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EXHIBIT 10(o)
AMENDED AND RESTATED
CREDIT AGREEMENT
for an amount of
up to
USD 2,250,000.00
to
SOUTH HAMPTON REFINING COMPANY
provided by
DEN NORSKE BANK ASA
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I N D E X
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
2. AMOUNT AND PURPOSE . . . . . . . . . . . . . . . . . . . 7
3. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 8
4. EXTENSION RENEWAL AND AVAILABILITY . . . . . . . . . . . 10
5. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . 10
6. REPAYMENT. . . . . . . . . . . . . . . . . . . . . . . . 11
7. PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . 12
8. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . 12
9. REPRESENTATIONS AND COVENANTS . . . . . . . . . . . . . 12
10. CHANGES IN CIRCUMSTANCES . . . . . . . . . . . . . . . . 18
11. FEES, COSTS AND EXPENSES . . . . . . . . . . . . . . . . 19
12. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 19
13. CALCULATION . . . . . . . . . . . . . . . . . . . . . . 20
14. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . 20
15. CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . 23
16. NOTICES AND CORRESPONDENCE . . . . . . . . . . . . . . . 23
17. GOVERNING LAW AND JURISDICTION . . . . . . . ... . . . . 24
18. FINAL AGREEMENT . . . . . . . . . . . . . . . . . . . . 24
19. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . 24
Exhibit A - Form of Promissory Note
Exhibit B - Form of Borrowing Base Certificate
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Amended and Restated Credit Agreement dated __________ , 1998 (the
"Restated Agreement") between South Hampton Refining Company, a Texas
corporation (the "Borrower") and Den norske Bank ASA, New York Branch, a
Norwegian bank (the "Bank").
WHEREAS, the Borrower and the Bank entered into the Amended and
Restated Credit Agreement dated October 15, 1996 as amended and restated
from time to time (as so amended and restated, the "Credit Agreement"); and
WHEREAS, the Borrower and the Bank wish to amend and restate the Credit
Agreement to modify certain provisions of the Credit Agreement and to
embody all of the amendments made to the Credit Agreement in one document.
NOW, THEREFORE, in consideration of the above recitals and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree to amend and restate the Credit
Agreement to read in its entirety as follows:
1. DEFINITIONS
"Advance" means the loans by the Bank to the
Borrower pursuant to Section 2 hereof.
"American Shield" means American Shield Refining Company, a
Delaware corporation.
"Arabian Shield" means Arabian Shield Development Company, a
Delaware corporation.
"Banking Day" means a day upon which banks are open for
business in such places contemplated for the
transactions required by this Restated Agreement.
"Borrowing Base" means the aggregate of (i) 90% of cash of
the Borrower held in the Cash Collateral
Accounts, (ii) 80% of Eligible Accounts
Receivable and (iii) 60% of Inventory.
"Borrowing Base means a certificate in the form of Exhibit B
Certificate" attached hereto.
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Amended and Restated Credit Agreement
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"Cash Collateral means the accounts at a designated depositary
Accounts" bank acceptable to the Bank providing for the
payment of all the Borrower's receivables to a
designated account or accounts under the joint
control of the Borrower and the Bank.
"Closing Date" means November 30th, 1998.
"Commitment" means an amount up to USD 2,250,000.00 on the
Closing Date, reducing (i) on the last day of
each fiscal quarter of the Borrower commencing
December 31, 1998 by the sum of USD 105,000,
(ii) by the amount of any Distribution made
under Section 9(d)(ii) on the date such
Distribution is made, and (iii) on each of the
first five (5) Payment Dates hereunder, by the
sum of USD 40,000.
"Credit Facility" means the revolving credit facility, the terms
and conditions of which are set out in Section 2
of this Restated Agreement.
"Current Ratio" means the ratio of the current assets of the
Borrower to its current liabilities as each
would be classified as current assets or
liabilities in accordance with generally
accepted accounting principles in the U.S., of a
corporation conducting a business the same as or
similar to the business of the Borrower, but
excluding receivables from or payables to any
subsidiary, parent or affiliate of the Borrower.
"Distribution" means a distribution by the Borrower to a Parent
Company in respect of dividends.
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"Eligible Accounts means all accounts receivable which have been
Receivable" created in the ordinary course of Borrower's
business and for which Borrower's right to
receive payment is absolute and not contingent
upon the fulfillment of any condition whatsoever,
and shall not include (a) any invoice of a
customer which remains unpaid more than 90 days
from its invoice date, (b) any account for which
there exists a right of set off, counterclaim,
dispute, objection, complaint, defense or
discount,(c) any account which arises from the
sale or lease to or performance of services for,
or represents an obligation of, an employee,
affiliate, partner, parent or subsidiary of
Borrower, (d) that portion of any account from a
customer of Borrower which represents the amount
by which Borrower's total accounts from such
customer exceeds 25% of Borrower's total
accounts,(e) any account arising from a sale or
lease to a non-United States or non-Canadian
customer, and (f) any account designated to
Borrower by the Bank in which the Bank is not or
does not continue to be, in the Bank's reasonable
judgment, satisfied with the credit standing of
the customer of Borrower in relation to the
amount of credit extended.
"Fixed Charge Coverage means the ratio of (a) the earnings of the
Ratio" Borrower excepting extraordinary items of
gain or loss, but without deduction for interest,
taxes, depreciation and amortization to (b) the
aggregate of scheduled payments of principal of
all debt of the Borrower and interest thereon.
"GAAP" means generally accepted accounting principles in
effect in the United States.
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"Hazardous Substance" means any hazardous, dangerous or toxic waste,
substance or material as defined in the
Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C.
Sec. 9601 et sea. (hereinafter, "CERCLA"); the
Resource Conservation and Recovery Act, 42 U.S.C.
Sec. 6901, et seq. (hereinafter, "RCRA"); the
Hazardous Materials Transportation Act, 49 U.S.C.
Sec. 1801, et seq.; the Texas Solid Waste
Disposal Act, Tex. Rev. Civ. Stat. Ann. Art.
4777-7 Sec. 13(g)(7); or any other federal, state
or local statute, law, ordinance, code or
regulation relating to or imposing liability or
standards of conduct concerning the use,
production, generation or disposal of any
hazardous, toxic or otherwise dangerous waste,
substance, or material, currently or at any time
hereafter, in effect.
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"Inventory" means any and all of Borrower's right, title and
interest in and to inventory, wherever
located, and in which the Bank has a perfected
security interest, including without limitation,
any and all goods held for sale or lease
or being processed for sale or lease in
Borrower's business, as now or hereafter
conducted, including without limitation, all
feed stock, materials, goods, and work-in-
progress, finished goods, and other tangible
property held for sale or lease or furnished or
to be furnished under the contracts of service
or used or consumed in Borrower's business,
along with all documents (including documents
of title) covering inventory, all cash and
non-cash proceeds from the sale of inventory
including proceeds from insurance and
including such property the sale or other dispo-
sition of which has given rise to accounts and
which has not been returned to or repossessed
or stopped in transit by Borrower, but
specifically excluding obsolete or slow moving
inventory.
"Margin" means 1% (one percent).
"Maturity Date" means December 31, 2000 or as extended in the
sole discretion of the Bank.
"Net Income" means net income of the Borrower as determined
in accordance with GAAP.
"Parent Company" means American Shield Refining Company, Arabian
Shield Development Company and Texas Oil &
Chemical Co. II, or any combination thereof.
"Payment Date" means the last day of each month during the term
of this Restated Agreement.
"Permitted Distribution" shall have the meaning set forth in Section 9(d)
hereof.
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"Prime Rate" shall mean the rate announced from time to time
by the Bank as its prime lending rate in effect
in its New York, New York office, automatically
fluctuating upward and downward with and at the
time of each such announcement without special
notice to Borrower or any other Person. The
Bank's prime rate may be one of several interest
rates, may serve only as reference rate and may
not be the Bank's lowest rate.
"Required Commitment means for any period, those amounts by which the
Reduction" Commitment is reduced pursuant to clause (i) of
the definition of "Commitment".
"Saudi Fal" means Saudi Fal, a limited liability company.
"Security Documents" means all or any documents pursuant to Section 8
hereof, as have been or may be entered into as
security for all or any of the obligations of
the Borrower hereunder.
"Tangible Net Worth" means, at a particular date, the sum of the
capital stock (excluding treasury stock) and
surplus (including earned surplus, capital
surplus and the balance of the current profit
and loss account not transferred to surplus)
prepared in accordance with GAAP as of the date
of determination, excluding, however, from the
determination, all inter-company transactions
and after deducting therefrom the net book value
of all assets (after deducting any reserves
applicable thereto) which would be treated as
intangibles under GAAP, including, without
limitation, such items as good will, trademarks,
trade names, patents and licenses, franchises
and operating rights), of the Borrower.
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"Tax" means all or any levies, imposts, duties,
charges, fees, deductions and withholdings
levied or imposed by any national or local
governmental or public body or authority (except
for United States federal, state and local income
taxes levied on the Bank's gross income or
receipts or United States federal, state and
local gross receipts or franchise taxes levied in
lieu of income taxes) and any restrictions or
conditions resulting in a charge.
"TOCCO II" means Texas Oil & Chemical Co. II, Inc., a Texas
corporation.
"USD" means the lawful currency of the United States of
America.
Where the context of this Agreement so allows, words importing the singular
include the plural and vice versa.
2. AMOUNT AND PURPOSE
(a) The Bank shall make available the Commitment as follows:
USD 2,250,000.00 which shall be used by the Borrower for the purpose
of refinancing, renewing and extending the loan evidenced by its
Promissory Note dated December 30, 1990, as amended or restated from
time to time (the "Old Note"); and
(b) The Commitment shall be drawn down by the Borrower in the form of
Advances for a term which shall not extend beyond the Maturity Date. The
total amount of Advances outstanding under the Credit Facility shall not
exceed at any time the lesser of the Commitment and the Borrowing Base.
Within such limit, the Borrower may borrow, prepay pursuant to Section 7 of
this Restated Agreement and reborrow under this Section 2(b). Each borrowing
by the Borrower shall be in an aggregate principal amount of at least USD
50,000.
(c) The Commitment shall be evidenced by the promissory note of the
Borrower in the form of Exhibit A attached hereto (the "Note").
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(d) Notwithstanding anything else in this Restated Agreement, at no
time shall there be outstanding Advances in an amount in the aggregate
greater than the lesser of the Commitment and the Borrowing Base.
3. CONDITIONS PRECEDENT
3.1 The Borrower shall give the Bank at least one Banking Day
irrevocable prior written notice of its desire to have an Advance made.
3.2 The obligation of the Bank to make the first Advance under this
Restated Agreement shall be subject to the Bank or its legal counsel having
received in form and content satisfactory to the Bank:
(a) The counterparts of this Restated Agreement duly executed by the
Borrower's authorized representative or representatives.
(b) The Security Documents.
(c) Copies certified by the Secretary of the Borrower of:
(i) the By-Laws of the Borrower,
(ii) The resolutions of the Board of Directors of the Borrower
approving the execution, delivery and performance by the
Borrower of this Restated Agreement, the Note, the Security
Documents and specifying the persons authorized to sign the
above mentioned documents on its behalf.
(d) Any consents necessary from governmental or other authorities for
the execution, delivery and performance by the Borrower of this Restated
Agreement.
(e) A copy certified as of a recent date by the Secretary of State of
Texas of the Articles of Incorporation of the Borrower with all amendments
thereto.
(f) Evidence from the Secretary of State and the Comptroller of Public
Accounts of the State of Texas as to the continued existence and good
standing of the Borrower.
(g) An opinion of counsel to the Borrower acceptable to the Bank as
to:
(i) the valid existence and good standing of the Borrower under
the laws of the State of Texas.
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(ii) the due authorization, execution and delivery by the
Borrower of this Restated Agreement, the Note and the
Security Documents to which it is a party.
(iii) this Restated Agreement, the Note and the Security
Documents to which the Borrower is a party constituting
the legally valid and binding obligations of the
Borrower in accordance with their terms.
(iv) the execution, delivery and performance of this Restated
Agreement, the Note and the Security Documents to which
the Borrower is a party, by the Borrower not resulting
in a breach of any terms or conditions of, or resulting
in the imposition of any lien, charge or encumbrance
upon any properties of the Borrower or constituting a
default under any indenture, agreement, order, judgment
or other instrument under which the Borrower or its
property may be bound or constituting a violation of
the Articles of Incorporation or By-Laws of the
Borrower or violating any provision of applicable law.
(v) the execution, delivery and performance of this
Agreement, the Note and the Security Documents to which
the Borrower is a party by the Borrower not requiring
the consent or approval of, the giving of notice to,
the registration with or the taking of any action by
any governmental authority of the United States or the
State of Texas.
(vi) such other matters as the Bank may request.
(h) the Note.
(i) Uniform Commercial Code financing statements covering the
security interests granted by the Security Documents shall have been duly
executed by the Borrower as debtor, and duly filed in all places as are, in
the opinion of the Bank, necessary or desirable to perfect said security
interest.
(j) Evidence of the insurance required by Section 9(b)(vii) hereof.
(k) Evidence satisfactory to the Bank that the Borrower's indebtedness
to Saudi Fal is repaid in full within two business days following the
Closing Date.
(l) Evidence satisfactory to the Bank that the Borrower's indebtedness
to American Shield Refining Company and Arabian Shield
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Development Company has been converted to a contribution of capital to the
Borrower.
3.4 The obligations of the Bank to make each subsequent Advance shall
be subject to the further condition precedent that the Bank shall have
received a certificate dated the date of such Advance of the Borrower
certifying that:
(a) the representations and warranties contained in Section 9 are true
and correct on and as of the date of such Advance as though made
on and as of such date; and
(b) no event has occurred and is continuing, or would result from such
Advance, which constitutes an Event of Default or with the passing
of time or the giving of notice would constitute an Event of Default.
3.5 All of the conditions precedent contained in this Section 3 are
for the sole benefit of the Bank and the Bank may waive any of them in its
absolute discretion.
4. EXTENSION RENEWAL AND AVAILABILITY
Subject to the provisions of Sections 10 and 11 hereof and:
(a) The Bank's prior satisfaction that the relevant conditions set out
in Section 3 above have been complied with,
(b) No Event of Default as defined in Section 15 herein has occurred
or is continuing,
the indebtedness evidenced by the Old Note shall be refinanced, extended,
renewed and restructured and the new credit facility of Facility B shall be
made available to the Borrower all in accordance with the terms and
provisions of this Restated Agreement.
5. INTEREST
(a) Interest Rate
The Borrower shall pay interest on the Advances drawn and outstanding under
this Restated Agreement at the annual rate which is conclusively certified
by the Bank to be the aggregate of the Margin and the Prime Rate.
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(b) Interest Payment
(i) Interest shall be payable monthly in arrears on the last day
of each month and on the Maturity Date and calculated in
accordance with Section 14 hereof.
(ii) If any interest would be payable on a non-Banking Day, it
shall be paid on the next succeeding Banking Day.
(c) Computation of Interest
Notwithstanding any provision of this Restated Agreement or the Note
to the contrary, in no event shall the aggregate amount of consideration
which constitutes interest under any applicable law which is contracted
for, charged or received hereunder or under the Note ("Interest") exceed
the maximum amount of nonusurious interest allowed by law, and any excess
shall be credited on this Restated Agreement or the Note (or if all
obligations under this Restated Agreement or the Note shall have been paid
in full, refunded to the Borrower). For purposes of the foregoing, the
maximum amount of interest allowed by law shall be calculated by
determining the amount of interest that could be contracted for, charged or
received during the term hereof at the maximum rate of nonusurious interest
allowed from time to time by applicable law as is now or, to the extent
allowed by law, as may hereafter be in effect (the "maximum nonusurious
interest rate") and, if at any time the rate of Interest to accrue would
exceed the maximum nonusurious interest rate, the rate of Interest to
accrue under this Restated Agreement or the Note shall be limited to the
maximum nonusurious interest rate, but any subsequent reductions in the
Prime Rate shall not reduce the rate of Interest to accrue under this
Restated Agreement or the Note below the maximum nonusurious interest rate
until the total amount of Interest accrued and paid under this Restated
Agreement or the Note equals the amount of Interest which would have
accrued if a rate per annum equal to the Prime Rate plus the Margin had at
all times been in effect.
6. REPAYMENT
The Borrower shall repay all principal amounts outstanding plus any
other outstanding amounts hereunder in a single installment on the Maturity
Date. Subject to the terms hereof, the Borrower may reborrow amounts repaid
or prepaid prior to the Maturity Date, upon one (1) day prior written
notice to the Bank.
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7. PREPAYMENT
The Borrower shall make an immediate prepayment in an amount by
which the principal amount outstanding hereunder exceeds the Commitment or
the Borrowing Base, if ever.
8. SECURITY
The Facility is secured by:
(a) The Pledge Agreement dated June 16, 1997 by DCCO II in favor of
the Bank.
(b) The Deed of Trust dated January 20, 1985 from the Borrower to
Michael E. Niebruegge as Trustee.
(c) The Deed of Trust dated April 8, 1986 from Texas Oil &
Chemical Terminal, Inc. ("Terminal") to Michael E. Niebruegge as
Trustee.
(d) The Security Agreement and Financing Statement from the Borrower
to the Bank dated as of January 14, 1985, duly ratified by the Borrower.
(e) The Cash Collateral Accounts.
(f) An Assignment of Insurances dated March 3, 1988 from the Borrower
and Texas Oil & Chemical Co. II, Inc., duly ratified by the parties
thereto.
(g) A pledge by American Shield Refining Company of all of the issued
and outstanding shares of Texas Oil & Chemical Co. II, Inc. in form and
substance satisfactory to the Bank, duly ratified by the parties thereto.
9. REPRESENTATIONS AND COVENANTS
(a) The Borrower represents to and agrees with the Bank that:
(i) this Restated Agreement and the Security Documents to which it is
a party constitute valid, binding and enforceable obligations of
the Borrower according to the terms and conditions hereof and
thereof and the execution and performance of this Restated
Agreement and such Security Documents do not and will not
contravene any applicable law, order, regulation or restriction
of any kind binding on the Borrower.
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(ii) the Borrower is a duly formed and validly existing corporation
under the laws of the State of Texas, has full power to enter
into this Restated Agreement and the Security Documents to which
it is party, to make borrowings hereunder and to service and
repay the Commitment.
(iii) the chief executive office of the Borrower is located at 7752 FM
418, Silsbee, Texas.
(iv) it is currently in possession of permits authorizing all
activities now or formerly conducted on the properties securing
this indebtedness from the Texas Water Commission, the Texas Air
Quality Control Board, the U.S. Environmental Protection Agency,
the U.S. Army Corps of Engineers and the Texas Railroad
Commission. Furthermore, the Borrower agrees that it maintains no
Hazardous Substances on the properties securing this indebtedness
without possession of the appropriate permits.
(v) no Event of Default has occurred and is continuing.
(b) Affirmative Covenants. The Borrower undertakes to the Bank that
so long as any amount is owing hereunder it will:
(i) promptly inform the Bank of any occurrence of which it becomes
aware which is, or with the passage of time or the giving of
notice would constitute, an Event of Default hereunder or under
any of the Security Documents to which it is a party or which in
its reasonable opinion might adversely affect its ability fully to
perform its obligations under this Restated Agreement or any of
the Security Documents to which it is a party.
(ii) deliver to the Bank by the 105th day of the end of the each fiscal
year, consolidated annual audited financial statements, including
consolidating financial statements of the Borrower, and by the
30th day after the end of each month, profit and loss and balance
sheet statements.
(iii) deliver to the Bank by the 30th day following the end of each
quarter, statements showing the source and use of funds of the
Borrower for the preceding quarter.
(iv) deliver to the Bank within 3 Banking Days of the last day of each
calendar month and the 15th day of each calendar month a
Borrowing Base Certificate as of such days as well as a
certificate signed by the President or the Chief Financial
Officer of the Company as to the inventory and accounts
receivable (status and aging) of the Borrower.
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(v) deliver to the Bank within 45 days of the last day of each fiscal
quarter, compliance statements signed by the President or Chief
Financial Officer of the Borrower certifying that the Borrower is
in compliance with all of the representations and covenants
hereof as if made on the date of such certificate, and that no
default has occurred hereunder, together with a calculation of
all financial ratios set forth in Section 9(c)(ix), (x) and (xi)
hereof.
(vi) deliver to the Bank no later than December 1 of each year the
business plan, income and expense projections, projected balance
sheet and projected sources and uses of funds statement of the
Borrower for the subsequent calendar year.
(vii) deliver to the Bank within 45 days of the end of each calendar
month a written status report of the Borrower's operations,
financial performance and outstanding accounts payable for the
previous calendar month and such other financial information as
the Bank may from time to time reasonably request; permit the
Bank or its representative at any reasonable time or times to
inspect the properties of the Borrower and to inspect, audit and
examine the books or records of the Borrower and to take extracts
therefrom. The Bank shall further have the right to order an
audit of Borrower's books and records, no more than twice
annually. The costs of such audit shall be borne by the Borrower.
(viii) maintain insurance acceptable to the Bank including, but not
limited to, casualty insurance with responsible and reputable
insurance companies or associations in such amounts and covering
such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general
areas in which the Borrower operates. The Borrower shall furnish
the Bank with evidence of all such insurance policies currently
in force and with evidence of payment of the premiums on such
policies.
(ix) execute and deliver to the Bank any instruments, documents or
certificates which in the Bank's judgment are necessary to amend,
modify, extend or supplement any of the Security Documents to
better evidence, reflect and secure the Note.
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(x) perform and maintain, or cause to be performed or maintained, all
permits, licenses, consents and agreements concerning its
assets or operations.
(xi) notify the Bank, within five (5) days, should it ever come into
possession of knowledge or have a claim or complaint asserted
against it because the Borrower or any other person or entity
caused or permitted any Hazardous Substances to be stored,
located, held or disposed of on, under or at any of the
properties securing Facility A or Facility B in a manner not in
compliance with all applicable laws, regulations and permits
regarding such storage, holding or disposal.
(xii) give the Bank, within five (5) days, written notice in the event
the Borrower receives notice of (1) the happening of any spill or
cleanup of Hazardous Substances affecting the properties securing
the Credit Facility, or any other property owned by the Borrower
that would require the Borrower to notify any environmental
agency, of any federal, state or local government of such spill
or cleanup; or (2) any complaint, violation, notice or citation
regarding any permit controlling the environmental health or
safety violation of the Borrower, including health or safety
violation of the Borrower, including without limitation, any
notice from the Environmental Protection Agency.
(xiii) indemnify and hold the Bank harmless from and against any and all
claims, losses, liability, damages and injuries of any kind
whatsoever incurred or suffered by or asserted against the Bank
with respect to or as a direct result of the presence, escape,
seepage, spillage, leaking, discharge or migration from any of
the properties securing the Credit Facility of any Hazardous
Substance, including without limitation, any claims asserted or
arising under CERCLA, RCRA or the Texas Solid Waste Disposal Act,
regardless of whether or not caused by or within the control of
the Borrower.
(xiv) cause each agreement between the Borrower and the holder of any
debt subordinated to the Loan to provide that such holder may not
accelerate the payment of such subordinated debt until all
amounts outstanding hereunder, now or in the future, are repaid
or prepaid in full.
(xv) maintain its Inventory and other properties in good and safe
working order. The Bank shall have the right to perform an
inspection of Borrower's Inventory and
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properties four (4) times per year upon at least two (2) days'
prior notice to the Borrower. The costs of such inspections shall
be borne by the Borrower.
(xvi) Year 2000 Compliance. On or prior to June 30, 1999 (the
"Compliance Date"), the Borrower shall take all actions necessary
to insure that the automated systems used by the Borrower that are
material to its operations (collectively, "Mission-Critical
Systems"), including without limitation, software, hardware and
other data processing devices, shall not fail, malfunction or
produce incorrect results with respect to data, calculations and
other processing involving dates before, as of or after December
31, 1999, regardless of the form of the date data is received or
processed (collectively "Year 2000 Compliant" or "Year 2000
Compliance"). Without limiting the generality of the foregoing,
on or prior to the Compliance Date, the Borrower shall test and
certify that its Mission-Critical Systems are Year 2000 Compliant
in accordance with commercially reasonable practices and industry
standards. The Borrower agrees that upon the reasonable request of
the Bank, the Borrower will make its employees, consultants,
premises, records and documentation available to the Bank with
respect to their Year 2000 Compliance efforts.
(c) Negative Covenants. The Borrower undertakes to the Bank that so
long as any amount is owing hereunder it will not without the prior written
consent of the Bank:
(i) create or permit to subsist, without the prior written consent of
the Bank, any mortgage, pledge, lien or other security interest
on any or all of its present or future revenues, properties or
assets except liens in favor of Saudi Fal and Arabian Shield duly
subordinated to any liens in favor of the Bank and liens
permitted by the Security Documents or with the prior written
consent of the Bank or as disclosed to the Bank in writing and
accepted by the Bank on the Closing Date;
(ii) borrow any money, enter into any lease or other financial
obligation or enter into any guarantee for the obligations or the
indebtedness of any third party without the prior written consent
of the Bank except (1) loans or leases entered into in connection
with the acquisition of equipment in the ordinary course of
business, which loans or leases shall not exceed $100,000 in the
aggregate at any time and (2) one or more letters of credit
naming
Amended and Restated Credit Agreement Page 16
19
Southern Company Energy as beneficiary, the aggregate face amount
of which shall not exceed USD 110,000;
(iii) merge with any other entity or change its present line of
business. For the purposes of this Restated Agreement, the
Borrower's line of business shall be the owning, acquisition,
production, refining, transportation and sale of hydrocarbon
products;
(iv) make any investments or lend money to any party without the prior
written consent of the Bank except for short-term employee loans
not exceeding $40,000 in the aggregate;
(v) except for Permitted Distributions, make any payment of interest
on or principal of any debt subordinated to the Loan or any
dividend payments or distributions to its shareholders without
the prior written consent of the Bank;
(vi) make capital expenditures in any fiscal year of more than $350,000
plus expenditures specifically submitted to and approved in
writing by the Bank;
(vii) make any change in the address of its chief executive office
without the prior written consent of the Bank, which consent
shall not be unreasonably withheld;
(viii) sell or assign the accounts, contract rights or receivables
pertaining to its business or sell, lease, abandon or otherwise
dispose of, directly or indirectly, its assets except in ordinary
course of business not to exceed USD 100,000 and except for the
sale of three (3) hydrocracker reactors that are currently not
in use;
(ix) allow its Current Ratio to be less than 2.25:1.0;
(x) allow its Tangible Net Worth to be less than the aggregate of (a)
USD 5,200,000, including without limitation the amount of
indebtedness (plus accrued and unpaid interest, if any) of
Borrower to Arabian Shield and American Shield that is converted
to equity of the Borrower, (b) 70% of positive Net Income after
September 30, 1998 and (c) 100% of the proceeds of any equity
offering by Borrower or capital contribution to Borrower.
(xi) allow its earnings before Taxes to be less than USD 175,000 in any
single quarter or less than USD 800,000 for any consecutive
four-quarter period.
Amended and Restated Credit Agreement Page 17
20
(d) Distributions. For purposes of Section 9(c) hereof, "Permitted
Distribution" shall mean:
(i) A Distribution equal to the lesser of (A) thirty-five percent
(35%) of the quantity of (x) Borrower's Net Income before Taxes
for any quarter minus (y) one hundred fifty percent (150%) of the
Required Commitment Reduction for such quarter, and (B) USD
105,000; and
(ii) A Distribution in the amount of no more than USD 45,000 per fiscal
quarter; provided that such distribution shall not be a Permitted
Distribution unless the Borrower's Net Income before Taxes for
the previous fiscal quarter is USD 800,000 or greater.
(iii) Any Distribution pursuant to subsections (i) or (ii) shall be made
in the next succeeding quarter. The first Distribution pursuant
to subsection (i) shall be made no earlier than the fourth
quarter of 1998. The first Distribution pursuant to subsection
(ii) shall be made no earlier than the first quarter of 1999. No
Distribution shall be allowed if an Event of Default has occurred
hereunder, the Note or any Security Document, or would be caused
by such Distribution. The Borrower may not aggregate
Distributions from more than one fiscal quarter; Distributions
that accumulate in one fiscal quarter must be made in the next
succeeding quarter only. The Borrower shall provide written
notice to the Bank of any Distribution prior to its payment,
together with a statement of Borrower's Net Income before Taxes
for the applicable quarter, showing the calculations of the
amount of such Distributions and certifying that no Event of
Default has occurred or shall occur by reason of making the
Distribution.
10. CHANGES IN CIRCUMSTANCES
(a) In the event that any applicable law or regulation shall subject
the Bank to any Taxes or impose any reserve deposit or other requirements
against any assets or liabilities of the Bank, the result of which is to
increase the cost to the Bank of making or maintaining the Credit Facility
or to reduce the amount of principal or interest received by the Bank, then
the Borrower shall be required to compensate the Bank for such additional
cost or reduction.
(b) In the event that any applicable law or regulation shall make it
unlawful for the Bank to make or maintain the Credit Facility, then the
Bank's obligations hereunder shall terminate,
Amended and Restated Credit Agreement Page 18
21
and all amounts owing by the Borrower to the Bank shall become due
and repayable forthwith.
(c) If the circumstances contemplated by subclause (a) or (b) above
should occur and the Bank intends to invoke the conditions contained
therein, then the Bank shall promptly advise the Borrower thereof.
(d) Should the conditions of subsection (a) above be invoked and the
Borrower find the resultant additional cost to be unacceptable, then the
Borrower shall prepay any amounts outstanding hereunder on the next Payment
Date.
(e) If the Borrower prepays any amounts outstanding hereunder in
accordance with subsection (d) above, then it shall nonetheless compensate
the Bank for additional costs defined under subsection (a) above up to and
including the date of prepayment.
11. FEES, COSTS AND EXPENSES
(a) The Borrower shall pay to the Bank upon demand, all reasonable
costs, charges and expenses (including legal fees) incurred by the Bank in
connection with the preparation, execution, amendment and enforcement of
this Restated Agreement and the Security Documents and the preservation of
the Bank's rights hereunder and thereunder.
(b) The Borrower shall pay to the Bank on the Closing Date a
facility fee of USD 10,000.
(c) The Borrower shall pay a commitment fee to the Bank on the unused
portion of the Credit Facility at the rate of 1/2 of 1% per annum on such
unused portion, payable quarterly in arrears on the last day of each such
quarter and commencing December 31, 1998.
(d) The obligations of the Borrower under this Section 12 shall
survive the repayment of all amounts outstanding hereunder and all interest
due thereon.
12. PAYMENTS
(a) All payments hereunder shall be made to the following account:
Unibank New York
For the account of Den norske Bank, New York Branch
Account No. 28764999
Ref. South Hampton Refining Company
Amended and Restated Credit Agreement Page 19
22
(b) In the event of any payments hereunder not being received on the
due date therefor, interest will be charged by the Bank from the due date
until the date that payment is received at a rate corresponding to the
aggregate of the Margin plus 2% (two percent) and the Prime Rate as defined
in Section 5(a)(i) hereof. Subject to the provisions of Section 5(c) hereof,
interest charged under this subsection (b) shall be added to the defaulted
amount on each Payment Date until the defaulted amount is repaid in full.
(c) All payments to be made by the Borrower hereunder shall be made
without set-off or counterclaim and free and clear or and without deduction
for or on account of any present or future Taxes of any nature now or
hereafter imposed unless the Borrower is compelled by law to make payment
subject to any such Tax. In that event the Borrower shall pay to the Bank
such additional amounts as may be necessary to insure that the Bank
receives a net amount which the Bank would have received had payment not
been made subject to such Tax.
(d) If the Credit Facility or any part thereof is, for any reason
whatsoever, prepaid or repaid on a day other than a Payment Date, the
Borrower shall pay to the Bank on request such amount or amounts as may be
necessary to compensate the Bank for any loss or premium or penalty
incurred by it in respect of the liquidation or reemployment of funds
borrowed for the purpose of maintaining such Facility.
13. CALCULATION
All interest, commission and any other payments hereunder of an annual
nature shall accrue from day to day and be calculated on the actual number
of days elapsed and on the basis of a 365 or 366 day year, as appropriate.
14. EVENTS OF DEFAULT
Upon notice from the Bank to the Borrower, the obligations of the Bank
hereunder shall terminate forthwith and any amounts outstanding under this
Restated Agreement and the Note (including interest accrued thereon) shall
become immediately repayable (together with any compensatory amounts
necessary) if any of the following events of default ("Events of Default")
has occurred under this Restated Agreement:
(a) If the Borrower fails to pay any sum due hereunder on the due
date.
(b) If the Borrower defaults in the due performance and observance
of any of the terms, covenants, undertakings and
Amended and Restated Credit Agreement Page 20
23
conditions on its part contained herein or in the Security Documents and
such default continues unremedied for a period of 10 days.
(c) If any representation made by the Borrower in this Restated
Agreement or any notice, certificate, or statement delivered or made
pursuant hereto or under the Security Documents proves to be incorrect,
inaccurate or misleading in any material manner when made.
(d) If a default is declared under any of the Security Documents.
(e) If a distress or other execution is levied upon, or against any
substantial part of the property of the Borrower and is not discharged
within 15 days.
(f) If the Borrower is unable to or admits in writing its inability to
pay their debts as they mature, or makes a general assignment for the
benefit of its creditors.
(g) If any proceedings are commenced in, or any order or judgment is
given by, any competent court for the liquidation, winding up or
reorganization of the Borrower or any order shall be made by any competent
court or resolution passed by the Borrower for the appointment of a
receiver or a similar functionary for all or a substantial part of its
assets, save for the purpose of amalgamation, reorganization or merger not
involving insolvency the terms of which shall have received the prior
written approval or the Bank, and as otherwise permitted herein.
(h) If the Borrower ceases or threatens to cease to carry on its
business or disposes or threatens to dispose of a substantial part of its
business, properties, or assets or the same are seized or appropriated for
any reason and not released within 30 days.
(i) If any license, consent, permission or approval required in
connection with this Restated Agreement or any Security Document is
revoked, terminated or modified in a manner which would materially restrict
or limit the operation of any property owned or operated by the Borrower.
(j) Default by the Borrower under any other agreement or indenture for
the borrowing of money or the guarantee of a third party's obligations.
Provided, however, that notwithstanding anything to the contrary in
this Restated Agreement, in the event the Borrower has cured any Event of
Default prior to the Bank having given notice of
Amended and Restated Credit Agreement Page 21
24
acceleration of the amounts owed under this Restated Agreement with
respect to such Event of Default, then such Event of Default shall be
deemed not to have occurred and the Bank shall not be entitled to
accelerate the Borrower's payment obligations hereunder.
Amended and Restated Credit Agreement Page 22
25
15. CHANGE OF CONTROL. If at any time while the Note shall be outstanding
or the Bank has a Commitment hereunder Nicholas N. Carter shall cease to be
the president or chief executive officer of the Borrower, a "Change of
Control" shall be deemed to have occurred. The Borrower shall promptly, but
in any event within three (3) days give written notice to Bank upon
obtaining knowledge of an event which is or would constitute the occurrence
of a Change of Control. The Bank shall, upon the happening of a Change of
Control, have the privilege, following the subsequent fifty (50) day
period, of declaring the Note to be due and payable on a date not earlier
than ten (10) days from the date of the exercise of said privilege. The
Note then outstanding shall thereupon become due and payable on the date
specified in the notice sent to the Borrower by the Bank including the
principal amount thereof plus accrued interest thereon to the accelerated
maturity date and any amounts owed by Borrower to the Bank pursuant to this
Agreement or the Security Documents.
16. NOTICES AND CORRESPONDENCE
(a) Except as otherwise provided in this Section 16, all notices,
requests, consents, demands and other communications provided for or
permitted hereunder shall be effective when duly deposited in the mails,
certified, return receipt requested, or delivered to Federal Express or
similar courier company or transmitted by telex or telefax, addressed to
the respective party at the address set forth below, except that notices to
the Bank shall not be effective until received.
Bank: Den norske Bank ASA, Representative Office
333 Clay Street, Suite 4890
Houston, Texas 77002
Telefax No. (713) 757-1167
Attention: Byron Cooley
with a copy to
Den norske Bank ASA, New York Branch
200 Park Avenue, 31st Floor
New York, New York 10166-0396
Telefax No. (212) 681-4123
Attention: Customer Service
Amended and Restated Credit Agreement Page 23
26
Borrower: South Hampton Refining Company
7752 FM 418
P.O. Box 1636
Silsbee, Texas 77656
Telefax No.: (409) 385-2453
Attention: President
(b) Either of the parties hereto may change its respective address by
notice in writing given to the other party to this Restated Agreement.
(c) All information required to be provided by the Borrower to the
Bank pursuant to Section 9(b) above shall be sent to the Bank at the above
Houston address.
(d) Time is of the essence of this Restated Agreement but no failure
or delay on the part of the Bank to exercise any power or right under this
Restated Agreement shall operate as a waiver thereof or preclude the
exercise of any other power or right. The remedies provided herein are
cumulative, and are not exclusive of any remedies provided by law.
(e) The Bank shall use its best efforts to deliver to Arabian Shield
any notices which it is required to give to Borrower, but the Bank's
failure to so provide shall not constitute lack of notice to the Borrower
or the waiver of any default, nor shall same relieve the Borrower or any
other party of liability hereunder.
17. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York and the Borrower hereby irrevocable
submits to the jurisdiction of the courts of the State of New York and the
Federal courts located in New York.
18. FINAL AGREEMENT
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES, COMPLETELY REPLACES CREDIT AGREEMENT REFERRED TO HEREIN, AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN
THE PARTIES.
19. COUNTERPARTS
The Agreement shall be executed in any number of counterparts each of
which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument.
Amended and Restated Credit Agreement Page 24
27
IN WITNESS whereof the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
SOUTH HAMPTON REFINING COMPANY
By: /s/ NICK CARTER
-----------------------------------
Name: Nick Carter
---------------------------------
Title: President
--------------------------------
DEN NORSKE BANK ASA
By: /s/ BYRON L. COOLEY
-----------------------------------
Name: Byron L. Cooley
---------------------------------
Title: Senior Vice President
---------------------------------
BY: /s/ WILLIAM V. MOYER
------------------------------------
Name: William V. Moyer
----------------------------------
Title: Senior Vice President
---------------------------------
Amended and Restated Credit Agreement Page 25
28
ExHIBIT A TO AMENDED AND
RESTATED CREDIT AGREEMENT
SOUTH HAMPTON REFINING COMPANY
PROMISSORY NOTE
USD 2,250,000.00 October _____, 1998
FOR VALUE RECEIVED, SOUTH HAMPTON REFINING COMPANY (herein called the
"Undersigned") hereby promises to pay to Den norske Bank ASA, or order, on
or before June 30, 2000 on demand, TWO MILLION TWO HUNDRED FIFTY THOUSAND
AND NO/100 DOLLARS OF THE UNITED STATES OF AMERICA (USD 2,250,000.00) and
to pay interest on the unpaid portion of said principal sum outstanding
from time to time, as hereinafter provided.
Principal and Interest
1.1 (a) Interest on this Note shall be payable at the times and the rates
as provided in Section 5 of the Amended and Restated Credit Agreement (the
"Restated Credit Agreement") dated the date hereof, between the Undersigned
and the payee hereof.
(b) In case any payment of principal or interest is not paid when due,
additional interest at the rate determined as provided in Section 13(b) of
the Restated Credit Agreement shall be payable on all overdue principal
and, to the extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated on the outstanding principal amounts and
on the basis of the actual number of days and a year of 365 or 366 days, as
appropriate.
1.3 The principal of this Note shall be payable as provided in Section 6 of
the Restated Credit Agreement.
29
SECURITY
2.1 This Note is issued under and pursuant to the Restated Credit Agreement
and is, in part, a renewal, restructure and rearrangement of the
indebtedness evidenced by the promissory note dated March 3, 1988 from the
Undersigned to the payee of this Note. Reference is hereby made to the
Restated Credit Agreement for a description of the security of this Note,
the nature and extent of the security afforded thereby and the rights of
the Undersigned and the holder hereof with respect to such security.
Payment of this Note may be demanded by the holder hereof prior to the
maturity of this Note under certain circumstances and conditions, in the
manner, and with the effect, provided in the Restated Credit Agreement and
the Security Documents described therein.
MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and
non-payment hereof and hereby consent that any and all securities or other
property, if any, held by the holders hereof at any time as security for
this Note may be exchanged, released or surrendered and that the time of
payment of this Note may be extended, all in the sole discretion of the
holder hereof and without notice and without affecting in any manner the
liability of the parties hereto.
3.2 No course of dealing between the Undersigned and the holder hereof in
exercising any rights hereunder shall operate as a waiver of any right of
any holders except to the extent expressly waived in writing by such
holder.
30
3.3 Whenever any payment to be made hereunder shall be due on a Saturday,
Sunday or public holiday under the laws of the place where payment is to
be made pursuant to the Restated Credit Agreement or other day on which
banking institutions at such place are not open for business, such payments
shall be made on the next day on which such banking institutions are open
for business after such holiday.
3.4 Any notice to be given pursuant to this Note shall be given in
accordance with Section 16 of the Restated Credit Agreement.
IN WITNESS WHEREOF, the Undersigned has caused this Note to be duly
executed the day and year first above written.
SOUTH HAMPTON REFINING COMPANY
By: /s/ NICK CARTER
-----------------------------------------
Name: Nick Carter
----------------------------------
Title: President
----------------------------------
31
EXHIBIT B TO AMENDED AND
RESTATED CREDIT AGREEMENT
BORROWING BASE CERTIFICATE
1. Cash in Cash Collateral Accounts USD
---------------
90% USD
---------------
2. Eligible Accounts Receivable* USD
---------------
80% USD
---------------
3. Inventory (at market price)*
Raw materials USD
---------------
Finished products USD
---------------
60% USD
---------------
5. Total 1, 2 and 3 USD
---------------
6. Outstanding to DnB USD
---------------
Certified as true and correct:
SOUTH HAMPTON REFINING COMPANY
By:
---------------------------------
Title:
------------------------------
Date: ______________, 199_
* Detailed listing attached