1
EXHIBIT 10.17
WAIVER AND AMENDMENT AGREEMENT
This Waiver and Amendment Agreement (the "Waiver") is dated as of April
13,1999 and is made by and among UNITED REFINING COMPANY, a Pennsylvania
corporation ("United Refining"), UNITED REFINING COMPANY OF PENNSYLVANIA, a
Pennsylvania Corporation ("United Refining PA"), KIANTONE PIPELINE CORPORATION,
a New York Corporation ("Kiantone, and hereinafter together with United Refining
and United Refining PA sometimes collectively referred to as the "Borrowers" and
individually as a "Borrower") the BANKS under the Credit Agreement (as
hereinafter defined) and PNC BANK, NATIONAL ASSOCIATION, in its capacity as
agent for the Banks under the Credit Agreement (hereinafter referred to in such
capacity as the "Agent").
RECITALS:
WHEREAS, Borrowers, the Banks, and the Agent are parties to that
certain Credit Agreement dated as of June 9, 1997 (as previously amended,
restated, supplemented or modified, the "Credit Agreement"); and
WHEREAS, unless otherwise defined herein, capitalized terms used herein
shall have the meanings given to them in the Credit Agreement; and
WHEREAS, Borrowers have not complied with the covenant that
Consolidated Net Worth may not be less than Base Net Worth contained in Section
7.2.17 (Minimum Net Worth) of the Credit Agreement (the "Section 7.2.17
Violation") during some or all of the period of the fiscal quarter ended
February 28, 1999 as more fully disclosed in the Compliance Certificate which
Borrowers have delivered or will deliver to the Banks for such fiscal quarter
(the "Delivered Compliance Certificate"); and
WHEREAS, the Borrowers have requested that the Banks waive the Section
7.2.17 Violation for the fiscal quarter ended February 28, 1999 and amend
Section 4.9 of the Credit Agreement, as more fully provided herein.
NOW, THEREFORE, in consideration of the foregoing and intending to be
legally bound, the parties hereto agree as follows:
1. Warranty. The Borrowers represent and warrant to the Banks that the
Delivered Compliance Certificate correctly discloses Borrowers' Consolidated Net
Worth to be $38,082,000 and Base Net Worth to be $40,171,000 as of the date and
periods set forth in such Delivered Compliance Certificate and that except for
the Section 7.2.17 Violation, the Borrowers were in full compliance with the
Credit Agreement during the fiscal quarter ended February 28, 1999.
2. Waiver With Respect To Section 7.2.17 Violation. The Banks hereby
waive the violation of Section 7.2.17 for the fiscal quarter ended February 28,
1999 subject to Borrowers' warranty in paragraph 1 and the acknowledgments and
agreements by the Borrowers in paragraph 4 hereof.
1
2
3. Amendment of Section 4.9. The parties hereto hereby amend and
restate Section 4.9 (Receipt and Application of Payment; Cash Collateral
Account; Collections; Agent's Right to Notify Account Debtors) to read as
follows:
The provisions of this Section 4.9 shall apply immediately:
4.9.1 Receipt and Application of Payment.
At all times now and hereafter (i) the Agent shall instruct
Chase and National City pursuant to the Wire Transfer
Agreements to deposit via wire transfer into the Cash
Collateral Account all cash, checks and other items of payment
received in the Chase Lockbox or National City Lockbox, as the
case may be, within 24 hours of Chase's or National City's
receipt thereof, net of any items presented for payment (ii)
all cash, checks or other items of payment received in the PNC
Lockbox shall be immediately deposited into the Cash
Collateral Account promptly upon PNC's receipt thereof, and
(iii) the Borrowers shall deposit into the Cash Collateral
Account within 24 hours of Borrowers' receipt thereof all
cash, checks or other items of payment received from those
Account Debtors not currently making payment into a Lockbox
or, promptly upon request of the Agent, shall cause such
Account Debtors to deposit such cash, checks or other items of
payment directly into one of the Lockboxes. In the event a
Borrower (or any of its Affiliates, shareholders, directors,
officers, employees, agents or those persons acting for or in
concert with a Borrower) shall receive any cash, checks,
notes, drafts or other similar items of payment relating to or
constituting the Collateral (or proceeds thereof), no later
than the first Business Day following receipt thereof, such
Borrower shall
(i) deposit or cause the same to be deposited, in
kind, in the Cash Collateral Account established by such
Borrower with the Agent or such other depository as may be
designated in writing by the Agent (the "Depository"), from
which account the Agent alone shall have the power of
withdrawal, and with respect to which the Depository shall
waive any rights of set off, and
(ii) at the Agent's request, forward to the Agent,
on a daily basis, a collection report in form and substance
satisfactory to the Agent and copies of all such items and
deposit slips related thereto.
4.9.2 Cash Collateral Account
The Agent alone shall have the sole power of withdrawal from
the Cash Collateral Account, to be exercised as follows:
(a) Provided no Event of Default shall have occurred and be
continuing, and provided that no Potential Default with
respect to the covenants set forth in Sections 7.1.2, 7.2.1,
7.2.16 and 7.2.17 shall have occurred and be continuing, the
Agent shall withdraw all funds in the Cash Collateral Account
at the end of each Business Day and deposit such funds into a
designated general deposit account maintained by Borrowers
with the Agent.
2
3
(b) Upon the occurrence of an Event of Default, or upon the
occurrence of a Potential Default with respect to the
covenants set forth in Sections 7.1.2, 7.2.1, 7.2.16 and
7.2.17, and for so long as such Event of Default or Potential
Default shall be continuing, the Agent in the exercise of its
sole discretion may withdraw all funds in the Cash Collateral
Account at the end of each Business Day ad deposit such funds
into a designated general deposit account maintained by
Borrowers with the Agent. All cash notes, checks, drafts or
similar items of payment by or for the account of a Borrower
deposited into the Cash Collateral Account and not withdrawn
at the end of any Business Day in accordance with the previous
sentence shall be deemed the sole and exclusive property of
the Banks immediately upon the earlier of the receipt of such
items by the Agent or the Depository or the receipt of such
items by such Borrower; provided, however, that for the
purpose of computing interest hereunder such items shall be
deemed to have been collected and shall be applied by the
Agent on account of the Revolving Credit Loans outstanding to
such Borrower one (1) Business Day after receipt by the Agent
(subject to correction for any items subsequently dishonored
for any reason whatsoever). Notwithstanding anything to the
contrary herein, all such items of payment shall, solely for
purposes of determining the occurrence of such Event of
Default, be deemed received upon actual receipt by the Agent,
unless the same are subsequently dishonored for any reason
whatsoever, and all funds in the Cash Collateral Account,
including all payments made by or on behalf of and all credits
due a Borrower, may be applied and reapplied in whole or in
part to any of the Revolving Credit Loans to the extent and in
the manner the Agent deems advisable.
4.9.3 Collections: Agent's Right to Notify Account Debtors.
The Borrowers hereby authorize the Agent now and at all times
hereafter, to (i) after the occurrence of an Event of Default,
notify any or all Account Debtors that the Accounts have been
assigned to the Banks and that the Banks have a security
interest therein, and to (ii) direct such Account Debtors to
make all payments due from them to each Borrower upon the
Accounts directly to the Agent, to the Lockboxes or to any
other lockbox designated by the Agent. The Agent shall
promptly furnish the Borrowers with a copy of any such notice
sent. Any such notice, in the Agent's sole discretion, may be
sent on the Borrowers' stationery, in which event the
appropriate Borrower shall co-sign such notice with the Agent.
To the extent that any Law or custom or any contract with any
Account Debtor requires notice to or the approval of the
Account Debtor in order to perfect such assignment of a
security interest in Accounts, each Borrower agrees to give
such notice or obtain such approval.
4. Full Force and Effect. All provisions of the Credit Agreement remain
in full force and effect on and after the date hereof. The Banks do not amend or
waive any provisions of the Credit Agreement except as expressly amended or
waived hereby. Without limiting the foregoing, the Banks retain all rights given
to the Banks under the Credit Agreement and under applicable law in connection
with any failure by the Borrower to comply with the Credit Agreement as amended
hereby. The foregoing rights expressly include, without limitation, any rights
given
3
4
to the Banks under Section 8.2 if a Potential Default or an Event of Default
arises as a result of any such failure to comply.
5. Borrowing Base. The definition of "Borrowing Base" contained in
Section 1.1 of the Credit Agreement is hereby amended and restated to read as
follows:
Borrowing Base shall mean at any time the sum of (i) one
hundred percent (100%) of cash held in the Cash Collateral
Account, the Borrower's general deposit account into which
funds withdrawn from the Cash Collateral Account are deposited
pursuant to Section 4.9.2 hereof and any overnight sweep
investment account into which any of Borrower's funds swept
from such accounts are deposited, plus (ii) eighty percent
(80%) of Qualified Accounts ("Accounts Portion"), plus (iii)
the lesser of (A) seventy percent (70%) of Qualified Inventory
("Inventory Portion"), or (B) one hundred fifty percent (150%)
of the Accounts Portion.
6. Waiver and Amendment Fee. The Borrowers' shall pay to the Agent for
the accounts of the Banks based on their Ratable Shares, as consideration for
the Banks' waiver of the Section 7.2.17 Violation and the other changes being
made to the Credit Agreement hereunder, a nonrefundable fee equal to $17,500
payable on the Effective Date as hereinafter defined.
7. Counterparts: Effective Date. This Waiver may be signed in
counterparts. This Waiver shall become effective as of the date first above
written when it has been executed by the Borrowers, the Agent and the Required
Banks. The Borrowers agree to cooperate with the Agent to implement the
provisions of Section 4.9 as amended hereby as soon as practicable, but in any
event no later than May 13, 1999.
[SIGNATURES BEGIN ON NEXT PAGE]
4
5
[SIGNATURE PAGE 1 OF 1 TO WAIVER AND AMENDMENT AGREEMENT]
The undersigned have executed this Waiver as of the date first above
written.
UNITED REFINING COMPANY, a
Pennsylvania corporation
By: /s/ James E. Murphy
---------------------------------------------
Title: V.P. - Finance and Chief Financial Officer
UNITED REFINING COMPANY OF PENNSYLVANIA,
a Pennsylvania corporation
By: /s/ James E. Murphy
---------------------------------------------
Title: V.P. - Finance and Chief Financial Officer
KIANTONE PIPELINE CORPORATION,
a New York corporation
By: /s/ James E. Murphy
---------------------------------------------
Title: V.P. - Finance and Chief Financial Officer
PNC BANK, NATIONAL ASSOCIATION,
Individually and as Agent
By: /s / Richard Munsick
---------------------------------------------
Title: Vice President
MANUFACTURERS AND TRADERS TRUST COMPANY
By: /s/ C. Gregory Vogelsang
---------------------------------------------
Title: Assistant Vice President
NATIONAL BANK OF CANADA
By: /s/ Eric L. Moore
---------------------------------------------
Title: Vice President
By: /s/ Donald P. Haddad
---------------------------------------------
Title: Vice President
5