached as EXHIBIT F to the
Credit Agreement (such Facility A Notes shall be in renewal,
extension, increase and replacement of the Facility A Notes
executed prior to the date hereof, and such Facility B Notes
shall be in renewal, extension and replacement of the Facility
B Notes executed prior to the date hereof);
(c) RESOLUTIONS, ETC. (i) Resolutions of the board of
directors of the Company and each Guarantor authorizing the
transactions contemplated hereby, certified by the Secretary or
an Assistant Secretary of such Person; (ii) Certificates of the
Secretary or Assistant Secretary of the Company and each
Guarantor certifying the names and true signatures of the
officers or such Person authorized to execute, deliver and
perform, this Amendment, and all other Loan Documents to be
delivered by it hereunder; and (iii) amendments to Articles or
certificates of incorporation and the bylaws of the Company and
each Guarantor made since the Closing Date, certified by the
Secretary or Assistant Secretary of the such Person;
(d) GOOD STANDING. A good standing certificate for the
Company and each Guarantor from the state of incorporation as
of a recent date;
(e) LEGAL OPINIONS. Opinions of counsel to the Company
and addressed to the Agent and the Banks, substantially in the
form of Exhibit "A" hereto;
(f) PAYMENT OF FEES. Evidence of payment by the Company
of all accrued and unpaid fees, costs and expenses owed
pursuant to the Fee Letter among the Company, the Arranger and
the Agent dated as of May 10, 1997;
(g) OTHER. Such other approvals, opinions and documents
as the Agent or the Majority Banks may reasonably request.
SECTION 4. EFFECT OF AMENDMENT. This Amendment (i)
except as expressly provided herein, shall not be deemed to be
a consent to the modification or waiver of any other term or
condition of the Credit Agreement or of any of the instruments
or agreements referred to therein and (ii) shall not prejudice
any right or rights which the Agent or the Banks may now have
under or in connection with the Credit Agreement, as amended by
this Amendment. Except as otherwise expressly provided by this
Amendment, all of the terms, conditions and provisions of the
Credit Agreement shall remain the same. It is declared and
agreed by each of the parties hereto that the Credit Agreement,
as amended hereby, shall continue in full force and effect, and
that this Amendment and such Credit Agreement shall be read and
construed as one instrument. The Company confirms that the
Facility B Notes executed prior to the date hereof remain in
full force and effect.
SECTION 5. GUARANTIES. Each of the Guarantors hereby
consents to and accepts the terms and conditions of this
Amendment, agrees to be bound by the terms and conditions
hereof, and ratifies and confirms that its Guaranty executed
and delivered in connection with the Credit Agreement is and
remains in full force and effect.
SECTION 6. MISCELLANEOUS This Amendment shall for all
purposes be construed in accordance with and governed by the
laws of the State of Texas. The captions in this Amendment are
for convenience of reference only and shall not define or limit
the provisions hereof. This Amendment may be executed in
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which together shall
constitute one instrument. In proving this Amendment, it shall
not be necessary to produce or account for more than one such
counterpart.
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NO ORAL AGREEMENTS. THE CREDIT AGREEMENT (AS AMENDED BY
THE FIRST AMENDMENT AND THIS SECOND AMENDMENT) AND THE OTHER
LOAN DOCUMENTS, REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and
duly authorized officers as of the date and year first above
written.
GIANT INDUSTRIES, INC.,
as Company
By: /s/ A. Wayne Davenport
____________________________________
Name: A. Wayne Davenport
Title: Vice President & CFO
GIANT INDUSTRIES ARIZONA, INC. GIANT
EXPLORATION & PRODUCTION COMPANY
GIANT FOUR CORNERS, INC.
SAN JUAN REFINING COMPANY
CINIZIA PRODUCTION COMPANY,
as Guarantors
By: /s/ A. Wayne Davenport
____________________________________
Name: A. Wayne Davenport
in each case, as Vice President
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BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, As Agent
By: /s/ J. Stephen Mernick
____________________________________
J. Stephen Mernick
Senior Vice President
BANK OF AMERICA ILLINOIS, as a Bank
and as Issuing Bank
By: /s/ J. Stephen Merick
____________________________________
J. Stephen Mernick
Senior Vice President
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THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Steven Capouch
____________________________________
Steven Capouch
First Vice President
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UNION BANK OF CALIFORNIA, N.A.
By:____________________________________
Name:
Title: