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EXHIBIT 10.1
CREDIT AGREEMENT
Among
TESORO PETROLEUM CORPORATION
as the Company
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
Individually, as an Issuing Bank and as Agent,
BANQUE PARIBAS
Individually, as an Issuing Bank, and as Co-Agent
and
FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO
$125,000,000 Revolving Credit Facility
$15,000,000 Optional Advancing Term Loan
April 20, 1994
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.03 Other Definitional Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE II
AMOUNT AND TERMS OF LOANS
Section 2.01 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 2.02 Borrowing Requests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.03 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.04 Disbursement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.05 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.06 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.07 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.08 Repayment of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.09 Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.10 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.11 Continuation and Conversion Options . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.12 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.13 Payments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.14 Interest Rate Not Ascertainable, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.15 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.16 Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 2.17 Change of Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.18 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.19 Sharing of Payments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.20 E&P Loan Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 2.22 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 2.23 Disposition of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 2.24 Senior Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE III
CONDITIONS TO BORROWINGS AND TO
PURCHASE, RENEWAL AND REARRANGEMENT
Section 3.01 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.02 Conditions Precedent to Initial Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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Section 3.03 Conditions Precedent to Each Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 3.04 Recordings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 3.05 Activation of Term Loan Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.02 Corporate Power and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.03 Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.04 No Legal Bar or Resultant Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.05 No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.06 Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.07 Investments and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.08 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.09 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.10 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.11 Taxes; Governmental Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.12 Titles, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.13 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.14 Casualties; Taking of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.15 Compliance with the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.16 No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.17 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.18 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.19 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.21 Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.22 Gas Imbalances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.23 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.24 Recapitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE V
COVENANTS
Section 5.01 Certain Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(a) Maintenance and Compliance, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(b) Payment of Taxes and Claims, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(c) Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(d) Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
(e) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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(f) Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(g) Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
(h) Operation and Maintenance of Mortgaged Property and Compliance with Leases . . . . . . . . 56
(i) Stock of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(j) Certain Additional Assurances Regarding Maintenance and Operation of Properties . . . . . 57
(k) Designation of Subsidiaries as Additional Guarantors. . . . . . . . . . . . . . . . . . . 57
(l) Minimum Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(m) Payment of Charters and Tariffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(n) Title Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 5.02 Reporting Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(a) Annual Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(b) Quarterly Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(c) No Default/Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(d) Auditors' No Default Certificate; Management Letters . . . . . . . . . . . . . . . . . . . 59
(e) Engineering Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(f) Title Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(g) Events or Circumstances with respect to Mortgaged Property . . . . . . . . . . . . . . . . 59
(h) Bi-Weekly Borrowing Base Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(i) Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(j) Shareholder Communications, Filings, etc . . . . . . . . . . . . . . . . . . . . . . . . . 60
(k) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(l) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(m) Borrowing Base Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(n) Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 5.03 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(a) Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(b) Working Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(c) Company's Cash Flow Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(d) Tesoro Alaska EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 5.04 Certain Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(a) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(b) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(c) Mergers, Sales, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(d) Dividends, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(e) Investments, Loans, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
(f) Lease Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
(g) Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(h) Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(i) ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
(j) Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(k) Negative Pledge Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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(l) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(m) Unconditional Purchase Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(n) Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(o) Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.02 Covenants Without Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.03 Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.04 Other Financing Document Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 6.05 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.06 Non-Payments of Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.07 Defaults Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.08 Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 6.09 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.10 Money Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.11 Discontinuance of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.12 Security Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.13 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.14 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 6.15 Material Adverse Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE VII
THE AGENT
Section 7.01 Appointment of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.02 Nature of Duties of Agent and Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.03 Lack of Reliance on the Agent and the Co-Agent . . . . . . . . . . . . . . . . . . . . . . 75
Section 7.04 Certain Rights of the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.05 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.06 INDEMNIFICATION OF AGENT AND THE CO-AGENT . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7.07 The Agent and Co-Agent in their Individual Capacity . . . . . . . . . . . . . . . . . . . 76
Section 7.08 May Treat Lender as Owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 7.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
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ARTICLE VIII
MISCELLANEOUS
Section 8.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Section 8.02 Amendments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.03 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.04 Payment of Expenses, Indemnities, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.05 Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Section 8.06 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 8.07 Assignments and Participations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 8.08 Governing Law; Submission to Jurisdiction; Etc . . . . . . . . . . . . . . . . . . . . . . 83
Section 8.09 Independent Nature of Lenders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 8.10 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 8.11 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 8.12 Renewal, Extension or Rearrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 8.13 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 8.14 Taxes, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 8.15 Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 8.16 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.17 Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.18 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.19 Survival of Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.20 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.21 Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.22 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.23 Conflict with E&P Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.24 EXCULPATION PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 8.25 Proposed Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ANNEXES
Annex I - Commitments
Annex II - Eligible Inventory Valuation
SCHEDULES
Schedule 4.05 - Consents
Schedule 4.07 - Investment and Guaranties
Schedule 4.08 - Litigation
Schedule 4.10 - ERISA
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Schedule 4.12 - Titles
Schedule 4.13 - Defaults
Schedule 4.20 - Insurance
Schedule 4.22 - Gas Imbalances
Schedule 5.04(a) - Existing Indebtedness
Schedule 5.04(b) - Liens
Schedule 5.04(k) - Negative Pledge Agreements
EXHIBITS
Exhibit A - Form of Revolving Note
Exhibit B - Form of Term Note
Exhibit C - Subsidiaries/Guarantors
Exhibit D - Form of Borrowing Request
Exhibit E-1 - Form of Opinion of Fulbright & Jaworski, L.L.P.
Exhibit E-2 - Form of Opinion of James C. Reed, Jr.
Exhibit E-3 - Form of Opinion of Groh, Eggers & Price
Exhibit F - Form of Assignment and Acceptance
Exhibit G - Form of Borrowing Base Report
Exhibit H - Form of Activation of Term Loan Commitment
Exhibit I - Form of Letter to Hydrocarbon Purchasers
Exhibit J - Description of E&P Restructuring
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into as of this 20th day of
April, 1994, among TESORO PETROLEUM CORPORATION, a Delaware corporation (the
"Company"); TEXAS COMMERCE BANK NATIONAL ASSOCIATION, individually, as an
Issuing Bank and as Agent, BANQUE PARIBAS, individually, as an Issuing Bank and
as Co-Agent, and each of the lenders that is a signatory hereto or which
becomes a party hereto as provided in Section 8.07 (individually, a "Lender"
and, collectively, the "Lenders").
RECITALS
A. The Company has previously entered into a Continuing Letter of Credit
Agreement, dated as of January 27, 1994, between the Company and the Banque
Paribas (the "BP Letter of Credit Agreement") pursuant to which Banque Paribas
issued certain Outstanding Letters of Credit (as hereinafter defined).
B. The Lenders have agreed to assume, upon the terms and subject to the
conditions stated herein, the obligations existing under the Outstanding
Letters of Credit.
In consideration of the mutual covenants and agreements herein contained,
the Company, the Agent, the Issuing Banks and the Lenders agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
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):
"$2.16 Preferred Stock" shall mean the $2.16 Cumulative Convertible
Preferred Stock of the Company.
"$2.20 Preferred Stock" shall mean the $2.20 Cumulative Convertible
Preferred Stock of the Company.
"Account Borrowing Base Parties" shall mean Tesoro Alaska, PEDCO and
Tesoro R&M, and "Account Borrowing Base Party" shall mean any one of them.
"Advance Notice" shall mean written or telecopy notice (or telephonic
notice promptly confirmed in writing), which in each case shall be
irrevocable, from the Company to be received by the Agent 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:
9
(i) Eurodollar Loans - 3 Business Days; and
(ii) Base Rate Loans - 1 Business Day.
For the purpose of determining the respectively applicable Loan in the
case of the conversion from one type of Loan into another, the Loan into
which there is to be a conversion shall control. The Agent, each Issuing
Bank and each Lender are entitled to rely upon and act upon telecopy
notice made or purportedly made by the Company, and the Company hereby
waives the right to dispute the authenticity and validity of any such
transaction once the Agent or any Lender has advanced funds or any
Issuing Bank has issued Letters of Credit, absent manifest error.
"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.
"Agent" shall mean Texas Commerce Bank National Association, acting
in the manner and to the extent described in Article VII.
"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, as security for
the Lender Indebtedness, as the same may be amended, modified or
supplemented from time to time.
"Applicable Margin" shall mean, on any day and with respect to any
Loan, the applicable per annum percentage set forth at the appropriate
intersection in the table shown below, based on the ratio of EBITDA to
Fixed Charges for the Rolling Period ending on the most recent Quarterly
Date with respect to which the Agent shall have received the financial
statements and other information (the "Current Information") required to
be delivered to the Agent pursuant to Section 5.02 hereof (said
calculation to be made by the Agent as soon as practicable after receipt
by the Agent of all required current information):
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Ratio of EBITDA Base Rate Loan Eurodollar Loan
to Fixed Charges Margin Percentage Margin Percentage
----------------------------------------------------------------------------------
Greater than 4:1 0.25% 1.25%
Less than or equal to
4.:1 but greater than 3.5:1 0.50% 1.50%
Less than or equal to
3.5:1 but greater than 3:1 0.75% 1.75%
Less than or equal to
3:1 but greater than 2.5:1 1.00% 2.00%
Less than or equal to 2.5:1 1.25% 2.25%
Each change in the Applicable Margin based on a change in the Current
Information shall be effective as of the first day of the third month
of each applicable calendar quarter (but based upon Current
Information for the immediately preceding calendar quarter), or if
such day is not a Business Day, then the first Business Day
thereafter. Notwithstanding the foregoing, during the period
beginning on the Closing Date and ending on December 1, 1994, the
Applicable Margin shall be (a) .75% for Base Rate Loans and (b) 1.75%
for Eurodollar Loans. The Applicable Margin beginning on December 1,
1994 until redetermination thereof in accordance with the above terms
shall be based on the ratio of EBITDA to Fixed Charges for the
nine-month period ending on September 30, 1994.
"Application" shall mean an "Application and Agreement for
Letters of Credit," or similar instruments or agreements, entered into
between the Company and an Issuing Bank in connection with any Letter
of Credit.
"Assignment and Acceptance" shall have the meaning assigned
such term in Section 8.07(b).
"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 Loan Value.
"Bankruptcy Code" shall have the meaning provided in Section
6.08.
"Base Rate" shall have the meaning provided in Section 2.06(a).
"Base Rate Loan" shall mean a Revolving Credit Loan or a Term
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
-3-
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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 Loan Value.
"Borrowing Base Report" shall mean the report of the Company
concerning the amount of the Borrowing Base, to be delivered pursuant
to Section 5.02(h), substantially in the form attached as Exhibit G.
"Borrowing Request" shall mean a request for a Borrowing
pursuant to Section 2.02, substantially in the form attached as
Exhibit D.
"BP" shall mean Banque Paribas, in its individual capacity or
as an Issuing Bank, as the case may be and not as Co-Agent.
"BP Letter of Credit Agreement" shall have the meaning
assigned to such term in the Recitals of this Agreement.
"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 and, for purposes of this Agreement, the amount of such
obligations shall be the capitalized amount thereof.
"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 of
original issue discount and deferred financing costs on existing
Indebtedness that has been replaced by Indebtedness permitted by
Section 5.04(a)(ii), in each case for such period and determined as to
such Person.
"Change of Control" shall mean 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
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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.
"Closing Date" shall mean the as of date of this Agreement set
forth in the first paragraph hereof.
"Co-Agent" shall mean Banque Paribas.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute.
"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 "Total Commitment." Each Lender's
Commitment is the sum of its Revolving Credit Commitment, its
Unavailable Commitment and, if activated pursuant to Section 2.01(e),
its Term Loan Commitment.
"Common Stock" shall mean the Common Stock, $.16 2/3 par value
of the Company issued pursuant to the Recapitalization.
"Company" shall mean Tesoro Petroleum Corporation, a Delaware
corporation.
"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 good will, 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.
"Consolidated Working Capital Ratio" shall mean, at any time
and from time to time, the ratio of (i) the sum of accounts receivable
plus inventory to (ii) the sum of accounts payable plus current
accrued liabilities, in each case as of the date of determination and
for the Company and its Subsidiaries determined on a consolidated
basis.
"Consolidating Statement Entities" shall mean, for the purpose
of identifying the Persons or groups of Persons for whom consolidating
financial statements shall be prepared, (a) the
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Company; the Account Borrowing Base Parties; Tesoro E&P; Tesoro Alaska
Pipeline Company, a Delaware corporation; Tesoro Bolivia; Tesoro
Northstore Company, an Alaskan corporation; Tesoro Natural Gas
Company, a Delaware corporation; and any other Subsidiary of the
Company designated from time to time by the Agent and (b) all of the
consolidated Subsidiaries of the Company other than those specifically
referred to in clause (a) above reported as a single consolidated
group.
"Cover" for Letter of Credit Liabilities shall be effected by
paying to the Agent in immediately available funds, to be held by the
Agent in a collateral account maintained by the 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 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 Agent in such collateral account until
such time as the applicable Letter of Credit shall have expired and
Reimbursement Obligations, if any, with respect thereto shall have
been fully satisfied.
"Current Information" shall have the meaning provided in the
definition of "Applicable Margin."
"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.
"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.
"Dollar" and the sign "$" shall mean lawful money of the
United States of America.
"E&P Loan Value" shall mean the amount of Revolving Credit
Loans that the Lenders shall determine, pursuant to Section 2.20, can
be supported by the BB Properties.
"E&P Mortgage" shall mean the Mortgage, Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement
dated as of the Closing Date granted by the Tesoro E&P, to Stephen H.
Field, as trustee, granting a Lien on the Oil and Gas Properties of
Tesoro E&P, as security for the indebtedness defined therein as
"Indebtedness".
"E&P Restructuring" shall mean the restructuring of certain
Subsidiaries of the Company and their assets in accordance with the
transactions described on Exhibit J.
"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, plus, to the extent deducted from net
income, interest expense, depreciation, depletion and impairment,
amortization of leasehold and
-6-
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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 replaced by Indebtedness permitted
by Section 5.04(a)(ii) hereof), 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 8.22 have been satisfied and (iii) the initial
Loans have been made, 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 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 Agent, and
the 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);
-7-
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(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;
(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;
(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 Agent,
in its sole discretion, has determined that said account has
been properly assigned to the 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 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. or any wholly
owned Subsidiary of any one of them, or other obligors
approved for such purpose by the Agent in writing (with such
approval being reported to the Lenders), then said account
shall be included as an Eligible Account to the extent that
the total sum due to any of the obligors named above is less
than 15% of the total balance then due on all applicable
Account Borrowing Base Party's accounts,
-8-
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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 Agent, in its good faith discretion, to be
unacceptable in accordance with its customary practices for
facilities of this nature.
"Eligible Inventory" shall mean, at any time, all inventory
(as such term is defined in Section 9-104(4) of the UCC) of the
Inventory Borrowing Base Parties, including, without limitation, the
In Transit Inventory and inventory in the Tesoro Terminals, 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 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 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 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 or Washington, or to the extent that it qualifies
as In Transit Inventory, is located in the territorial waters
of Alaska, California, Oregon, Washington or British Columbia,
Canada (and not in international waters);
(d) Said inventory is not stored at any terminal
other than a Tesoro Terminal; and
(e) Other than inventory which qualifies as In
Transit Inventory, said inventory is not in transit to or from
the Kenai Refinery.
For purposes of this definition, "In Transit Inventory" shall mean, at
any time, feedstocks, blendstocks or refined products solely owned by
an Inventory Borrowing Base Party that are in transit:
(a) 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 Kenai Pipeline Company in the area
of Cook Inlet, Alaska (the "KPL Facility"), or (iv) in the
Cook Inlet Pipeline
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17
Company System in the area of Cook Inlet, Alaska, including
feedstocks or blendstocks in storage at the Drift River
Terminal in Drift River, Alaska; or
(b) 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 (a) above).
"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.
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"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 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 or a Term
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 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
VI.
"Excess Cash Flow" shall mean (a) Cash Flow of Tesoro Alaska
for any calendar year, minus (b) regularly scheduled payments of
principal and interest, to the extent not previously deducted from net
income of Tesoro Alaska, on the outstanding Term Loans for any
calendar year, minus (c) capital expenditures of Tesoro Alaska
(excluding capital expenditures for the addition of the Vacuum Unit)
during such calendar year, minus (d) $10,000,000.
"Exchange Notes" shall mean the 13% Exchange Notes due
December 1, 2000, issued by the Company.
"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 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,
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19
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.
"Fixed Charges" shall mean, as to the Company and its
Subsidiaries on a consolidated basis and for each Rolling Period, the
sum of scheduled debt payments, plus cash interest expense, plus cash
dividends.
"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.
"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 Guaranty Agreement dated
as of the Closing Date 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 Agent or (ii) the Majority Lenders,
in each case pursuant to Section 5.01(k).
"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
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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.
"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.
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21
"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.
"Inventory Borrowing Base Parties" shall mean Tesoro Alaska
and Tesoro R&M, and "Inventory Borrowing Base Party" shall mean any
one of them.
"Issuing Bank" shall mean, for each Letter of Credit, TCB or
BP 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 appurtances 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,
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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.
"Lender Indebtedness" shall mean any and all amounts owing or
to be owing by the Company to the Agent, the Issuing Banks or the
Lenders with respect to or in connection with the Loans, any Letter of
Credit Liabilities, the Notes, 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 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 or a Term Loan, and
"Loans" shall mean collectively the Revolving Credit Loans or Term
Loans or one or more of them as provided herein.
"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
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Credit Agreement or valued at current market as may otherwise be
mutually agreed upon from time to time between the Company and the
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 sum of (i) the
then Aggregate Revolving Credit Exposure, plus (ii) the then unpaid
principal amount of the Term Loans at such time.
"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 aggregate Revolving Credit Commitments
as of such date and (b) the Borrowing Base as of such date.
"Maximum Revolving Credit Loan Available Amount" shall mean,
at any date, an amount equal to the lesser of (a) the difference
between (i) Maximum Available Amount as of such date and (ii) the
aggregate amount of all Letter of Credit Liabilities as of such date
and (b) the E&P Loan Value as of such date.
"MetLife Louisiana" shall mean MetLife Security Insurance
Company of Louisiana.
"MetLife Option" shall mean the option to purchase granted by
MetLife Louisiana to the Company pursuant to which the Company shall
have the option to purchase all shares of the $2.20 Preferred Stock
and the Common Stock held by MetLife Louisiana.
"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 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 a Guarantor and that has been designated by the
Company to the Agent as a "Non-Guarantor Subsidiary;" provided, the
aggregate amount invested after the Closing Date directly or
indirectly by the Company in such Subsidiaries shall not exceed
$1,000,000.
"Notes" shall mean the Revolving Credit Notes and the Term
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
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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
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 following
letters of credit issued by BP under the BP Letter of Credit
Agreement:
LC # Loan Party Stated Amount Expiry Beneficiary
---- ---------- ------------- ------ -----------
023214 Tesoro Alaska $5,940,000 10/31/94 Union Oil Company of California
023215 Tesoro Alaska $1,107,700 10/31/94 Conoco, Inc.
024511 Tesoro Alaska $ 700,000 10/31/94 Exxon Pipeline Company
024512 Tesoro Bolivia $2,000,000 10/14/94 Banco De La Union S.A.
024515 Tesoro Bolivia $2,000,000 05/12/95 Banco De La Union S.A.
023248 The Company $ 854,250 09/30/94 National Union Fire Insurance Company (automatically
renewable)
024513 The Company $1,000,000 09/30/94 Fireman's Insurance Company (automatically renewable)
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024509 Tesoro Petroleum $1,045,000 06/30/94 Conoco, Inc.
Distributing
Company
"Payment Office" shall mean the Agent's office located at 712
Main Street, Houston, Texas, 77002; Attention: Mr. P. Stan Burge.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor thereto.
"PEDCO" shall mean Tesoro Petroleum Distributing Company, a
Louisiana corporation.
"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 5.04(d).
"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 Agent announces
from time to time as its prime rate, and is thereafter entered in the
minutes of the Agent's Loan and Discount Committee. 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 fluctuate. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually
charged to any customer. The 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.
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"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, 1994; provided, however, that if any such day is not a
Business Day, such Quarterly Date shall be the next succeeding
Business Day.
"Recapitalization" shall mean the consummation of (a) the
exchange of a minimum of $44,116,000 of Subordinated Debentures for
Exchange Notes, (b) the reclassification of the $2.16 Preferred Stock
into an aggregate of approximately 6,465,859 shares of Common Stock,
(c) an agreement with MetLife Louisiana, the sole holder of the $2.20
Preferred Stock pursuant to which it will agree to waive certain put
options and mandatory redemption requirements existing in connection
with the $2.20 Preferred Stock and make certain other concessions and
waivers with regard to the $2.20 Preferred Stock and will grant to the
Company the MetLife Option, and (d) amendments to the Company's
Certificate of Incorporation to provide for the above described
transactions, all as more particularly described in that certain Proxy
Statement, Prospectus and Consent Solicitation of the Company dated
January 3, 1994.
"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 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 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 5.02(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 reasonably requested by the Agent in connection with
any redetermination of the E&P Loan Value.
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"Responsible Officer" shall mean the Chief Executive Officer,
the Chief Financial Officer, the Treasurer or the Controller, in each
case of the Company.
"Revolving Credit Commitment" shall have the meaning assigned
such term in Subsection 2.01(c).
"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)(ii); the Revolving Credit Loans shall not include
any Letter of Credit Liabilities.
"Revolving Credit Maturity Date" shall mean April 1, 1997.
"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.
"Security Instruments" shall mean the agreements or
instruments described or referred to in Subsections 3.02(d)(iii)
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.
"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
$10,000,000 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 3/4% Subordinated
Debentures due March 15, 2001, issued by the Company.
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"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.
"Taxes" shall have the meaning provided in Subsection 2.21(a).
"TCB" shall mean Texas Commerce Bank National Association, in
its individual capacity or as an Issuing Bank, as the case may be, and
not as Agent.
"Term Loan" shall have the meaning provided in Subsection
2.01(a)(i).
"Term Loan Commitment" shall have the meaning assigned such
term in Subsection 2.01(d)
"Term Loan Drawdown Termination Date" shall mean March 31,
1995, unless extended to a later date pursuant to Subsection 2.05(b).
"Term Loan Maturity Date" shall mean March 31, 1998.
"Term Note" shall mean a promissory note of the Company
described in Section 2.05(b) payable to any Lender and being
substantially in the form of Exhibit B, evidencing the aggregate
indebtedness of the Company to such Lender resulting from Term Loans
made by such Lender.
"Tesoro Alaska" shall mean Tesoro Alaska Petroleum Company, a
Delaware corporation.
"Tesoro Bolivia" shall mean Tesoro Bolivia Petroleum Company,
a Texas corporation.
"Tesoro E&P" shall mean (a) Tesoro Exploration and Production
Company, a Delaware corporation and, (b) at all times after the
consummation of the E&P Restructuring, 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 R&M" shall mean Tesoro Refining, Marketing & Supply
Company, a Delaware corporation.
"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.
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"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.
"Unavailable Commitment" shall mean, for each Lender, the
amount set forth opposite such Lender's name on Annex I under the
caption "Unavailable Commitment" (as the same may be reduced pursuant
to Section 2.01(f) or Section 2.09 or otherwise from time to time
modified pursuant to Section 8.07(b) hereof) and "Unavailable
Commitments" shall mean the aggregate amount, collectively for all
Lenders, of each such Lender's Unavailable Commitment.
"Vacuum Unit" shall mean the vacuum fractionation tower
operating at near absolute vacuum and related hydraulic, heat exchange
and process control systems.
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 (i) to make, on any
Business Day prior to the Term Loan Drawdown Termination Date, term
loans (each a "Term Loan") to the Company; and (ii) 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 and the
Term 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.
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(c) Revolving Credit Commitments. Each Lender's
Revolving Credit Exposure shall not exceed at any one time the amount
set forth opposite such Lender's name on Annex I under the caption
"Revolving Credit Commitment" (as the same may be increased pursuant
to Section 2.01(f), reduced pursuant to Section 2.01(e) or Section
2.09 or otherwise from time to time modified pursuant to Section
8.07(b), its "Revolving Credit Commitment," and collectively for all
Lenders, the "Revolving Credit Commitments"); 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
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) Term Loan Commitments. Subject to Section 2.01(e),
the Term Loans made pursuant hereto by each Lender shall not exceed in
aggregate principal amount outstanding the amount set forth opposite
such Lender's name on Annex I under the caption "Term Loan Commitment"
(as the same may be reduced pursuant to Section 2.09 or otherwise from
time to time modified pursuant to Section 8.07(b), its "Term Loan
Commitment," and collectively for all Lenders, the "Term Loan
Commitments"). There may be no more than one Borrowing with respect
to Term Loans during any calendar month. Any portion of each Lender's
Term Loan Commitment not utilized on or before the Term Loan Drawdown
Termination Date shall be permanently cancelled. Any Term Loans that
are repaid or prepaid may not be reborrowed.
(e) Term Loan Activation Option. The Revolving Credit
Commitments as of the Effective Date shall be $100,000,000 and until
the Company elects to activate the Term Loan Commitments, the Term
Loan Commitments shall be $0. The Company may, at its option,
activate the Term Loan Commitments at any time within 90 days of the
Closing Date by providing the Agent with written notice in the Form of
Exhibit H. Concurrently with such notice, the Company shall deliver
the Term Notes to the Agent in accordance with Section 2.05(b), and
the Term Loan Commitments shall then be available. Concurrently with
such activation of the Term Loan Commitments, the Revolving Credit
Commitments shall be permanently reduced by $15,000,000.
(f) Unavailable Commitments. The Company may from time
to time, by written notice to the Agent, the Issuing Banks and each
Lender, designate all, or an aggregate portion in the minimum amount
of $5,000,000 or in integral multiples of $1,000,000, of the
Unavailable Commitments as Revolving Credit Commitments. Any amount
of the Unavailable Commitments so designated, shall be permanently
converted to Revolving Credit Commitments and the Revolving Credit
Commitment of each Lender shall be proportionately increased.
(g) 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
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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) whether such Borrowing will be Revolving Credit Loans or Term
Loans, (ii) the aggregate principal amount of the Loans to be made
pursuant to such Borrowing, (iii) the date of Borrowing (which shall
be a Business Day), (iv) whether the Loans being made pursuant to such
Borrowing are to be Base Rate Loans or Eurodollar Loans, and (v) in
the case of Eurodollar Loans, the Interest Period to be applicable
thereto.
(b) Notice by Agent. The 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 Agent may act without liability upon the basis
of telephonic notice believed by the 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 Agent's
record of the terms of such telephonic notice, absent manifest error.
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 an 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 such 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 (other than
Outstanding Letter of Credit No. 024515), 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 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
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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 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 such 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 Agent or such Issuing Bank may reasonably
request, (E) such other information and documents relating to the
Letter of Credit as the Agent or such 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 such Issuing Bank to make payment under the Letter of Credit;
provided that such Issuing Bank, in its reasonable judgment, may
require changes in such documents and certificates; and provided
further that neither Issuing Bank shall be required to issue any
Letter of Credit that on its terms requires payment thereunder prior
to the next Business Day following receipt by such Issuing Bank of
such documents and certificates. Each such notice shall be
accompanied by the applicable 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 Subsection 2.03(b)(2)(i) 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
applicable 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 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,
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reimburse the Agent for the account of the applicable 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 Agent that the Company intends to reimburse the
Agent for the account of the applicable Issuing Bank for the amount of
such drawing with funds other than the proceeds of a Revolving Credit
Loan or delivered to the 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 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 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 Agent to reimburse the applicable Issuing
Bank for the amount of such drawing.
(iv) If the Company fails to reimburse the applicable Issuing
Bank as provided in clause (iii) above, such Issuing Bank shall
promptly notify the Agent and the 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 Agent for the account of the
applicable Issuing Bank on the date of such notice an 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 such Issuing Bank the amount of such Lender's
participation in such Letter of Credit as provided in this clause
(iv), such 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 such Issuing Bank any amounts made available by such
Lender to such 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 such Issuing Bank was wrongful and
such wrongful payment was the result of gross negligence or willful
misconduct on the part of such Issuing Bank. The applicable Issuing
Bank shall pay to the Agent and the 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 such Issuing Bank in respect of such Letter of Credit pursuant to
this clause (iv).
(v) The issuance by the applicable 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 such Issuing Bank, and that the Company
shall have executed and delivered such other instruments and
agreements relating to such Letter of Credit as such Issuing Bank
shall have reasonably requested and that are not inconsistent with the
terms of this Agreement including the applicable 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.
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(vi) AS BETWEEN THE COMPANY AND ANY ISSUING BANK, THE COMPANY
ASSUMES ALL RISKS OF THE ACTS AND OMISSIONS OF OR MISUSE OF THE
LETTERS OF CREDIT ISSUED BY SUCH ISSUING BANK BY THE RESPECTIVE
BENEFICIARIES OF SUCH LETTERS OF CREDIT. IN FURTHERANCE AND NOT IN
LIMITATION OF THE FOREGOING, SUCH 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 SUCH 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 CAUSES BEYOND THE CONTROL OF
SUCH 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 SUCH 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 SUCH ISSUING BANK
ARISING SOLELY OUT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH ISSUING BANK, AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.
(vii) Each Issuing Bank will send to the Company and the
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 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 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 Agent and the Company, and the 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:
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(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
such 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 such 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 such Issuing Bank, as determined
by a court of competent jurisdiction;
(E) any adverse change in the condition (financial
or otherwise) of the Company;
(F) any breach of this Agreement or any other
Financing Document by the Company, Agent or any Lender (other than the
applicable 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 such 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 11:00 a.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 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 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.
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(b) Funds to the Agent. Unless the 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 Agent such Lender's
portion of the Borrowing to be made on such date, the Agent may assume
that such Lender has made such amount available to the Agent on such
date, and the Agent may make available to the Company a corresponding
amount. If such corresponding amount is not in fact made available to
the Agent by such Lender on the date of a Borrowing, the 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
Agent's demand therefor, the Agent shall promptly notify the Company,
and the Company shall immediately pay such corresponding amount to the
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 Commitment hereunder.
Section 2.05 Notes.
(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 plus its Unavailable 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) Term Notes. The Company's obligation to pay the
principal of, and interest on, the Term Loans made by each Lender
shall be further evidenced by the Company's issuance, execution and
delivery of a Term Note payable to the order of each such Lender in
the amount of such Lender's Term Loan Commitment and dated as of the
date of issuance of such Term Note. The principal amount of each Term
Note shall be payable in twelve (12) equal installments commencing on
the first Quarterly Date to occur after the Term Loan Drawdown
Termination Date, and on each Quarterly Date thereafter; provided
however, if the Vacuum Unit has not been completed and placed in
operation on or prior to the Term Loan Drawdown Termination Date, the
Company may extend the Term Loan Drawdown Termination Date to June 30,
1995 and defer the first such installment payment to the next
Quarterly Date to occur after such extended Term Loan Drawdown
Termination Date, in which event, the principal amount of each Term
Note shall be payable in eleven (11) equal installments commencing on
such Quarterly Date. The Company agrees to make such installments on
each Quarterly Date with the final installment in the amount of the
aggregate unpaid principal balance then owing thereunder being payable
on or before the Term Loan Maturity Date. Any prepayment of the
principal amount of the Term Notes shall be applied to the
installments unpaid at such time in the inverse order of maturity.
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(c) 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 8.13:
(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
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 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 (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 Agent. The 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.
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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 with regard to
Revolving Credit Loans shall extend beyond the Revolving Credit
Maturity Date and no Interest Period with regard to Term Loans shall
extend beyond the Term Loan Maturity Date.
Section 2.08 Repayment of Loans. Subject to the provisions of
Sections 2.09 and 2.10, the Company shall pay to the 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.
Section 2.09 Termination or Reduction of Commitments.
(a) Revolving Credit Commitments. The Company may, upon
at least three Business Days' notice to the 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.
(b) Term Loan Commitments. The Company may, upon at
least three Business Days' notice to the Agent, terminate entirely at
any time, or proportionately reduce from time
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to time by an aggregate amount of $1,000,000 or any larger multiple of
$500,000, the unused portions of the Term Loan Commitments, provided
that any such reduction shall apply proportionately to the Term Loan
Commitment of each Lender. If the Term Loan Commitments are
terminated in their entirety, all accrued commitment fees with respect
thereto shall be payable on the effective date of such termination.
(c) Unavailable Commitments. The Company may, upon at
least three Business Days' notice to the 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 Unavailable Commitments, provided that any such
reduction shall apply proportionately to the Unavailable Commitment of
each Lender. If the Unavailable Commitments and the Revolving Credit
Commitments are terminated in their entirety, all accrued commitment
fees with respect to the Unavailable Commitments shall be payable on
the effective date of such termination.
Section 2.10 Prepayments.
(a) Mandatory E&P Loan Value 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 Loan
Value as provided in Section 2.20, the outstanding aggregate principal
amount of the Revolving Credit Loans exceeds the amount of such
redetermined E&P Loan Value, the Company shall pay or prepay the
Revolving Credit Loans in the amount of such excess within five
Business Days of the date of such redetermination. All prepayments
pursuant to this Subsection 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.
(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
prepayment or Cover shall be payable or 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 Agent
provides notice thereof to the Company.
(c) Mandatory Excess Cash Flow Prepayments. On or before
the 120th day after each December 31, commencing on December 31, 1995,
the Company shall prepay (by payment to the Agent for the benefit of
the Lenders) an aggregate principal amount of Term Loans equal to 50%
of Excess Cash Flow for the Calendar Year ending on such date less the
amount of any voluntary prepayments of Term Loans made by the Company
as permitted in Subsection 2.10(d) during such calendar year, such
prepayment shall be applied to installments of principal in the
inverse order of their maturity; provided that such prepayments shall
not exceed $5,000,000 in the aggregate.
(d) 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,
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in the case of a Eurodollar Loan, three Business Days' prior written
notice to the Agent, and, in the case of a Base Rate Loan, one
Business Day's prior written notice to the 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 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 Rase 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.
(e) Notice by Agent. Upon receipt of a notice of
prepayment pursuant to this Section, the 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 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 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 Agent of such
election, specifying each Interest Period therefor.
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(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.
Section 2.12 Fees.
(a) Revolving Credit Commitments. The Company shall pay
to the 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 one-half of one percent (1/2%) per annum on the average daily
excess amount of the Revolving Credit Commitments over the Revolving
Credit Exposure, payable in arrears on the Quarterly Dates, commencing
on the first Quarterly Date to occur after the Closing Date.
(b) Unavailable Commitments. The Company shall pay to
the 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 Unavailable Commitments
shall have been converted or terminated entirely) computed at a rate
equal to one-fourth of one percent (1/4%) per annum on the average
daily amount of the Unavailable Commitments, 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 to designate
all or part of the Unavailable Commitments as Revolving Credit
Commitments pursuant to Section 2.01(f), the Company shall pay to the
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 of such
designation (but in no event earlier than the Closing Date) to and
including such date of designation computed at a rate equal to
one-fourth of one percent (1/4%) per annum on the amount so
designated. Payment of such additional commitment fee shall be due
and payable upon delivery of the notice of designation provided to the
Agent pursuant to Section 2.01(f).
(c) Term Loan Commitments. The Company shall pay to the
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 Term Loan Drawdown
Termination Date (or such earlier date as the Term Loan Commitments
shall have been terminated entirely) computed at a rate equal to
one-half of one percent (1/2%) per annum on the average daily unused
portion of the Term Loan Commitments, payable in arrears on the
Quarterly Dates, commencing on the first Quarterly Date to occur after
the Closing Date.
(d) Letters of Credit. (i) As consideration for the
issuance of any Letter of Credit, the Company will pay to the
applicable 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
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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 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
at the time of the issuance of such Letter of Credit less one-fourth
of one percent (1/4%) per annum, payable in arrears on each Quarterly
Date.
(e) Agent and Co-Agent Fees. The Company shall pay to
the Agent such fees as are set forth in the letter agreement between
the Agent and the Company dated as of February 7, 1994, and accepted
and agreed to by the Company as of February 23, 1994, as the same has
been or may be hereafter amended or supplemented, on the dates
specified therein. The Company shall pay to the Co-Agent such fees as
are set forth in the letter agreement, dated as of the Closing Date,
between the Co-Agent and the Company on the dates specified therein.
(f) Facility Fee. The Company shall pay to the Agent on
the Closing Date for the account of each Lender, a facility fee in the
amount set forth, for each Lender (other than TCB or BP), in a
facility fee letter agreement dated as of the Closing Date between the
Company and each such Lender.
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 Agent on behalf of the Lenders without defense, set-off
or counterclaim to the 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 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
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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 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 Agent's standard practice. If the 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 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, and in any such event, the Agent shall forthwith give
notice (by telephone confirmed in writing) to the Company and to the Lenders of
such determination. Until the 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 Agent of
such determination (which notice the 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 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.
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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
(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 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 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 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 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 Agent shall forthwith give notice (by
telephone confirmed in writing) to the Company and to the
Lenders of such advice;
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(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 Agent), the 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 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 any 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
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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 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 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 Loan Value.
(a) Redetermination Date; Initial E&P Loan Value. The
E&P Loan Value shall be determined in accordance with Section 2.20(b)
by the 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 Loan Value, such redetermination shall
remain in effect until the next successive Redetermination Date.
"Redetermination Date" shall mean the date that the redetermined E&P
Loan Value 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 September 1, 1994 unless redetermined pursuant to
any unscheduled redeterminations, the amount of the E&P Loan Value
shall be $31,700,000.
(b) Redetermination. Upon receipt of the Reserve Reports
by the Agent, the Agent will redetermine the E&P Loan Value. Such
redetermination by the 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 Agent shall propose to the Lenders a new E&P
Loan Value within 15 days following receipt by the Agent and the
Lenders of the complete Reserve Reports. After having received notice
of such proposal by the Agent, the Majority Lenders shall have ten
days to agree or disagree with such proposal. If at the end of the
ten days, the Majority Lenders have not communicated their approval or
disapproval, such silence shall be deemed to be an approval and the
Agent's proposal shall be the new E&P Loan Value. If however, the
Majority Lenders notify Agent within ten days of their disapproval,
the Majority Lenders shall, within a reasonable period of time, agree
on a new E&P Loan Value.
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(c) Exclusion of Certain Property. The 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 Loan Value, 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 September 1 and March 1, commencing September 1, 1994 (each
being a "Scheduled Redetermination Date"), the Agent and the Lenders
shall redetermine the amount of the E&P Loan Value in accordance with
Section 2.20(b). In addition, the Agent may initiate, with the
concurrence of the Majority Lenders, a redetermination of the E&P Loan
Value at any other time as they so elect one unscheduled
redetermination during any consecutive twelve (12) month period by
specifying in writing to the Borrower the date on which the Borrower
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 Loan Value 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 Agent. In the
event of any such unscheduled redetermination, the Agent and the
Lenders shall redetermine the amount of the E&P Loan Value in
accordance with Section 2.20(b).
(e) Notice by Agent. The Agent shall promptly notify in
writing the Borrower and the Lenders of the new E&P Loan Value. Any
redetermination of the E&P Loan Value shall not be in effect until
written notice is received by the Borrower.
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 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 Agent, such 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 Agent, such Issuing Bank
or such Lender is organized, or (iii) any jurisdiction (or political
subdivision thereof) in which such Lender, such Issuing Bank or the
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 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, such
Issuing Bank or the 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
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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").
(C) INDEMNIFICATION. THE COMPANY WILL INDEMNIFY EACH
LENDER, EACH ISSUING BANK AND THE 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 SUCH ISSUING BANK OR THE 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, ANY ISSUING BANK OR THE AGENT, AS THE CASE MAY BE, MAKES
WRITTEN DEMAND THEREFOR. IF ANY LENDER, ANY ISSUING BANK OR THE AGENT
RECEIVES A REFUND OR CREDIT IN RESPECT OF ANY TAXES OR OTHER TAXES FOR
WHICH SUCH LENDER, SUCH ISSUING BANK OR THE 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, SUCH ISSUING BANK
OR THE AGENT, AGREES TO RETURN SUCH REFUND OR CREDIT (PLUS PENALTIES,
INTEREST OR OTHER CHARGES) TO SUCH LENDER, SUCH ISSUING BANK OR THE
AGENT IN THE EVENT SUCH LENDER, SUCH ISSUING BANK OR THE 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, any Issuing Bank or the Agent, the Company
will furnish to the 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
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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 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
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
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 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 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 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 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 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 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 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
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
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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 computing such Lender's portion
of any Borrowing to be made hereunder, the Agent may, in its discretion, round
each Lender's portion of such Borrowing to the next higher or lower whole
dollar amount.
Section 2.23 Disposition of Proceeds. The E&P Mortgage contains
an assignment by Tesoro E&P to the 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 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 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 Agent shall execute and deliver a letter in the form of Exhibit I to such
Persons as the Company may direct; provided, further, if the Agent, any 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
Agent (unless waived by the Agent) at least three Business Days' advance
written notice of the proposed Effective Date, which shall be a Business Day
not later than 10 days from the Closing Date, for the delivery of 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 such
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 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
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disbursements of counsel to the Agent for which the Company has been provided
an invoice and any fees payable to the Lenders or the Agent on or before the
Effective Date), shall have been paid in full, and the Agent shall have
received the following, each dated as of the Closing Date, in form and
substance satisfactory to the Agent, with an original thereof for the 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):
(a) Notes - A duly completed and executed Revolving
Credit Note for each Lender and in each case payable to the order of
the 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 5.02, 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 - The following opinions of
counsel, in each case addressed to the Agent, the Issuing Bank and
each of the Lenders and covering such other matters as any Lender
through the Agent, the Issuing Bank or the Agent may reasonably
request:
(i) Fulbright & Jaworski, L.L.P., counsel to the
Company and its Subsidiaries, substantially in the form of
Exhibit E-1 hereto;
(ii) James C. Reed, Jr., special counsel to the
Company, substantially in the form of Exhibit E-2 hereto; and
(iii) Groh, Eggers & Price, local Alaska counsel to
the Company, substantially in the form of Exhibit E-3 hereto.
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(d) The Security Instruments -
(i) Guaranty Agreement;
(ii) Subrogation and Contribution Agreement dated
as of the Closing Date among the Guarantors;
(iii) Security Agreements dated as of the Closing
Date executed by each of the Company, Tesoro E&P, Tesoro
Alaska, Tesoro R&M and Tesoro Petroleum Distributing Company,
a Delaware corporation, granting to the 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;"
(iv) Pledge Agreements dated as of the Closing
Date executed by the Company granting to the Agent a first
priority security interest in 100% of the capital stock of
Tesoro Alaska, Tesoro R&M, and Tesoro Alaska Pipeline Company,
a Delaware corporation, as security for the Lender
Indebtedness;
(v) the Alaska Deed of Trust;
(vi) the E&P Mortgage;
(vii) Financing Statements, as appropriate, to
perfect the security interests created by the instruments
delivered under clauses (iii) through (vi) above;
(viii) Stock certificates and corresponding stock
powers to perfect the Agent's security in the stock pledged by
the instrument delivered under clause (iv) above;
(ix) all Property in which the 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 Agent or any
bailee accepted by the Agent to the extent that such
possession is necessary for the purpose of perfecting the
Agent's Lien in such collateral security; and
(x) the Cash Collateral Account Agreement
described in the definition of "Cover".
(e) Insurance. A certificate of insurance coverage of
the Borrower evidencing that the Borrower is carrying insurance in
accordance with Section 5.01(e) hereof. In addition, the Agent shall
have received evidence satisfactory to the 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 any of the
Kenai Refinery or Tesoro Terminals are situated in an area identified
as having special flood hazards, the Agent shall have received a copy
of the applicable flood insurance policies (or policy applications),
in form and substance satisfactory to the 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 Agent may
require from attorneys satisfactory to the 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. A Mortgagee's Policy of
Title Insurance in form and substance satisfactory to the Agent
insuring the lien granted pursuant to the Alaska Deed of Trust and a
current survey covering the Refinery Premises.
(h) Environmental Report. A review by Pilko &
Associates, Inc. of prior environmental site assessments for the Kenai
Refinery and such other reviews or further assessments that may be
determined to be required by the Agent, in its sole discretion, to
assess existence of any environmental items which could reasonably be
expected to have a Material Adverse Affect.
(i) Miscellaneous. Such other documents or conditions
precedent which the 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 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 Agent shall have received such
other documents as the Agent or any Lender or special counsel to the
Agent may reasonably request, all in form and substance satisfactory
to the 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 Agent to the appropriate offices for filing or recording.
Section 3.05 Activation of Term Loan Commitments. At the time of
the activation by the Company of the Term Loan Commitments, the Agent and, as
appropriate, each Lender shall have
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received the following, each dated as of the date on which the Term Loan
Commitments are activated pursuant to Subsection 2.01(e), in form and substance
satisfactory to the Agent, with an original thereof for the Agent and with
sufficient copies thereof for each Lender:
(a) Term Notes - A duly completed and executed Term Loan
Note for each Lender and in each case payable to the order of the
Agent for the benefit of such Lender.
(b) Notice of Activation - Notice, in the form of Exhibit
H, that the Term Loan Commitments have been activated pursuant to
Subsection 2.01(e).
(c) Termination of AIDA Financing - Evidence satisfactory
to the Agent that the Indebtedness permitted by Subsection
5.04(a)(xii) has not been utilized and any commitments in connection
therewith have been terminated.
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:
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
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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,
1993, 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 Statement Entities as of December 31, 1993, and the
related unaudited consolidating statements of income and cash flows,
which shall be delivered to each Lender as soon as available and in
any event within 90 days of the Closing Date and certified to by a
Responsible Officer, 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, 1993,
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
5.04(e)(ii) through (vi), 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 provide working capital and for general
corporate purposes. The proceeds of the Term Loan will be used only to
finance the addition of the Vacuum Unit to the Kenai Refinery and constitute
Expansion Debt as such term is defined in that certain Subordination Agreement
dated December 15, 1992, 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. The Letters of
Credit
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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 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.
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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 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.
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.
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
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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 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
any of 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.
(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, 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
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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 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.
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Section 4.24 Recapitalization. As of the Closing Date, the
Company has consummated the Recapitalization and all transactions required in
connection therewith.
ARTICLE V
COVENANTS
Section 5.01 Certain 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:
(a) Maintenance and Compliance, etc. The Company will
and will cause each of its Subsidiaries to (i) except as permitted by
Section 5.04(c), preserve and maintain its corporate existence, rights
and franchises and (ii) 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.
(b) 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.
(c) Further Assurances. The Company will and will cause
each of its Subsidiaries 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. The Company at its
expense will, as promptly as practical, execute and deliver to the
Agent or the applicable Issuing Bank 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.
(d) 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 its
Subsidiaries to take such action with respect to their obligations to
be performed and discharged under the Financing Documents to which
they respectively are parties.
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(e) 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 Agent, the Company will furnish or cause to be
furnished to the 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 Agent and if requested will furnish the
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, 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 Agent or the
Lenders shall have a Lien under the Financing Documents, naming the
Agent as a loss payee and containing provisions that such policies
will not be cancelled without 30 days prior written notice having been
given by the insurance company to the Agent.
(f) 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.
(g) Right of Inspection. The Company will permit and
will cause each of its Subsidiaries to permit any officer, employee or
agent of the 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 Agent or any of the Lenders.
(h) Operation and Maintenance of Mortgaged Property and
Compliance with Leases. Subject to Subsection 5.01(j), 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.
(i) 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 Subsection 5.04(c).
(j) 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
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or such Subsidiary shall not be obligated, itself, to perform any
undertakings contemplated by the covenants and agreements contained in
Subsections 5.01(b), 5.01(e), and 5.01(h) 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.
(k) 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 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.
(l) 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.
(m) 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.
(n) Title Opinions. Within 60 days of the Closing Date,
the attorneys who furnished the title opinions required pursuant to
Section 3.02(f) will provide to the 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 5.02 Reporting 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 furnish to each Lender:
(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
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flows 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 cash flows for such calendar year,
accompanied by a certification thereon of a Responsible Officer,
stating that such consolidating financial statements form the basis of
the Company's consolidated financial statements 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 50 days after the end of each calendar quarter
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, 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 cash flows, 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 form the basis of the Company's
consolidated financial statements 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 compliance (including, but not
limited to, showing all material calculations) as at the end of such
calendar year or such calendar quarter with Subsections 5.03(a),
5.03(b) and 5.03(c); and (iv) containing or accompanied by such
financial or other details, information and material as the 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 copies of
each management letter issued to the Company by such accountants
promptly following
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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 30 days after
such date, a report (the "Reserve Report") in form and substance
satisfactory to the Majority Lenders 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.
(f) Title Information. Within a reasonable time after a
request by the 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 Friday of the preceding calendar week.
(ii) As soon as available and in any event by the
50th day after the end of each calendar quarter of the
Company, a quarterly Borrowing Base Report dated and
reflecting amounts as of the last day of such calendar quarter
which have been reconciled to the financial statements
delivered pursuant to Subsection 5.02(b).
(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
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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 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
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, but at the cost of the Company, a
report of an independent collateral field examiner approved by the
Agent in writing and reasonably acceptable to the Company (which may
be the Agent or an affiliate thereof) with respect to the Eligible
Accounts and Eligible Inventory components included in the Borrowing
Base, and the Agent shall have the option to receive such additional
reports as the Agent or the Majority Lenders shall reasonably request;
provided, however, that so long as no Default has occurred and is
continuing, neither the Agent nor the Majority Lenders shall request
more than one such additional report (for a total of two such reports)
per calendar year.
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(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.
Section 5.03 Financial 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:
(a) Consolidated Tangible Net Worth. Maintain
Consolidated Tangible Net Worth in an amount not less than (i) for the
calendar year ending December 31, 1994, $110,000,000, and (ii) for
the calendar year beginning January 1, 1995, and for each calendar
year thereafter, the sum of the amount calculated pursuant to this
Subsection for the previous year plus 75% of the Company's
consolidated net income for such previous year; 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 Subsection 5.04(d)(ii), 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 exercise
of the MetLife Option pursuant to Subsection 5.04(d)(ii) or from the
retirement of the Subordinated Debentures and Exchange Notes due to
write-offs of original issue discount or deferred financing costs.
(b) Working Capital. Maintain at all times its
Consolidated Working Capital Ratio of at least 1.50 to 1.00.
(c) Company's Cash Flow Coverage. Maintain a cash flow
coverage ratio for itself and its Subsidiaries on a consolidated basis
as of any Quarterly Date equal to or greater than 1.10 to 1.00 for the
Rolling Period ending on the applicable Quarterly Date. As used in
this Subsection 5.03(c), 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
E&P Loan Value 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 or for the addition of the Vacuum
Unit, plus (D) cash dividends actually paid by the Company and its
Subsidiaries on a consolidated basis.
(d) Tesoro Alaska EBITDA. Cause Tesoro Alaska to
maintain the Tesoro Alaska EBITDA (i) for each Rolling Period ending
on or before September 30, 1995, in an amount equal to or greater than
$15,000,000 and (ii) for each Rolling Period thereafter, in an amount
equal to or greater than $20,000,000. As used in this Subsection,
Tesoro Alaska EBITDA shall mean, as to Tesoro Alaska, and for any
Rolling Period, the amount equal to net income of Tesoro Alaska less
any non-cash income included in net income, plus, to the extent
deducted from net income, interest expense, depreciation, depletion
and impairment, amortization of leasehold and
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intangibles, other non-cash expenses, and taxes, provided, that, gains
or losses on the disposition of assets shall not be included in Tesoro
Alaska EBITDA.
Section 5.04 Certain 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:
(a) 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:
(i) the Lender Indebtedness;
(ii) 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 5.04(a) and any
renewal, extension, refinancing or refunding of such
Indebtedness; provided that (A) 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
than the Indebtedness being renewed, extended, refunded or
refinanced;
(iii) 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;
(iv) 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;
(v) 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;
(vi) Indebtedness created, incurred, assumed or
guaranteed after the date hereof not otherwise permitted
pursuant to this Subsection 5.04(a), provided that the
aggregate outstanding principal amount of such Indebtedness
shall not exceed $10,000,000 at any one time outstanding;
(vii) 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
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Company, (C) the Company to any Guarantor and (D) any
Guarantor to any other Guarantor;
(viii) 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;
(ix) Capital Lease Obligations not to exceed
$7,500,000 at any one time;
(x) 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;
(xi) Indebtedness, not to exceed $10,000,000 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, or stay and
appeal bonds; provided, however, to the extent such letters of
credit or bank guaranties are used in lieu or in support of
stay or appeal bonds, such $10,000,000 maximum amount shall be
reduced by an amount equal to the aggregate amount of any
Letters of Credit used in lieu or support of stay or appeal
bonds;
(xii) Indebtedness owed to National Bank of Alaska
and the Alaska Industrial Development and Export Authority
regarding financing for the Vacuum Unit; provided that such
Indebtedness is subject to documentation (including, but not
limited to, documentation setting forth the terms pursuant to
which the Lien on the Kenai Refinery securing the Lender
Indebtedness is subordinated) satisfactory to the Agent and
the principal amount of such Indebtedness shall not exceed
$15,000,000 in the aggregate; and provided further that such
Indebtedness shall only be permitted if the Term Loan
Commitments have been terminated in full as provided in
Subsection 2.09(b); and
(xiii) 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.
(b) 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:
(i) Liens existing on the date hereof and set out
on Schedule 5.04(b);
(ii) Liens securing the Lender Indebtedness;
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(iii) 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;
(iv) 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;
(v) 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);
(vi) 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;
(vii) 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;
(viii) inchoate Liens arising under ERISA;
(ix) any Lien on any Property securing
Indebtedness incurred or assumed for the purpose of financing
all or any part of the acquisition cost of such Property,
provided that such Lien does not extend to any other Property
of the Company and the aggregate unpaid purchase price secured
by all such Liens at any time shall not exceed $2,500,000;
(x) 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;
(xi) 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,
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grant, license or permit which do not materially impair the
use of such Property for the purposes for which it is held;
(xii) 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;
(xiii) 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;
(xiv) 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;
(xv) Liens on the Kenai Refinery securing the
Indebtedness described in Section 5.04(a)(xii); provided
further, up to the maximum amount allowed by such Section,
such Liens may be prior to the Lien on the Kenai Refinery
securing the Lender Indebtedness;
(xvi) Liens securing up to $5,000,000 of the
Indebtedness permitted by Subsection 5.04(a)(xi) to the extent
such Indebtedness is issued in support of the Company's (or
its Subsidiaries') Bolivian operations; and
(xvii) extensions, renewals or replacements of any
Lien referred to in Subsections 5.04(b)(i) through (xvi),
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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(c) 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, PEDCO, 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, PEDCO, 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 another Guarantor other than Tesoro
Bolivia, PEDCO, Tesoro Environmental, or any Subsidiary thereof, or
(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. 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, (E) sell the Property of or stock issued by Tesoro
Bolivia, PEDCO, 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 Agent and the applicable Issuing
Bank in their sole discretion and (F) consummate the E&P
Restructuring.
(d) Dividends, etc. 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, except that the Company may (i)
declare and deliver stock dividends, (ii) redeem or purchase stock
from MetLife Louisiana pursuant to the MetLife Option with, but only
with, (A) the proceeds from the issuance of new shares of common stock
of the Company, (B) the proceeds from the issuance of new shares of
non-redeemable preferred stock of the Company having terms
satisfactory to the Majority Lenders, or (C) the proceeds from up to
$10,000,000 of Indebtedness permitted by Subsection 5.04(a)(vi), (iii)
issue shares of common stock and pay cash not to exceed $1,000,000 in
lieu of fractional shares of common stock upon the exercise of the
MetLife Option, (iv) declare and pay cash dividends (A) on the $2.20
Preferred Stock or (B) at any time after all of the $2.20
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Preferred Stock has been redeemed or purchased and retired pursuant to
clause (ii) above, on common stock or preferred stock issued by the
Company in an amount not to exceed (i) ten percent of consolidated net
income up to $25,000,000 and (ii) twenty percent of consolidated net
income in excess of $25,000,000 of the Company and its Subsidiaries in
any calendar year; provided that both before and after giving effect
to any such dividend, a Default shall not have occurred and be
continuing.
(e) 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:
(i) investments, loans or advances, the material
details of which have been set forth in the Financial
Statements or are disclosed to the Agent in Schedule 4.07
hereto;
(ii) investments in direct obligations of the
United States of America or any agency thereof;
(iii) 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 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;
(iv) investments in commercial paper of maturities
less than one year rated A1 or P1 by Standard & Poor's or
Moody's Investors Services, Inc., respectively, or any
equivalent rating from any other rating agency satisfactory to
the Agent;
(v) routine loans or advances to employees made
in the ordinary course of business not to exceed (A) $25,000
at any one time outstanding to any one employee and (B)
$250,000 in the aggregate;
(vi) investments in securities purchased by the
Company or any Subsidiary of the Company under repurchase
obligations pursuant to which arrangements are made with
selling 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 &
Poor's or Moody's Investors Services, Inc., respectively; or
(B) with the written approval of the 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;
(vii) the purchase, redemption or acquisition of
capital stock of the Company as permitted by Section 5.04(d);
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(viii) investments described in Exhibit J;
(ix) 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; and
(x) 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 or due to a failure by a
participant to comply with the terms and conditions of a stock
incentive as provided for under the terms of such incentive
stock plans or stock incentive grants thereunder.
(f) Lease Payments. Except for (i) oil and gas lease
obligations permitted under Subsection 5.04(a), (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.
(g) 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.
(h) 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.
(i) ERISA Compliance.
(i) 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;
(ii) 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;
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(iii) 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;
(iv) 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;
(v) 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;
(vi) 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;
(vii) 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
(viii) 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.
(j) 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.
(k) 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 5.04(k) 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.
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(l) 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 5.04(l) 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 $25,000 at any
one time outstanding to any one employee, (iii) any other transaction
with any employee, 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 or (iv) the consummation of the E&P Restructuring.
(m) 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.
(n) 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.
(o) Capital Expenditures.
(i) The Company. Make, or permit any of its
Subsidiaries to make Capital Expenditures (excluding Capital
Expenditures made (A) for the addition of the Vacuum Unit or
(B) by Tesoro E&P during such calendar year for the
acquisition, exploration or development of Oil and Gas
Properties) in any calendar year for the Company and its
Subsidiaries on a consolidated basis in excess of the
following amounts; provided, however, that the maximum amount
of Capital Expenditures for any calendar year ending after
December 31, 1994 shall be increased by an amount equal to the
difference between the maximum Capital Expenditures from the
prior calendar year less the actual Capital Expenditures for
such prior calendar year:
Year Ending Maximum Capital
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December 31, Expenditures
------------ ------------
1994 $22,000,000
1995 $15,000,000
1996 $20,000,000
(ii) Tesoro Alaska. Permit Tesoro Alaska to make
Capital Expenditures (excluding Capital Expenditures made for
the addition of the Vacuum Unit) in any calendar year in
excess of the following amounts; provided, however, that the
maximum amount of Capital Expenditures for any calendar year
ending after December 31, 1994 shall be increased by an amount
equal to the difference between the maximum Capital
Expenditures for the prior calendar year less the actual
Capital Expenditures for such prior calendar year:
Year Ending Maximum Capital
December 31, Expenditure
------------ -----------
1994 $ 8,000,000
1995 $ 6,000,000
1996 $10,000,000
(iii) Additional Capital Expenditures.
Notwithstanding the maximum capital expenditure amounts set
forth in clauses (i) and (ii) above, the maximum amount of
capital expenditures for the Company and its Subsidiaries on a
consolidated basis and for Tesoro Alaska may be increased by a
total of $10,000,000 in the aggregate spread, as the Company
may elect, among the calendar years of 1994, 1995 and 1996;
provided that after giving effect to any such increased
capital expenditures, the Company shall not be in Default.
ARTICLE VI
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each an "Event of Default"):
Section 6.01 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 6.02 Covenants Without Notice. The Company shall fail to
observe or perform any covenant or agreement contained in Subsections 5.01(e),
(g) and (i), Sections 5.04 (excluding Subsections 5.04(a)(iii) and (viii), and
Subsection 5.04(l) hereof) or Section 5.03;
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Section 6.03 Other Covenants. The Company shall fail to observe
or perform any covenant or agreement contained in (a) Subsection 5.01(k),
Subsections 5.02(a), (b), (c), (d), (g), (h), (i), (j), (k) or (m), Subsections
5.04(a)(iii) or (viii) or Subsection 5.04(l), 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, any Issuing Bank or the
Agent; and (b) this Agreement, other than those referred to in Sections 6.01,
6.02, or clause (a) of this Section 6.03, 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, any Issuing Bank or the Agent;
Section 6.04 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 6.05 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 6.06 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 $1,000,000 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 6.07 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
$1,000,000 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 $1,000,000 or more in the aggregate of such
Indebtedness; or $1,000,000 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 6.08 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
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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;
Section 6.09 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 6.10 Money Judgment. A judgment or order for the payment
of money in excess of $1,000,000 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 6.11 Discontinuance of Business. The Company or any
Guarantor shall cease to carry on its business as currently conducted or as
contemplated to be conducted;
Section 6.12 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 6.13 Change of Control. The occurrence of a Change of
Control;
Section 6.14 Mandatory Prepayments. The Company shall fail to
make any mandatory prepayment required by Section 2.10; or
Section 6.15 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 Agent, upon the written or telex request
of the Majority Lenders, shall, by written notice to the
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Company, take any or all of the following actions, without prejudice to the
rights of the Agent, any Lender or the holder of any Note, to enforce its
claims against the Company: (i) declare the Revolving Credit Commitment, the
Unavailable Commitment and other lending obligations, if any, terminated,
whereupon the Revolving Credit Commitment, the Unavailable 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 6.08 shall occur, the result which would occur upon the
giving of written notice by the Agent to the Company, as specified in clauses
(i) and (ii) above, shall occur automatically without the giving of any such
notice.
ARTICLE VII
THE AGENT
Section 7.01 Appointment of Agent. Each Lender and the Issuing
Bank hereby designate Texas Commerce Bank National Association, as Agent to act
as herein specified. Each Lender and the Issuing Bank hereby irrevocably
authorizes the 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 Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agent
may perform any of its duties hereunder by or through its agents or employees.
Section 7.02 Nature of Duties of Agent and Co-Agent. The Agent
and the Co-Agent shall have no duties or responsibilities except those
expressly set forth with respect to each of the Agent or the Co-Agent in this
Agreement. Neither the Agent, the Co-Agent nor any of their respective
officers, directors, employees or 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 Agent
and the Co-Agent shall be mechanical and administrative in nature; the Agent
and the Co-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 Agent
or the Co-Agent any obligations in respect of this Agreement except as
expressly set forth herein.
Section 7.03 Lack of Reliance on the Agent and the Co-Agent.
(a) Independent Investigation. Independently and without
reliance upon the Agent or the Co-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 Agent and the Co-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.
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(b) Agent Not Responsible. The Agent and the Co-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 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 7.04 Certain Rights of the Agent. If the 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 Agent shall be entitled to refrain
from such act or taking such action unless and until the Agent shall have
received instructions from the Majority Lenders; and the 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
Agent as a result of the 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 7.05 Reliance by Agent. The 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 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 7.06 INDEMNIFICATION OF AGENT AND THE CO-AGENT. TO THE
EXTENT THE AGENT OR THE CO-AGENT IS NOT REIMBURSED AND INDEMNIFIED BY THE
COMPANY, EACH LENDER WILL REIMBURSE AND INDEMNIFY THE AGENT OR THE CO-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 AGENT OR THE CO-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 AGENT OR THE CO-AGENT FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM, AS TO THE
AGENT, THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR, AS TO THE
CO-AGENT, THE CO-AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 7.07 The Agent and Co-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 Agent and Co-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 Agent
and Co- Agent in their individual capacity. The Agent and Co-Agent may accept
deposits from, lend money to, and generally engage in any kind of banking,
trust,
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financial advisory or other business 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 7.08 May Treat Lender as Owner. The Agent and the
Co-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 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 7.09 Successor Agent.
(a) Agent Resignation. The 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 Agent. If no successor Agent shall
have been so appointed by the Majority Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent's
giving of notice of resignation or the Majority Lenders' removal of
the retiring Agent, then, upon five days' notice to the Company, the
retiring Agent may, on behalf of the Lenders, appoint a successor
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 Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 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 Agent and the Company; provided that a copy of all notices to the Agent
(a) which are Advance Notices shall also be sent to Texas Commerce Bank
National Association, 712 Main Street, Houston, Texas 77002, Telecopier No.
(713)216-6387, Attention: Stan Burge, (b) which are requests for the issuance
of a Letter of Credit by TCB shall also be sent to Texas Commerce Bank,
Documentary Services Division, 717 Travis, 3 TCBS-300, Houston, Texas 77002,
Telcopier No. (713)236-4222, and (c) which are requests for the issuance
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of a Letter of Credit by 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, with a copy to Texas Commerce Bank
National Association, Loan Syndication Services, 1111 Fannin Street, 9th Floor
MS 46, Houston, Texas 77002, Telecopier No. (713)750-3810, Attention: Roy
Mendiola. 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 Agent shall not be effective until received.
Section 8.02 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 Term Loan Drawdown Termination Date, the Revolving Credit Maturity
Date or the Term Loan 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 8.02 or Section 8.04 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
Agent shall be effective without the consent of the Agent; (d) no amendment,
modification or waiver which modifies the rights, duties or obligations of the
Co-Agent shall be effective without the consent of the Co-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 8.03 No Waiver; Remedies Cumulative. No failure or delay
on the part of the Company or the 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 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 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 Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
Section 8.04 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 Agent and each Issuing Bank in the administration
(both before and after the execution hereof and including advice of
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counsel as to the rights and duties of the Agent and the Lenders with
respect thereto) 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 Agent and in the case of enforcement for any of the
Lenders) and promptly reimburse the Agent for all amounts expended,
advanced, or incurred by the 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 AGENT, THE CO-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 AGENT, THE CO-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 8.04(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 AGENT, THE CO-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 AGENT, THE CO-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 8.04(C) IN RESPECT OF ANY PROPERTY FOR ANY
OCCURRENCE ARISING SOLELY AND DIRECTLY FROM THE ACTS OR OMISSIONS OF
THE 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 8.04 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 8.05 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
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during the continuance thereof and whether or not such Lender, such Issuing
Bank or such holder has made any demand 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 such Issuing Bank to or for the credit or the account of the Company
against any and all of the Lender Indebtedness then outstanding.
Section 8.06 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
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 8.07 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 Agent and 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 F (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 Agent a processing and recordation fee of $2,500. Any such
assignment will become effective upon the recording by the 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 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 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 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
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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 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 or the Term Loan 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
8.15. Notwithstanding anything in this Section 8.07(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 8.07(b) shall not be considered a participation pursuant to
this Section 8.07(c).
(d) Registration Statements; Blue Sky Laws.
Notwithstanding any other provisions of this Section 8.07, 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 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.
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(f) Assignees Treated as Lenders. The entries in the
Register shall be conclusive in the absence of manifest error and the
Company, the 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.
Section 8.08 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) Designation of 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.
(d) Service of Process. Nothing herein shall affect the
right of the 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 8.09 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.
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Section 8.10 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 8.11 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 8.12 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 8.13 Interest. It is the intention of the parties hereto to
conform strictly to usury laws applicable to the Agent, the Co-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 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 cancelled 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
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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 8.14 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 8.15 Confidential Information. The Agent and each Lender agree
that all documentation and other information made available by the Company to
the 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 Agent or such
Lender, or was theretofore known or hereinafter becomes known to the Agent or
such Lender independent of any disclosure thereto by the Company) be held in
the strictest confidence by the 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 Agent or such
Lender may disclose documentation and information to the Agent and/or to any
other Lender which is a party to this Agreement or any Affiliates thereof and
(ii) the 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 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
Agent in connection with such potential transfers. Notwithstanding the
foregoing, nothing contained herein shall be construed to prevent the 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
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 Agent or such Lender is
compelled to disclose such confidential information in a proceeding requesting
such disclosure, the 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 8.16 ENTIRE AGREEMENT. THE NOTES, THIS AGREEMENT AND THE OTHER
FINANCING DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE
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 8.17 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,
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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 8.18 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 8.19 Survival of Indemnities. The Company's obligations under
Sections 2.16, 2.18, 2.21 and 8.04 shall survive the payment in full of the
Loans and the Letter of Credit Liabilities.
Section 8.20 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 8.21 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.
Section 8.22 Effectiveness. This Agreement shall not be effective until
executed by all signatories hereto and delivered to the Agent in the State of
Texas and accepted by the Agent in such state.
Section 8.23 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 8.24 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."
Section 8.25 Proposed Restructuring. The Company has indicated that it
intends to pursue the consummation of the E&P Restructuring. The Agent, the
Co-Agent, the Issuing Banks and the Lenders hereby approve, subject to
satisfactory documentation, including, but not limited to, any reasonably
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required modification to this Agreement, the E&P Restructuring and the
transactions contemplated in connection therewith.
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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/William T. VanKleef
-----------------------------------------
Address: William T. VanKleef
Vice President, Treasurer
8700 Tesoro Drive
San Antonio, Texas 78217
AGENT, CO-AGENT, ISSUING BANKS
AND THE LENDERS: TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
Individually, as an Issuing Bank and as Agent
By:/s/P. Stan Burge
-----------------------------------------
Address: P. Stan Burge
Vice President
712 Main Street
Houston, Texas 77002
Attention: Mr. P. Stan Burge
BANQUE PARIBAS
Individually, as an Issuing Bank
and as Co-Agent
By:/s/Brian Malone
-----------------------------------------
Address: Name:
Title:
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: Mr. Brian Malone By:/s/Patrick J. Milon
-----------------------------------------
Name:
Title:
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Address: BANK OF SCOTLAND
380 Madison Avenue
New York, New York 10017
Attention: Ms. Catherine Oniffrey By:/s/Elizabeth Wilson
--------------------------------------
Name:
Title:
With Copy To:
1200 Smith Street
1750 Two Allen Center
Houston, Texas 77002
Attention: Ms. Janna Blanter
CHRISTIANIA BANK
By:/s/Peter M. Dodge and
--------------------------------------
/s/Carl Petter Svendsen
--------------------------------------
Address: Name:
Title:
11 West 42nd Street, 7th Floor
New York, New York 10036
Attention: Mr. Peter Dodge
Address: THE BANK OF NOVA SCOTIA
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308 By:/s/F.C.H. Ashby
--------------------------------------
Attention: Ms. Lauren Bianchi Name:
Title:
With Copy To:
1100 Louisiana Street, Suite 3000
Houston, Texas 77002
Attention: Mr. Michael W. Nepveux
NBD BANK, N.A.
By:/s/James L. Caldwell IV
--------------------------------------
Address: Name:
Title:
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Mr. Russell H. Liebetrau, Jr.
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CONTINENTAL BANK, N.A.
By:/s/Robert R. Ingersoll
--------------------------------------
Address: Name:
Title:
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Mr. Robert Ingersoll
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By: FIRST UNION CORPORATION OF NORTH
CAROLINA, as agent
By:/s/Paul N. Riddle
--------------------------------------
Address: Name:
Title:
1001 Fannin Street, Suite 2255
Houston, Texas 77002
Attention: Mr. Paul N. Riddle
Address: NATIONAL BANK OF CANADA
125 West 55th Street
New York, New York 10019-5366 By:/s/Larry L. Sears
--------------------------------------
Name:
With Copy To: Title:
2121 San Jacinto, Suite 1850 By:/s/David L. Schreiber
---------------------------------------
Dallas, Texas 75201 Name:
Attention: Mr. David L. Schreiber Title:
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THE FROST NATIONAL BANK
By:/s/Jim Crosby
--------------------------------------
Address: Name:
Title:
100 W. Houston Street
San Antonio, Texas 78205
Attention: Mr. Phil Dudley
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ANNEX I
Commitments
Revolving
Credit Unavailable Total Term Loan
Banks Commitment Commitment Commitments Commitment
- ----- ---------- ---------- ----------- ----------
Texas Commerce Bank 12,800,000.00 3,200,000.00 16,000,000.00 1,920,000.00
Banque Paribas 12,800,000.00 3,200,000.00 16,000,000.00 1,920,000.00
Bank of Scotland 10,400,000.00 2,600,000.00 13,000,000.00 1,560,000.00
Christiania Bank 10,400,000.00 2,600,000.00 13,000,000.00 1,560,000.00
The Bank of Nova Scotia 10,400,000.00 2,600,000.00 13,000,000.00 1,560,000.00
NBD Bank, N.A. 10,400,000.00 2,600,000.00 13,000,000.00 1,560,000.00
Continental Bank, N.A. 8,800,000.00 2,200,000.00 11,000,000.00 1,320,000.00
First Union National
Bank of North Carolina 8,800,000.00 2,200,000.00 11,000,000.00 1,320,000.00
National Bank of Canada 8,800,000.00 2,200,000.00 11,000,000.00 1,320,000.00
The Frost National Bank 6,400,000.00 1,600,000.00 8,000,000.00 960,000.00
------------ ------------ ------------ ----------
Total 100,000,000.00 25,000,000.00 125,000,000.00 15,000,000.00
Annex I-1
97
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
$__________ April ___, 1994
TESORO PETROLEUM CORPORATION, a Delaware corporation (the "Company"), for
value received, promises and agrees to pay to (the "Lender"),
or order, at the Payment Office of TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(the "Agent"), at 712 Main Street, Houston, Texas 77002, the principal sum
of ___________________________________ DOLLARS ($___________________), 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 March 31, 1997,
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 20th day of April, 1994, by and among the Company and
Texas Commerce Bank National Association, individually, as an Issuing Bank and
as Agent, Banque Paribas, individually, as Co-Agent and as Issuing Bank 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
A-1
98
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 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
99
EXHIBIT B
FORM OF TERM NOTE
$__________ April ___, 1994
TESORO PETROLEUM CORPORATION, a Delaware corporation (the "Company"), for
value received, promises and agrees to pay to (the"Lender")
or order, at the Payment Office of TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, at 712 Main Street, Houston, Texas 77002, the principal sum of
___________________________________ DOLLARS ($___________________), in lawful
money of the United States of America and in immediately available funds, in
installments 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
of the Term 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 Term Loan until such Term 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 payment 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 March 31, 1998,
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 Term Notes referred to in the Credit Agreement
dated as of the 20th day of April, 1994, by and among the Company and Texas
Commerce Bank, individually, as an Issuing Bank, and as Agent, Banque Paribas
individually, as Co-Agent and as an Issuing Bank, and the 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 Term 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 Term Loan,
the amount and date of each payment or prepayment of principal of each such
Term Loan received by the Lender and the Interest Periods and interest rates
applicable to each Term 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 Term 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
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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 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 Term 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:
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Name:
Title:
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