-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FAAZ46+xfdhwbd38Wqea0MvrexmQzLvRuOBxBlXer7mF1Xx1aoerkYGHDvvUoso2 fo0z1dz+WZpLJ5a4YHQ4tg== 0000950128-00-000677.txt : 20000417 0000950128-00-000677.hdr.sgml : 20000417 ACCESSION NUMBER: 0000950128-00-000677 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000229 FILED AS OF DATE: 20000414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED REFINING CO CENTRAL INDEX KEY: 0000101462 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 251411751 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-06198 FILM NUMBER: 601577 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIANTONE PIPELINE CORP CENTRAL INDEX KEY: 0000830253 STANDARD INDUSTRIAL CLASSIFICATION: PETROLEUM REFINING [2911] IRS NUMBER: 251211902 STATE OF INCORPORATION: NY FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-01 FILM NUMBER: 601578 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED REFINING CO /PA/ CENTRAL INDEX KEY: 0001040270 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 250850960 STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-02 FILM NUMBER: 601579 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIANTONE PIPELINE CO CENTRAL INDEX KEY: 0001045539 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-03 FILM NUMBER: 601580 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KWIK FIL INC CENTRAL INDEX KEY: 0001045540 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-04 FILM NUMBER: 601581 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KWIK FILL INC CENTRAL INDEX KEY: 0001045541 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-05 FILM NUMBER: 601582 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED JET CENTER INC CENTRAL INDEX KEY: 0001045542 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-06 FILM NUMBER: 601583 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BELL OIL CORP CENTRAL INDEX KEY: 0001045543 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-07 FILM NUMBER: 601584 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PPC INC CENTRAL INDEX KEY: 0001045544 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-08 FILM NUMBER: 601585 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUPER TEST PETROLEUM INC CENTRAL INDEX KEY: 0001045545 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-09 FILM NUMBER: 601586 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VULCAN ASPHALT REFINING CORP CENTRAL INDEX KEY: 0001045546 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-10 FILM NUMBER: 601587 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDEPENDENT GASOLINE & OIL CO OF ROCHESTER CENTRAL INDEX KEY: 0001045547 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: PA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-35083-11 FILM NUMBER: 601588 BUSINESS ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 BUSINESS PHONE: 8147231500 MAIL ADDRESS: STREET 1: 15 BRADLEY ST CITY: WARREN STATE: PA ZIP: 16365 10-Q 1 UNITED REFINING FORM 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------- (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Period Ended February 29, 2000 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________________ to ______________________ Commission File No. 333-35083 --------- UNITED REFINING COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 25-1411751 - ------------------------------------ ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 15 Bradley Street - -------------------- Warren, Pennsylvania 16365 - -------------------- ----- (address of principal (Zip Code) executive office) Registrant's telephone number, including area code 814-726-4674 ------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---------- ---------- Number of shares outstanding of Registrant's Common Stock as of April 14, 2000: 100. 2
- ----------------------------------------------------------------------------------------------------------------------------- TABLE OF ADDITIONAL REGISTRANTS - ----------------------------------------------------------------------------------------------------------------------------- State of Other Primary Standard IRS Employer Jurisdiction of Industrial Identification Commission File Name Incorporation Classification Number Number Number - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- Kiantone Pipeline Corporation New York 4612 25-1211902 333-35083-01 - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- Kiantone Pipeline Company Pennsylvania 4600 25-1416278 333-35083-03 - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- United Refining Company of Pennsylvania 5541 25-0850960 333-35083-02 Pennsylvania - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- United Jet Center, Inc. Delaware 4500 52-1623169 333-35083-06 - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- Kwik-Fill, Inc. Pennsylvania 5541 25-1525543 333-35083-05 - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- Independent Gas and Oil Company of New York 5170 06-1217388 333-35083-11 Rochester, Inc. - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- Bell Oil Corp. Michigan 5541 38-1884781 333-35083-07 - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- PPC, Inc. Ohio 5541 31-0821706 333-35083-08 - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- Super Test Petroleum, Inc. Michigan 5541 38-1901439 333-35083-09 - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- Kwik-Fil, Inc. New York 5541 25-1525615 333-35083-04 - ------------------------------------- ------------------------ ----------------------- ------------------ ------------------- Vulcan Asphalt Refining Corporation Delaware 2911 23-2486891 333-35083-10 - ------------------------------------- ------------------------ ----------------------- ------------------ -------------------
2 3 PART I. FINANCIAL INFORMATION PAGE(S) - -------------------------------- Item 1. Financial Statements Consolidated Balance Sheets - February 29, 2000 and August 31, 1999 4 Consolidated Statements of Operations - Six Months and Quarters Ended February 29, 2000 5 and February 28, 1999 Consolidated Statements of Cash Flows - Six Months Ended February 29, 2000 6 and February 28, 1999 Notes to Consolidated Financial Statements 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10-14 PART II. OTHER INFORMATION 15 - ----------------------------- 3 4 UNITED REFINING COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS --------------------------- (IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------ FEBRUARY 29, 2000 AUGUST 31, (UNAUDITED) 1999 -------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT: Cash and cash equivalents $ 6,255 $ 8,925 Accounts receivable, net 35,965 33,239 Inventories 76,813 70,728 Prepaid expenses and other assets 9,079 10,146 ---------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS 128,112 123,038 ---------------------------------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT: Cost 283,195 279,895 Less: accumulated depreciation 71,629 66,473 ---------------------------------------------------------------------------------------------------------- NET PROPERTY, PLANT AND EQUIPMENT 211,566 213,422 ---------------------------------------------------------------------------------------------------------- DEFERRED FINANCING COSTS 5,972 6,370 OTHER ASSETS 5,602 6,410 ---------------------------------------------------------------------------------------------------------- $ 351,252 $ 349,240 ---------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDER'S EQUITY CURRENT: Revolving credit facility $ 21,000 $ 5,000 Current installments of long-term debt 174 217 Accounts payable 24,914 34,727 Accrued liabilities 10,270 12,374 Sales, use and fuel taxes payable 12,636 16,856 Deferred income taxes 661 661 ---------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 69,655 69,835 LONG TERM DEBT: LESS CURRENT INSTALLMENTS 201,013 200,956 DEFERRED INCOME TAXES 14,134 13,515 DEFERRED GAIN ON SETTLEMENT OF PENSION PLAN OBLIGATIONS 1,882 1,990 DEFERRED RETIREMENT BENEFITS 15,503 14,055 OTHER NONCURRENT LIABILITIES 373 468 ---------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 302,560 300,819 ---------------------------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDER'S EQUITY: Common stock, $.10 par value per share - shares authorized 100; issued and outstanding 100 - - Additional paid-in capital 7,150 7,150 Retained earnings 41,542 41,271 ---------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDER'S EQUITY 48,692 48,421 ---------------------------------------------------------------------------------------------------------- $ 351,252 $ 349,240 ----------------------------------------------------------------------------------------------------------
4 5 UNITED REFINING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED) ------------------------------------- (IN THOUSANDS)
- ----------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED SIX MONTHS ENDED FEBRUARY, FEBRUARY, ---------------------------------------------------------- 2000 1999 2000 1999 ---------------------------------------------------------------------------------------------------------------------- (RESTATED) (RESTATED) NET SALES $ 250,676 $ 144,662 $ 495,760 $ 331,754 COSTS OF GOODS SOLD 221,572 127,708 438,567 289,591 ---------------------------------------------------------------------------------------------------------------------- GROSS PROFIT 29,104 16,954 57,193 42,163 ---------------------------------------------------------------------------------------------------------------------- EXPENSES: Selling, general and administrative expenses 19,920 19,570 39,856 39,194 Depreciation and amortization expenses 2,587 2,356 5,176 4,712 ---------------------------------------------------------------------------------------------------------------------- TOTAL OPERATING EXPENSES 22,507 21,926 45,032 43,906 ---------------------------------------------------------------------------------------------------------------------- OPERATING INCOME (LOSS) 6,597 (4,972) 12,161 (1,743) ---------------------------------------------------------------------------------------------------------------------- OTHER INCOME (EXPENSE): Interest income 50 228 114 743 Interest expense (5,699) (5,456) (11,271) (10,891) Other, net (468) (421) (417) 536 ---------------------------------------------------------------------------------------------------------------------- (6,117) (5,649) (11,574) (9,612) ---------------------------------------------------------------------------------------------------------------------- INCOME (LOSS) BEFORE INCOME TAX EXPENSE 480 (10,621) 587 (11,355) INCOME TAX EXPENSE (BENEFIT) 274 (4,186) 316 (4,470) ---------------------------------------------------------------------------------------------------------------------- NET INCOME (LOSS) $ 206 $ (6,435) $ 271 $ (6,885) ----------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements 5 6 UNITED REFINING COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED) ------------------------------------- (IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED FEBRUARY, --------------------------- 2000 1999 -------------------------------------------------------------------------------------------------------- (RESTATED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 271 $ (6,885) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 6,704 6,194 Post-retirement benefits 1,448 624 Change in deferred income taxes 619 (2,588) Gain on asset dispositions (64) (918) Cash used in working capital items (23,881) (25,217) Other, net (474) (19) -------------------------------------------------------------------------------------------------------- TOTAL ADJUSTMENTS (15,648) (21,924) -------------------------------------------------------------------------------------------------------- NET CASH USED IN OPERATING ACTIVITIES (15,377) (28,809) -------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to property, plant and equipment (3,361) (11,189) Proceeds from asset dispositions 104 2,140 Decrease in restricted cash, cash equivalents and investments - 5,397 -------------------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (3,257) (3,652) -------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings on revolving credit facility 16,000 14,000 Proceeds from issuance of long term debt 152 - Deferred financing costs (50) - Principal reductions of long term debt (138) (183) -------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 15,964 13,817 -------------------------------------------------------------------------------------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (2,670) (18,644) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,925 26,400 -------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,255 $ 7,756 -------------------------------------------------------------------------------------------------------- CASH PROVIDED BY (USED IN) WORKING CAPITAL ITEMS: Accounts receivable, net $ (2,726) $ 6,016 Inventories (6,085) (6,267) Prepaid expenses and other assets 1,067 (3,645) Accounts payable (9,813) (5,698) Accrued liabilities (2,104) (1,245) Sales, use and fuel taxes payable (4,220) (14,378) -------------------------------------------------------------------------------------------------------- TOTAL CHANGE $ (23,881) $ (25,217) --------------------------------------------------------------------------------------------------------
6 7 UNITED REFINING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended February 29, 2000 are not necessarily indicative of the results that may be expected for the year ending August 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto incorporated by reference in the Company's Form 10-K filing dated November 29, 1999. 2. DERIVATIVE INSTRUMENTS AND In June 1998, the Financial Accounting HEDGING ACTIVITIES Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133 ("Statement 133"), "Accounting for Derivative Instruments and Hedging Activities". Statement 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure these instruments at fair value. The accounting for changes in the fair value of a derivative, that is, gains and losses, depends on the intended use of the derivative and its resulting designation. Statement 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Management believes that the adoption of Statement 133 will not have a material effect on the Company's financial position or results of operations. 3. CREDIT FACILITY During February, 2000 the Company renegotiated its secured revolving credit facility to provide for a temporary increase in its revolving credit commitment up to $45,000,000. The commitment increase shall remain in effect through December 31, 2000, at which time it will revert to its prior maximum level of $35,000,000. The interest rate on borrowings varies with the Company's earnings and is based on the higher of the bank's prime rate or federal funds rate plus up to .75% for base rate borrowings and the LIBOR rate plus 1.25% to 2.5% for Euro-Rate borrowings. 4. RESTATEMENT Effective September 1, 1998, the Company changed its method of accounting for major maintenance turnarounds. Accordingly, the Company has restated its financial statements for the three and six months ended February 28, 1999 to reflect this change as follows (in thousands): 7 8 UNITED REFINING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - --------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED FEBRUARY 28, 1999 FEBRUARY 28, 1999 ------------------ ---------------- ----------------- ----------------- AS REPORTED AS RESTATED AS REPORTED AS RESTATED - -------------------------------------- ---------------- ------------------ ----------------- ----------------- Loss before income tax benefit $ (10,908) $ (10,621) $ (11,801) $ (11,355) Net Loss $ ( 6,609) $ ( 6,435) $ ( 7,155) $ ( 6,885) - -------------------------------------- ---------------- ------------------ ----------------- -----------------
5. SUBSIDIARY GUARANTORS Summarized financial information for the Company's wholly owned subsidiary guarantors is as follows (in thousands):
FEBRUARY 29, 2000 (UNAUDITED) AUGUST 31, 1999 - ----------------------------------------------------------------------------------------- Current assets $ 47,437 $ 45,027 Noncurrent assets 87,937 88,431 Current liabilities 131,753 125,789 Noncurrent liabilities 9,218 10,312 - -----------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED FEBRUARY FEBRUARY (UNAUDITED) (UNAUDITED) ----------------------------------------------------------------------------- 2000 1999 2000 1999 - ------------------------------------------------------------------------------------------------- Net sales $ 133,834 $ 96,516 $ 268,793 $ 201,686 Gross profit 16,621 17,528 35,396 34,129 Operating loss (1,574) (125) (890) (1,314) Net loss (2,295) (1,134) (2,954) (2,006) - -------------------------------------------------------------------------------------------------
6. SEGMENTS OF BUSINESS The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail. The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, and the marketing of petroleum products to wholesale and industrial customers. The retail segment sells petroleum products and convenience and grocery items through company owned gasoline stations and convenience stores under the Kwik Fill(R) and Red Apple Food Mart(R) brand names. 8 9 UNITED REFINING COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- Intersegment revenues are calculated using estimated market prices and are eliminated upon consolidation. Summarized financial information regarding the Company's reportable segments is presented in the following tables (in thousands):
THREE MONTHS ENDED SIX MONTHS ENDED FEBRUARY FEBRUARY (UNAUDITED) (UNAUDITED) ------------------ ------------------ --------------------- -------------------- 2000 1999 2000 1999 - ------------------------------------- ------------------ ------------------ --------------------- -------------------- (RESTATED) (RESTATED) Net Sales Retail $ 132,689 $ 95,314 $ 266,459 $ 199,233 Wholesale 117,987 49,348 229,301 132,521 --------- --------- --------- --------- $ 250,676 $ 144,662 $ 495,760 $ 331,754 --------- --------- --------- --------- Intersegment Sales Wholesale $ 44,251 $ 24,935 $ 113,227 $ 58,269 --------- --------- --------- --------- Operating Income (Loss) Retail $ (2,252) $ (395) $ (2,153) $ (1,897) Wholesale 8,849 (4,577) 14,314 154 --------- --------- --------- --------- $ 6,597 $ (4,972) $ 12,161 $ (1,743) --------- --------- --------- --------- Depreciation and Amortization Retail $ 721 $ 660 $ 1,444 $ 1,320 Wholesale 1,866 1,696 3,732 3,392 --------- --------- --------- --------- $ 2,587 $ 2,356 $ 5,176 $ 4,712 --------- --------- --------- ---------
FEBRUARY 29, 2000 (UNAUDITED) AUGUST 31, 1999 --------------------------------------------------------------- Total Assets Retail $115,793 $113,599 Wholesale 235,459 235,641 -------- -------- $351,252 $349,240 -------- -------- Capital Expenditures Retail $ 1,044 $ 18,698 Wholesale 2,317 7,526 -------- -------- $ 3,361 $ 26,224 -------- --------
9 10 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- Recent Developments The Company's results in the first six months of fiscal 2000 were significantly affected by the rapid rise in worldwide crude oil prices which began in February 1999 and continued through the Company's second fiscal quarter ended February 29, 2000. The rise in prices increased the Company's wholesale margins, but reduced the Company's retail petroleum margins. The increase in crude oil prices was in large part due to crude oil production restraints imposed on its members by the Organization of Petroleum Exporting Countries (OPEC). Worldwide crude oil prices, as indicated by crude oil futures contracts traded on the New York Mercantile Exchange (NYMEX) reached a peak of over $34 per barrel in early March trading, having increased approximately $22 per barrel from prices one year earlier. NYMEX prices have since declined to less than $26 per barrel. The decline is largely the result of action taken by OPEC at a late March meeting to relax their production restraints. The price decline will tend to reduce the Company's wholesale gasoline and distillate margins but increase asphalt and retail gasoline margins. Results of Operations Comparison of Fiscal Quarters ended February 29, 2000 and February 28, 1999 Net Sales. Net sales increased $106.0 million or 73.3% from $144.7 million for the fiscal quarter ended February 28, 1999 to $250.7 million for the fiscal quarter ended February 29, 2000. Retail sales increased $37.4 million, or 39.2% from $95.3 million to $132.7 million, while wholesale sales increased $68.6 million or 138.9% from $49.4 million to $118.0 million. The retail sales increase was due to a 4.2% increase in retail petroleum volume, a 40.8% increase in retail petroleum prices, and a 14.8% increase in retail merchandise sales. The wholesale sales increase was due to an 11.6% increase in wholesale volume and a 114.3% increase in wholesale prices. The higher retail and wholesale prices were primarily the result of a 111.4% increase in worldwide crude oil prices as indicated by prices of NYMEX crude oil contracts for the fiscal quarter ended February 29, 2000 compared to contracts for the prior year quarter. The higher retail sales volumes were primarily the result of the performance of retail locations upgraded under the Company's Capital Improvement Plan. The higher wholesale volume was partially the result of higher product demand, most notably the demand for home heating oil in February 2000. The Company met this demand primarily by reducing product inventory volumes to levels significantly below those of the prior year quarter. Costs of Goods Sold. Costs of goods sold increased $93.9 million or 73.5% from $127.7 million for the fiscal quarter ended February 28, 1999 to $221.6 million for the fiscal quarter ended February 29, 2000. Retail costs of goods sold increased $38.6 million or 49.3% from $78.3 million to $116.9 million, while wholesale costs of goods sold increased $55.3 million or 111.9% from $49.4 million to $104.7 million. The increase in consolidated costs of goods sold was primarily the result of the increase in worldwide crude oil prices, partially offset by increased discounts for heavy sour grades of crude oil and by the beneficial impact on costs of goods sold of increases in the value of the Company's working inventories. The value of the working inventories increased approximately $5.9 million in the fiscal quarter ended February 29, 2000, which reduced costs of goods sold. In the fiscal quarter ended February 28, 1999, the value of working inventories decreased approximately $1.2 million, which increased costs of goods sold. 10 11 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- Gross Profit. Gross profit increased $12.1 million from $17.0 for the fiscal quarter ended February 28, 1999 to $29.1 million for the fiscal quarter ended February 29, 2000. Gross profit as a percentage of sales, declined from 11.7% for the fiscal quarter ended February 28, 1999 to 11.6% for the fiscal quarter ended February 29, 2000. Operating Expenses. Operating expenses increased $0.6 million or 2.7% from $21.9 million for the fiscal quarter ended February 28, 1999 to $22.5 million for the fiscal quarter ended February 29, 2000. This increase was primarily due to increased depreciation on new capital equipment installed under the Company's Capital Improvement Plan, and to increased retail expenses for sales promotions and for credit card processing, partially offset by lower retail maintenance expenses. Increased retail promotions expenses were primarily in connection with a "frequent fueler" program. Increased credit card processing expenses were primarily due to increased customer use of credit cards at stations offering recently installed "Pay at the Pump" service and to the higher retail petroleum prices, which increased the average fee per credit card transaction. Reduced retail maintenance expenses were primarily due to the substantial completion in December 1998 of the Federally mandated program of replacing or upgrading underground storage tanks. Operating Income. As a result of the above, operating income increased $11.6 million from a $5.0 million operating loss for the fiscal quarter ended February 28, 1999 to $6.6 million operating income for the fiscal quarter ended February 29, 2000. Interest Expense. Net interest expense (interest expense less interest income) increased $0.4 million from $5.2 million for the fiscal quarter ended February 28, 1999 to $5.6 million for the fiscal quarter ended February 29, 2000. The increased net interest expense was due to a decrease in interest income earned, as a result of lower balances of restricted cash and investments and to increased use of the Company's revolving credit facility to finance crude oil and product inventories at much higher worldwide petroleum prices than in the prior year quarter. Income Taxes. The Company's effective tax rate for the fiscal quarter ended February 29, 2000 was approximately 57.1% compared to a rate of 39.4% for the fiscal quarter ended February 28, 1999. The increase in the current quarter rate is primarily due to nondeductable permanent differences, which did not exist in the prior year. Comparison of the Six Months ended February 29, 2000 and February 28, 1999 Net Sales. Net sales increased $164.0 million or 49.4% from $331.8 million for the six months ended February 28, 1999 to $495.8 million for the six months ended February 29, 2000. Retail sales increased $67.3 million or 33.8% from $199.2 million to $266.5 million, while wholesale sales increased $96.7 million or 72.9% from $132.6 million to $229.3 million. The retail sales increase was due to a 4.5% increase in retail petroleum volume, a 31.7% increase in retail petroleum prices, and a 20.2% increase in retail merchandise sales. The wholesale sales increase was due to a 1.3% increase in wholesale volume and a 70.8% increase in wholesale prices. The higher retail and wholesale prices were primarily the result of an 82.9% increase in worldwide crude oil prices as indicated by prices of NYMEX crude oil contracts for the six months ended February 29, 2000 compared to contracts for the prior year period. The higher retail sales volumes were primarily the result of the performance of retail locations upgraded under the Company's Capital Improvement Plan. 11 12 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- The Company supplied the increased wholesale volume by reducing ending product inventory volumes to levels significantly below those of the prior year period. Costs of Goods Sold. Costs of goods sold increased $149.0 million to 51.5% from $289.6 million for the six months ended February 28, 1999 to $438.6 million for the six months ended February 29, 2000. Retail costs of goods sold increased $66.5 million or 40.0% from $166.1 million to $232.6 million, while wholesale costs of goods sold increased $82.5 million or 66.8% from $123.5 million to $206.0 million. The increase in consolidated costs of goods sold was primarily the result of the increase in worldwide crude oil prices, partially offset by the beneficial impact on costs of goods sold of increases in the value of the Company's working inventories. The value of the working inventories increased approximately $10.2 million in the six months ended February 29, 2000 which reduced costs of goods sold. In the six months ended February 28, 1999, the value of working inventories decreased approximately $2.8 million, which increased costs of goods sold. Gross Profit. Gross profit increased $15.0 million from $42.2 for the six months ended February 28, 1999 to $57.2 million for the six months ended February 29, 2000. Gross profit as a percentage of sales declined from 12.7% for the six months ended February 28, 1999 to 11.5% for the six months ended February 29, 2000, as the percentage increase in sales did not keep pace with rapidly increasing worldwide petroleum prices. Operating Expenses. Operating expenses increased $1.1 million or 2.5% from $43.9 million for the six months ended February 28, 1999 to $45.0 million for the six months ended February 29, 2000. This increase was primarily due to increased depreciation on new capital equipment installed under the Company's Capital Improvement Plan, and to increased retail expenses for sales promotions and for credit card processing, partially offset by lower retail maintenance expenses. Increased retail promotions expenses were primarily in connection with a "frequent fueler" program. Increased credit card processing expenses were primarily due to increased customer use of credit cards at stations offering recently installed "Pay at the Pump" service and to the higher retail petroleum prices, which increased the average fee per credit card transactions. Reduced retail maintenance expenses were primarily due to the substantial completion in December 1998 of the Federally mandated program of replacing or upgrading underground storage tanks. Operating Income. As a result of the above, operating income increased $13.9 million from a $1.7 million operating loss for the six months ended February 28, 1999 to $12.2 million operating income for the six months ended February 29, 2000. Interest Expense. Net interest expense (interest expense less interest income) increased $1.1 million from $10.1 million for the six months ended February 28, 1999 to $11.2 million for the six months ended February 29, 2000. The increased net interest expense was due to a decrease in interest income earned, as a result of lower balances of restricted cash and investments and to increased use of the Company's revolving credit facility to finance crude oil and product inventories at much higher worldwide petroleum prices than in the prior year period. 12 13 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- Income Taxes. The Company's effective tax rate for the six months ended February 29, 2000 was approximately 53.8% compared to a rate of 39.4% for the six months ended February 28, 1999. The increase in the current six month rate is primarily due to nondeductible permanent differences, which did not exist in the prior year. Liquidity and Capital Resources Working capital (current assets minus current liabilities) at February 29, 2000 was $58.5 million and at August 31, 1999 was $53.2 million. The Company's current ratio (current assets divided by current liabilities) was 1.8:1 at February 29, 2000 and August 31, 1999 respectively. Net cash used in operating activities totaled $15.4 million and $28.8 million for the six months ended February 29, 2000 and February 28, 1999. Net cash used in investing activities for purchases of property, plant and equipment totaled $3.4 million and $11.2 million for the six months ended February 29, 2000 and February 28, 1999 respectively. The Company reviews its capital expenditures on an ongoing basis. The Company currently has budgeted approximately $5.0 million for capital expenditures in fiscal 2000. Maintenance and non-discretionary capital expenditures have averaged approximately $4 million annually over the last three years excluding the Capital Improvement Plan for the refining and marketing operations. Management does not foresee any increase in maintenance and non-discretionary capital expenditures during fiscal 2000. Future liquidity, both short and long-term, will continue to be primarily dependent on realizing a refinery margin sufficient to cover fixed and variable expenses, including planned capital expenditures. The Company expects to be able to meet its working capital, capital expenditure and debt service requirements out of cash flow from operations, cash on hand and borrowings under the Company's bank credit facility with PNC Bank, N.A. as Agent Bank. During February 2000, the Company renegotiated its revolving credit facility to provide for a temporary increase in its revolving credit commitment up to $45,000,000 to meet short term working capital needs. Although the Company is not aware of any pending circumstances which would change its expectation, changes in the tax laws, the imposition of and changes in federal and state clean air and clean fuel requirements and other changes in environmental laws and regulations may also increase future capital expenditure levels. Future capital expenditures are also subject to business conditions affecting the industry. The Company continues to investigate strategic acquisitions and capital improvements to its existing facilities. Federal, state and local laws and regulations relating to the environment affect nearly all the operations of the Company. As is the case with all companies engaged in similar industries, the Company faces significant exposure from actual or potential claims and lawsuits involving environmental matters. Future expenditures related to environmental matters cannot be reasonably quantified in many circumstances due to uncertainties as to required remediation methods and related clean-up cost estimates. The Company cannot predict what additional environmental legislation or regulations will be 13 14 UNITED REFINING COMPANY AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (UNAUDITED) - -------------------------------------------------------------------------------- enacted or become effective in the future or how existing or future laws or regulations will be administered or interpreted with respect to products or activities to which they have not been previously applied. Seasonal Factors Seasonal factors affecting the Company's business may cause variation in the prices and margins of some of the Company's products. For example, demand for gasoline tends to be highest in spring and summer months, while demand for home heating oil and kerosene tends to be highest in the winter months. As a result, the margin on gasoline prices versus crude oil costs generally tends to increase in the spring and summer, while margins on home heating oil and kerosene tend to increase in winter. Also, because winter weather in the Company's market is not favorable for paving activity, the Company's asphalt sales in winter months are composed of a much lower percentage of paving asphalt and a correspondingly higher percentage of roofing asphalt whose demand is much less seasonal. In addition, the Company stores a significant portion of winter asphalt production for sale the following spring and summer. Year 2000 Computer Issues In the past, the Company discussed its plan to ensure Year 2000 readiness, including computer hardware and software applications testing and remediation. In late 1999, the Company completed its examination and as a result of its planning and implementation efforts, the Company experienced no significant disruptions in either information technology ("IT") or non-information technology systems. The Company believes these systems successfully responded to the Year 2000 date change. The costs associated with remediating any Year 2000 problems have not been material to date. The Company is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems, or the products and services of third parties. The Company will continue to monitor its critical computer applications and those of its suppliers and vendors throughout the Year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. 14 15 PART II - OTHER INFORMATION Item 1. Legal Proceedings In 1995, the Pennsylvania Environmental Defense Foundation ("PEDF") commenced a lawsuit in the United States District Court for the Western District of Pennsylvania under Section 505 of the federal Water Pollution Control Act, 33 U.S.C. Section 1251, et. Seq. The complaint alleges a series of discharges to the Allegheny River at the Company's refining facility in Warren, Pennsylvania exceeding the limits contained in the Company's waste water discharge permits. PEDF seeks to enjoin future discharges in excess of permitted limits, an assessment of civil penalties up to $25,000 per day as provided in the Act, and an award of attorneys' fees. Following trial and post-trial proceedings, the Court entered judgment in the amount of $400,000 against the Company, plus attorneys' fees as provided by the statute. The amount of attorneys' fees remains to be determined. Either the Company or PEDF may elect to appeal the judgment. Notwithstanding any appeal, the Company believes that this action will not have any material adverse effect upon its operations or consolidated financial condition. Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8K (a) Exhibit 10.18 - Amendment to Credit Agreement dated as of February 4, 2000 by and among URC, URCP, KPC and the banks party thereto and PNC Bank, National Association, as agent. Exhibit 27 - Financial Data Schedule (b) No reports on Forms 8-K have been filed for the quarter for which this report is being filed. 15 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 UNITED REFINING COMPANY ----------------------- (Registrant) /s/ Myron L. Turfitt ----------------------- Myron L. Turfitt President /s/ James E. Murphy ----------------------- James E. Murphy Chief Financial Officer 16 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 KIANTONE PIPELINE CORPORATION ----------------------------- (Registrant) /s/ Myron L. Turfitt ----------------------------- Myron L. Turfitt President /s/ James E. Murphy ----------------------------- James E. Murphy Chief Financial Officer 17 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 UNITED REFINING COMPANY OF PENNSYLVANIA --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 18 19 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 KIANTONE PIPELINE COMPANY ------------------------- (Registrant) /s/ Myron L. Turfitt ------------------------- Myron L. Turfitt President /s/ James E. Murphy ------------------------- James E. Murphy Chief Financial Officer 19 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 UNITED JET CENTER, INC. ----------------------- (Registrant) /s/ Myron L. Turfitt ----------------------- Myron L. Turfitt President /s/ James E. Murphy ----------------------- James E. Murphy Chief Financial Officer 20 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 KWIK-FILL, INC. ------------------------- (Registrant) /s/ Myron L. Turfitt ------------------------- Myron L. Turfitt President /s/ James E. Murphy ------------------------- James E. Murphy Chief Financial Officer 21 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC. --------------------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------------------- Myron L. Turfitt President /s/ James E. Murphy --------------------------------------- James E. Murphy Chief Financial Officer 22 23 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 BELL OIL CORP. ------------------------ (Registrant) /s/ Myron L. Turfitt ------------------------ Myron L. Turfitt President /s/ James E. Murphy ------------------------ James E. Murphy Chief Financial Officer 23 24 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 PPC, INC. ----------------------------- (Registrant) /s/ Myron L. Turfitt ----------------------------- Myron L. Turfitt President /s/ James E. Murphy ----------------------------- James E. Murphy Chief Financial Officer 24 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 SUPER TEST PETROLEUM, INC. -------------------------- (Registrant) /s/ Myron L. Turfitt --------------------------- Myron L. Turfitt President /s/ James E. Murphy --------------------------- James E. Murphy Chief Financial Officer 25 26 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 KWIK-FIL, INC. ---------------------------- (Registrant) /s/ Myron L. Turfitt ---------------------------- Myron L. Turfitt President /s/ James E. Murphy ---------------------------- James E. Murphy Chief Financial Officer 26 27 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: April 14, 2000 VULCAN ASPHALT REFINING CORPORATION ----------------------------------- (Registrant) /s/ Myron L. Turfitt ----------------------------------- Myron L. Turfitt President /s/ James E. Murphy ----------------------------------- James E. Murphy Chief Financial Officer 27 EX-10.18 2 EXHIBIT 10.18 1 Exhibit 10.18 FOURTH AMENDMENT TO CREDIT AGREEMENT This Fourth Amendment to Credit Agreement (the "Fourth Amendment") is dated as of February 4, 2000 and is made by and among UNITED REFINING COMPANY, a Pennsylvania corporation ("United Refining"), UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania Corporation ("United Refining PA"), KIANTONE PIPELINE CORPORATION, a New York corporation ("Kiantone, and hereinafter together with United Refining and United Refining PA sometimes collectively referred to as the "Borrowers" and individually as a "Borrower") the BANKS under the Credit Agreement (as hereinafter defined) and PNC BANK, NATIONAL ASSOCIATION, in its capacity as agent for the Banks under the Credit Agreement (hereinafter referred to in such capacity as the "Agent"). RECITALS: WHEREAS, the Borrowers, the Banks, and the Agent are parties to that certain Credit Agreement dated as of June 9, 1997 (as previously amended, restated, supplemented or modified, the "Credit Agreement"); and WHEREAS, unless otherwise defined herein, capitalized terms used herein shall have the meanings given to them in the Credit Agreement; and WHEREAS, the Borrowers, the Banks and the Agent desire to amend the Credit Agreement as hereinafter provided. NOW, THEREFORE, in consideration of the foregoing and intending to be legally bound, the parties hereto agree as follows: 1. Amendment to Credit Agreement and Notes Temporary Increase in Revolving Credit Commitments. The Borrowers and the Banks hereby agree that the Revolving Credit Commitments under the Credit Agreement be temporarily increased in an amount not to exceed $10,000,000 (the "Commitments Increase") so that the total amount of the Revolving Credit Commitments after giving effect to such increase shall not exceed $45,000,000, subject to the following terms and conditions: (a) Term of Increase; Automatic Reduction at End of Such Term. The Commitments Increase shall become effective as of January 31, 2000 and shall remain in effect through December 31,2000 (the "Increased Commitments Period"), after which the amount of the Revolving Credit Commitments shall revert to the levels which existed immediately prior to January 31, 2000, less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement. (b) Ratable Sharing in Increases and Decreases. Each Bank shall share in the Commitments Increase and in the Revolving Credit Commitments after the expiration of the Increased Commitments Period according to its Ratable Share. 2 (c) Repayment of Loans. The Borrowers shall repay outstanding Loans prior to the expiration of the Increased Commitments Period to the extent necessary to cause the amount of Loans outstanding on January 1, 2001 to be equal to or less than the amount of the Revolving Credit Commitments in effect as of such date, as provided in clause (a) above. Any repayment pursuant to this clause (c) shall be subject to Section 4.6.2 (Indemnity) of the Credit Agreement. Any failure by the Borrowers to repay Loans required under this clause (c) on or before the date required for such repayment shall constitute an Event of Default under the Credit Agreement. (d) Commitment Fees. It is acknowledged that during the Increased Commitments Period, the amount of the Commitment Fees shall be computed on the amount of the Revolving Credit Commitments as increased pursuant to this Section 1. (e) Amendment to Revolving Credit Notes. Exhibit 1.1(R) of the Credit Agreement [Form of Revolving Credit Note] is hereby amended and restated in its entirety as set forth on the exhibit titled as Exhibit 1.1(R) attached hereto. (f) Amendment to Pricing Grid. Schedule 1.1(A) of the Credit Agreement [Pricing Grid Variable Pricing and Fees Based on Leverage Ratio] is hereby amended and restated in its entirety as set forth on the schedule titled as Schedule 1.1(A) attached hereto. 2. Conditions to Effectiveness. This Fourth Amendment shall become effective upon satisfaction of each of the following conditions: (a) Execution and Delivery of Documents. The Borrowers, the Banks and the Agent shall have executed this Fourth Amendment and the Borrowers shall have executed and delivered Amended and Restated Revolving Credit Notes in the form of Exhibit 1.1(R) to each Bank for such Bank's ratable share of the Revolving Credit Commitments. (b) Secretary's Certificate. There shall be delivered to the Agent a certificate dated the date hereof and signed by the Secretary of each of the Loan Parties, certifying as appropriate as to: (i) all action taken by each Loan Party in connection with this Fourth Amendment and the documents related hereto; (ii) the names of the officer or officers authorized to sign this Fourth Amendment and the documents related hereto and the true signatures of such officer or officers and specifying the Authorized Officers permitted to act on behalf of each Loan Party for purposes of this Fourth Amendment and the true signatures of such officers, on which the Agent may conclusively rely; 2 3 (c) Opinion of Counsel. Counsel for the Loan Parties shall deliver a written opinion dated as of the date hereof in form and substance satisfactory to the Agent with respect to (i) the due organization of the Borrowers, (ii) the corporate power and authority of Borrowers to enter into this Fourth Amendment (iii) the execution and delivery of this Fourth Amendment and the documents related hereto not violating the organizational documents of the Borrowers and (iv) the enforceability of the Credit Agreement and the other Loan Documents, as amended hereby. (d) Amendment Fees. The Borrowers shall pay to the Agent for the ratable benefit of the Banks a fee in the amount of $50,000. 3. Full Force and Effect. All provisions of the Credit Agreement remain in full force and effect on and after the date hereof except as expressly amended hereby. The Banks do not amend any provisions of the Credit Agreement except as expressly amended hereby. 4. Counterparts Effective Date. This Fourth Amendment may be signed in counterparts. This Fourth Amendment shall become effective as of the date first above written when the conditions set forth in Section 2 hereof have been satisfied. 5. No Novation. This Fourth Amendment amends the Credit Agreement and the Revolving Credit Notes, but is not intended to constitute, and does not constitute, a novation of the Obligations of the Loan Parties under the Credit Agreement and the other Loan Documents. [SIGNATURES BEGIN ON NEXT PAGE] 3 4 [SIGNATURE PAGE 1 OF 2 TO FOURTH AMENDMENT TO CREDIT AGREEMENT] The undersigned have executed this Fourth Amendment as of the date first above written. UNITED REFINING COMPANY, a Pennsylvania corporation By: /s/ Myron Turfitt --------------------------------- Title: President ----------------------------- UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation By: /s/ Myron Turfitt --------------------------------- Title: President ----------------------------- KIANTONE PIPELINE CORPORATION, a New York corporation By: /s/ Myron Turfitt --------------------------------- Title: President ----------------------------- 4 5 [SIGNATURE PAGE 2 OF 2 TO FOURTH AMENDMENT TO CREDIT AGREEMENT] NATIONAL BANK OF CANADA By: /s/ Eric Moore --------------------------- Title: Vice President ------------------------ By: /s/ Donald Haddad --------------------------- Title: Vice President ------------------------ PNC BANK, NATIONAL ASSOCIATION, individually and as Agent By: /s/ Robert J. Tiskus --------------------------- Title: Assistant Vice President ------------------------ MANUFACTURERS AND TRADERS TRUST COMPANY By: /s/ C. Gregory Vogelsang --------------------------- Title: Assistant Vice President ------------------------ 5 6 SCHEDULE 1.1(A) PRICING GRID VARIABLE PRICING AND FEES BASED ON LEVERAGE RATIO
===================== ========================== ================= =================== =============== REVOLVING LETTER OF LETTER OF CREDIT BASE CREDIT EURO CREDIT LEVEL LEVERAGE RATIO RATE SPREAD RATE SPREAD FEE ===================== ========================== ================= =================== =============== Level I Less than 2.0 to 1.0 0 1.25% 1.25% - --------------------- -------------------------- ----------------- ------------------- --------------- Greater than or equal to Level II 2.0 to 1.0 but less than 0 1.50% 1.50% 3.0 to 1.0 - --------------------- -------------------------- ----------------- ------------------- --------------- Greater than or equal to Level III 3.0 to 1.0 but less than .25% 1.75% 1.75% 3.5 to 1.0 - --------------------- -------------------------- ----------------- ------------------- --------------- Greater than or equal to Level IV 3.5 to 1.0 but less than .50% 2.00% 2.00% 4.0 to 1.0 - --------------------- -------------------------- ----------------- ------------------- --------------- Greater than or equal to Level V 4.0 to 1.0 but less than .75% 2.25% 2.25% 5.1 to 1.0 - --------------------- -------------------------- ----------------- ------------------- --------------- Level VI Greater than or equal to .75% 2.50% 2.50% 5.1 to 1.0 ===================== ========================== ================= =================== ===============
For purposes of determining the Applicable Margin and the Letter of Credit Fee: (a) The Applicable Margin and the Letter of Credit Fee shall be determined on the Closing Date based on the Leverage Ratio computed on such date pursuant to a certificate in the form of Exhibit 1.1(A)(2) to be delivered on the Closing Date. (b) The Applicable Margin and the Letter of Credit Fee shall be recomputed as of the end of each fiscal quarter ending after the Closing Date based on the Leverage Ratio as of such quarter-end. Any increase or decrease in the Applicable Margin or the Letter of Credit Fee computed as of a quarter end shall be effective on the date on which the Compliance Certificate evidencing such computation is due to be delivered under Section 8.3.4. 6 7 EXHIBIT 1.1(R) FORM OF AMENDED AND RESTATED REVOLVING CREDIT NOTE $__________________________* January ___, 2000 *(Subject to automatic reduction as of January 1, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, [UNITED REFINING COMPANY, a Pennsylvania corporation] [UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation] [KIANTONE PIPELINE CORPORATION, a New York corporation] (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of ___________________________________________________________________ (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (provided, however, that as of January 1, 2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $________ less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, [United Refining Company,] [United Refining Company of Pennsylvania,] [Kiantone Pipeline Corporation], the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. 7 8 This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which arc hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. ATTEST: BORROWER: [UNITED REFINING COMPANY] [UNITED REFINING COMPANY OF PENNSYLVANIA] [KIANTONE PIPELINE CORPORATION] By: _______________________________ By: ________________________________ Title: __________________________ Title: ___________________________ {SEAL} 8 9 AMENDED AND RESTATED REVOLVING CREDIT NOTE $12,857,143* January 31, 2000 *(Subject to automatic reduction as of January 1, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY, a Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of NATIONAL BANK OF CANADA (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (provided, however, that as of January 1,2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $10,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. 9 10 The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 10 11 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: UNITED REFINING COMPANY By: /s/ Myron Turfitt ---------------------------- Title: President ------------------------- 11 12 AMENDED AND RESTATED REVOLVING CREDIT NOTE $12,857,143* January 31, 2000 * (Subject to automatic reduction as of January 1, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of NATIONAL BANK OF CANADA (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned provided, however, that as of January 1, 2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $10,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company, Kiantone Pipeline Corporation, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Banks failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. 12 13 This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived) and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 13 14 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: UNITED REFINING COMPANY OF PENNSYLVANIA By: /s/ Myron Turfitt ------------------------ Title: President --------------------- 14 15 AMENDED AND RESTATED REVOLVING CREDIT NOTE $12,857,143* January 31, 2000 (Subject to automatic reduction as of January 1, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned) KIANTONE PIPELINE CORPORATION, a New York corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of NATIONAL BANK OF CANADA (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (provided, however, that as of January 1,2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $10,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fee on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company, United Refining Company of Pennsylvania, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. 15 16 The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 16 17 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: KIANTONE PIPELINE CORPORATION By: /s/ Myron Turfitt ---------------------------- Title: President ------------------------- 17 18 AMENDED AND RESTATED REVOLVING CREDIT NOTE $19,285,714* January 31, 2000 *(Subject to automatic reduction as of January 1, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY) a Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of PNC BANK, NATIONAL ASSOCIATION (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (provided, however, that as of January 1, 2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $15,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower. Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. 18 19 The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 19 20 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: UNITED REFINING COMPANY By: /s/ Myron Turfitt -------------------------- Title: President ----------------------- 20 21 AMENDED AND RESTATED REVOLVING CREDIT NOTE $19,285,714* January 31, 2000 *(subject to automatic reduction as of January 1, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of PNC BANK, NATIONAL ASSOCIATION (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (provided, however, that as of January 1,2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $15,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company of Pennsylvania, Kiantone Pipeline Corporation, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. 21 22 The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 22 23 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: UNITED REFINING COMPANY OF PENNSYLVANIA By: /s/ Myron Turfitt -------------------------- Title: President ----------------------- 23 24 AMENDED AND RESTATED REVOLVING CREDIT NOTE $19,285,714* January 31, 2000 *(Subject to automatic reduction as of January 1, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, KIANTONE PIPELINE CORPORATION, a New York corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of PNC BANK, NATIONAL ASSOCIATION (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (1) provided, however, that as of January 1, 2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $15,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company, United Refining Company of Pennsylvania, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower, Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. 24 25 The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 25 26 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: KIANTONE PIPELINE CORPORATION By: /s/ Myron Turfitt ------------------------ Title: President --------------------- 26 27 AMENDED AND RESTATED REVOLVING CREDIT NOTE $12,857,143* January 31,2000 *(Subject to automatic reduction as of January I, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY, a Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (1) provided, however, that as of January 1, 2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $10,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company, United Refining Company of Pennsylvania, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower, Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. 27 28 The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 28 29 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: UNITED REFINING COMPANY By: /s/ Myron Turfitt ------------------------ Title: President --------------------- 29 30 AMENDED AND RESTATED REVOLVING CREDIT NOTE $12,857,143* January 31,2000 *(Subject to automatic reduction as of January I, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (1) provided, however, that as of January 1, 2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $10,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company, United Refining Company of Pennsylvania, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower, Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. 30 31 The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 31 32 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: UNITED REFINING COMPANY OF PENNSYLVANIA By: /s/ Myron Turfitt --------------------------- Title: President ------------------------ 32 33 AMENDED AND RESTATED REVOLVING CREDIT NOTE $12,857,143* January 31,2000 *(Subject to automatic reduction as of January I, 2001, as provided herein) FOR VALUE RECEIVED, the undersigned, KIANTONE PIPELINE CORPORATION, a New York corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of MANUFACTURERS AND TRADERS TRUST COMPANY (the "Bank") the principal amount of each Revolving Credit Loan made by the Bank to the Borrower pursuant to the Credit Agreement referred to below, the aggregate principal amount of which Revolving Credit Loans at any time outstanding shall not exceed the U.S. dollar amount first above mentioned (1) provided, however, that as of January 1, 2001 such U.S. dollar amount first above mentioned shall be automatically reduced to $10,000,000 less the amount of any intervening reductions in the Revolving Credit Commitments made pursuant to the terms of the Credit Agreement), payable on the Expiration Date, subject to mandatory prepayment as provided in the Credit Agreement. The Borrower further promises to pay interest and fees on the unpaid principal amount of each Revolving Credit Loan from the date of such Revolving Credit Loan until such principal amount is paid in full, at the rates and at the times set forth in the Credit Agreement dated as of June 9, 1997, (as amended, restated, modified or otherwise supplemented from time to time, the "Credit Agreement"), among the Borrower, United Refining Company, United Refining Company of Pennsylvania, the Banks and PNC Bank, National Association, as the Agent. All principal, interest, and fees are payable in lawful money of the United States of America in immediately available funds to the Principal Office of the Agent. If an Event of Default has occurred and is continuing, then the Borrower shall pay interest on: (i) the entire principal amount of the then outstanding Revolving Credit Loans; and (ii) all other obligations due and payable by the Borrower to the Bank pursuant to the Credit Agreement, payable on demand, at an interest rate per annum equal to the Base Rate plus two percent (2%) per annum. In the event the interest rate hereunder exceeds the maximum permitted by law, then the Revolving Credit Loans shall automatically bear interest, in accordance herewith at the maximum rate permitted by law. The Bank is authorized but not required to record the date and amount of each Revolving Credit Loan made, the date and amount of any principal and interest payment, and the principal balance hereof on any schedule which may be attached hereto and made a part hereof, and any such recordation shall, in the absence of manifest error, constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the Bank's failure to so record shall not limit the obligations of the Borrower hereunder and under the Credit Agreement to pay the principal of and fees and interest on the Revolving Credit Loans. This promissory note is one of the Revolving Credit Notes referred to in the Credit Agreement and evidences the Bank's Revolving Credit Loans to the Borrower, Capitalized terms used herein but not otherwise defined herein shall have the respective meanings assigned to them in the Credit Agreement. This promissory note is secured by certain collateral more specifically described in the Credit Agreement and the other Loan Documents. 33 34 The Credit Agreement provides, among other things, for acceleration (which in certain cases shall be automatic) of the maturity hereof upon the occurrence of certain stated events, in each case without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived, and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. In accordance with the Credit Agreement, the Borrower agrees to pay all costs, including reasonable attorneys' fees, incurred by the Agent or the Bank in enforcing payment hereof. This promissory note shall be binding upon, inure to the benefit of, and be enforceable by the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. This promissory note shall be governed by the internal law of the Commonwealth of Pennsylvania. [SIGNATURES BEGIN ON NEXT PAGE] 35 [SIGNATURE PAGE 1 OF 1 TO AMENDED AND RESTATED REVOLVING CREDIT NOTE] BORROWER: KIANTONE PIPELINE CORPORATION By: /s/ Myron Turfitt --------------------------- Title: President ------------------------ 34 EX-27 3 EXHIBIT 27
5 0000101462 UNITED REFINING CO. 6-MOS AUG-31-2000 SEP-01-1999 FEB-29-2000 6,255 0 35,965 526 76,813 128,112 283,195 71,629 351,252 69,655 201,013 0 0 0 48,692 351,252 495,760 495,760 438,567 39,856 0 131 11,719 587 316 271 0 0 0 271 0 0
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