UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 1998
Commission file number 1-3939
KERR-MCGEE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 73-0311467
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
KERR-MCGEE CENTER, OKLAHOMA CITY, OKLAHOMA 73125
(Address of principal executive offices)
Registrant's telephone number, including area code: (405)270-1313
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
Common Stock $1 Par Value New York Stock Exchange
Preferred Share Purchase Right
8-1/2% Sinking Fund Debentures,
Due June 1, 2006 New York Stock Exchange
7-1/2% Convertible Subordinated
Debentures Due May 15, 2014 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $2.7 billion as of March 15, 1999.
The number of shares of common stock outstanding as of March 15, 1999, was
83,614,002.
DOCUMENTS INCORPORATED BY REFERENCE
Specified sections of the Kerr-McGee Corporation 1998 Annual Report to
Stockholders, as described herein, are incorporated by reference in Parts I and
II of this Form 10-K. The definitive Proxy Statement for the 1999 Annual Meeting
of Stockholders, which will be filed with the Securities and Exchange Commission
within 120 days after December 31, 1998, is incorporated by reference in Part
III of this Form 10-K.
KERR-McGEE CORPORATION
PART I
Items 1. and 2. Business and Properties
GENERAL DEVELOPMENT OF BUSINESS
Kerr-McGee Corporation, an energy and chemical company, had its
beginning in 1929 with the formation of Anderson & Kerr Drilling Company. The
company was incorporated in Delaware in 1932. With oil and gas exploration and
production as its base, the company has expanded into titanium dioxide pigment
manufacturing and marketing and minerals, mining and marketing. Kerr-McGee owns
a large inventory of natural resources that includes oil and gas reserves and
chemical and mineral deposits.
For a discussion of recent business developments, reference is made to
the "Kerr-McGee/Oryx" section of Management's Discussion and Analysis in the
1998 Annual Report to Stockholders, which discussion is incorporated by
reference in Item 7, and the Exploration and Production discussion included in
this Form 10-K.
INDUSTRY SEGMENTS
For information as to business segments of the company, reference is
made to Note 21 to the Consolidated Financial Statements in the 1998 Annual
Report to Stockholders, which note is incorporated by reference in Item 8.
EXPLORATION AND PRODUCTION
Kerr-McGee Corporation manages oil and gas operations worldwide. The
company acquires leases and concessions and explores for, develops, produces and
markets crude oil and natural gas through its subsidiaries, Kerr-McGee Oil & Gas
Corporation, Kerr-McGee Oil (U.K.) PLC, Kerr-McGee Resources (U.K.) Limited,
Kerr-McGee China Petroleum Ltd. and various other subsidiaries.
The areas of Kerr-McGee's offshore oil and gas exploration and/or
production activities are the Gulf of Mexico, North Sea, China, Thailand and
Gabon. Onshore exploration and/or production operations are in Indonesia, the
United Kingdom, Thailand and Yemen.
- ------------------
Except as indicated under Items 1 through 3, 5 through 8 and 10 through
14, no other information appearing in either the company's 1998 Annual Report to
Stockholders or its 1999 Proxy Statement is deemed to be filed as part of this
annual report on Form 10-K.
Kerr-McGee's average daily proprietary oil production during 1998 was
66,800 barrels, an increase of 17% from 1997. Kerr-McGee's average oil price was
$11.88 per barrel in 1998, compared with $18.51 per barrel for 1997.
During 1998, proprietary natural gas sales averaged 198 million cubic
feet per day, up 8% from 1997 sales. The 1998 average natural gas price was
$2.18 per thousand cubic feet compared with $2.56 per thousand cubic feet for
1997.
Kerr-McGee continued to add to its worldwide prospect inventory in
1998. Gross acreage at year-end 1998 was more than 27 million acres, an
increase of 47% compared with year-end 1997.
Results of Operations, Sales Prices, Production Costs, Capitalized Costs and
Costs Incurred
Reference is made to Notes 24, 25 and 28 to the Consolidated Financial
Statements in the 1998 Annual Report to Stockholders, which notes are
incorporated by reference in Item 8. These notes contain information on the
results of operations from crude oil and natural gas activities, average sales
prices per unit of crude oil and natural gas and production costs per barrel of
oil equivalent (BOE) for each of the past three years; capitalized costs of
crude oil and natural gas activities at December 31, 1998 and 1997; and costs
incurred in crude oil and natural gas activities for each of the past three
years.
Reserves
Kerr-McGee's estimated proved crude oil, condensate and natural gas
reserves at December 31, 1998, and the changes in net quantities of such
reserves for the three years then ended are shown in Note 27 to the Consolidated
Financial Statements of the 1998 Annual Report to Stockholders, which note is
incorporated by reference in Item 8.
From time to time reports are filed with the United States Department
of Energy relating to the company's reserves. The reserves reported in the Notes
to Financial Statements are consistent with other filings pertaining to proved
net reserves. Minor differences in gas volumes occur due to different pressure
bases being required in the reports. However, the difference in estimates does
not exceed 5% of the total estimated reserves.
Undeveloped Acreage
As of December 31, 1998, the company had interests in undeveloped oil
and gas leases in the Gulf of Mexico, the United Kingdom and Danish sectors of
the North Sea and onshore and offshore in other international areas as follows:
Gross Net
Location Acreage Acreage
Gulf of Mexico 810,739 464,564
--------- ---------
North Sea 1,624,754 750,002
--------- ----------
Other international -
Yemen 9,880,007 4,624,432
Thailand 6,324,659 2,648,609
Gabon 3,115,998 436,240
China 2,998,623 1,481,437
---------- ----------
22,319,287 9,190,718
---------- ----------
Total 24,754,780 10,405,284
========== ==========
Developed Acreage
At December 31, 1998, the company had interests in developed oil and
gas acreage in the Gulf of Mexico, the United Kingdom sector of the North Sea,
offshore China and onshore Indonesia as follows:
Gross Net
Location Acreage Acreage
Gulf of Mexico 355,727 158,915
------- -------
North Sea 295,464 68,960
------- -------
Other international -
Indonesia 1,725,035 517,511
China 78,332 19,191
--------- -------
1,803,367 536,702
--------- -------
Total 2,454,558 764,577
========= =======
Net Exploratory and Development Wells
Domestic and international exploratory and development wells drilled
during the three years ended December 31, 1998, are as follows. Included in 1996
are wells drilled on onshore North American properties that were later merged
into an equity affiliate or divested.
1998 1997 1996
---- ---- ----
Exploratory Wells - Net(1)
Domestic
Productive 1.40 2.65 4.91
Dry holes 2.73 2.65 .83
---- ---- ----
4.13 5.30 5.74
---- ---- ----
United Kingdom
Dry holes 1.05 .40 2.19
---- ---- ----
Other international
Dry holes 3.64 1.37 .50
---- ---- ----
Total 8.82 7.07 8.43
==== ==== ====
Development Wells - Net(1)
Domestic
Productive 6.99 5.11 17.26
Dry holes 1.00 - 1.00
----- ---- -----
7.99 5.11 18.26
----- ---- -----
United Kingdom
Productive 1.77 .55 1.09
Dry holes - - -
----- ---- -----
1.77 .55 1.09
----- ---- -----
Other international
Productive 2.54 4.12 2.98
Dry holes - - .04
----- ---- -----
2.54 4.12 3.02
----- ---- -----
Total 12.30 9.78 22.37
===== ==== =====
(1)Net Wells - The total of the company's fractional working interests in "gross
wells" expressed as the equivalent number of full-interest wells.
Gross and Net Wells
The number of productive oil and gas wells in which the company had an
interest at December 31, 1998, is shown in the following table. These wells
include 274 gross or 24.92 net wells associated with improved recovery projects
and 146 gross or 76.10 net wells that have multiple completions but are included
as single wells.
Gross Net
Location Wells Wells
Crude Oil
Gulf of Mexico 192 76.61
North Sea 166 16.31
China 25 6.13
Indonesia 13 3.90
--- ------
396 102.95
--- ------
Natural Gas
Gulf of Mexico 81 38.36
North Sea 40 2.90
--- ------
121 41.26
--- ------
Total 517 144.21
=== ======
Wells in Process of Drilling
At year-end 1998, the company had wells classified as temporarily
suspended or in the process of drilling as follows:
Gross Net
Wells Wells
Gulf of Mexico 15 5.20
North Sea 29 10.72
Indonesia 14 4.20
-- -----
Total 58 20.12
== =====
Crude Oil and Natural Gas Sales
The following table summarizes the sales of the company's proprietary
crude oil and natural gas production for the past three years:
(Millions) 1998 1997 1996
------ ------ -----
Crude oil and condensate - barrels
Domestic 8.1 8.8 11.2
North Sea 12.4 8.7 11.2
Other international 3.9 3.4 2.5
------ ------ ------
24.4 20.9 24.9
====== ====== ======
Crude oil and condensate
Domestic $ 94.6 $163.8 $216.4
North Sea 148.9 162.8 213.1
Other international 46.2 59.5 46.8
------ ------ ------
$289.7 $386.1 $476.3
====== ====== ======
Natural gas - MCF
Domestic 60.2 56.5 83.5
North Sea 12.1 10.6 10.2
Other international - - 9.3
------ ------ ------
72.3 67.1 103.0
====== ====== ======
Natural gas
Domestic $127.6 $145.4 $180.5
North Sea 30.1 26.7 26.8
Other international - - 10.6
------ ------ ------
$157.7 $172.1 $217.9
====== ====== ======
Sales of Production
All of the company's crude oil and natural gas is sold at market
prices. Kerr-McGee has formed strategic alliances with two energy marketing
companies to sell substantially all proprietary domestic crude oil and natural
gas production. International crude oil is sold both under contract and through
spot market sales in the geographic area of production.
Improved Recovery
The company continues to initiate and/or participate in improved
recovery projects where geological, engineering and economic conditions are
favorable. As of December 31, 1998, the company was participating in 15 active
improved recovery projects located principally in the United Kingdom sector of
the North Sea. Most of the company's operations outside North America
incorporate water injection. Pressure-maintenance operations begin at or near
the time of initial production from these fields.
Merger with Oryx Energy Company
On October 14, 1998, Kerr-McGee Corporation and Oryx Energy Company
signed a strategic merger that was completed on February 26, 1999. The merger
created one of the largest U.S.-based independent oil and gas exploration and
production companies. The combination resulted in significant additions to
Kerr-McGee's core exploration and production operations in the Gulf of Mexico
and the North Sea and further contributed to the company's international
exploration efforts.
Through the merger Kerr-McGee added more than 600,000 net acres to the
company's Gulf of Mexico inventory and several currently producing fields,
including Baldpate and Neptune in deepwater. The merger also added about 225,000
net acres, both developed and undeveloped, in the North Sea. The company has
acquired interest in eight additional North Sea fields and is operator of the
Ninian, Murchison, Hutton and Lyell fields. The combined company also has
exploration and/or production operations in Ecuador, Kazakhstan, Algeria and
Australia.
Exploration and Development Activities
Gulf of Mexico
Since 1947, the Gulf of Mexico has been a major area of operation for
Kerr-McGee and accounted for nearly 50% of Kerr-McGee's oil and gas production
in 1998. The company continues aggressive lease acquisition, exploration and
exploitation programs. In 1998, Kerr-McGee was awarded approximately 124,000 net
acres through federal and state lease sales. About 75% of this new acreage is
located in deepwater areas at depths ranging from 2,000 feet to more than 8,000
feet of water. Additional deepwater acreage and exploration opportunities were
acquired through the establishment of a strategic alliance, and
multi-disciplinary asset teams were formed to target exploitation opportunities
in established fields.
During 1998, three new fields started production in the Gulf of Mexico.
A summary of these and other key developments is as follows:
Garden Banks 65 (60%): First production from this Kerr-McGee-operated
field began in May 1998, and development was completed in late July. At year-end
1998, production averaged 100 million cubic feet of gas per day and 150 barrels
of oil per day. Kerr-McGee leases the production and processing facility
associated with this project from a pipeline company, which significantly
reduced development cost. Additional exploratory drilling is scheduled for 1999
on two adjacent company-operated blocks.
Ewing Bank 910(40%): First production commenced in December at an
initial rate of 3,500 barrels of oil per day. Located in 560 feet of water, the
production facility is the tallest company-operated stand-alone platform. Ewing
Bank 910 and 954 and South Timbalier block 320 are tied into this production
facility. Additional development drilling and completion work are expected to be
finished in mid-1999.
West Cameron 638 (40%): First gas production from this
Kerr-McGee-operated field began in December 1998. This subsea development,
located in 375 feet of water, is expected to reach peak production in 1999.
Pompano Field, Viosca Knoll 989 area (25%): Average 1998 production
from the Pompano Field exceeded 50,000 barrels of oil per day and more than 60
million cubic feet of gas per day. Processing of 4D seismic data was completed
in 1998, and evaluation is under way to determine the benefit from additional
development wells. At year-end 1998, the 29 wells from the platform and subsea
were capable of producing about 61,000 barrels of oil per day.
North Sea
Kerr-McGee has been active in the North Sea area since 1976. In May
1998, the company completed the purchase of the United Kingdom North Sea assets
of Gulf Canada Resources Limited (GCRL), which significantly increased the
company's North Sea reserve base and production. As a result of this strategic
acquisition in this core area, Kerr-McGee now has interests in six additional
producing fields, and the company's daily production rates in the North Sea
increased by 80% from 1997 levels. In 1998, the North Sea production represented
more than 51% of the company's worldwide liquids production and 19% of its gas
sales.
North Sea exploration activity in 1998 also included participation in
both the United Kingdom and Danish North Sea license rounds. Kerr-McGee was
awarded four blocks in the 18th United Kingdom round, totaling approximately
43,000 net acres, and two blocks in the fifth Danish round, totaling
approximately 35,500 net acres. Kerr-McGee is the operator for these new blocks.
Following is a summary of the company's key developments in the North
Sea:
Gryphon field, block 9/18b (46.5%): Kerr-McGee operates this field, and
as a result of the Gulf Canada transaction, the company's interest increased
from 25% to 46.5%. Gryphon was the first field in the North Sea to use a
permanently moored floating production, storage and offloading (FPSO) vessel. In
1998, the field production rate averaged more than 22,200 barrels of oil per day
and contributed more than 15% of the company's total net worldwide oil
production.
The Gryphon Asset Team successfully expanded operations into areas
adjacent to Gryphon. Kerr-McGee was awarded block 9/24a in the 18th license
round and reached an agreement to acquire equity in block 9/23a. A
new-technology 3D ocean bottom cable seismic survey is planned for 1999, which
will cover the field and nearby prospective areas.
Janice field, block 30/17a (50.9%): Modifications to the Janice "A"
floating production unit were completed, and the vessel was inaugurated in
October 1998. First oil from this Kerr-McGee-operated field commenced in
February 1999, with peak daily production expected to exceed 55,000 barrels of
oil.
Ross field, blocks 13/28a, 13/29a and 13/28c (14.5%): Development
drilling and construction of the FPSO vessel continued in 1998. First oil from
this new field acquired in the GCRL transaction is expected in 1999 with initial
production estimated at 40,000 barrels of oil per day.
Brae area, blocks 16/3a, 16/7a (8%) and 16/3b (5%): Production from
the six fields in the Brae area contributed more than 11% of Kerr-McGee's net
worldwide oil production.
Wytch Farm field (7.4%): Wytch Farm is the largest onshore oil field in
Europe and this interest was acquired in the GCRL transaction. Located on the
southern coast of Dorset, England, production is achieved through extended-reach
horizontal wells. In 1998, the field averaged nearly 100,000 barrels of oil per
day.
Other International
In 1998, Kerr-McGee continued its exploration and production efforts by
strategically expanding into various international areas. Significant new
reserves were added in Indonesia, new acreage was acquired in Thailand and
Gabon, and a strategic alliance was formed in Yemen.
A summary of key developments follows:
Indonesia:
Jabung block (30%), Sumatra: Discovered in 1995, this 1.7 million-acre
block consists of five proven oil and gas fields. An integrated plan of
development is being prepared for submission to the Indonesian government, which
will include the existing facilities servicing the North Geragai and Makmur
fields. Completion of gas marketing negotiations is expected in 1999 with
initial deliveries planned for 2001.
Combined production from the Makmur field, which began production in
January 1998, and the North Geragai field averaged more than 9,700 barrels of
oil per day. After completion of additional horizontal drilling and well work,
production in 1999 from these two fields is expected to average more than 11,500
barrels of oil per day.
Appraisal work continued on the Northeast Betara and North Betara
fields. The Gemah oil and gas field was discovered in late 1998. Delineation
continues with oil production expected in 2000.
Several new exploratory prospects are under consideration for Jabung.
Drilling plans will be made in 1999.
China:
Liuhua 11-1 field (24.5%), South China Sea: This field was developed
entirely with horizontal wells. Production averaged nearly 33,000 barrels of oil
per day in 1998.
Block 04/36 (45%), Bohai Bay: Kerr-McGee is the operator of this block.
A 3D seismic survey was completed in 1998, and a comprehensive evaluation of the
development potential of the area has been completed. Meetings with partner
groups are scheduled for early 1999 to evaluate technical data and development
options.
Thailand:
Block W7/38 (42.5%), Andaman Sea: Kerr-McGee was awarded this 4.9
million-acre block in March 1998 and is the operator. A reconnaissance seismic
survey was acquired and interpreted in 1998, and additional seismic data will be
acquired in early 1999 to further delineate prospective areas. Exploration
drilling is planned for 2000.
Gabon:
In November 1998, the company acquired a 14% interest in two adjoining
exploration blocks located offshore along the southern coast of Gabon. The Anton
Marin and Astrid Marin blocks total 3.3 million acres in water depths ranging
from 3,000 feet to more than 9,000 feet. A 3D seismic program is scheduled to
begin in 1999, followed by exploration drilling in 2000.
Yemen:
In 1998, Kerr-McGee entered into a partnership with a company that has
significant existing infrastructure in Yemen. The agreement includes blocks 50
(47.5%) and 51 (43.8%), which cover nearly 10 million acres. Interpretation of
seismic data is ongoing, and exploratory drilling is anticipated in 2001.
Brazil:
Kerr-McGee and partners began negotiations in 1998 with Brazilian
authorities for Block BS-1 (40%), which covers 2.3 million acres and is located
in water depths ranging from more than 200 feet to 5,000 feet. Kerr-McGee will
be the operator. The company expects completion of final contractual
negotiations in 1999.
CHEMICALS
Kerr-McGee's chemical operations produce and market inorganic
industrial and specialty chemicals, heavy minerals and forest products through
its subsidiaries, Kerr-McGee Chemical LLC, KMCC Western Australia Pty. Ltd.,
Kerr-McGee Chemical GmbH, and Kerr-McGee Pigments Limited. Many of these
products are processed using proprietary technology developed by the company.
Industrial chemicals include titanium dioxide pigment, synthetic
rutile, manganese products and sodium chlorate. Specialty chemicals are boron
trichloride and elemental boron. Heavy minerals produced are ilmenite, synthetic
and natural rutile, zircon and leucoxene. Forest products operations treat
railroad crossties and other hardwood products and provide wood-treating
services.
Pigment
The company's primary chemical product is titanium dioxide pigment,
which is produced at four titanium dioxide (TiO2) plants in the United States,
Australia, Germany and Belgium. The plants in Hamilton, Mississippi, and
Kwinana, Western Australia, manufacture TiO2 using the company's proprietary
chloride-process technology. The plants in Uerdingen, Germany, and Antwerp,
Belgium, produce TiO2 using the sulfate process.
The company's titanium dioxide pigment plant at Hamilton, Mississippi,
has a production capacity of 150,000 metric tons per year. An expansion is
expected to be completed in the third quarter of 1999, which will increase the
Hamilton plant's production capacity to 178,000 metric tons. The feedstock for
the Hamilton plant is synthetic rutile from the company's plant at Mobile,
Alabama. The annual production capacity at Mobile is 200,000 metric tons.
On March 31, 1998, the company acquired an 80% interest in Bayer AG's
(Bayer) European titanium dioxide pigment business, including plants at
Uerdingen, Germany, and Antwerp, Belgium. The Uerdingen plant has capacity of
100,000 metric tons per year, and the Antwerp plant's annual capacity is 30,000
metric tons.
The company also owns a 25% equity interest in a titanium dioxide
pigment plant in Yanbu, Saudi Arabia. The plant utilizes the company's
proprietary chloride process in its manufacturing process.
The company owns a 50% interest in a joint venture that operates an
integrated titanium dioxide project located within 120 miles of Perth, Western
Australia. The project consists of a heavy-minerals mine and mill and facilities
for production of synthetic rutile and TiO2.
Heavy minerals are mined from 20,700 acres that are leased by the joint
venture. The company's 50% interest in the property's remaining proved and
probable reserves represents 151 million metric tons of sand containing 3.7%
heavy minerals, or heavy minerals in place totaling 5.6 million metric tons. The
valuable heavy minerals are composed of 4.4% rutile, 61.9% ilmenite, 3.4%
leucoxene and 11.1% zircon, with the remaining 19.2% of heavy minerals presently
having no value.
The heavy minerals are processed at the 507,000 metric-ton-per-year
separation mill. The recovered ilmenite is processed into synthetic rutile at an
adjoining synthetic rutile facility, which has a capacity of 195,000 metric tons
per year. Production from the synthetic rutile plant serves as feedstock for the
pigment plants in Australia and Saudi Arabia. The annual production capacity of
the pigment plants in Kwinana, Western Australia, and Yanbu, Saudi Arabia, in
which the company owns interest of 50% and 25%, respectively, is 83,000 and
67,000 metric tons, respectively.
Information regarding heavy-mineral reserves, production and average
prices for the three years ended December 31, 1998, is presented in the
following table. Mineral reserves in this table represent those estimated
quantities of proved and probable ore that, under presently anticipated
conditions, may be profitably recovered and processed for the extraction of
their mineral content. Future production of these resources is dependent on many
factors, including market conditions and government regulations.
(Thousands of metric tons) 1998 1997 1996
- -------------------------- ----- ----- -----
Proved and probable (demonstrated)
reserves 5,600 5,900 5,000
Production 209 212 135
Average market price (per metric ton) $124 $140 $157
Electrolytic Products
Facilities at the Hamilton, Mississippi, complex include a sodium
chlorate plant with a production capacity of 130,000 metric tons per year and a
manganese metal plant that has an annual capacity of 11,000 metric tons.
The Henderson, Nevada, facilities include electrolytic cells and
processing equipment for the manufacture of manganese dioxide and a specialty
boron products plant. Annual production capacity for each product is as follows:
manganese dioxide - 26,500 metric tons; boron trichloride - 340,000 kilograms;
and elemental boron - 36,000 kilograms.
In March 1998, Kerr-McGee sold its ammonium perchlorate business.
Forest Products
The principal forest product is treated railroad crossties. Other
products include crossing materials, bridge timbers and utility poles. The
company's six operating wood-preserving plants are located along major railways
in Madison, Illinois; Indianapolis, Indiana; Columbus, Mississippi; Springfield,
Missouri; The Dalles, Oregon; and Texarkana, Texas.
Marketing
Titanium dioxide pigment is the world's preferred white opacifier and
is used primarily in coatings, plastics and paper. The company's plant at
Hamilton, Mississippi, primarily serves the Americas. Most of the pigment
production from the joint venture in Kwinana, Western Australia, is sold in the
Far East and Australia. The production from the Uerdingen, Germany, and Antwerp,
Belgium, operations is primarily sold in Europe. The acquisition of the European
plants has increased Kerr-McGee's annual gross titanium dioxide pigment capacity
to about 10% of global capacity. World demand for pigments is expected to
increase by an average of about 3% per year over the next five years.
Manganese dioxide is a major component of alkaline batteries. The
company's share of the North American manganese dioxide market is approximately
one-third. Demand is projected to grow 5% to 8% annually for the next five
years. The demand is driven by the need for alkaline batteries for portable
electronic devices.
Sodium chlorate is used in the environmentally preferred chlorine
dioxide process for bleaching pulp. Sodium chlorate demand in the United States
is expected to be flat in 1999, then increase approximately 5% annually in the
near term as the pulp and paper industry continues the conversion to the
chlorine dioxide process. The company has about a 7% share of the U.S. market.
Manganese metal is used in aluminum and specialty and stainless steel
alloys. The primary use of manganese metal is for alloying aluminum can sheet.
The company supplies approximately 40% of the U.S. aluminum industry manganese
requirements.
Kerr-McGee is the world's largest producer of elemental boron, which is
used primarily in automobile airbags. Kerr-McGee is also the largest producer of
boron trichloride, which is used to produce boron filament for sports equipment
and composites for high-performance aircraft, pharmaceuticals and
semi-conductors.
The company's share of the U.S. railroad crosstie market is 38%.
Domestic crosstie demand is expected to remain relatively flat at about 13
million to 15 million ties per year.
DISCONTINUED OPERATIONS
In early 1998, the company announced its intent to exit the coal
business. The sales of the coal assets were completed in July 1998 for
approximately $600 million. For additional discussion about discontinued
operations, reference is made to the "Transactions in 1998" section of
Management's Discussion and Analysis and Note 22 to the Consolidated Financial
Statements in the 1998 Annual Report to Stockholders, which are incorporated by
reference in Items 7 and 8.
OTHER
Research and Development
The company's Technical Center in Oklahoma City performs research and
development in support of its existing businesses and in the pursuit of new
products and processes. These programs continue to concentrate on improvements
to chemical plant processes and products.
Employees
On December 31, 1998, the company had 3,367 employees. Approximately
600, or 18% of these employees were represented by chemical industry collective
bargaining agreements in Europe.
Competitive Conditions
In the petroleum industry, competition exists from the initial process
of bidding for leases to the sale of crude oil and natural gas. Competitive
factors include finding and developing petroleum, producing crude oil and
natural gas efficiently, transporting the produced crude oil and natural gas and
developing successful marketing strategies.
The titanium dioxide pigment business is very competitive. The number
of competitors in the industry has declined due to recent consolidations, a
trend that is expected to continue as companies owning chloride process
technology acquire operations that use the older sulfate technology. It is
expected that many of these sulfate plants will be converted to the chloride
technology. Worldwide, Kerr-McGee is one of only four companies that own
chloride technology to produce titanium dioxide pigment. Cost efficiencies and
product quality are key competitive factors in the titanium dioxide pigment
business.
It is not possible to predict the effect of future competition on
Kerr-McGee's operating and financial results.
GOVERNMENT REGULATIONS AND ENVIRONMENTAL RESERVES
General
The company is subject to extensive regulation by federal, state, local
and foreign governments. The production and sale of crude oil and natural gas in
the United States are subject to regulation by federal and state authorities,
particularly with respect to allowable rates of production, offshore exploration
and production and environmental matters. Stringent environmental-protection
laws and regulations apply to almost all of the company's operations. In
addition, there are special taxes that apply to the oil and gas industry.
Environmental Matters
Federal, state and local laws and regulations relating to environmental
protection affect almost all company operations. During 1998, direct capital and
operating expenditures related to environmental protection and cleanup of
existing sites totaled $37 million. Additional expenditures totaling $105
million were charged to environmental reserves. While it is extremely difficult
to estimate the total direct and indirect costs to the company of government
environmental regulations, it is presently estimated that the direct capital and
operating expenditures and expenditures charged to reserves will be
approximately $115 million in both 1999 and 2000. Some expenditures to reduce
the occurrence of releases to the environment may result in increased
efficiency; however, most of these expenditures produce no significant increase
in production capacity, efficiency or revenue. Operation of pollution-control
equipment installed for these purposes usually entails additional expense.
Based on present information, the company believes that it has accrued
and is accruing reasonable reserves for expenditures that may have to be paid in
the future for environmental matters. Because of continually changing laws and
regulations, the nature of the company's businesses, negotiations and pending
proceedings, it is not possible to reliably estimate the amount or timing of all
future expenditures relating to environmental matters. The company provides for
costs related to environ-mental contingencies when a loss is probable and the
amount is reasonably estimable. Although management believes adequate reserves
have been provided for all known environmental contingencies, it is possible,
due to the above-noted uncertainties, that additional reserves could be required
in the future.
Also see "Item 3. Legal Proceedings," which follows.
Item 3. Legal Proceedings
The company continues its efforts to decommission a facility in West
Chicago, Illinois, which processed thorium ores and was closed in 1973. For a
discussion of contingencies, including a detailed discussion of the West Chicago
matter, reference is made to the Environmental Matters section of Management's
Discussion and Analysis and Note 9 to the Consolidated Financial Statements in
the 1998 Annual Report to Stockholders, which are incorporated by reference in
Items 7 and 8, respectively.
Item 4. Submission of Matters to a Vote of Security Holders
None submitted during the fourth quarter of 1998.
Executive Officers of the Registrant
<TABLE>
The following is a list of executive officers, their ages, and their
positions and offices as of March 1, 1999:
<CAPTION>
Name Age Office
<S> <C> <C>
Robert L. Keiser 56 Chairman of the Board since February 1999. Chairman of the Board and Chief
Executive Officer of Oryx Energy Company from 1994 until February 1999.
Luke R. Corbett 52 Chief Executive Officer since 1997. Chairman of the Board from 1997 until February
1999. President and Chief Operating Officer from 1995 until 1997. Group Vice
President from 1992 until 1995.
Tom J. McDaniel 60 Vice Chairman of the Board since 1997. Senior Vice President from 1986 until 1997.
Corporate Secretary from 1989 until 1997.
John C. Linehan 59 Executive Vice President since 1997. Chief Financial Officer since 1987. Senior Vice
President from 1987 until 1997.
Kenneth W. Crouch 55 Senior Vice President since 1996. Senior Vice President, Worldwide Exploration and
Production operations since 1998. Senior Vice President, Exploration, Kerr-McGee
Oil & Gas Corporation from 1996 to 1998. Senior Vice President, North American and
International Exploration, Exploration and Production Division during 1996. Vice
President, Gulf of Mexico and International Exploration, Exploration and Production
Division from 1995 until 1996. Vice President and Managing Director of Exploration
for North Sea Operations, Exploration and Production Division from 1993 until 1995.
Russell G. Horner, Jr. 59 Senior Vice President and Corporate Secretary since 1997. General Counsel since
1986. Vice President from 1986 until 1997.
Michael G. Webb 51 Senior Vice President for Strategic Planning since 1996. Senior Vice President since
1994. Senior Vice President, Exploration, Exploration and Production Division from
1994 until 1996.
George D. Christiansen 54 Vice President, Safety and Environ-mental Affairs since March 1998. Vice President
Environmental Assessment and Remedi-ation from 1996 to 1998. Vice President,
Minerals Exploration, Hydrology and Real Estate from 1994 to 1996.
Julius C. Hilburn 48 Vice President, Human Resources since 1996. Manager, Benefits Administration from
1992 until 1996.
Deborah A. Kitchens 42 Vice President and Controller since 1996. Controller, Exploration and Production
Division from 1992 until 1996.
J. Michael Rauh 49 Treasurer since 1996. Vice President since 1987. Controller from 1987 until 1996.
Jean B. Wallace 45 Vice President, General Administration since 1996. Vice President, Human Resources
from 1989 until 1996.
W. Peter Woodward 50 Senior Vice President since May 1997. Senior Vice President for Kerr-McGee Chemical
since May 1997. Senior Vice President Chemical Marketing for Kerr-McGee Chemical
Corporation from May 1996 until May 1997. Director Pigment Business Management,
Kerr-McGee Chemical Corporation from 1993 until 1996.
</TABLE>
There is no family relationship between any of the executive officers.
FORWARD-LOOKING INFORMATION
This report contains forward-looking statements and assumptions
concerning Kerr-McGee's future results and prospects. These statements are based
on current expectations and are subject to certain events and risks that may be
beyond the company's control. In addition, the company may from time to time
make oral forward-looking statements. In connection with the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, the company
is hereby identifying important factors that could cause actual results to
differ materially from those contained in any forward-looking statement made by
or on behalf of the company. Any such statement is qualified by reference to the
following cautionary statements.
Such events and risks include the success of the oil and gas
exploration program, ultimate volume of recoverable oil and gas reserves,
success of cost-control efforts, general economic conditions, timely development
and market acceptance of customer products for which Kerr-McGee supplies raw
materials, and other risk factors discussed in this annual report on Form 10-K
and the company's 1998 Annual Report to Stockholders. Actual results and
developments may differ from those expressed or implied in this report.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters
Information relative to the market in which the company's common stock
is traded, the high and low sales prices of the common stock by quarters for the
past two years, and the approximate number of holders of common stock is
furnished in Note 29 to the Consolidated Financial Statements in the 1998 Annual
Report to Stockholders, which note is incorporated by reference in Item 8.
Quarterly dividends declared totaled $1.80 per share for the years 1998
and 1997 and $1.64 per share for the year 1996. Cash dividends have been paid
continuously since 1941 and totaled $86 million in 1998, $85 million in 1997 and
$83 million in 1996.
Item 6. Selected Financial Data
Information regarding selected financial data required in this item is
presented in the schedule captioned "Five-Year Financial Summary" in the 1998
Annual Report to Stockholders and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
"Management's Discussion and Analysis" in the 1998 Annual Report to
Stockholders is incorporated herein by reference.
Item 7a. Quantitative and Qualitative Disclosure about Market Risk
For information required under this section, reference is made to the
"Market Risks" section of Management's Discussion and Analysis in the 1998
Annual Report to Stockholders, which discussion is incorporated by reference
above.
Item 8. Financial Statements and Supplementary Data
The following financial statements and supplementary data included in
the 1998 Annual Report to Stockholders are incorporated herein by reference:
Report of Independent Public Accountants
Consolidated Statement of Income
Consolidated Statement of Comprehensive Income
and Stockholders' Equity
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Notes to Financial Statements
Item 9. Change in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) Identification of directors -
For information required under this section, reference is made to
the "Election of Directors" section of the company's proxy
statement for 1999 made in connection with its Annual
Stockholders' Meeting to be held on May 11, 1999.
(b) Identification of executive officers -
The information required under this section is set forth in the
caption "Executive Officers of the Registrant" on pages 17 and 18
of this Form 10-K pursuant to Instruction 3 to Item 401(b) of
Regulation S-K and General Instruction G(3) to Form 10-K.
(c) Compliance with Section 16(a) of the 1934 Act -
For information required under this section, reference is made to
the "Compliance with Section 16(a) of the Securities Exchange Act
of 1934" section of the company's proxy statement for 1999 made in
connection with its Annual Stockholders' Meeting to be held on May
11, 1999.
Item 11. Executive Compensation
For information required under this section, reference is made to the
"Executive Compensation and Other Information" section of the company's proxy
statement for 1999 made in connection with its Annual Stockholders' Meeting to
be held on May 11, 1999.
Item 12. Security Ownership of Certain Beneficial Owners and Management
For information required under this section, reference is made to the
"Security Ownership" portion of the "Election of Directors" section of the
company's proxy statement for 1999 made in connection with its Annual
Stockholders' Meeting to be held on May 11, 1999.
Item 13. Certain Relationships and Related Transactions
For information required under this section, reference is made to the
"Election of Directors" and "Certain Relationships and Related Transactions"
sections of the company's proxy statement for 1999 made in connection with its
Annual Stockholders' Meeting to be held on May 11, 1999.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements -
The following consolidated financial statements of Kerr-McGee
Corporation and its subsidiary companies, included in the
company's 1998 Annual Report to Stockholders, are incorporated
by reference in Item 8:
Report of Independent Public Accountants
Consolidated Statement of Income for the Years Ended
December 31, 1998, 1997 and 1996
Consolidated Statement of Comprehensive Income and
Stockholders' Equity for the Years Ended December 31,
1998, 1997 and 1996
Consolidated Balance Sheet at December 31, 1998 and 1997
Consolidated Statement of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996
Notes to Financial Statements
(a) 2. Financial Statement Schedules -
Report of Independent Public Accountants on Financial
Statement Schedule
Schedule II - Valuation Accounts and Reserves for the
Years Ended December 31, 1998, 1997 and 1996
Schedules I, III, IV and V are omitted as the subject matter
thereof is either not present or is not present in amounts
sufficient to require submission of the schedules in
accordance with instructions contained in Regulation S-X.
(a) 3. Exhibits -
The following documents are filed under Commission file number
1-3939 as a part of this report.
Exhibit No.
3.1 Restated Certificate of
Incorporation of Kerr-McGee
Corporation.
3.2 Bylaws of Kerr-McGee Corporation as
approved February 26, 1999.
4.1 Amended and Restated Rights
Agreement dated as of July 9, 1996,
filed as Exhibit 1 to the
report on Form 8-K dated July 9,
1996, and incorporated herein by
reference.
4.2 Indenture dated as of June 1, 1976,
between the company and Citibank,
N.A., as trustee, relating to the
company's 8-1/2% Sinking Fund
Debentures due June 1, 2006, filed
as Exhibit 2 to Form S-7, effective
June 10, 1976, Registration No.
2-53878, and incorporated herein by
reference.
4.3 Indenture dated as of November 1,
1981, between the company and United
States Trust Company of New York, as
trustee, relating to the company's
7% Debentures due November 1, 2011
filed as Exhibit 4 to Form S-16,
effective November 16, 1981,
Registration No. 2-772987, and
incorporated herein by reference.
4.4 Indenture dated as of August 1, 1982
filed as Exhibit 4 to Form S-3,
effective August 27, 1982,
Registration Statement No. 2-78952,
and incorporated herein by
reference, and its first supplement
dated May 7, 1996, between the
company and Citibank, N.A., as
trustee, relating to the company's
6.625% notes due October 15, 2007,
and 7.125% debentures due October
15, 2027;
4.5 The $325 million Credit Agreement
dated as of December 4, 1996,
providing for a five-year revolving
credit facility with a bullet
maturity on the fifth anniversary of
the execution of the Credit
Agreement, filed as Exhibit 4.5 to
the report filed on Form 10-K for
the year ended December 31, 1997,
and incorporated herein by
reference.
4.6 The company agrees to furnish to the
Securities and Exchange Commission,
upon request, copies of each of the
following instruments defining the
rights of the holders of certain
long-term debt of the company: the
Note Agreement dated as of November
29, 1989, among the Kerr-McGee
Corporation Employee Stock Ownership
Plan Trust (the Trust) and several
lenders, providing for a loan
guaranteed by the company of $125
million to the Trust; the Amended
and restated Credit Agreement dated
as of April 26, 1998, among
Kerr-McGee Corporation, Kerr-McGee
Oil (U.K.) PLC, and several banks
providing for revolving credit of up
to a total of $225 million -- $75
million through February 8, 1999,
and $150 million through April 28,
2002; the Revolving Credit Agreement
dated as of February 20, 1997,
between Kerr-McGee China Petroleum
Ltd., as borrower, and Kerr-McGee
Corporation, as guarantor, and
several banks providing for
revolving credit of up to $75
million through March 6, 2000, and
the $76 million Credit Agreement
dated May 15, 1998, between
Kerr-McGee Resources (U.K.) Limited,
Kerr-McGee Andrew Limited,
Kerr-McGee Dorset Limited and
various banks providing for
revolving credit. The $100 million,
8% Note Agreement entered into by
Oryx Energy Company (Oryx) dated as
of October 20, 1995, and due October
15, 2003. The $150 million, 8-3/4%
Note Agreement entered into by Oryx
dated as of July 17, 1996, and due
July 15, 2004. The $150 million,
8-1/8% Note Agreement entered into
by Oryx dated as of October 20,
1995, and due October 15, 2005. The
$11 million, 9-1/4% Series A Note
Agreement entered into by Oryx and
due January 2, 2002. The $2.2
million, 9-1/2% Series A Note
Agreement entered into by Oryx and
due February 1, 2002. The $100
million, 10% Note Agreement entered
into by Oryx dated as of June 27,
1991, and due June 15, 1999. The
$100 million,, 9-1/2% Note Agreement
entered into by Oryx dated as of
June 27, 1991, and due November 1,
1999. The $150 million, 10% Note
Agreement entered into by Oryx dated
as of April 10, 1991, and due April
1, 2001. The total amount of
securities authorized under each of
such instruments does not exceed 10%
of the total assets of the company
and its subsidiaries on a
consolidated basis.
4.7 Kerr-McGee Corporation Direct
Purchase and Dividend Reinvestment
Plan filed on Form S-3 effective
August 19, 1993, Registration No.
33-66112, and incorporated herein by
reference.
4.8 The $250 million Credit Agreement
dated as of February 26, 1999,
providing for a 364 day revolving
credit facility, filed as
Exhibit 4.8 to the report filed on
Form 10-K for the year ended
December 31, 1998.
4.9 The $500 million Credit Agreement
dated as of February 26, 1999,
providing for a three-year revolving
credit facility with a bullet
maturity on the third anniversary of
the execution of the Credit
Agreement, filed as Exhibit 4.9 to
the report filed on Form 10-K for
the year ended December 31, 1998.
4.10 Indenture dated as of May 15, 1989
by and between Oryx Energy Company
and Texas Commerce Bank National
Association, as trustee, relating
to Oryx's 7-1/2% Convertible
Subordinated Debentures due May 15,
2014, filed as Exhibit 4.1 to
Oryx's Form S-1, effective May 5,
1989, Registration No. 33-28494,
and incorporated herein by reference
and the First Supplemental Indenture
among Oryx Energy Company,
Kerr-McGee Corporation and Chase
Bank of Texas, National Association,
as trustee, dated as of February 26,
1999, and filed as Exhibit 4.1 to
Form 8-K filed March 11, 1999, and
incorporated herein by reference.
10.1* Deferred Compensation Plan for
Non-Employee Directors as amended
and restated effective October 1,
1990, filed as Exhibit 10(1) to the
report filed on Form 10-K for the
year ended December 31, 1990, and
incorporated herein by reference.
10.2* Kerr-McGee Corporation Stock
Deferred Compensation Plan for
Non-Employee Directors as amended
and restated effective August 1,
1995, filed as Exhibit 10.2 to the
report filed on Form 10-K for the
year ended December 31, 1995, and
incorporated herein by reference.
10.3* Description of the company's Annual
Incentive Compensation Plan, filed
as Exhibit 10.3 to the report filed
on Form 10-K for the year ended
December 31, 1995, and incorporated
herein by reference.
10.4* The Long Term Incentive Program as
amended and restated effective
May 9, 1995, filed as Exhibit 10.5
on Form 10-Q for the quarter ended
March 31, 1995, and incorporated
herein by reference.
10.5* Benefits Restoration Plan as amended
and restated effective September 13,
1989, filed as Exhibit 10(6) to the
report on Form 10-K for the year
ended December 31, 1992, and
incorporated herein by reference.
10.6* Kerr-McGee Corporation Executive
Deferred Compensation Plan as
amended and restated effective
January 1, 1996, filed as Exhibit
10.6 to the report on Form 10-K for
the year ended December 31, 1995,
and incorporated herein by
reference.
10.7* Kerr-McGee Corporation Supplemental
Executive Retirement Plan as amended
and restated effective May 3, 1994,
filed as Exhibit 10.8 on Form 10-K
for the year ended December 31,
1994, and incorporated herein by
reference.
10.8* Amended and restated Agreement,
restated as of December 31, 1992,
between the company an John C.
Linehan filed as Exhibit 10(10) on
Form 10-K for the year ended
December 31, 1992, and incorporated
herein by reference.
10.9* Amended and restated Agreement,
restated as of December 31, 1992,
between the company and Luke R.
Corbett filed as Exhibit 10(11) on
Form 10-K for the year ended
December 31, 1992, and incorporated
herein by reference.
10.10* Amended and restated Agreement,
restated as of December 31, 1992,
between the company and Tom J.
McDaniel filed as Exhibit 10.13 on
Form 10-K for the year ended
December 31, 1994, and incorporated
herein by reference.
10.11* Amended and restated Agreement,
restated as of December 31, 1992,
between the company and Russell G.
Horner, Jr. filed as Exhibit 10.11
on Form 10-K for the year ended
December 31, 1997, and incorporated
herein by reference.
10.12* Amended and restated Agreement,
restate as of December 31, 1992,
between the company and Kenneth W.
Crouch filed as Exhibit 10.12 on
Form 10-K for the year ended
December 31, 1997, and incorporated
herein by reference.
10.13* Employment Letter Agreement, as of
October 14, 1998, between the
company and Robert L. Keiser filed
as Exhibit 10.1 on Form S-4 dated
January 27, 1999, and incorporated
herein by reference.
10.14* Form of agreement, amended and
restated as of December 31, 1992,
between the company and certain
executive officers not named in the
Summary Compensation Table contained
in the company's definitive Proxy
Statement for the 1998 Annual
Meeting of Stockholders, filed as
Exhibit 10(14) on Form 10-K for the
year ended December 31, 1992, and
incorporated herein by reference.
12 Computations of ratio of earnings to
fixed charges.
13 1998 Annual Report to Stockholders.
21 Subsidiaries of the Registrant.
23 Consent of Arthur Andersen LLP.
24 Powers of Attorney.
27 Financial Data Schedule (electronic
filing only).
*These exhibits relate to the compensation plans and arrangements of the
company.
(b) Reports on Form 8-K -
Current Report on Form 8-K filed October 19, 1998, reported items
5 and 7 announcing the merger between Kerr-McGee Corporation and
Oryx Energy Company. Current Report on Form 8-K filed November 13,
1998, reported on items 5 and 7 and included restated financial
information and statements at December 31, 1997, 1996 and 1995 and
for the years then ended.
Report of Independent Public Accountant on Financial
Statement Schedule
To Kerr-McGee Corporation:
We have audited in accordance with generally accepted auditing
standards, the consolidated financial statements included in Kerr-McGee
Corporation's 1998 Annual Report to Stockholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated February 26, 1999. Our
audit was made for the purpose of forming an opinion on those statements taken
as a whole. The Schedule of Valuation Accounts and Reserves is the
responsibility of the company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic consolidated financial statements. This schedule has been subjected to
the auditing procedures applied in the audit of the basic consolidated financial
statements and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma,
February 26, 1999
SCHEDULE II
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
VALUATION ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
Additions
Balance at Charged to Charged to Deductions Balance at
Beginning Profit and Other from End of
(Millions of dollars) of Year Loss Accounts Reserves Year
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1998
a. Deducted from asset accounts
Allowance for doubtful notes
and accounts receivable $ 14 $ 1 $ - $ 1 $ 14
Warehouse inventory obsolescence 3 2 - 1 4
----- ----- ---- ---- -----
$ 17 $ 3 $ - $ 2 $ 18
===== ===== ==== ==== =====
b. Not deducted from asset accounts
Environmental $160 $ 59 $ 29(A) $105 $143
Postretirement benefits 120 1 - 8 113
Oil and gas site dismantlement and coal
site reclamation and restoration 91 11 - 29 73
Surface mine stripping cost 19 21 - 40 -
Pension benefits 10 4 - 1 13
Other 7 6 - 6 7
----- ----- ---- ---- -----
$407 $ 102 $ 29 $189 $349
==== ===== ==== ==== ====
Year Ended December 31, 1997
a. Deducted from asset accounts
Allowance for doubtful notes
and accounts receivable $ 13 $ 2 $ - $ 1 $ 14
Warehouse inventory obsolescence 3 1 - 1 3
----- ----- ---- ---- -----
$ 16 $ 3 $ - $ 2 $ 17
===== ===== ==== ==== =====
b. Not deducted from asset accounts
Environmental $235 $ 30 $(11)(A)(B) $94 $160
Postretirement benefits 117 11 - 8 120
Oil and gas site dismantlement and coal
site reclamation and restoration 110 (3) (11) (B) 5 91
Surface mine stripping cost 15 38 - 34 19
Pension benefits 7 11 5 (A) 13 10
Other 7 1 - 1 7
----- ----- ---- ---- -----
$491 $ 88 $(17) $155 $407
==== ===== ==== ==== ====
Year Ended December 31, 1996
a. Deducted from asset accounts
Allowance for doubtful notes
and accounts receivable $ 14 $ 1 $ - $ 2 $ 13
Warehouse inventory obsolescence 3 - - - 3
----- ----- ---- ---- -----
$ 17 $ 1 $ - $ 2 $ 16
===== ===== ==== ==== =====
b. Not deducted from asset accounts
Environmental $230 $ 55 $ 4 (A) $ 54 $235
Postretirement benefits 112 11 - 6 117
Oil and gas site dismantlement and coal
site reclamation and restoration 103 14 - 7 110
Surface mine stripping cost 16 35 - 36 15
Pension benefits 11 - (4) (A) - 7
Other 6 2 - 1 7
----- ----- ---- ---- -----
$478 $117 $ - $104 $491
==== ==== ==== ==== ====
(A) Transfer (to) from current liabilities.
(B) Transfer from reserve for abandonment to environmental.
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
KERR-McGEE CORPORATION
By: Luke R. Corbett*
Luke R. Corbett,
Chief Executive Officer
March 30, 1999 By: (John C. Linehan)
Date John C. Linehan,
Executive Vice President and
Chief Financial Officer
By: (Deborah A. Kitchens)
Deborah A. Kitchens,
Vice President and Controller
and Chief Accounting Officer
* By his signature set forth below, John C. Linehan has signed this
Annual Report on Form 10-K as attorney-in-fact for the officer noted
above, pursuant to power of attorney filed with the Securities and
Exchange Commission.
By: (John C. Linehan)
John C. Linehan
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons in the capacities and
on the date indicated.
By: Luke R. Corbett*
Luke R. Corbett, Director
By: William E. Bradford*
William E. Bradford, Director
By: Sylvia A. Earle*
Sylvia A. Earle, Director
By: David C. Genever-Watling*
David C. Genever-Watling, Director
March 30, 1999 By: Martin C. Jischke*
Date Martin C. Jischke, Director
By: Robert L. Keiser*
Robert L. Keiser, Director
By: Tom J. McDaniel*
Tom J. McDaniel, Director
By: William C. Morris*
William C. Morris, Director
By: John J. Murphy*
John J. Murphy, Director
By: Leroy C. Richie*
Leroy C. Richie, Director
By: Richard M. Rompala*
Richard M. Rompala, Director
By: Matthew R. Simmons*
Matthew R. Simmons, Director
By: Farah M. Walters*
Farah M. Walters, Director
By: Ian L. White-Thomson*
Ian L. White-Thomson, Director
*By his signature set forth below, John C. Linehan has signed this
Annual Report on Form 10-K as attorney-in-fact for the directors noted
above, pursuant to the powers of attorney filed with the Securities and
Exchange Commission.
By: (John C. Linehan)
John C. Linehan
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
KERR-McGEE CORPORATION
FIRST: The name of the corporation is:
KERR-McGEE CORPORATION
SECOND: The registered office of the corporation in the State of
Delaware is located at No. 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name and address of its resident agent is The Corporation
Trust Company, No. 1209 Orange Street, Wilmington, Delaware 19801.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: (1) The total number of shares of all classes of stock which
the corporation shall have the authority to issue is 340,000,000, of which
40,000,000 shares shall be preferred stock, without par value, and 300,000,000
shall be common stock of the par value of $1.00 per share.
Each holder of common stock, as such, shall be entitled to one vote for
each share of common stock held of record by such holder on all matters on which
stockholders generally are entitled to vote; provided, however, that, except as
otherwise required by law, holders of common stock, as such, shall not be
entitled to vote on any amendment to this certificate of incorporation
(including any certificate of designations relating to any series of preferred
stock) that relates solely to the terms of one or more outstanding series of
preferred stock if the holders of such affected series are entitled, either
separately or together with the holders of one or more other such series, to
vote thereon pursuant to this certificate of incorporation (including any
certificate of designations relating to any series of preferred stock) or
pursuant to the General Corporation Law of the State of Delaware.
(2) The preferred stock may be issued from time to time in one
or more series. The resolution or resolutions of the Board of Directors
providing for the issue of shares of a particular series shall fix, subject to
applicable laws and provisions of this certificate of incorporation, the voting
power, designation, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions of the shares of
such series. The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
i) the number of shares constituting such series,
including the authority to increase or decrease such
number, and the distinctive designation of such
series;
ii) the rate of dividends payable on shares of such
series, the dates on which such dividends shall be
paid, and whether such dividends shall be cumulative
or noncumulative;
iii) the full or limited voting power, if any, for such
series and the terms and conditions under which such
voting power may be exercised;
iv) the right, if any, of the corporation to redeem
shares of such series and the terms and conditions of
such redemption;
v) the obligations, if any, of the corporation to retire
shares of such series pursuant to a retirement or
sinking fund of a similar nature or otherwise and the
terms and conditions of such obligation;
vi) the terms and conditions, if any, upon which the
shares of such series shall be convertible into
shares of stock of any other class or series
including the conversion rate and the term of
adjustment thereof, if any;
vii) the amount which the holders of the shares of such
series shall be entitled to receive in case of a
liquidation, dissolution or winding up of the
corporation;
viii) the relative priority of the shares of such series to
shares of other classes or series with respect to
dividends or upon the dissolution of or the
distribution of assets of the corporation; and
ix) and other rights and qualifications, preferences and
limitations or restrictions of the shares of such
series;
so far as not inconsistent with the provisions of
this certificate of incorporation and to the full
extent now or hereafter permitted by the laws of the
State of Delaware.
(3) Except as otherwise provided in this paragraph (3), no direct or
indirect purchase by the corporation from any Interested Stockholder (as
hereinafter defined) of shares of common stock of the corporation beneficially
owned by such Interested Stockholder for less than two years prior to the date
of such purchase shall be made at a per share price in excess of Fair Market
Value (as hereinafter defined) at the time of such purchase unless such purchase
is approved by the affirmative vote of not less than a majority of the Voting
Stock (as defined in Article THIRTEENTH) held by Disinterested Stockholders (as
hereinafter defined).
The provisions of this paragraph (3) shall not apply to (i) any offer
to purchase made by the corporation which is made on the same terms and
conditions of the holders of all shares of common stock of the corporation, or
(ii) any open market purchases by the corporation of shares of its common stock
at prevailing market prices.
The provisions of this paragraph (3) shall not be amended without the
affirmative vote of (a) not less than a majority of the Voting Stock entitled to
vote thereon and (b) not less than a majority of the Voting Stock entitled to
vote thereon held by Disinterested Stockholders.
For purposes of this paragraph (3); I) the terms "Interested
Stockholder" shall have the meaning of "Related Person" set forth in paragraph
(B)(3) of Article THIRTEENTH except that the percent of Voting Stock referred to
in clauses (a) and (b) of such definition shall be five percent (5%) rather than
ten percent (10%); (ii) the term "Fair Market Value" shall have the meaning set
forth in paragraph (B)(9) of Article THIRTEENTH except that "Fair Market Value"
shall mean the highest sale price or bid quotation during the five-trading day
period preceding the date of the purchase of the stock; and (iii) the terms
"Disinterested Stockholders" means those holders of the Voting Stock, none of
which is an Interested Stockholder.
(4) Series B Preferred Stock
Section 1. Designation and Amount. There shall be designated a
series of preferred stock as "Series B Junior Participating Preferred Stock"
(the "Series B Preferred Stock") and the number of shares constituting the
Series B Preferred Stock shall be 1,000,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors; provided, that
no decrease shall reduce the number of shares of Series B Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
corporation convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of preferred stock of the corporation (the "Preferred Stock") (or any
similar stock) ranking prior and superior to the Series B Preferred Stock with
respect to dividends, the holders of shares of Series B Preferred Stock, in
preference to the holders of common stock of the corporation (the "Common
Stock") and of any other stock of the corporation ranking junior to the Series B
Preferred Stock, shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the last day of January, April, July, and October
in each year (each such date being referred to herein as a "Dividend Payment
Date"), commencing on the first Dividend Payment Date after the first issuance
of a share or fraction of a share of Series B Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $1 or (b)
subject to the provision for adjustment hereinafter set forth, 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
per share amount (payable in kind) of all non-cash dividends or other
distributions other than a dividend payable in shares of Common Stock, declared
on the Common Stock since the immediately preceding Dividend Payment Date or,
with respect to the first Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series B Preferred Stock. In the event the
corporation shall at any time after July 9, 1996 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event under clause (b) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
(B) The corporation shall declare a dividend or distribution
on the Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Dividend Payment Date and the next subsequent
Dividend Payment Date, a dividend of $1 per share on the Series B Preferred
Stock shall nevertheless be payable, when, as and if declared, on such
subsequent Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether
or not earned or declared, on outstanding shares of Series B Preferred Stock
from the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of issue is
a Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive a quarterly
dividend and before such Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series B Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding. The Board of Directors may fix a record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of
Series B Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment
hereinafter set forth and except as otherwise provided in this
certificate of incorporation or required by law, each share of Series B
Preferred Stock shall entitle the holder thereof to 100 votes on all
matters upon which the holders of the Common Stock of the corporation
are entitled to vote. In the event the corporation shall at any time
after July 9, 1996 declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the number of votes per share to
which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in this certificate
of incorporation or in any other certificate of designations creating a
series of Preferred Stock or any similar stock, and except as otherwise
required by law, the holders of shares of Series B Preferred Stock and
the holders of shares of Common Stock and any other capital stock of
the corporation having general voting rights shall vote together as one
class on all matters submitted to a vote of stockholders of the
corporation.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series B Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends
or distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not earned or declared, on
shares of Series B Preferred Stock outstanding shall have been paid in
full, the corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (as to
dividends) to the Series B Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as
to dividends) with the Series B Preferred Stock, except
dividends paid ratably on the Series B Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series B Preferred Stock, provided that the corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the corporation ranking junior (as to dividends and upon
dissolution, liquidation or winding up) to the Series B
Preferred Stock or rights, warrants or options to acquire such
junior stock;
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series B
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(B) The corporation shall not permit any subsidiary of the
corporation to purchase or otherwise acquire for consideration any
shares of stock of the corporation unless the corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their retirement become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to any conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the corporation, no distribution shall
be made (A) to the holders of the Common Stock or of shares of any other stock
of the corporation ranking junior, upon liquidation, dissolution or winding up,
to the Series B Preferred Stock unless, prior thereto, the holders of shares of
Series B Preferred Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or not
earned or declared, to the date of such payment, provided that the holders of
shares of Series B Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to holders
of shares of Common Stock, or (B) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series B Preferred
Stock, except distributions made ratably on the Series B Preferred Stock and all
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up. In
the event, however, that there are not sufficient assets available to permit
payment in full of the Series B liquidation preference and the liquidation
preferences of all other classes and series of stock of the corporation, if any,
that rank on a parity with the Series B Preferred Stock in respect thereof, then
the assets available for such distribution shall be distributed ratably to the
holders of the Series B Preferred Stock and the holders of such parity shares in
the proportion to their respective liquidation preferences. In the event the
corporation shall at any time after July 9, 1996 declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series B Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(A) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. Consolidation, Merger, etc. In case the corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are converted into, exchanged for or changed
into other stock or securities, cash and/or any other property, then in any such
case each share of Series B Preferred Stock shall at the same time be similarly
converted into, exchanged for or changed into an amount per share (subject to
the provision for adjustment hereinafter set forth) equal to 100 times the
aggregate amount of stock, securities, cash and/or any other property (payable
in kind), as the case may be, into which or for which each share of Common Stock
is converted, exchanged or converted. In the event the corporation shall at any
time after July 9, 1996 declare or pay any dividend on the Common Stock payable
in shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the conversion,
exchange or change of shares of Series B Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series B Preferred
Stock shall not be redeemable from any holder.
Section 9. Rank. The Series B Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up of the corporation, junior to all other
series of Preferred Stock and senior to the Common Stock.
Section 10. Amendment. If any proposed amendment to this
certificate of incorporation would alter, change or repeal any of the
preferences, powers or special rights given to the Series B Preferred Stock so
as to affect the Series B Preferred Stock adversely, then the holders of the
Series B Preferred Stock shall be entitled to vote separately as a class upon
such amendment, and the affirmative vote of two-thirds of the outstanding shares
of the Series B Preferred Stock, voting separately as a class, shall be
necessary for the adoption thereof, in addition to such other vote as may be
required by the General Corporation Law of the State of Delaware.
Section 11. Fractional Shares. Series B Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Preferred Stock.
(5) Preemptive Rights. Neither the holders of preferred stock nor the
holders of common stock shall have any preemptive rights, and the corporation
shall have the right to issue and sell to any person or persons any shares of
its capital stock or any option rights or any securities having conversion or
option rights, without first offering such shares, rights or securities to any
holders of preferred stock or common stock.
FIFTH: (1) The business and affairs of the corporation shall be managed
by a Board of Directors. The number of directors shall be fixed from time to
time by resolution adopted by affirmative vote of the majority of the Board of
Directors, but shall not be fixed at a number less than three.
The directors shall be classified, with respect to the time
for which they severally hold office, into three classes, as nearly equal in
number as possible, with the term of the first class to expire at the 1999
annual meeting of the stockholders, the term of office of the second class to
expire at the 2000 annual meeting of the stockholders, and the term of office of
the third class to expire at the 2001 annual meeting of the stockholders, with
the members of each class to hold office until their successors are elected and
qualified. At each succeeding annual meeting of the stockholders of the
corporation, the successors to the class of directors whose term expires at the
meeting shall be elected to hold office for a term expiring st the annual
meeting of the stockholders held in the third year following the year of their
election.
Newly created directorships resulting from any increase in the
number of directors and any vacancies on the Board of Directors resulting from
death, resignation, disqualification, removal or other cause shall be filled by
the affirmative vote of a majority of the remaining directors then in office,
even though less than a quorum of the Board of Directors. Any director elected
in accordance with the preceding sentence shall hold office for the remainder of
the full term of the class of directors in which the new directorship was
created or the vacancy occurred until such director's successor shall have been
elected and qualified. No decrease in the number of directors constituting the
Board of Directors shall shorten the term of any incumbent director.
Directors may be removed only for cause, and then only by the
affirmative vote of at least 75 percent in voting power of all shares of the
corporation entitled to vote generally in the election of directors, voting as a
single class.
(2) Notwithstanding the foregoing, whenever the holders of any one or
more series of preferred stock issued by the corporation shall have the right,
voting separately as a series or separately as a class with one or more such
other series, to elect directors at an annual or special meeting of
stockholders, the election, term of office, removal, filling of vacancies and
other features of such directorships shall be governed by the terms of this
certificate of incorporation (including any certificate of designations relating
to any series of preferred stock) applicable thereto, and such directors so
elected shall not be divided into classes pursuant to this Article FIFTH unless
expressly provided by such terms.
SIXTH: The Board of Directors shall be authorized to make, amend,
alter, change, add to or repeal the By-Laws of the corporation in any manner not
inconsistent with the laws of the State of Delaware, subject to the power of the
stockholders to amend, alter, change, add to or repeal the By-Laws made by the
Board of Directors. Notwithstanding anything contained in this certificate of
incorporation to the contrary, the affirmative vote of the holders of at least
75 percent in voting power of all the shares of the corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required in order for the stockholders to alter, amend or repeal any
provision of the By-Laws which is to the same effect as Article FIFTH, Article
SIXTH, and Article FOURTEENTH of this certificate of incorporation or to adopt
any provision inconsistent therewith.
SEVENTH: (1) (a) The corporation shall, to the full extent permitted by
the Laws of the State of Delaware as then in effect or, if less stringent, in
effect on December 31, 1985 ("Delaware Law"), and as more fully described in the
By-Laws, indemnify any person (the "Indemnitee") made or threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative and whether or not by
or in the right of the corporation, by reason of the fact that the Indemnitee is
or was a director, officer or employee of the corporation or is or was serving
at the request of the corporation as a director, officer, employee, trustee,
partner, or other agent of any other enterprise or legal person (any such
action, suit or proceeding being herein referred to as a "Legal Action") against
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by the Indemnitee in connection with
such Legal Action or its investigation, defense or appeal (herein called
"Indemnified Expenses"), if the Indemnitee has met the standard of conduct
necessary under Delaware Law to permit such indemnification. Rights to
indemnification shall extend to the heirs, beneficiaries, administrators and
executors of any deceased Indemnitee.
For purposes of this Section, reference to "any other
enterprise or legal person" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer, employee or agent
of the corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries.
(b) The Indemnified Expenses shall be paid by the corporation
in advance as shall be appropriate to permit Indemnitee to defray such expenses
currently as incurred, provided the Indemnitee agrees in writing that in the
event it shall ultimately be determined as provided hereunder that Indemnitee
was not entitled to be indemnified, then Indemnitee shall promptly repay to the
corporation such amounts so paid.
(c) Any amendment, repeal or modification of this Article
SEVENTH, the corporation's By-Laws or any applicable provision of Delaware Law,
or any other instrument, which eliminates or diminishes the indemnification
rights provided for in this Article SEVENTH shall be ineffective as against an
Indemnitee with respect to any Legal Action based upon actions taken or not
taken by the Indemnitee prior to such repeal or the adoption of such
modification or amendment. The provisions of this Article SEVENTH, Section (1)
shall be applicable to all Legal Actions made or commenced after the adoption
hereof, whether arising from acts or omissions to act occurring before or after
its adoption. The provisions of this Article SEVENTH, Section (1) shall be
deemed to be a contract between the corporation and each director or officer who
serves in such capacity at any time while this Article SEVENTH, Section (1) and
the relevant provisions of Delaware Law and other applicable law, if any, are in
effect. If any provision of this Article SEVENTH, Section (1) shall be found to
be invalid or limited in application by reason of any law or regulation, it
shall not affect the validity of the remaining provisions hereof. The rights of
indemnification provided in this Article SEVENTH, Section (1) shall neither be
exclusive of, nor be deemed in limitation of, any rights to which an officer,
director, employee or agent may otherwise be entitled or permitted by contract,
this certificate of incorporation, vote of stockholders or directors or
otherwise, or as a matter of law, both as to actions in such person's official
capacity and actions in any other capacity while holding such office, it being
the policy of the corporation that indemnification of any person whom the
corporation is obligated to indemnify pursuant to subsection (a) of this Article
SEVENTH, Section (1) shall be made to the fullest extent permitted by law.
(d) The corporation may purchase and maintain insurance on
behalf of any person described in subsection (a) of this Article SEVENTH,
Section (1) against any liability asserted against such person, whether or not
the corporation would have the power to indemnify such person against such
liability under the provisions of this Article SEVENTH, Section (1) or
otherwise.
(2) To the full extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
the corporation shall not be liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. No repeal,
amendment or modification of this Article, whether direct or indirect, shall
eliminate or reduce its effect with respect to any act or omission of a director
of the corporation occurring prior to such repeal, amendment or modification.
EIGHTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
ss.291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this corporation under
ss.79 of Title 8 of the Delaware Code order a meeting of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of this corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
NINTH: [Reserved]
TENTH: [Reserved]
ELEVENTH: [Reserved]
TWELFTH: [Reserved]
THIRTEENTH: The vote of the stockholders of the corporation required to
approve any Business Transaction shall be as set forth in this Article
THIRTEENTH. Each capitalized term shall have the meaning ascribed to it in
Paragraph (B) of this Article.
(A) Notwithstanding any provision of law or any other provision of this
certificate of incorporation or any agreement with any national securities
exchange or otherwise which might permit a lesser vote or no vote and in
addition to any affirmative vote required of the holders of any particular class
or series of Voting Stock by law or by this certificate of incorporation, the
affirmative vote of the holders of not less than 51% of the outstanding shares
of Voting Stock of the corporation beneficially owned by stockholders other than
the Related Person shall be required for the approval or authorization of any
Business Transaction; provided, however, that such 51% voting requirement shall
not be applicable to any Business Transaction, and such Business Transaction
shall require only such affirmative vote as is required by law, any other
provision of this certificate of incorporation, any preferred stock designation
or any agreement with any national securities exchange, if, in the case of a
Business Transaction that does not involve any cash or other consideration being
received by the stockholders of the corporation solely in respect of their
ownership of shares of Voting Stock of the corporation, the condition specified
in the following paragraph (1) is satisfied, or, in the case of any other
Business Transaction, the conditions specified in either of the following
paragraphs (1) and (2) are satisfied.
(1) The Continuing Directors at the time of such Business
Transaction constitute at least a majority of the Board of Directors of
the corporation and such Business Transaction shall have been approved
by a majority vote of the Continuing Directors; or
(2)(a) The consideration to be received by holders of a
particular class or series of outstanding Voting Stock (including
common stock) shall be in cash or in the same form as was previously
paid in order to acquire beneficially shares of such class or series of
Voting Stock that are beneficially owned by the Related Person and, if
the Related Person beneficially owns shares of any class or series of
Voting Stock that were acquired with varying forms of consideration,
the form of consideration to be received by holders of such class or
series of Voting Stock shall be either cash or the form used to acquire
beneficially the largest number of shares of such class or series of
Voting Stock beneficially acquired by it prior to the Announcement
Date; and
(b) The aggregate amount of the cash and the Fair Market Value
as of the Consummation Date of any consideration other than cash to be
received per share by holders of common stock in such Business
Transaction shall be at least equal to the highest of the following (it
being intended that the requirements of this clause (A)(2)(b) shall be
required to be met with respect to all shares of common stock
outstanding whether or not the Related Person has acquired any shares
of the common stock):
i) If applicable, the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid in order to acquire any shares
of common stock beneficially owned by the Related Person which
were acquired beneficially by such Related Person (x) with in
the two-year period immediately prior to the Announcement Date
or (y) in the transaction in which it became a Related Person,
whichever is higher; or
ii) The Fair Market Value per share of common stock
on the Announcement Date or on the Determination Date,
whichever is higher; and
(c) The aggregate amount of the cash and the Fair Market Value
as of the Consummation Date of any consideration other than cash to be
received per share by holders of shares of any other class or series of
Voting Stock, other than common stock, shall be at least equal to the
highest of the following (it being intended that the requirements of
this clause (A)(2)(c) shall be required to be met with respect to every
class and series of such outstanding Voting Stock, whether or not the
Related Person has previously acquired any shares of a particular class
or series of Voting Stock):
i) If applicable, the highest per share price
(including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid in order to acquire any shares
of such class or series of Voting Stock beneficially owned by
the Related Person which were acquired beneficially by such
Related Person (x) with the two-year period immediately prior
to the Announcement Date or (y) in the transaction in which it
became a Related Person, whichever is higher;
ii) If applicable, the highest preferential amount
per share to which the holders of share of such class or
series of Voting Stock are entitled in the event of any
voluntary or involuntary liquidation, dissolution or winding
up of the corporation; or
iii) The Fair Market Value per share of such class or
series of Voting Stock on the Announcement Date or the
Determination Date, whichever is higher; and
(d) After such Related Person has become a Related Person and
prior to the consummation of such Business Transaction:
i) Such Related Person shall not have become the
Beneficial Owner of any additional shares of Voting Stock of
the corporation, except as part of the transaction in which it
became a Related Person or upon conversion of convertible
securities acquired by it prior to becoming a Related Person
or as a result of a pro rata stock dividend or stock split;
and
ii) Such Related Person shall not have received the
benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or
other financial assistance or tax credits or other tax
advantages provided by the corporation or any Subsidiary,
whether in anticipation of or in connection with such Business
Transaction or otherwise; and
iii) Such Related Person shall not have caused any
material change in the corporation's business or capital
structure, including, without limitation, the issuance of
shares of capital stock of the corporation to any third party;
and
iv) There shall have been (aa) no failure to declare
and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding
preferred stock, and (bb) no reduction in the annual rate of
dividends paid on common stock (after giving effect to any
reclassification, including any reverse stock split,
recapitalization, reorganization or similar transaction which
has the effect of enlarging or reducing the number of
outstanding shares of common stock), unless such failure or
reduction shall have been approved by a majority of the
Continuing Directors; and
(e) A proxy or information statement describing the proposed
Business Transaction and complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder (or any subsequent provisions replacing such Act, rules and
regulations), whether or not the corporation is then subject to such
requirements, shall be mailed at least thirty (30) days prior to the
consummation of such Business Transaction to the public stockholders of
the corporation and shall contain at the front thereof in a prominent
place (i) any recommendations as to the advisability (or
inadvisability) of the Business Transaction which the Continuing
Directors, if any, may choose to state and (ii) the opinion of a
reputable national investment banking firm as to the fairness (or not)
of such Business Transaction from the point of view of the remaining
public stockholders of the corporation (such investment banking firm to
be engaged solely on behalf of the remaining public stockholders, to be
paid a reasonable fee for their services by the corporation upon
receipt of such opinion, to be unaffiliated with such Related Person,
and, if there are at the time any Continuing Directors, to be selected
by a majority of the Continuing Directors).
(B) or purposes of this Article THIRTEENTH:
(1) The term "Business Transaction" shall mean:
(a) Any merger or consolidation of the corporation or
any Subsidiary with (i) any Related Person or (ii) any other
corporation or entity (whether or not itself a Related Person)
which is, or after such merger or consolidation, would be, an
Affiliate of a Related Person;
(b) Any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or in a
series of transactions) to or with any Related Person or any
Affiliate of any Related Person of assets of the corporation
or any Subsidiary having an aggregate Fair Market Value of
$10,000,000 or more;
(c) The adoption of any plan or proposal for the
liquidation or dissolution of the corporation proposed by or
on behalf of a Related Person or any Affiliate of the Related
Person;
(d) The issuance of or transfer by the corporation or
any Subsidiary (in one transaction or in a series of related
transactions) of any securities of the corporation or any
Subsidiary to a Related Person, or any Affiliate of a Related
Person, in exchange for cash, securities or other property (or
a combination thereof) having a Fair Market Value of
$10,000,000 or more, other than the issuance of securities
upon the conversion of convertible securities of the
corporation or any Subsidiary which were not acquired by such
Related Person (or such Affiliate) from the corporation or a
Subsidiary;
(e) Any reclassification of securities (including any
reverse stock split), or recapitalization or reorganization of
the corporation, or any merger or consolidation of the
corporation with any of its Subsidiaries or any self tender
offer for or repurchase of securities of the corporation or
any Subsidiary by the corporation or any Subsidiary or any
other transaction (whether or not with or into or otherwise
involving a Related Person) which in any such case has the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class or
series of stock or securities convertible into stock of the
corporation or any Subsidiary which is directly or indirectly
beneficially owned by any Related Person or any Affiliate of
any Related Person;
(2) A "person" shall mean any individual, firm, corporation,
group (as such term is used in Rule 13d of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
December 31, 1984) or other entity.
(3) "Related Person" shall mean any person (other than the
corporation or any Subsidiary or any employee benefit plan of the
corporation or any Subsidiary) who or which:
(a) Is the beneficial owner, directly or indirectly,
of more than ten percent of the combined voting power of the
then outstanding shares of Voting Stock; or
(b) Is an Affiliate of the corporation and at anytime
within the two-year period immediately prior to the date in
question was the beneficial owner, directly or indirectly, of
ten percent or more of the combined voting power of the then
outstanding shares of Voting Stock; or
(c) Is an assignee of or has otherwise succeeded to
the beneficial ownership of any shares of Voting Stock that
were at any time within the two-year period immediately prior
to the date in question beneficially owned by a Related
Person, if such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the
Securities Act of 1933.
(4) A person shall be a "beneficial owner" of any Voting
Stock:
(a) Which such person or any of its Affiliates
or Associates beneficially owns, directly or indirectly; or
(b) which such person or any of its Affiliates or
Associates has (a) the right to acquire (whether or not such
right is exercisable immediately), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (b) the right to vote or direct the vote
pursuant to any agreement, arrangement or understanding; or
(c) which are beneficially owned, directly or
indirectly, by any other person with which such person or any
of its Affiliates or Associates has any agreement, arrangement
or understanding for the purpose of acquiring, holding, voting
or disposing of any shares of Voting Stock.
(5) For the purposes of determining whether a person is a
Related Person pursuant to Paragraph (B)(3) of this Article THIRTEENTH,
the number of shares of Voting Stock deemed to be outstanding shall
include shares deemed owned by such Related Person through application
of Paragraph (B)(4) of this Article but shall not include any other
shares of Voting Stock that may be issuable pursuant to any agreement,
arrangement or understanding, or upon exercise of conversion rights,
warrants or options, or otherwise.
(6) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect on
December 31, 1984.
(7) "Subsidiary" shall mean any corporation more than 50% of
whose outstanding stock having ordinary voting power in the election of
directors is owned, directly or indirectly, by this corporation or by a
Subsidiary or by this corporation and one or more Subsidiaries;
provided, however, that for the proposes of the definition of Related
Person set forth in Paragraph (B)(3) of this Article THIRTEENTH, the
term "Subsidiary" shall mean only a corporation of which a majority of
each class of equity security is owned, directly or indirectly, by this
corporation.
(8) "Continuing Director" shall mean any member of the Board
of Directors of this corporation who is unaffiliated with, and not a
nominee of, the Related Person and was a member of the Board prior to
the time that the Related Person became a Related Person, and any
successor of a Continuing Director who is unaffiliated with, and not a
nominee of, the Related Person and who is recommended to succeed a
Continuing Director by a majority of Continuing Directors then on the
Board of Directors.
(9) "Fair Market Value" shall mean: (1) in the case of stock,
the highest closing sale price during the 30-day period preceding the
date in question of a share of such stock on the Composite Tape of New
York Stock Exchange-Listed stocks, or, if such stock is not quoted on
the New York Stock Exchange-Composite Tape, on the principal United
States securities exchange registered under the Securities Exchange Act
of 1934 on which such stock is listed, or, if such stock is not listed
on any such exchange, the highest closing sales price or bid quotation
with respect to a share of such stock during the 30-day period
preceding the date in question on the National Association of
Securities Dealers, Inc. Automated Quotation System or any system then
in use, or if no such quotations are available, the fair market value
on the date in question of a share of such stock as determined by a
majority of the Continuing Directors in good faith; and (2) in the case
of stock of any class or series which is not traded on any United
States registered securities exchange nor in the over-the-counter
market or in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by
a majority of the Continuing Directors in good faith.
(10) In the event of any Business Transaction in which the
corporation survives, the phrase "any consideration other than cash to
be received" as used in Paragraph (A)(2)(b) and (A)(2)(c) of this
Article THIRTEENTH shall include the shares of common stock and/or the
share of any other class of outstanding Voting Stock retained by the
holders of such shares.
(11) "Announcement Date" shall mean the date of first public
announcement of the proposed Business Transaction.
(12) "Determination Date" shall mean the date on which the
Related Person became a Related Person.
(13) "Consummation Date" shall mean the date of the
consummation of the Business Transaction.
(14) The terms "Voting Stock" shall mean all outstanding
shares of capital stock of all classes and series of the corporation
entitled to vote generally in the election of directors of the
corporation, in each case voting together as a single class.
(C) If the Continuing Directors constitute at least a majority of the
Board of Directors of the corporation, a majority of such Continuing Directors
shall have the power and duty to determine, on the basis of information known to
them after reasonable inquiry, all facts necessary to determine compliance with
this Article THIRTEENTH, including, without limitation:
(1) Whether a person is a Related Person;
(2) The number of shares of Voting Stock beneficially owned by
any person;
(3) Whether a person is an Affiliate or Associate of another
person;
(4) Whether the requirements of (A) of this Article THIRTEENTH
have been met with respect to any Business Transaction; and
(5) Whether the assets which are the subject of any Business
Transaction have, or the consideration to be received for the issuance
or transfer of securities by the corporation or any Subsidiary in any
Business Transaction has, an aggregate Fair Market Value of $10,000,000
or more. The good faith determination of a majority of the Continuing
Directors on such matters shall be conclusive and binding for all
purposes of this Article THIRTEENTH.
(D) Nothing contained in this Article THIRTEENTH shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
(E) Notwithstanding anything contained in this certificate of
incorporation to the contrary, the affirmative vote of (1) the holders of at
least 51% of the Voting Stock, voting together as a single class, and (2) the
holders of a least 51% of the Voting Stock, voting together as a single class,
other than shares of Voting Stock beneficially owned by a Related Person, shall
be required to alter, amend or repeal this Article THIRTEENTH or to adopt any
provision inconsistent therewith.
FOURTEENTH: Any action required or permitted to be taken by the holders
of the common stock of the corporation must be effected at a duly called annual
or special meeting of such holders and may not be effected by any consent in
writing by such holders. Except as otherwise required by law and subject to the
rights of the holders of any series of preferred stock, special meetings of
stockholders of the corporation may be called only by the Chief Executive
Officer of the corporation or by the Board of Directors pursuant to a resolution
approved by the Board of Directors.
FIFTEENTH: Notwithstanding anything contained in this certificate of
incorporation to the contrary, the affirmative vote of the holders of at least
75 percent in voting power of all the shares of the corporation entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to alter, amend or repeal Article FIFTH, Article SIXTH, Article
FOURTEENTH or this Article FIFTEENTH or to adopt any provision inconsistent
therewith.
CERTIFICATE
I, the undersigned, _________________________________, (Assistant) Secretary of
KERR-McGEE CORPORATION, a Delaware corporation, do hereby certify that the
foregoing is a full, true, and correct copy of the Restated Certificate of
Incorporation of said Corporation in effect on the date of this certificate.
Given under my hand and seal of the Corporation this ______ day of
_________________, _____.
-------------------------------
(Assistant) Secretary
(SEAL)
AMENDED AND RESTATED
BY-LAWS
OF
KERR-McGEE CORPORATION
ARTICLE I
OFFICES
Section 1. The principal place of business of Kerr-McGee
Corporation ("Corporation") shall be in Oklahoma City, Oklahoma.
Section 2. The Corporation may also have offices at such other
places as the Board of Directors may from time to time appoint or the business
of the Corporation may require.
ARTICLE II
SEAL
Section 1. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization, and the words "Corporate
Seal, Delaware". The Corporate Seal may be used by causing it or a facsimile
thereof to be impressed, affixed or reproduced.
Section 2. The corporate seal shall be retained under the
custody and control of the Secretary or Assistant Secretary except as and to the
extent the use of same by others may be expressly authorized by the Board of
Directors.
ARTICLE III
STOCKHOLDERS' MEETINGS
Section 1. All meetings of the stockholders for any purpose
may be held at such place as shall be stated in the notice of the meeting.
Section 2. An annual meeting of the stockholders shall be held
within one hundred fifty (150) days after the end of each fiscal year as the
Board of Directors may set for a particular year's annual meeting, at which
meeting they shall elect by a plurality vote by ballot a board of directors and
transact such other business as may properly be brought before the meeting.
Section 3. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
law, by the Certificate of Incorporation or by these By-Laws. If, however, such
majority shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or by proxy, shall
have the power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until the requisite amount of voting stock
shall be present. At such adjourned meeting at which the requisite amount of
voting stock shall be represented, any business may be transacted which might
have been transacted at the meeting as originally notified.
Section 4. At any meeting of the stockholders, every
stockholder having the right to vote shall be entitled to vote in person or by
proxy appointed either by an instrument in writing, subscribed by such
stockholder or by other means permitted by applicable law.
Section 5. Except as may otherwise be provided by law or in
the Certificate of Incorporation of the Corporation, or any amendment thereto,
each stockholder shall have one vote for each share of the stock having voting
power, registered in his name on the books of the Corporation, and except where
the transfer books of the Corporation shall have been closed or a date shall
have been fixed as a record date for the determination of its stockholders
entitled to vote, no share of stock shall be voted on at any election for
directors which shall have been transferred on the books of the Corporation
within twenty days preceding such election of directors, or on any other matter
respecting which stockholders are entitled to vote if such stock has been so
transferred within twenty days prior to action on such matter.
Section 6. Except as otherwise provided by law, written notice
of the annual meeting of stockholders shall be given at least ten days prior to
the meeting, and in accordance with Article XXI hereof, to each stockholder so
entitled to vote thereat.
Section 7. A complete list of the stockholders so entitled to
vote at the ensuing election of directors arranged in alphabetical order, with
the address of each, and the number of voting shares registered in the name of
each, shall be filed in the office where the election is to be held, at least
ten days before every election, and shall at all times during the ordinary
business hours and during the whole time of said election be open to the
examination of any stockholder.
Section 8. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute, shall be called
only by the Chief Executive Officer of the Corporation or by the Secretary at
the direction of the Board of Directors pursuant to a resolution approved by the
Board of Directors.
Section 9. Business transacted at all special meetings shall
be confined to the objects stated in the notice of the meeting.
Section 10. Written notice of a special meeting of
stockholders, stating the time and place and object thereof, shall be given at
least ten days before such meeting, and in accordance with Article XXI hereof,
to each stockholder entitled to vote thereat.
Section 11.
(A) Annual Meeting of Stockholders.
(1) Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be considered by
the stockholders may be made at an annual meeting of stockholders (a) pursuant
to the Corporation's notice of meeting delivered pursuant to Article III,
Section 6 of these By-Laws, (b) by or at the direction of the Chief Executive
Officer or the Board of Directors or (c) by any stockholder of the Corporation
who is entitled to vote at the meeting, who complied with the notice procedures
set forth in subparagraphs (2) and (3) of this paragraph (A) of this By-Law and
who was a stockholder of record at the time such notice is delivered to the
Secretary of the Corporation.
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (c) of paragraph
(A)(1) of this By-Law, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation, and, in the case of business other
than nominations, such other business must be a proper matter for stockholder
action. To be timely, a stockholder's notice shall be delivered to the Secretary
at the principal executive offices of the Corporation not less than seventy days
nor more than ninety days prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than twenty days, or delayed by more than seventy
days, from such anniversary date, notice by the stockholder to be timely must be
so delivered not earlier than the ninetieth day prior to such annual meeting and
not later than the close of business on the later of the seventieth day prior to
such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Such stockholder's
notice shall set forth (a) as to each person whom the stockholder proposes to
nominate for election or re-election as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected; (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (c) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this By-Law to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by the
Corporation at least eighty days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this By-Law shall also
be considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public announcement is
first made by the Corporation.
(B) Special Meetings of Stockholders. Only such business shall
be conducted at a special meeting of stockholders as shall have been brought
before the meeting pursuant to the Corporation's notice of meeting pursuant to
Article III, Section 10 of these By-Laws. Nominations of persons for election to
the Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (a)
by or at the direction of the Chief Executive Officer or the Board of Directors
or (b) by any stockholder of the Corporation who is entitled to vote at the
meeting, who complies with the notice procedures set forth in this By-Law and
who is a stockholder of record at the time such notice is delivered to the
Secretary of the Corporation. Nominations of stockholders of persons for
election to the Board of Directors may be made at such a special meeting of
stockholders if the stockholder's notice as required by paragraph (A)(2) of this
By-Law shall be delivered to the Secretary at the principal executive offices of
the Corporation not earlier than the ninetieth day prior to such special meeting
and not later than the close of business on the later of the seventieth day
prior to such special meeting or the tenth day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting.
(C) General.
(1) Only persons who are nominated in accordance with the
procedures set the forth in this By-Law shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this By-Law. Except as otherwise provided by law, the Certificate of
Incorporation or these By-Laws, the chairman of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this By-Law and, if any proposed nomination or business is not in compliance
with this By-Law, to declare that such defective nomination shall be disregard
or that such proposed business shall not be transacted.
(2) For purposes of this By-Law, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(3) For purposes of this By-Law, no adjournment nor notice of
adjournment of any meeting shall be deemed to constitute a new notice of such
meeting for purposes of this Section 11, and in order for any notification
required to be delivered by a stockholder pursuant to this Section 11 to be
timely, such notification must be delivered within the periods set forth above
with respect to the originally scheduled meeting.
(4) Notwithstanding the foregoing provisions of this By-Law, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth in this By-Law. Nothing in this By-Law shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
ARTICLE IV
DIRECTORS
Section 1. The property and business of the Corporation shall
be managed by its Board of Directors, the members of which need not be
stockholders.
Section 2. The Board of Directors of the Corporation shall
consist of such number of directors, not less than three, as shall from time to
time be fixed exclusively by resolution of the Board of Directors. The directors
shall be divided into three classes in the manner set forth in the Certificate
of Incorporation of the Corporation, each class to be elected for the term set
forth therein. Directors shall (except as hereinafter provided for the filling
of vacancies and newly created directorships) be elected by the holders of a
plurality of the voting power present in person or represented by proxy and
entitled to vote.
Section 3. Each director shall be elected to serve until his
successor shall be elected and shall qualify by evidence of acceptance of such
office and such acceptance shall be presumed in the absence of express rejection
thereof by the person elected within ten days after his knowledge of election. A
person who has passed his 64th birthday and who has not theretofore served as a
director of the Corporation shall not be eligible to be elected a director,
whether pursuant to this Section 3 or to Section 6, of this Article. A person
who has passed his 70th birthday, or who has retired as an employee, shall not
in any event be eligible for reelection to the Board or be qualified for
continued service as a director of the Corporation, irrespective of prior
service as a director of the Corporation. For purposes of this Section, any
service as a director of {O Company} prior to the merger of {O Company} shall be
deemed to be prior service as a director of the Corporation. Any failure of any
director to meet the qualifications for service as a director set forth in these
By-Laws, or otherwise under law, shall result in the termination of the term of
such director.
Section 4. The directors may hold their meetings, have one or
more offices and keep the books of the Corporation in the City of Oklahoma City,
Oklahoma, or at such other places as they may from time to time determine and
designate.
Section 5. The members of the Board of Directors or any
committee thereof may participate in a meeting of such Board or committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this subsection shall
constitute presence in person at such a meeting.
Section 6. Vacancies in the Board of Directors, however
occasioned, and newly created directorships resulting from any increase in the
authorized number of directors, may be filled only by a majority of the
remaining directors then in office though less than a quorum and the accepting
directors so chosen shall hold office for a term as set forth in the Certificate
of Incorporation of the Corporation and until a successor or successors have
been duly elected and qualified unless sooner displaced.
Section 7. Notwithstanding the foregoing, whenever the holders
of any one or more series of Preferred Stock issued by the Corporation shall
have the right, voting separately by series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, removal, filling
of vacancies and other features of such directorships shall be governed by the
terms of the Amended and Restated Certificate of Incorporation applicable
thereto, and such directors so elected shall not be divided into classes
pursuant to Article SEVENTH of the Amended and Restated Certificate of
Incorporation unless expressly provided by such terms. The number of directors
that may be elected by the holders of any such series of Preferred Stock shall
be in addition to the number fixed by or pursuant to the By-Laws. Except as
otherwise expressly provided in the terms of such series, the number of
directors that may be so elected by the holders of any such series of stock
shall be elected for terms expiring at the next annual meeting of stockholders
and without regard to the classification of the members of the Board of
Directors as set forth in Section 2 hereof, and vacancies among directors so
elected by the separate vote of the holders of any such series of Preferred
Stock shall be filled by the affirmative vote of a majority of the remaining
directors elected by such series, or, if there are no such remaining directors,
by the holders of such series in the same manner in which such series initially
elected a director.
Section 8. Subject to provisions of pertinent law and the
Certificate of Incorporation, dividends, if any, declared respecting any class
of shares of the Corporation's capital stock may be declared by the Board of
Directors at any regular meeting thereof and despite any provision of the
By-Laws to the contrary at any special meeting thereof, whether or not
consideration or action respecting dividends be stated in the notice thereof;
and dividends may be paid in cash or, if the declaration thereof so provides, in
property, including shares of the Corporation. There may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors from time to time, in its absolute discretion, deems proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for repair
or maintaining any property of the Corporation, or for such other purpose as the
Board of Directors shall deem conducive to the interest of the Corporation, and
the Board of Directors may abolish any reserve in the manner in which it was
created.
Section 9. The Board of Directors shall have power to close
the stock transfer books of the Corporation for a period not exceeding sixty
days preceding the date of any meeting of stockholders or the date for payment
of any dividend or the date for the allotment of rights or the date when any
change or conversion or exchange of capital stock shall go into effect or for
any other purpose; provided, however, that in lieu of closing the stock transfer
books, as aforesaid, the Board of Directors may fix in advance a date not
exceeding sixty days preceding the date of any meeting of stockholders or the
date for the payment of any dividend, or the date for the allotment of rights,
or the date when any change or conversion or exchange of capital stock shall go
into effect, or a date for such other purpose, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock, or for such other purpose, and in such
case only such stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting and any
adjournment, thereof, or to receive such allotment of rights, or to exercise
such rights or to be considered as stockholders for such other purpose, as the
case may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 10. In addition to the powers and authorities by these
By-Laws expressly conferred upon it, the Board of Directors may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Certificate of Incorporation or by these By-Laws directed
or required to be exercised or done by the stockholders.
Section 11. Any action required or permitted to be taken at
any meeting of the Board of Directors may be taken without a meeting if prior to
such action a written consent thereto is signed by all members of the Board and
such written consent is filed with the minutes of proceedings of the Board.
ARTICLE V
COMMITTEES
Section 1. The Board of Directors may appoint an Executive
Committee of two or more directors, which shall consist of the Chief Executive
Officer and such other director or directors as shall be designated by
resolution adopted by the Board of Directors. Such Committee shall have and may
exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation while the Board of
Directors is not in session except that it shall not have power or authority in
reference to (1) amending the Certificate of Incorporation, (2) adopting an
agreement of merger or consolidation under Section 251 or 252 of the Delaware
General Corporation Law, (3) recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
(4) recommending to the stockholders dissolution of the Corporation or
revocation of a dissolution, or (5) amending the By-Laws; nor shall it have any
power or authority which the Board of Directors has by resolution withheld from
it. Vacancies in the membership of the Committee shall be filled by the Board of
Directors at a regular meeting or a special meeting called for that purpose.
Section 2. The Committees of the Board shall be governed by
Subsection (2) of Section 141(c) of the Delaware General Corporation Law which
provides for the designation of committees of the Corporation's Board of
Directors and the permissible functions of such committees.
Section 3. The Board of Directors by resolution or resolutions
adopted by a majority of the Board of Directors may designate other committees,
each committee to consist of two or more directors of the Corporation and to
exercise such powers and duties and to have such name as may be designated by
resolution adopted by the Board of Directors.
Section 4. Each committee of the Board of Directors may meet
at such stated times and/or upon call with such notice as said committee may by
resolution provide from time to time. At all meetings of each committee, a
majority of members thereof shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of a majority of the members
present at any meeting at which there is a quorum shall be the act of the
committee.
Section 5. Committees of the Board of Directors shall keep
regular minutes of their proceedings. Any action required or permitted to be
taken at any meeting of the Committee may be taken without a meeting if prior to
such action a written consent thereto is signed by all members of the Committee
and such written consent is filed with the minutes of proceedings of the
Committee.
ARTICLE VI
COMPENSATION OF DIRECTORS
Section 1. Directors may, pursuant to resolution of the Board
of Directors, be paid a stated sum with respect to each regular and special
meeting of the Board of Directors and be allowed their expenses of attendance,
if any, for attending each meeting of the Board of Directors. Directors who are
not full-time employees of the Corporation may be paid such additional
compensation for their services as directors as may from time to time be fixed
by resolution of the Board of Directors. Nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefor.
Section 2. Members of the Executive Committee and members of
other committees of the Board of Directors who are not full-time employees of
the Corporation may, pursuant to resolution of the Board of Directors, be paid a
stated sum for attending meetings of such committees. All members of committees
of the Board of Directors may, pursuant to resolution of the Board of Directors,
be allowed their expenses of attendance, if any, for attending meetings of such
committees.
ARTICLE VII
MEETINGS OF THE BOARD OF DIRECTORS
Section 1. Annual meetings of the Board of Directors shall be
held at such place within or without the State of Delaware as soon as
practicable following the election of new directors at the annual meeting of the
stockholders.
Section 2. Regular meetings of the Board of Directors may be
held at such time and place, within or without the State of Delaware as shall
from time to time be determined by the Board of Directors. After there has been
such determination and notice thereof has been once given to each member of the
Board of Directors, regular meetings may be held without any further notice
being given.
Section 3. Special meetings of the Board of Directors may be
called by the Chief Executive Officer on twenty-four hour's notice to each
director, either personally or by mail or by telegram; special meetings shall be
called by the Chief Executive Officer or Secretary in like manner and on like
notice on the written request of a majority of the directors.
Section 4. At all meetings of the Board of Directors, a
majority of the directors shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically provided by
statute or by the Certificate of Incorporation or by these By-laws. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
ARTICLE VII-A
WAR AND NATIONAL EMERGENCY
Section 1. The emergency bylaws provided in this Article VII-A
shall be operative during any emergency resulting from an attack on the United
States, or during any nuclear or atomic disaster, or during the existence of any
catastrophe, or other similar emergency condition, as a result of which a quorum
of the Board of Directors cannot readily be convened for action. To the extent
not inconsistent with these emergency bylaws, the By-Laws of the Corporation
shall remain in effect during any emergency and upon its termination these
emergency bylaws shall cease to be operative.
Section 2. During any such emergency a meeting of the Board of
Directors may be called by any officer or director by giving two days' notice
thereof to such of the directors as it may be feasible to reach at the time and
by such means as may be feasible at the time. The notice shall specify the time
and the place of the meeting, which shall be the head office of the Corporation
or any other place specified in the notice. At any such meeting three members of
the then existing Board of Directors shall constitute a quorum, which may act by
majority vote.
Section 3. If the number of directors who are available to act
shall drop below three, additional directors, in whatever number is necessary to
constitute a Board of three Directors, shall be selected automatically from the
first available officers or employees in the order provided in the emergency
succession list established by the Board of Directors and in effect at the time
an emergency arises. Additional directors, beyond the minimum number of three
directors, but not more than three additional directors, may be elected from any
officers or employees on the emergency succession list.
Section 4. The Board of Directors is empowered with the
maximum authority possible under the Delaware Corporation Law, and all other
applicable law, to conduct the interim management of the affairs of the
Corporation in an emergency in what it considers to be in the best interests of
the Corporation (including the right to amend this Article) irrespective of the
provisions of the Certificate of Incorporation or of the By-Laws.
ARTICLE VIII
OFFICERS
Section 1. The officers of the Corporation shall be chosen by
the Board of Directors, shall include a Chief Executive Officer and a President,
and may include a Chairman of the Board (who shall be selected from the
directors then serving), one or more Vice Chairmen of the Board (who shall be
selected from the directors then serving), one or more Executive Vice
Presidents, Senior Vice Presidents, and Vice Presidents, respectively, a General
Counsel, a Secretary, one or more Assistant Secretaries, a Treasurer, one or
more Assistant Treasurers, and a Controller. Any number of offices may be held
by the same person, but if an instrument is required by law to be executed,
acknowledged or verified by two or more officers, no officer shall execute,
acknowledge or verify such instrument in more than one capacity for such
purpose.
Section 2. Without limiting the right of the Board of
Directors to choose officers of the Corporation at any time when vacancies occur
or when the number of officers is increased, the Board of Directors at the first
meeting after each annual meeting of stockholders shall choose a Chief Executive
Officer, a President and such other officers as shall be designated at such
time, including, if so designated, a Chairman of the Board, one or more Vice
Chairmen of the Board, Executive Vice Presidents, Senior Vice Presidents and
Vice Presidents, respectively, a General Counsel, a Secretary, one or more
Assistant Secretaries, a Treasurer, one or more Assistant Treasurers, and a
Controller. None of said officers, except the Chairman of the Board, and Vice
Chairmen of the Board, need be members of the Board.
Section 3. The Board of Directors may choose such other
officers and agents as it shall deem necessary or advisable, who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors, or,
in the absence of exact specification or limitation thereof by the Board of
Directors, as the Chief Executive Officer may determine from time to time.
Subject to the below provisions, each of the officers of the Corporation elected
by the Board of Directors or appointed by an officer in accordance with these
By-Laws shall have the powers and duties prescribed by law, by the By-Laws or by
the Board of Directors and, in the case of appointed officers, the powers and
duties prescribed by the appointing officer, and, unless otherwise prescribed by
the By-Laws or by the Board of Directors or such appointing officer, shall have
such further powers and duties as ordinarily pertain to that office.
Section 4. The salaries of all officers of the Corporation and
of its wholly owned subsidiaries, other than his own salary, shall be determined
by the Chief Executive Officer but shall be reviewed from time to time by an
Executive Compensation Committee appointed by the Board of Directors from among
its members. The Executive Compensation Committee shall recommend to the Board
of Directors such changes in the officers' salaries as fixed by the Chief
Executive Officer as it may deem appropriate and the Board of Directors shall
instruct the Chief Executive Officer to implement those of the recommended
changes which it approves. The salary of the Chief Executive Officer shall be
determined by the Board of Directors.
Section 5. The officers of the Corporation shall hold office
until their successors are chosen and qualify in their stead. Any officer
elected or appointed by the Board of Directors may be removed at any time with
or without cause by the affirmative vote of a majority of the whole Board of
Directors.
ARTICLE IX
CHAIRMAN OF THE BOARD
Section 1. The Chairman of the Board shall do and perform such
duties as may from time to time be assigned to him by the Board of Directors or
the Chief Executive Officer.
ARTICLE X
CHIEF EXECUTIVE OFFICER
Section 1. The Chief Executive Officer shall preside at all
meetings of the stockholders and of the Board of Directors, and shall be a
member, ex officio, of all committees, except the Audit, Finance, Stock Option
and Executive Compensation committees. The Chief Executive Officer shall have
general and active management of the business of the Corporation, and shall see
that all orders and resolutions of the Board of Directors and of the committees
thereof are carried into effect.
Section 2. The Chief Executive Officer shall have authority,
which he may delegate, to execute certificates of stock, bonds, deeds, powers of
attorney, mortgages and other contracts, under the seal of the Corporation,
unless required by law to be otherwise signed and executed and unless the
signing and execution thereof shall be expressly and exclusively delegated by
the Board of Directors to some other officer or agent of the Corporation.
ARTICLE XI
VICE CHAIRMAN OF THE BOARD
Section 1. In the absence of the Chief Executive Officer, the
Vice Chairman (or, if there exists more than one Vice Chairman, the Vice
Chairman designated by the Board of Directors) shall serve as the Chief
Executive Officer of the Corporation. The Vice Chairmen of the Board shall
advise and counsel with the Chief Executive Officer and with other officers of
the Corporation, and each shall do and perform such other duties as may from
time to time be assigned to him by the Board of Directors or the Chief Executive
Officer.
Section 2. Any Vice Chairman of the Board, to the extent
delegated by the Chief Executive Officer or the Board of Directors, may execute
certificates of stock, bonds, deeds, powers of attorney, mortgages and other
contracts under the seal of the Corporation, unless required by law to be
otherwise signed and executed and unless the signing and execution thereof be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
ARTICLE XII
PRESIDENT
Section 1. The President shall be the chief operating officer
of the Corporation.
Section 2. The President shall have the authority, which he
may delegate, to execute certificates of stock, bonds, deeds, powers of
attorney, mortgages and other contracts, under the seal of the Corporation,
unless required by law to be otherwise signed and executed and unless the
signing and execution thereof shall be expressly and exclusively delegated by
the Board of Directors or the Chief Executive Officer to some other officer or
agent of the Corporation.
ARTICLE XIII
VICE PRESIDENTS
Section 1. There may be one or more Executive Vice Presidents,
one or more Senior Vice Presidents, and such other Vice Presidents, with or
without other such special designations, as may be elected by the Board of
Directors from time to time.
Section 2. The Executive Vice Presidents and each of the Vice
Presidents shall have the authority to sign certificates of stock, bonds, deeds,
mortgages and other contracts, unless required by law to be otherwise signed and
executed and unless the signing and execution thereof shall be expressly and
exclusively delegated by the Board of Directors or the Chief Executive Officer
to some other officer or agent of the Corporation, and perform such duties and
exercise such powers as the Board of Directors or the Chief Executive Officer
shall prescribe.
ARTICLE XIV
SECRETARY
Section 1. The Secretary shall attend all sessions of the
Board of Directors and all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose; and shall
perform like duties for all committees of the Board of Directors when required.
He shall give, or cause to be given, all required notices of all meetings of the
stockholders and of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or the Chief Executive Officer,
under whose supervision he shall be. He shall be responsible for keeping in safe
custody the seal of the Corporation, and when such is proper, he shall affix the
same to any instrument requiring it, and when so affixed, it shall be attested
by his signature or by the signature of an Assistant Secretary.
Section 2. The Assistant Secretaries in the absence or
disability of the Secretary shall perform and exercise the powers of the
Secretary and shall perform such further duties as may be prescribed by the
Secretary, the Board of Directors or the Chief Executive Officer.
ARTICLE XV
TREASURER
Section 1. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation, in such depositories as may be designated by the Board of
Directors or the Chief Executive Officer.
Section 2. The Treasurer shall: (a) endorse or cause to be
endorsed in the name of the Corporation for collection the bills, notes, checks
or other negotiable instruments received by the Corporation, (b) sign or cause
to be signed all bills, notes, checks or other negotiable instruments issued by
the Corporation and (c) pay out or cause to be paid out money, as the
Corporation may require, taking proper vouchers therefor; provided, however,
that the Board of Directors and the Chief Executive Officer may by resolution
delegate, with or without power to re-delegate, any and all of the foregoing
duties of the Treasurer to other officers, employees or agents of the
Corporation, and to provide that other officers, employees and agents shall have
power to sign bills, notes, checks, vouchers, orders, or other instruments on
behalf of the Corporation. The Treasurer shall render to the Chief Executive
Officer and to the Board of Directors, whenever they may require it, an account
of his transactions as Treasurer.
Section 3. The Treasurer shall give the Corporation a bond if
required by the Board of Directors in a sum, and with one or more sureties
satisfactory to the Board, for the faithful performance of the duties of his
office and for the restoration of the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the Corporation.
Section 4. The Assistant Treasurers in the absence or
disability of the Treasurer shall perform and exercise the powers of the
Treasurer and shall perform such further duties as may be prescribed by the
Treasurer, the Board of Directors or the Chief Executive Officer.
ARTICLE XVI
CONTROLLER
Section 1. The Controller shall have charge of the
Corporation's books of account, records and auditing, and shall be subject in
all matters to the control of the Board of Directors and the Chief Executive
Officer.
ARTICLE XVII
VACANCIES AND DELEGATION OF DUTIES OF OFFICERS
Section 1. If the office of any officer or agent, one or more,
becomes vacant by reason of death, resignation, retirement, disqualification,
removal from office, or otherwise, the Board of Directors may choose a successor
or successors, who shall, unless the Board of Directors otherwise specifies,
hold office for the unexpired term in respect of which such vacancy occurred, or
until his successor shall be elected.
Section 2. In case of the absence of any officer of the
Corporation, or for any other reason that the Board of Directors may deem
sufficient, the Board of Directors may delegate, for the time being, the powers
or duties, or any of them, of such officer to any other officers and/or
directors; provided a majority of the entire Board of Directors concurs therein.
ARTICLE XVIII
STOCK AND STOCKHOLDERS
Section 1. The shares of stock of the Corporation shall be
represented by certificates, provided that the Board of Directors may provide by
resolution or resolutions that some or all of any or all classes or series of
the Corporation's stock shall be uncertificated shares. Any such resolution
shall not apply to shares represented by a certificate until such certificate is
surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate as provided in Article XVIII, Section 2 of these
By-Laws, or as otherwise permitted by law, representing the number of shares
registered in certificate form.
Section 2. The certificates of stock of the Corporation shall
be numbered and shall be entered in the books of the Corporation as they are
issued. They shall exhibit the holder's name and number of shares and shall be
signed by the Chairman of the Board, Chief Executive Officer, Vice Chairman of
the Board, President or a Vice President, and the Secretary or an Assistant
Secretary. Any and all signatures on a stock certificate may be a facsimile.
Section 3. Upon surrender to the Corporation of a certificate
for shares duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, the Corporation will issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books. Transfers of uncertificated shares will
be made on the records of the Corporation as may be provided by law.
Section 4. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact thereof
and accordingly shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person whether or
not it shall have express or other notice thereof, except as expressly provided
by the laws of Delaware.
Section 5. A new certificate of stock of the Corporation may
be issued in place of any certificate theretofore issued by the Corporation and
alleged to have been lost, stolen or destroyed.
The Board of Directors may from time to time prescribe the
terms and conditions under which such new certificates may be issued. Among
other things, the Board of Directors may require that the owner of the allegedly
lost, stolen or destroyed certificate, or his legal representatives, submit
proper evidence in writing and under oath that the alleged loss, theft, or
destruction actually occurred, and may require that such owner or
representatives give the Corporation a bond, satisfactory to the Corporation as
to form and security, sufficient to indemnify the Corporation against any claim
that may be made against it on account of the alleged loss, theft or destruction
of any such certificate or the issuance of any such new certificate. A new
certificate may be issued without requiring any bond when, in the judgment of
the Board of Directors or of any officer of the Corporation to whom the Board of
Directors may delegate appropriate authority, it is proper to waive the bond
requirement.
ARTICLE XIX
INSPECTION OF BOOKS, CHECKS AND FISCAL YEAR
Section 1. The Board of Directors shall determine from time to
time whether, and, if allowed, when and under what conditions and regulations
the accounts and books of the Corporation (except such as may by statute be
specifically open to inspection), or any of them, shall be open to the
inspection of the stockholders, and the stockholders' rights in this respect are
and shall be restricted and limited accordingly.
Section 2. Checks or demands for money and notes of the
Corporation may be signed by such officer or officers or such person or persons
other than those herein authorized and in such manner as the Board of Directors
or the Chief Executive Officer may from time to time provide.
Section 3. The fiscal year shall begin the first day in
January of each year and end the following December 31.
ARTICLE XX
DIRECTORS' ANNUAL STATEMENT
Section 1. The Board of Directors shall present at each annual
meeting a full and clear statement of the business and condition of the
Corporation.
ARTICLE XXI
NOTICES
Section 1. Whenever under the provisions of the Certificate of
Incorporation or of these By-Laws notice (which as herein used shall include
also annual reports, proxy statements and solicitations and other communications
to holders of the Corporation's securities) is required to be, or may be, given
to any director, officer, stockholder or other person, it may, unless legally
controlling provisions prohibit the same, be given in writing, by mail, by
depositing the same in any U.S. post office or letter-box, in a postpaid sealed
wrapper addressed to such person to whom the notice may be, or is required to be
given, at such address as appears on the books of the Corporation, and all
notices given in accordance with the provisions of this Article shall be deemed
to be given at the time when the same shall be thus mailed.
Section 2. Should a person who is a stockholder own shares
evidenced by more than one stock certificate, nevertheless only one notice (when
any is required to be, or may be, given to holders of shares of any or all
classes) shall be, in the sole discretion of the Corporation, required to be
mailed and if different addresses as to such person are recorded on the
Corporation's stock ledger the notice may be mailed to the address that appears
to have been given latest in time unless the stockholders shall have expressly
directed otherwise in writing to the Secretary of the Corporation, nor shall
variations in the designation of the name or identity of any one stockholder
require the mailing of more than one notice to any one stockholder, which may be
mailed to any one of the names or designations that may so appear in the
Corporation's stock ledger with respect to such stockholder; and, at the sole
discretion of the Corporation, the distribution of dividend payments may be,
unless a stockholder shall expressly request multiple distributions strictly in
accordance with the stock ledger record of his multiple ownerships, handled in
accordance with or so as not to be repugnant to the purpose of the above
provisions, which is to avoid the expenditure by the Corporation of effort, time
and expense in such matters that might have been avoided had the recording of a
stockholder's name and/or address incident to his multiple record ownership of
shares been effected accurately, uniformly and consistently.
Section 3. Any stockholder, director or officer may waive in
writing or otherwise any notice required to be given under the provisions of
pertinent statutes or of the Certificate of Incorporation or of these By-Laws. A
waiver of notice in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent to such notice.
ARTICLE XXII
INDEMNIFICATION
Section 1. The Corporation shall, to the full extent permitted
by the Laws of the State of Delaware as then in effect or, if less stringent, in
effect on December 31, 1985 ("Delaware Law"), indemnify any person (the
"Indemnitee") made or threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative and whether or not by or in the right of the Corporation, by
reason of the fact that the Indemnitee is or was a director, officer or employee
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, trustee, partner, or other agent of any other
enterprise or legal person (any such action, suit or proceeding being herein
referred to as a "Legal Action") against all expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the Indemnitee in connection with such Legal Action or its
investigation, defense or appeal (herein called "Indemnified Expenses"), if the
Indemnitee has met the standard of conduct necessary under Delaware Law to
permit such indemnification. Rights to indemnification shall extend to the
heirs, beneficiaries, administrators and executors of any deceased Indemnitee.
For purposes of this Section, reference to "any other
enterprise or legal person" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with respect to an
employee benefit plan; and references to "serving at the request of the
Corporation" shall include any service as a director, officer, employee or agent
of the Corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit plan,
its participants, or beneficiaries.
The Indemnified Expenses shall be paid by the Corporation in
advance as shall be appropriate to permit Indemnitee to defray such expenses
currently as incurred, provided the Indemnitee agrees in writing that in the
event it shall ultimately be determined as provided hereunder that Indemnitee
was not entitled to be indemnified, then Indemnitee shall promptly repay to the
Corporation such amounts so paid. The prepayment of expenses as provided for in
this Section 1 shall be authorized by the Board of Directors in the specific
case unless the Board of Directors receives within thirty (30) days of the
Indemnitee's request for indemnification an opinion of counsel selected in the
manner provided for in Section 2 of this Article XXII that there is no
reasonable basis for a belief that the Indemnitee's conduct met the requisite
standard of conduct. The fees of such counsel and all related expenses shall, in
all cases, be paid by the Corporation.
Section 2. The determination of whether Indemnitee has met the
standard of conduct required to permit indemnification under this By-Law shall
in the first instance be submitted to the Board of Directors of the Corporation.
If the Board by a majority vote of a quorum consisting of directors who were not
parties to such Legal Action determines Indemnitee has met the required standard
of conduct such determination shall be conclusive; but if such affirmative
majority vote is not given, then the matter shall be referred to independent
legal counsel for determination. Such outside counsel shall be selected by
agreement of the Board of Directors and Indemnitee or, if they are unable to
agree, then by lot from among those New York City law firms which (i) have more
than 100 attorneys, (ii) have a substantial practice in the corporate and
securities areas of law, (iii) have not performed any services for the
Corporation or any of its subsidiaries or affiliates for at least five (5) years
and (iv) have a rating of "av" in the then current Martindale-Hubbell Law
Directory. The fees and expenses of counsel in connection with making this
determination shall be paid by the Corporation.
Notwithstanding the foregoing, if dissatisfied with the
determination so made by counsel, Indemnitee may within two (2) years
thereafter, petition any court of competent jurisdiction to determine whether
Indemnitee is entitled to indemnification under the provisions hereof and such
court shall thereupon have the exclusive authority to make such determination.
The Corporation shall pay all expenses (including attorneys' fees) actually
incurred by Indemnitee in connection with such judicial determination.
The termination of any Legal Action by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not meet the
requisite standard of conduct; however, a successful defense of a Legal Action
by Indemnitee on the merits or otherwise shall conclusively establish Indemnitee
did meet such standard of conduct notwithstanding any previous determination to
the contrary under thin Section 2.
Section 3. The indemnification and advance payment of expenses
as provided in this Article XXII shall not be deemed exclusive of any other
rights to which Indemnitee may be entitled under any provision of law, the
Certificate of Incorporation, any By-Law or otherwise.
Section 4. If any provision of this Article XXII shall be held
to be invalid, illegal or unenforceable for any reason whatsoever, the validity,
legality and enforceability of the remaining provisions of this Article XXII
shall not in any way be affected or impaired thereby.
Section 5. Any amendment, repeal or modification of these
By-Laws, the Corporation's Certificate of Incorporation or any applicable
provision of Delaware Law, or any other instrument, which eliminates or
diminishes the indemnification rights provided for in this Article XXII shall be
ineffective as against an Indemnitee with respect to any Legal Action based upon
actions taken or not taken by the Indemnitee prior to such repeal or the
adoption of such modification or amendment. The provisions of this By-Law shall
be applicable to all Legal Actions made or commenced after the adoption hereof,
whether arising from acts or omissions to act occurring before or after its
adoption. The provisions of this By-Law shall be deemed to be a contract between
the Corporation and each director or officer who serves in such capacity at any
time while this By-Law and the relevant provisions of Delaware Law and other
applicable law, if any, are in effect. If any provision of this By-Law shall be
found to be invalid or limited in application by reason of any law or
regulation, it shall not affect the validity of the remaining provisions hereof.
The rights of indemnification provided in this By-Law shall neither be exclusive
of, nor be deemed in limitation of, any rights to which an officer, director,
employee or agent may otherwise be entitled or permitted by contract, this
By-Law, vote of stockholders or directors or otherwise, or as a matter of law,
both as to actions in such person's official capacity and actions in any other
capacity while holding such office, it being the policy of the Corporation that
indemnification of any person whom the Corporation is obligated to indemnify
pursuant to this By-Law shall be made to the fullest extent permitted by law.
ARTICLE XXIII
AMENDMENTS
Section 1. These By-Laws may be altered or amended or
repealed, in whole or in part: By the affirmative vote of the holders of a
majority of the stock issued and outstanding and entitled to a vote thereat, at
any regular or special meeting of the stockholders, or by the affirmative vote
of a majority of the Board of Directors in attendance at any regular or special
meeting of the Board of Directors; provided, however, that, notwithstanding any
other provisions of these By-Laws or any provision of law which might otherwise
permit a lesser vote of the stockholders, the affirmative vote of the holders of
at least 75 percent in voting power of all shares of the Corporation entitled to
vote generally in the election of directors, voting together as a single class,
shall be required in order for the stockholders to alter, amend or repeal
Section 8 and Section 11 of Article III, Sections 2 and 6 of Article IV or this
proviso to this Article XXIII of these By-Laws or to adopt any provision
inconsistent with any of such Sections or with this proviso.
CERTIFICATE
I, the undersigned, _________________________________, (Assistant) Secretary of
KERR-McGEE CORPORATION, a Delaware corporation, do hereby certify that the
foregoing is a full, true, and correct copy of the By-Laws of said Corporation
in effect on the date of this certificate.
Given under my hand and seal of the Corporation this ______ day of
_________________, _____.
-------------------------------
(Assistant) Secretary
(SEAL)
KERR-McGEE CORPORATION
--------------------------------------
$250,000,000 364-DAY
REVOLVING CREDIT AGREEMENT
Dated as of February 26, 1999
---------------------------------------
ROYAL BANK OF CANADA,
as Administrative Agent and Arranger
and
The Lenders Now or Hereafter Parties Hereto
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TABLE OF CONTENTS
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Page
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ARTICLE IDefinitions......................................................................1
SECTION 1.01. Defined Terms.....................................................1
SECTION 1.02. Classification of Loans and Borrowings...........................16
SECTION 1.03. Other Terms......................................................16
SECTION 1.04. Accounting Terms; GAAP...........................................17
SECTION 1.05. Euros as Payment for National Currencies.........................17
SECTION 1.06. Calculation of Dollar Equivalent Amounts.........................17
ARTICLE IIThe Credits....................................................................17
SECTION 2.01. Commitments......................................................17
SECTION 2.02. Loans and Borrowings.............................................18
SECTION 2.03. Requests for Revolving Borrowings................................18
SECTION 2.04. Funding of Borrowings............................................19
SECTION 2.05. Interest Elections...............................................20
SECTION 2.06. Termination or Reduction of Commitments..........................21
SECTION 2.07. Repayment of Loans; Evidence of Debt.............................21
SECTION 2.08. Prepayment of Loans..............................................22
SECTION 2.09. Fees.............................................................23
SECTION 2.10. Interest.........................................................24
SECTION 2.11. Alternate Rate of Interest.......................................25
SECTION 2.12. Illegality; Increased Costs......................................27
SECTION 2.13. Break Funding Payments...........................................28
SECTION 2.14. Taxes............................................................28
SECTION 2.15. Payments Generally; Pro Rata Treatment; Sharing of Set-offs......30
SECTION 2.16. Mitigation Obligations; Replacement of Lenders...................32
SECTION 2.17. Foreign Available Amount Designation.............................32
SECTION 2.18. Extension of Stated Revolving Loan Maturity Date.................32
SECTION 2.19. Addition or Termination of Subsidiary Borrowers..................33
SECTION 2.20. Change in Control................................................34
SECTION 2.21. Conversion to Term Loans.........................................34
ARTICLE IIIRepresentations and Warranties................................................34
SECTION 3.01. Corporate Existence and Power....................................35
SECTION 3.02. Corporate and Governmental Authorization; No Contravention.......35
SECTION 3.03. Binding Effect...................................................35
SECTION 3.04. Financial Information............................................35
SECTION 3.05. Litigation.......................................................36
SECTION 3.06. Compliance with ERISA............................................36
SECTION 3.07. Environmental Matters............................................36
SECTION 3.08. Taxes............................................................37
SECTION 3.09. Investment Company Act...........................................37
SECTION 3.10. Public Utility Holding Company Act...............................37
SECTION 3.11. Use of Proceeds..................................................37
SECTION 3.12. Disclosure.......................................................37
SECTION 3.13. Year 2000 Compliance.............................................37
SECTION 3.14. Material Subsidiaries............................................38
ARTICLE IVConditions.....................................................................38
SECTION 4.01. Effective Date...................................................38
SECTION 4.02. Each Credit Event................................................39
ARTICLE VAffirmative Covenants...........................................................40
SECTION 5.01. Information......................................................40
SECTION 5.02. Payment of Taxes.................................................41
SECTION 5.03. Insurance........................................................42
SECTION 5.04. Conduct of Business and Maintenance of Existence.................42
SECTION 5.05. Compliance with Laws.............................................42
SECTION 5.06. Compliance with Environmental Laws...............................42
SECTION 5.07. Use of Proceeds..................................................43
SECTION 5.08. Notice of Changed Credit Rating..................................43
SECTION 5.09. Subsidiary Borrowers.............................................43
SECTION 5.10. Year 2000 Compliance.............................................43
ARTICLE VINegative Covenants.............................................................43
SECTION 6.01. Compliance with ERISA............................................43
SECTION 6.02. Limitation on Secured Debt.......................................44
SECTION 6.03. Consolidations, Mergers and Sales of Assets......................45
SECTION 6.04. Transactions with Affiliates.....................................46
ARTICLE VIIGuaranty......................................................................46
SECTION 7.01. The Guaranty.....................................................46
SECTION 7.02. Bankruptcy.......................................................47
SECTION 7.03. Nature of Liability..............................................47
SECTION 7.04. Independent Obligation...........................................47
SECTION 7.05. Authorization....................................................47
SECTION 7.06. Subordination....................................................48
SECTION 7.07. Waiver...........................................................48
SECTION 7.08. Legal Limitations of Liability...................................49
SECTION 7.09. Discharge Only Upon Payment......................................49
SECTION 7.10. Subrogation......................................................49
ARTICLE VIIIEvents of Default............................................................50
ARTICLE IXThe Administrative Agent.......................................................52
ARTICLE XMiscellaneous...................................................................54
SECTION 10.01. Notices.........................................................54
SECTION 10.02. Waivers; Amendments.............................................54
SECTION 10.03. Expenses; Indemnity; Damage Waiver..............................55
SECTION 10.04. Successors and Assigns..........................................56
SECTION 10.05. Survival........................................................58
SECTION 10.06. Counterparts; Integration; Effectiveness........................58
SECTION 10.07. Severability....................................................59
SECTION 10.08. Right of Setoff.................................................59
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process......59
SECTION 10.10. WAIVER OF JURY TRIAL............................................60
SECTION 10.11. Headings........................................................60
SECTION 10.12. Confidentiality.................................................60
SECTION 10.13. Currency Indemnity..............................................60
SECTION 10.14. Subsidiary Borrower Several Obligations.........................61
SECTION 10.15. Joint and Several Obligations of the Company....................61
SECTION 10.16. Interest Rate Limitation........................................62
SECTION 10.17. International Banking Facilities................................62
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SCHEDULES:
Schedule A -- Commitments
Schedule B -- Pricing Schedule
Schedule C -- Notice Schedule
Schedule 3.14 -- Material Subsidiaries
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance Exhibit B-1 -- Form of Opinion of
Russell G. Horner, Jr. Exhibit B-2 -- Form of Opinion of Simpson Thacher &
Bartlett Exhibit C -- Form of Joinder Agreement Exhibit D -- Form of Cash
Collateral Account Agreement Exhibit E -- Form of Auditor's Certificate
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is dated as of February 26, 1999, by
and among KERR-McGEE CORPORATION, a Delaware corporation (the "Company"), the
Subsidiary Borrowers parties hereto, the Lenders now or hereafter parties
hereto, and ROYAL BANK OF CANADA ("RBC"), as Administrative Agent.
IT IS AGREED by the parties hereto as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABN Facility A" means Facility A of and as defined in the Amended and
Restated Credit Agreement dated as of April 28, 1997 (as amended April 26, 1998)
with the Company and Kerr-McGee Oil (U.K.) PLC as Borrowers, the banks, and ABN
AMRO Bank N.V. as Agent.
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted CD Rate" means, with respect to any Dollar Borrowing based on
the Fixed CD Rate for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the sum of (a) the
Fixed CD Rate for such Interest Period multiplied by the Reserve Rate, plus (b)
the Assessment Rate.
"Adjusted EURIBOR" means, with respect to any Euro Borrowing or NC
Borrowing based on EURIBOR, for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the sum of (a)
EURIBOR applicable to Euro deposits for such Interest Period multiplied by the
Reserve Rate, plus (b) the Associated Costs Rate.
"Adjusted Eurodollar LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the sum of (a) the LIBO Rate
applicable to Eurodollar deposits for such Interest Period multiplied by the
Reserve Rate, plus (b) the Associated Costs Rate.
"Adjusted Sterling LIBO Rate" means, with respect to any Sterling
Borrowing based on the LIBO Rate for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the sum
of (a) the LIBO Rate applicable to Sterling deposits for such Interest Period
multiplied by the Reserve Rate, plus (b) the Associated Costs Rate.
"Administrative Agent" means RBC, in its capacity as administrative
agent for the Lenders hereunder.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agency Account" means the account of the Administrative Agent as
specified by the Administrative Agent in the relevant payment notice to the
Person by whom such payment is to be made.
"Agreed Currency" has the meaning ascribed thereto in Section 10.13.
"Agreement" means this Revolving Credit Agreement, as amended,
modified, supplemented or restated from time to time.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Royal Bank Prime Rate and (ii) the sum of one-half of one
percent per annum plus the Federal Funds Effective Rate for such day.
"Alternate Currency" means Sterling, Euro or any National Currency.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentage for any
Lender shall be the percentage of the total Credit Exposure of all Lenders
represented by such Lender's Credit Exposure, in each case as of the date of
determination.
"Applicable Rate" means, for any day, with respect to any EURIBOR Loan
or LIBOR Loan, or with respect to the facility fees or utilization fees payable
hereunder, as the case may be, the applicable rate per annum set forth in the
Pricing Schedule.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "A" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in Dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"Associated Costs Rate" means, in relation to each Loan or Borrowing
denominated in an Alternate Currency and each Eurodollar Loan or Borrowing, the
percentage rate from time to time determined by the Administrative Agent or by
any Lender (with written notice thereof to the Administrative Agent and the
Company) as reflecting the cost, loss or difference in return which would be
suffered or incurred by the Administrative Agent (if it funded such Loan or
Borrowing) or by such Lender with respect to such Loan or Borrowing as a result
of:
(a) funding any special deposit, cash ratio deposit or other reserve
required to be placed with the Bank of England (or any other
Governmental Authority which replaces all or any of its functions);
and/or
(b) any charge or other reserve requirement imposed by the Financial
Services Authority of the United Kingdom (or any other Governmental
Authority which replaces all or any of its functions); and/or
(c) any charge or other reserve requirement imposed by the European
Central Bank, the Governing Council thereof or the European System of
Central Banks (or any other Governmental Authority which replaces all
or any of such Persons' functions)
in respect of eligible liabilities (assuming these to be in excess of any stated
minimum) or any similar concept, which relate to funding such Loan or Borrowing
or which has or would have the effect of reducing the rate of return of the
Administrative Agent (if it funded such Loan or Borrowing) or of such Lender
with respect to such Loan or Borrowing. As used in this definition, "eligible
liabilities" shall have the meaning ascribed to it by the Bank of England Act
1998 or by the Bank of England (as may be appropriate) at the time of
determination.
"Availability Period" means the period from and including the Effective
Date to but excluding the earlier of the Revolving Loan Maturity Date and the
date of termination of the Commitments.
"Benefit Liabilities" has the meaning as defined in Section 4001(a)(16)
of ERISA.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means the Company or any Subsidiary Borrower, and
"Borrowers" means collectively the Company and the Subsidiary Borrowers.
"Borrowing" means Loans of the same Type, made, converted or continued
on the same date, in the same currency, and, in the case of CD Loans, EURIBOR
Loans or LIBOR Loans, as to which a single Interest Period is in effect.
"Borrowing Request" means a request by any Borrower, for a Revolving
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City, New York and London, England are
authorized or required by law to remain closed, unless such term is used in
connection with (i) a CD Borrowing or an ABR Borrowing, in which case such day
shall be a Business Day if commercial banks are open for business in New York
City, New York, and (ii) a National Currency Borrowing or Euro Borrowing for
which funds are to be paid or made available in such National Currency or in
Euros on such day, in which case such day shall not be a Business Day unless
commercial banks are open for international business (including dealing in
deposits in such National Currency or in Euros, as the case may be) in New York
City, New York, London, England, and the place where such funds are to be paid
or made available.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Cash Collateral Account Agreement" shall mean each Cash Collateral
Account Agreement entered into pursuant to Section 2.08(c), each such agreement
substantially in the form of Exhibit D.
"CD", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted CD Rate.
"Change in Control" means (a) the acquisition by any Person or two or
more Persons acting as a group (within the meaning Rule 13d-3 of the Securities
Exchange Act of 1934) of greater than 40% of the outstanding Voting Stock of the
Company or (b) any merger or consolidation to which the Company is a party, or
the transfer, conveyance or lease of all or substantially all of the assets of
the Company to another Person, if immediately following such merger,
consolidation, transfer, conveyance or lease a majority of the directors of the
surviving corporation (or the corporation that is the beneficial owner of the
assets transferred or conveyed or the lessee of the assets leased) are other
than Continuing Directors or (c) the Company ceases to own, directly or
indirectly, 100% of the capital stock of each Subsidiary Borrower. "Continuing
Director" means a member of the board of directors of the Company who either (i)
was a member of such board of directors on the date hereof or (ii) was
designated (before initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors or (iii) was nominated or appointed to
such board of directors by a majority of the then Continuing Directors.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.12(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Term Loans.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time, or any successor statute, together with all
regulations and interpretations thereof or thereunder by the United States
Internal Revenue Service (or any successor).
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans and to convert the Revolving Loans outstanding on
the Revolving Loan Maturity Date to Term Loans, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.06 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Lender's Commitment under the Agreement is set forth on Schedule
A, or in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Commitment, as applicable. The initial amount of the Lenders'
Commitments to make Loans hereunder is $250,000,000 in the aggregate at any one
time of Dollar Borrowings and the Dollar Equivalent of Alternate Currency
Borrowings at such time.
"Commitment Expiration Date" with respect to a Non-Extending Lender,
has the meaning ascribed thereto in Section 2.18.
"Company" means Kerr-McGee Corporation, a Delaware corporation.
"Consolidated Subsidiary" means, at any date, any Subsidiary of the
Company or other entity the accounts of which would be consolidated with those
of the Company in its consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Tangible Net Worth" means at any date the consolidated
Stockholders' Equity of the Company and its Consolidated Subsidiaries less their
consolidated Intangible Assets plus the aggregate amount of non-cash write
downs, all determined as of such date. For purposes of this definition,
"Intangible Assets" means the amount of (i) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within 12 months after the acquisition of such business)
subsequent to December 31, 1997 in the book value of any asset owned by the
Company or a Subsidiary of the Company, and (ii) all unamortized debt discount
and expense (to the extent, if any, recorded as an unamortized deferred charge),
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, anticipated future benefit of tax loss carry-forwards, copyrights,
organization or developmental expenses.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Credit Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Loans.
"Debt Leverage Ratio" means, on any day, the ratio of (a) the Total
Indebtedness of the Company and its Subsidiaries on a consolidated basis as of
the date of determination to (b) EBITDAX for the Rolling Period ending on the
last day of the most recent Fiscal Quarter as of the date of determination.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Dollars" and "$" mean United States Dollars, and "Dollar" when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are denominated in United States Dollars.
"Dollar Equivalent" means the amount of Dollars equivalent to a given
amount of an Alternate Currency determined by using the quoted spot rate at
which the Administrative Agent offers to exchange Dollars for such Alternate
Currency in New York City at 10:00 a.m. (New York City time) on the date of
determination.
"Domestic Available Amount" means the aggregate amount of Loans
available to the Company and the Domestic Subsidiary Borrowers under this
Agreement, which amount shall not at any time exceed the Lenders' total
aggregate Commitments less the Foreign Available Amount. The initial Domestic
Available Amount is $165,000,000 of availability in the aggregate at any one
time of Dollar Borrowings and the Dollar Equivalent of Alternate Currency
Borrowings at such time.
"Domestic Subsidiary Borrower" means, as of the date hereof, Kerr-McGee
Credit LLC, together with any of the Company's Subsidiaries designated as a
"Domestic Subsidiary Borrower" pursuant to and in accordance with Section
2.19(a), other than any such Subsidiary that ceases to be a Subsidiary Borrower
pursuant to and in accordance with Section 2.19(c).
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
"EBITDAX" means, as to the Company and its Subsidiaries on a
consolidated basis and for any period, without duplication, the amount equal to
net income determined in accordance with GAAP, plus to the extent deducted from
net income, Interest Expense, depreciation, oil and gas exploration expenses,
including, without limitation, dry-hole costs, deferred management fees
permitted under Section 6.06, other non-cash expenses, and income and state
franchise tax expenses; provided, that, extraordinary gains or losses for any
such period, including but not limited to gains or losses on the disposition of
assets, shall not be included in EBITDAX.
"EC Treaty" means the Treaty establishing the European Community
(signed in Rome on March 25, 1957), as amended by the Treaty on European Union
(signed in Maastricht on February 7, 1992), as further amended or supplemented
from time to time.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).
"Effective Modification Date" means the date on which the Existing
Agreement shall have been amended, modified, restated, or replaced to the
satisfaction of the Administrative Agent so that the provisions corresponding to
the definitions of Indebtedness Threshold, ERISA Obligations Threshold, Material
Financial Obligations and Final Judgment Threshold as set forth therein are
substantively identical to those set forth herein and to be effective on and
after the Effective Modification Date.
"EMU Legislation" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by the European Council, the
Participating Member States or other Governmental Authority of the European
Union, relating in any way to the Euro and the European Economic and Monetary
Union.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary of the Company
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Company (and other ERISA Affiliates), is
treated as a single employer under Section 414(b) or (c) of the Code or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA Obligation Threshold" means (a) $5,000,000 prior to the
Effective Modification Date and (b) $50,000,000 on and after the Effective
Modification Date.
"EURIBOR" means, on any day, the rate appearing on Page 248 of the
Telerate Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to Euro deposits in the
Euro-zone interbank market) at approximately 11:00 a.m., Brussels time, two
TARGET Business Days prior to such day, as the average rate for time deposits in
Euros offered in the Euro-zone interbank market as calculated by the Banking
Federation of the European Union and the Financial Market Association. In the
event that such rates are not available at such time for any reason, then
"EURIBOR" shall mean, for any day, an interest rate per annum equal to the
Euro-zone interbank market offering rate for time deposits of 5,000,000 Euros
designated as "EURIBOR" and sponsored jointly by the Banking Federation of the
European Union and the Financial Market Association (or such rate as designated
by any company established or designated by such joint sponsors for the purposes
of compiling and publishing such rate). "EURIBOR", when used in reference to any
Loan or Borrowing, indicates that such Loan, or the Loans comprising such
Borrowing, are denominated in either Euros or a National Currency and bearing
interest at a rate determined by reference to Adjusted EURIBOR.
"Euro" means the lawful single currency of Participating Member States
of the European Union adopted in accordance with the EC Treaty and, when used in
reference to any Loan or Borrowing, indicates that such Loan, or the Loans
comprising such Borrowing, are denominated in such currency.
"Eurodollar", when used in reference to any Loan or Borrowing,
indicates that such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted Eurodollar LIBO Rate.
"European Council" means the council of 15 member states of the
European Union.
"European Union" means the European Union established under the EC
Treaty.
"Euro-zone" means the region comprised of the Participating Member
States.
"Event of Default" has the meaning assigned to such term in Article
VIII.
"Existing Agreement" means the Amended and Restated Credit Agreement
for $325,000,000 dated as of December 4, 1996 (as amended) with the Company and
Kerr-McGee Credit LLC, as borrowers, the banks, and Morgan Guaranty Trust
Company of New York as agent.
"Extension Request" shall have the meaning ascribed thereto in Section
2.19.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the United States Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Letter" means the letter agreement dated February 25, 1999,
regarding fees, executed by RBC in its capacity as the Administrative Agent and
accepted and agreed to by the Company, as amended or modified from time to time.
"Final Judgment Threshold" means a final judgment in the aggregate
amount of (a) $10,000,000 prior to the Effective Modification Date and (b)
$50,000,000 on or after the Effective Modification Date.
"Final Maturity Date" means, if the Revolving Loans are converted to
Term Loans pursuant to Section 2.21, then with respect to any Term Loan, the
date that is two years from the Revolving Loan Maturity Date as of the time of
such conversion.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of any Person.
"Fiscal Quarter" shall mean the fiscal quarter of the Company, ending
on the last day of each March, June, September and December of each year.
"Fixed CD Rate" means, with respect to any CD Borrowing for any
Interest Period, the arithmetic average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the prevailing rates per annum bid at or about 10:00 a.m.,
New York City time, to the Administrative Agent on the first Business Day of
such Interest Period by three negotiable certificate of deposit dealers of
recognized standing selected by the Administrative Agent for the purchase at
face value of negotiable certificates of deposit of major United States money
center banks in a principal amount of $5,000,000 and with a maturity comparable
to such Interest Period.
"Foreign Available Amount" means the aggregate amount of Loans
available to the Foreign Subsidiary Borrowers under this Agreement, which amount
shall equal initially $85,000,000 of availability in the aggregate at any time
of Dollar Borrowings and the Dollar Equivalent of Alternate Currency Borrowings
at such time. The Foreign Available Amount may be increased or decreased from
time to time at the option of the Company pursuant to the terms of Section 2.17;
provided, however, that the Foreign Available Amount shall not at any time
exceed $120,000,000 in the aggregate of Dollar Borrowings and the Dollar
Equivalent of Alternate Currency Borrowings at such time.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than United States of America, any State thereof or the
District of Columbia.
"Foreign Subsidiary Borrower" means, as of the date hereof, Kerr-McGee
(G.B.) Limited, Kerr-McGee Resources (U.K.) Limited, Kerr-McGee Oil (U.K.) PLC,
Kerr-McGee North Sea (U.K.) Limited, Kerr-McGee GmbH and Kerr-McGee Chemical
GmbH, together with any of the Company's Subsidiaries designated as a "Foreign
Subsidiary Borrower" pursuant to and in accordance with Section 2.19(b), other
than any such Subsidiary that ceases to be a Subsidiary Borrower pursuant to and
in accordance with Section 2.19(c).
"GAAP" means generally accepted accounting principles in the United
States of America, the United Kingdom or any Participating Member State, as
applicable.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, including,
without limitation, the European Union and the European Council, whether
federal, state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guaranteed Obligations" means all obligations of the Subsidiary
Borrowers (i) to each Lender for the full and prompt payment when due (whether
at the stated maturity, by acceleration or otherwise) of the principal and
interest on each note, if any, issued by such Borrowers to such Lender, and
Loans made under this Agreement, together with all the other obligations and
liabilities (including, without limitation, indemnities, fees and interest
thereon) of the Subsidiary Borrowers to such Lender now existing or hereafter
incurred under, arising out of or in connection with this Agreement and the due
performance and compliance with all the terms, conditions and agreements
contained in this Agreement by the Subsidiary Borrowers and (ii) to each Lender
and each Affiliate of a Lender which enters into a Hedging Agreement with a
Subsidiary Borrower, which by its express terms are entitled to the benefit of
the Guaranty of the Company pursuant to Article VII, the full and prompt payment
when due (whether by acceleration or otherwise) of all obligations of such
Subsidiary Borrower owing under such Hedging Agreement, whether now in existence
or hereafter arising, and the due performance and compliance with all terms,
conditions and agreements contained therein.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances, (k)
all production payments, proceeds production payments or similar obligations of
such Person, and (l) the net amount of obligations of such Person under Hedging
Agreements. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than, with respect to the
Administrative Agent, any Lender or any other recipient of any payment to be
made by or on account of any obligation of the Company or any Subsidiary
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which any Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Company under Section 2.16(b) or 2.18(d)), any withholding
tax that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending
office) or is attributable to such Foreign Lender's failure to comply with
Section 2.14(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Company with respect to such
withholding tax pursuant to Section 2.14(a).
"Interest Election Request" means a request by a Borrower to convert or
continue a Borrowing in accordance with Section 2.05.
"Interest Expense" shall mean, as to the Company and its Subsidiaries
on a consolidated basis and for any period, without duplication, total interest
expenses, whether paid or accrued as liabilities (including the interest
component of Capital Lease Obligations), with respect to all outstanding
Indebtedness, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to any financing or letters of credit
and net costs under any Hedging Agreement to the extent that such costs are
included within interest expense under GAAP.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, and (b) with respect to
any CD Loan, EURIBOR Loan or LIBOR Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
EURIBOR Borrowing or a LIBOR Borrowing, with an Interest Period of more than
three months' duration or a CD Borrowing with an Interest Period of more than 90
days' duration, each day prior to the last day of such Interest Period that
occurs at intervals of three months' duration or 90 days' duration, as the case
may be, after the first day of such Interest Period.
"Interest Period" means (a) with respect to any EURIBOR Borrowing or
LIBOR Borrowing, the period commencing on the date of such Borrowing and ending
on the numerically corresponding day in the calendar month that is one, two,
three or six months thereafter, or (if available to all Lenders) ending on the
day that is one, two or three weeks thereafter, as the Company may elect and,
(b) with respect to any CD Borrowing, the period commencing on the date of such
Borrowing and ending 30, 60, 90 or 120 days thereafter, as the Company may
elect; provided, that (i) if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of a EURIBOR Borrowing or a LIBOR Borrowing,
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the immediately preceding Business
Day, and (ii) any Interest Period pertaining to a EURIBOR Borrowing or a LIBOR
Borrowing that commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the last calendar
month of such Interest Period) shall end on the last Business Day of the last
calendar month of such Interest Period. For purposes hereof, the date of a
Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Joinder Agreement" means a Joinder Agreement, substantially in the
form of Exhibit C hereto, duly executed and delivered by the Company and the
Subsidiary Borrower party thereto.
"Kerr-McGee Chemical GmbH" means Kerr-McGee Chemical GmbH, a company
duly formed with limited liability in the Federal Republic of Germany.
"Kerr-McGee Credit LLC" means Kerr-McGee Credit LLC, a limited
liability company organized under the laws of Delaware.
"Kerr-McGee (G.B.) Limited" means Kerr-McGee (G.B.) Limited, a
company organized under the laws of England.
"Kerr-McGee GmbH" means Kerr-McGee GmbH, a company duly formed with
limited liability in the Federal Republic of Germany.
"Kerr-McGee North Sea (U.K.) Limited" means Kerr-McGee North Sea
(U.K.) Limited, a company organized under the laws of England.
"Kerr-McGee Oil (U.K.) PLC" means Kerr-McGee Oil (U.K.) PLC, a
company organized under the laws of England.
"Kerr-McGee Resources (U.K.) Limited" means Kerr-McGee Resources
(U.K.) Limited, a company organized under the laws of England.
"Lenders" means the Persons listed on Schedule A and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.
"LIBOR", when used in reference to any Loan or Borrowing, indicates
that such Loan, or the Loans comprising such Borrowing, are bearing interest at
a rate determined by reference to the Adjusted Eurodollar LIBO Rate or the
Adjusted Sterling LIBO Rate, as the case may be.
"LIBO Rate" means, with respect to any LIBOR Borrowing, for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to Dollar deposits or Sterling deposits, as
applicable, in each case in the London interbank market) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such Interest
Period, as the rate for Dollar deposits or Sterling deposits, as applicable,
with a maturity comparable to such Interest Period. In the event that such rate
is not available at such time for any reason, then the "LIBO Rate" with respect
to such LIBOR Borrowing for such Interest Period shall be the average of the
respective rates (rounded upwards if necessary, to the next 1/16 of 1%) at which
Dollar deposits or Sterling deposits, as applicable, of 5,000,000 units of the
applicable currency and for a maturity comparable to such Interest Period are
offered by the principal London office of the Reference Banks in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset.
"Loans" means the loans made by the Lenders to any Borrower pursuant to
this Agreement and includes both Revolving Loans and Term Loans.
"Margin Stock" means, "margin stock" as such term is defined in
Regulation T, U or X of the Board.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Company and its Consolidated Subsidiaries taken as a whole or (b) the
ability of the Company to perform any of its obligations under this Agreement.
"Material Financial Obligation(s)" means a principal or face amount of
Indebtedness of the Company and/or one or more of its Subsidiaries exceeding in
the aggregate (a) $10,000,000 prior to the Effective Modification Date and (b)
$50,000,000 on or after the Effective Modification Date.
"Material Subsidiary" means, at any time, any Subsidiary of the Company
either (a) meeting the definition of a "significant subsidiary" with respect to
the Company contained as of the date hereof in Regulation S-X of the SEC or (b)
constituting a Subsidiary Borrower.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means any employee pension benefit plan within the
meaning of Section 4001(a)(3) of ERISA or any employee pension benefit plan as
to which the Company or any of its ERISA Affiliates would be treated as a
contributing employer under Section 4212(c) of ERISA if it were to be
terminated.
"National Currency" or "NC" means the lawful currency (other than the
Euro) of any Participating Member State, which is freely transferable in
accordance with EMU Legislation and in which dealings in deposits of which are
carried out in the Euro-zone interbank market, and, when used in reference to
any Loan or Borrowing, indicates that such Loan, or the Loans comprising such
Borrowing, are denominated in a National Currency. Any given National Currency
shall be available hereunder only as and to the extent permitted by EMU
Legislation.
"Non-Extending Lender" has the meaning ascribed thereto in Section
2.18.
"Notice Schedule" means the schedule of addresses for notice of the
Lenders attached as Schedule C.
"Oryx Facility" means the $500,000,000 Revolving Credit Facility dated
October 17, 1997 with Oryx Energy Company, as borrower, NationsBank of Texas,
N.A., as administrative agent, NationsBank Montgomery Securities, Inc., as
arranger, Chase Securities Inc., as syndication agent, Barclays Bank PLC, as
documentation agent, and the lenders party thereto.
"Oryx Merger" means the merger between the Company and Oryx Energy
Company as described in the Agreement and Plan of Merger, dated October 14,
1998, between the Company and Oryx Energy Company.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participating Member State" shall mean each member state so described
in any legislative measures of the European Council for the introduction of,
changeover to, or operation of, a single or unified European currency being in
part the implementation of the third stage of the economic and monetary union as
contemplated in the EC Treaty.
"Payment Currency" has the meaning ascribed thereto in Section 10.13.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions under
ERISA.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pricing Schedule" means the Pricing Schedule attached as Schedule B.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
"Rating" means each rating with respect to the Company's Rating Debt as
determined from time to time by each Rating Agency. In each occurrence within
this Agreement (and the Schedules) where the possible Levels of Ratings are
indicated, the first listed Rating is the Rating available from S&P and/or Duff
& Phelps and the second listed Rating is the Rating available from Moody's.
"Rating Agencies" shall mean Duff & Phelps, Moody's and S&P.
"Rating Debt" means senior, unsecured, long-term indebtedness for
borrowed money of the Company that is not guaranteed by any other Person or
subject to any other credit enhancement.
"RBC" means Royal Bank of Canada, a Canadian chartered bank, in its
individual capacity.
"Reference Banks" means Royal Bank of Canada, ABN AMRO Bank N.V., and
NationsBank, N.A.
"Refunding Borrowing" means any Borrowing or that portion thereof,
which, after application of the proceeds thereof, results in no net increase in
the outstanding principal amount of Loans made by the Lenders to any Borrower.
"Register" has the meaning set forth in Section 10.04.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Credit Exposures
and unused Commitments representing 66 2/3% or more of the sum of the total
Credit Exposures and unused Commitments at such time.
"Reserve Rate" means a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal established
by the Board, the Financial Services Authority of the United Kingdom or any
other Governmental Authority performing similar functions and with jurisdiction
over the Lenders (a) with respect to the Adjusted CD Rate for new negotiable
nonpersonal time deposits in Dollars of over $100,000 with maturities
approximately equal to the applicable Interest Period, and (b) with respect to
EURIBOR or the LIBO Rate for funding of Borrowings denominated in Dollars or
Alternate Currencies (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). To the extent any Loans are subject to such reserve
requirements the amount of such reserve requirements shall be calculated without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under the applicable regulations. The Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Restricted Property", to the extent of the Company's direct or
indirect interest therein, means:
(a) any property interest owned by the Company or any
Consolidated Subsidiary in reserves of oil, gas or other minerals which
are "proved reserves", as defined in the regulations promulgated by the
SEC or, in the absence of any applicable definition, reserves which
geological, geophysical and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known
reservoirs or deposits under existing economic and operating
conditions, i.e. existing prices (with consideration of changes in
existing prices provided by contractual arrangements) and costs; and
(b) any manufacturing property and related equipment of the
Company or any Consolidated Subsidiary.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Revolving Loan Maturity Date" means the later of (a) February 25, 2000
and (b) if maturity is extended pursuant to Section 2.18, such extended maturity
date as determined pursuant to such Section.
"Rolling Period" means any period of four consecutive Fiscal Quarters.
"Royal Bank Prime Rate" means the rate of interest per annum determined
by RBC, acting through its New York Branch, in New York City from time to time
in its sole discretion as its Dollar prime commercial lending rate for such day.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
"SEC" means United States Securities and Exchange Commission or any
successor entity.
"Sterling" means Great Britain Pounds Sterling and, when used in
reference to any Loan or Borrowing, indicates that such Loan, or the Loans
comprising such Borrowing, are denominated in Great Britain Pounds Sterling.
"Stockholders' Equity" means, at any date, the consolidated
stockholders' equity of the Company and its Consolidated Subsidiaries as would
be shown on a balance sheet prepared in accordance with GAAP of such date.
"Subsidiary" means, with respect to any Person at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of such Person in its
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the Voting Stock or, in the case of a partnership, more than
50% of the general partnership interests are, as of such date, owned, Controlled
or held, or (b) that is, as of such date, otherwise Controlled, by such Person
or one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person.
"Subsidiary Borrower" means any Domestic Subsidiary Borrower or any
Foreign Subsidiary Borrower.
"TARGET" means the Trans-European Automated Real-time Gross Settlement
Express Transfer system.
"TARGET Business Day" means any Business Day that is not a day on which
TARGET is authorized or required by law to remain closed.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Term Loan" means a Revolving Loan that is converted to a term Loan
pursuant to Section 2.21.
"Total Indebtedness" shall mean, at any time and without duplication,
(a) all obligations of the Company and its Subsidiaries on a consolidated basis
for borrowed money and any other obligations evidenced by bonds, debentures,
notes, or other similar instruments plus (b) all Guarantees by the Company and
its Subsidiaries on a consolidated basis of the type of obligations described in
clause (a) of this definition.
"Transactions" means the execution, delivery and performance by each of
the Borrowers of this Agreement, the borrowing of Loans and the use of the
proceeds thereof.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted Eurodollar LIBO Rate, the
Adjusted Sterling LIBO Rate, the Adjusted CD Rate, the Alternate Base Rate or
Adjusted EURIBOR.
"U.K. Double Taxation Treaty" shall mean any convention between the
government of the United Kingdom and any other government for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income and capital gains.
"U.K. Tax Act" means the United Kingdom Income and Corporation Taxes
Act of 1988, as amended from time to time, or any successor statute, together
with all regulations and interpretations thereof or thereunder by the United
Kingdom Inland Revenue (or any successor).
"Unfunded Benefit Liabilities" means the "amount of unfunded benefit
liabilities" as defined in Section 4001(a)(18) of ERISA).
"U.S. Double Taxation Treaty" shall mean any convention between the
government of the United States and any other government for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income and capital gains.
"Voting Stock" means capital stock of any class or classes (however
designated) having ordinary voting power for the election of directors of the
Company, other than stock having such power only by reason of the happening of a
contingency.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, the term "Borrowing" denotes the aggregation of Loans of one or
more Lenders to be made to a single Borrower pursuant to Article II on a single
date and for a single Interest Period. Borrowings are classified for purposes of
this Agreement by reference to the Type of Loans comprising such Borrowing
(e.g., a "Sterling LIBOR Borrowing") or the Class of Loans comprising such
Borrowing (e.g., a "Revolving Borrowing") or the Type and Class of Loans
comprising such Borrowing (e.g., a "Sterling LIBOR Revolving Borrowing"). Loans
are classified for purposes of this Agreement by reference to the Class of such
Loans (e.g., a "Revolving Loan") or the Type of such Loan (e.g., a "Sterling
LIBOR Loan") or the Type and Class (e.g., a "Sterling LIBOR Revolving Loan").
SECTION 1.03. Other Terms. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, schedule, exhibit and like references are to this Agreement
unless otherwise specified. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise, any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), any reference herein
to any Person shall be construed to include such Person's successors and
assigns, and the words "asset" and "property" shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP, as in effect
from time to time, applied on a basis consistent (except for changes concurred
in by the Company's independent public accountants and disclosed in the
financial statements) with the most recent audited consolidated financial
statements of the Company and its Consolidated Subsidiaries delivered to the
Lenders.
SECTION 1.05. Euros as Payment for National Currencies. Subject to any
applicable EMU Legislation, with respect to each Loan made hereunder and
denominated in a National Currency, it is agreed that the applicable Borrower
may make any payment with respect thereto, whether of principal or interest, in
either such National Currency or in Euros, and if in Euros, then in an amount in
Euros equal to the applicable National Currency calculated pursuant to the then
applicable conversion rate between the Euro and such National Currency. As of
December 31, 1998, the European Council caused the conversion rates for the
National Currencies and the Euro to be irrevocably fixed.
SECTION 1.06. Calculation of Dollar Equivalent Amounts. For all
purposes of this Agreement where it is or becomes necessary to calculate the
amount of availability of the Commitments, the Domestic Available Amount or the
Foreign Available Amount or, in connection therewith, the outstanding amount of
the Loans, the Revolving Credit Exposure or the Credit Exposure, each such
calculation shall be made in accordance with the context of how any such term is
used, by determining the Dollar amount, the Dollar Equivalent of the applicable
Alternative Currencies or the sum of the Dollar amount plus the Dollar
Equivalent of the applicable Alternate Currencies, as applicable.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender severally agrees to (i) make Revolving Loans (a) to
the Company and the Domestic Subsidiary Borrowers or any one or more of them, up
to the Domestic Available Amount, and (b) to the Foreign Subsidiary Borrowers or
any one or more of them, up to the Foreign Available Amount, from time to time
during the Availability Period in an aggregate principal amount that will not
result in such Lender's Revolving Credit Exposure exceeding such Lender's
Commitment; and (ii) at the election of the Company, to convert the principal
amount of any Revolving Loans remaining outstanding on the Revolving Loan
Maturity Date to Term Loans. Within the foregoing limits and subject to the
terms and conditions set forth herein, any Borrower may make more than one
Borrowing on any Business Day and may borrow, prepay and reborrow Revolving
Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part
of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Loans as
required.
(b) Subject to Section 2.11, each Revolving Borrowing shall be
made entirely in LIBOR Loans, EURIBOR Loans, CD Loans or ABR Loans, as the
Company may request in accordance herewith. Each Lender, at its option, may make
any LIBOR Loan or EURIBOR Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of a Borrower to repay such Loans made to
it in accordance with the terms of this Agreement; and provided further that
each Lender shall have an office, or a branch, or an Affiliate available to it
and located in the appropriate jurisdiction through which such Lender can make
any Eurodollar Loan or any Loan denominated in an Alternate Currency as required
under this Agreement.
(c) At the commencement of each initial Interest Period for
(i) any Borrowing comprised of LIBOR Loans, EURIBOR Loans or CD Loans, such
Borrowing shall be in an aggregate amount that is an integral multiple of
1,000,000 units of the applicable currency thereof and not less than 10,000,000
units of such currency. At the time that each Borrowing comprised of ABR Loans
is made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $10,000,000; provided that such ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the Domestic Available Amount or the Foreign Available Amount, as
applicable. Borrowings of more than one Type and Class may be outstanding at the
same time; provided that there shall not at any time be more than a total of ten
CD, EURIBOR and LIBOR Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, (i)
the Company, on behalf of itself or any Borrower, shall not be entitled to
request, or to elect to convert (except for a conversion to a Term Loan pursuant
to Section 2.21) or continue, any Revolving Loan Borrowing if the Interest
Period requested with respect thereto would end after the Revolving Loan
Maturity Date and (ii) the Company, on behalf of itself or any Borrower, shall
not be entitled to request, or elect to convert or continue, any Term Borrowing
if the Interest Period requested with respect thereto would end after the Final
Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Company shall notify the Administrative Agent of such request by
hand delivery or telecopy of a Borrowing Request or by telephone (a) in the case
of a Eurodollar LIBOR Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before the date of the proposed Borrowing, (b) in the case
of a Sterling LIBOR Borrowing or a EURIBOR Borrowing, not later than 11:00 a.m.,
New York City time, four Business Days before the date of the proposed
Borrowing, (c) in the case of a CD Borrowing, not later than 11:00 a.m., New
York City time, two Business Days before the date of the proposed Borrowing, and
(d) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City
time, one Business Day before the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Company. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
(i) the applicable Borrower;
(ii) the aggregate amount of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business
Day;
(iv) whether such Borrowing is to be made in Dollars or an
Alternate Currency, and if such Borrowing is to be made in an Alternate
Currency, which Alternate Currency;
(v) whether such Borrowing is to be a CD Borrowing, an ABR
Borrowing, a EURIBOR Borrowing or a LIBOR Borrowing;
(vi) in the case of a CD Borrowing, a EURIBOR Borrowing or
LIBOR Borrowing, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term
"Interest Period"; and
(vii) the location and number of the applicable Borrower's
account to which funds are to be disbursed, which shall comply with the
requirements of Section 2.04.
If no election as to the Type of any Revolving Borrowing denominated in Dollars
is specified, then the requested Revolving Borrowing shall be an ABR Borrowing.
If no Interest Period is specified with respect to any requested CD, EURIBOR or
LIBOR Revolving Borrowing, then the Company shall be deemed to have selected an
Interest Period of 30 days' duration, in the case of a CD Borrowing, or one
month's duration, in the case of a EURIBOR Borrowing or a LIBOR Borrowing. If no
election as to the currency of the Borrowing is specified, then the Company
shall be deemed to have selected Dollars; provided that in no event shall a
Borrowing deemed to be denominated in Dollars bear interest at a rate other than
the Adjusted Eurodollar LIBO Rate, the Adjusted CD Rate or the Alternate Base
Rate. Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, in the case of
Dollar Borrowings, and by 12:00 noon, London time, in the case of Borrowings
denominated in an Alternate Currency, to the applicable Agency Account for the
account of the applicable Borrower. The Administrative Agent will make such
Loans available to the applicable Borrower by promptly crediting the amounts so
received, in like funds, to an account of such Borrower designated by the
Company in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the applicable Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the applicable Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the applicable Borrower, the interest rate applicable to ABR Loans.
If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.05. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a CD, EURIBOR or LIBOR Revolving Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Company may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a CD, EURIBOR or LIBOR Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Company may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Company
shall notify the Administrative Agent of such election by hand delivery or
telecopy of an Interest Election Request or by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Company were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Company.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing, a CD Borrowing, a EURIBOR Borrowing or a LIBOR Borrowing;
(iv) if the resulting Borrowing is a CD Borrowing, a EURIBOR
Borrowing or a LIBOR Borrowing, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term "Interest Period".
If any such Interest Election Request requests a CD Borrowing, a EURIBOR
Borrowing or a LIBOR Borrowing, but does not specify an Interest Period, then
the Company shall be deemed to have selected an Interest Period of 30 days'
duration, in the case of a CD Borrowing, or one month's duration, in the case of
a EURIBOR Borrowing or a LIBOR Borrowing.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Company fails to deliver a timely Interest Election
Request with respect to a CD Borrowing, a EURIBOR Borrowing or a LIBOR Borrowing
prior to the end of the Interest Period applicable thereto, then, unless such
Borrowing is repaid as provided herein, at the end of such Interest Period, (i)
if such Borrowing is denominated in Dollars, it shall be converted to an ABR
Borrowing and (ii) if such Borrowing is denominated in an Alternate Currency,
the Company shall be deemed to have selected an Interest Period of one month's
duration. Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent, at the request of
the Required Lenders, so notifies the Company, then, so long as an Event of
Default is continuing (i) no outstanding Borrowing denominated in Dollars may be
converted to or continued as a CD Borrowing or a LIBOR Borrowing and (ii) unless
repaid, (A) in the case of Borrowings denominated in Dollars, each CD Borrowing
and each LIBOR Borrowing shall be converted to an ABR Borrowing at the end of
the Interest Period applicable thereto, and (B) in the case of Borrowings
denominated in an Alternate Currency, the Company shall be deemed to have
selected an Interest Period of one month's duration.
SECTION 2.06. Termination or Reduction of Commitments.
(a) Unless previously terminated the Commitments shall
terminate on the Revolving Loan Maturity Date as provided in Section 2.21.
(b) The Company may at any time terminate, or from time to
time reduce, the Commitments with such reductions applicable in whole or in part
to the Domestic Available Amount or the Foreign Available Amount, at the option
of the Company; provided that (i) each reduction of the Commitments shall be in
an amount that is an integral multiple of $5,000,000 and not less than
$20,000,000 and (ii) the Company shall not terminate or reduce the Commitments
if, after giving effect to any concurrent prepayment of the Loans in accordance
with Section 2.08, (A) the sum of the Revolving Credit Exposures would exceed
the total Commitments, (B) with respect to the Company and the Domestic
Subsidiary Borrowers, the sum of the Revolving Credit Exposures attributable to
such Borrowers would exceed the Domestic Available Amount, and (C) with respect
to the Foreign Subsidiary Borrowers, the sum of the Revolving Credit Exposures
attributable to such Borrowers would exceed the Foreign Available Amount.
(c) The Company shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least five Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Company pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Commitments delivered by the Company may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Company (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a) Each Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each of its Revolving
Loans on the Revolving Loan Maturity Date (unless converted to Term Loans
pursuant to Section 2.21) and (ii) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each Term Loan on the Final
Maturity Date; provided, that the Revolving Loans made by a Non-Extending Lender
shall be repaid as provided in Section 2.18.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of each Borrower to
such Lender resulting from each Loan made by such Lender to such Borrower,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from a Borrower for the account of the
Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of each Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the applicable Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 10.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
(f) Any Loan made hereunder shall be repaid by the applicable
Borrower or Borrowers in the currency that such Loan was originally denominated
or deemed to be denominated; provided, however, that any Loan denominated in a
National Currency may be repaid in Euros in accordance with Section 1.05.
SECTION 2.08. Prepayment of Loans. (a) Any Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section;
provided that each prepayment of a Borrowing shall be in an amount that is an
integral multiple of $1,000,000 and not less than $10,000,000.
(b) The applicable Borrower shall notify the Administrative
Agent by telephone (confirmed immediately by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 11:00 a.m., New York City time, three Business Days before the date of
prepayment, (ii) in the case of prepayment of a Sterling LIBOR Borrowing or a
EURIBOR Borrowing, not later than 11:00 a.m., New York City time, four Business
Days before the date of prepayment, (iii) in the case of prepayment of a CD
Borrowing, not later than 11:00 a.m., New York City time, two Business Days
before the date of prepayment, or (iv) in the case of prepayment of an ABR
Borrowing, not later than 11:00 a.m., New York City time, one Business Day
before the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment is given
in connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.06, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.06. Promptly
following receipt of any such notice relating to a Borrowing, the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Borrowing shall be in an amount that would be permitted in the case of an
advance of a Borrowing of the same Type as provided in Section 2.02. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.10. Each prepayment shall include break funding
payments to the extent required by Section 2.13.
(c) In the event that (i) the aggregate principal amount of
all Loans under this Agreement exceeds the total aggregate Lenders' Commitments;
(ii) the aggregate principal amount of all Loans made to the Company and the
Domestic Subsidiary Borrowers exceeds the Domestic Available Amount; or (iii)
the aggregate principal amount of all Loans made to the Foreign Subsidiary
Borrowers exceeds the Foreign Available Amount; in each case as determined by
the aggregate of all applicable Dollar Borrowings and the Dollar Equivalent of
all applicable Alternate Currency Borrowings on the first Business Day of each
month then, at the request of the Administrative Agent, the Company shall, and
shall cause each Subsidiary Borrower to, prepay (A) in the case of clause (i)
above, immediately, and (B) in the case of clauses (ii) or (iii) above, within
three Business Days of such request, an amount equal to the excess described in
clauses (i), (ii), and (iii) above, as applicable, or in the case of clauses
(ii) and (iii) above, provide cash collateral by making a deposit in an account
with the Administrative Agent, in the name of the Administrative Agent and for
the benefit of the Lenders, of an amount in cash and in the same currency so as
to equal such excess as of such date plus any accrued and unpaid interest
thereon, which cash collateral shall be collaterally assigned as security
pursuant to the Cash Collateral Account Agreement, which agreement shall be
executed and delivered by the Borrowers to the Administrative Agent
contemporaneously with the payment of such cash collateral; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to any Borrower described in clause (h) or (i) of Article VIII. Such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrowers under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrowers'
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to satisfy obligations of
the Borrowers under this Agreement. If any Borrower is required to provide an
amount of cash collateral hereunder as a result of a request from the
Administrative Agent for a prepayment under this Section, such amount (to the
extent not applied as aforesaid) shall be returned to such Borrower within three
Business Days after the earlier of (x) the first Business Day of a month that
the Administrative Agent determines that such cash collateral is no longer
required pursuant to the terms of the first sentence of this Section and (y) a
prepayment of the Loans in an amount equal to such cash collateral.
(d) If the Borrowers' fail to satisfy any one or more of the conditions
precedent set forth in Section 4.02 for any Refunding Borrowing, the Company and
each Subsidiary Borrower shall repay its Loans (i) in the case of LIBOR Loans,
EURIBOR Loans or CD Loans, on the last day of the Interest Period applicable
thereto, and (ii) in the case of Base Rate Loans, on or before the fifteenth day
following the day on which notice is given by the Company or the Administrative
Agent of the failure to satisfy any such condition precedent.
SECTION 2.09. Fees. (a) The Company agrees to pay to the
Administrative Agent for the account of each Lender a facility fee, which shall
accrue at the Applicable Rate for facility fees on the daily amount of the
Commitment of such Lender (whether used or unused) during the period from and
including the Closing Date to but excluding the date on which such Commitment
terminates; provided that, if such Lender continues to have any Credit Exposure
after its Commitment terminates, then such facility fee shall continue to accrue
on the daily amount of such Lender's Credit Exposure from and including the date
on which its Commitment terminates to but excluding the date on which such
Lender ceases to have any Credit Exposure. Accrued facility fees shall be
payable in arrears on the last day of March, June, September and December of
each year and on the date on which the Commitments terminate, commencing on the
first such date to occur after the date hereof; provided that any facility fees
accruing after the date on which the Commitments terminate shall be payable on
demand. All facility fees shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first
day but excluding the last day).
(b) The Borrowers agree to pay to the Administrative Agent for
the account of each Lender a utilization fee which shall accrue at the
Applicable Rate for utilization fees on the daily amount of such Lender's Credit
Exposure during the time the sum of the total Credit Exposures equals or exceeds
33% of the total Commitments. Utilization fees shall be computed on the basis of
a year of 360 days and shall be payable in arrears on the last day of March,
June, September and December of each year. Each Subsidiary Borrower shall be
severally obligated to pay its portion of such fees with regard to its
Borrowings hereunder. Notwithstanding the foregoing, the Company agrees that it
will remain obligated for all such fees.
(c) The Company agrees to pay to the Administrative Agent, for
its own account, such fees as are set forth in the Fee Letter, on the dates and
in the manner specified therein.
(d) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent, for its own account
or for distribution, in the case of facility fees and utilization fees, to the
Lenders. Fees paid shall not be refundable under any circumstances.
SECTION 2.10. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest for each day such Loans are outstanding at the Alternate
Base Rate for such day. Any change in the Alternate Base Rate due to a change in
the Royal Bank Prime Rate or the Federal Funds Effective Rate shall be effective
from and including the effective date of such change in the Royal Bank Prime
Rate or the Federal Funds Effective Rate, as applicable.
(b) The Loans comprising each CD Borrowing shall bear interest
at the Adjusted CD Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate for LIBOR Borrowings plus 0.125% per annum.
(c) The Loans comprising each LIBOR Borrowing shall bear
interest at the Adjusted Eurodollar LIBO Rate or the Adjusted Sterling LIBO
Rate, as applicable, for the Interest Period in effect for such Borrowing plus
the Applicable Rate.
(d) The Loans comprising each EURIBOR Borrowing shall bear
interest at Adjusted EURIBOR for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
(e) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the applicable
Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section.
(f) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph (e) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Loan prior to the end of the Availability Period), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any EURIBOR,
CD or LIBOR Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
(g) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest on ABR Loans calculated by reference to
the Royal Bank Prime Rate shall be computed on the basis of a year of 365 days
(or 366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
applicable interest rates shall be determined by the Administrative Agent in
accordance with the terms of this Agreement, and such determination shall be
conclusive absent manifest error.
(h) All interest accruing on any Loan hereunder shall be paid
in the currency in which such Loan is denominated or deemed to be denominated;
provided, however, that the interest accruing on any Loan denominated in a
National Currency may be paid in Euros in accordance with Section 1.05.
SECTION 2.11. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a CD Borrowing, a EURIBOR Borrowing or a LIBOR
Borrowing:
(a) the Administrative Agent:
(i) determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted CD Rate, the Adjusted Eurodollar LIBO Rate,
the Adjusted Sterling LIBO Rate or Adjusted EURIBOR, as applicable, for
such Interest Period; or
(ii) is advised by the Required Lenders that the Adjusted CD
Rate, the Adjusted Eurodollar LIBO Rate, the Adjusted Sterling LIBO
Rate, or Adjusted EURIBOR, as applicable, for such Interest Period will
not adequately and fairly reflect the cost to such Lenders (or Lender)
of making or maintaining their Loans (or its Loan) included in such
Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Company, the
applicable Borrower and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent notifies the Company,
the applicable Borrower and the Lenders that the circumstances giving rise to
such notice no longer exist, (A) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a CD
Borrowing, a EURIBOR Borrowing, or a LIBOR Borrowing, as applicable, shall be
ineffective, (B) if any Borrowing Request requests a CD Borrowing or a LIBOR
Borrowing, as applicable, if such Borrowing is to be denominated in Dollars, it
shall be made as an ABR Borrowing and (C) any request for a EURIBOR or LIBOR
Borrowing denominated in an Alternate Currency shall be ineffective; provided
that if the circumstances giving rise to such notice do not affect all such
Types of Borrowings, then the other unaffected Types of Borrowings shall be
permitted.
(b) If, in relation to any Borrowing or proposed Borrowing to
be denominated in an Alternate Currency, and with respect to any Interest Period
relative thereto:
(i) the Administrative Agent shall have received notification
from a Lender or Lenders whose participations in such Borrowing
constitute at least 50% by value of such Borrowing, that by reason of
circumstances affecting the London interbank market or the Euro-zone
interbank market, as applicable:
(A) deposits in the applicable Alternate Currency the
same period as such Interest Period will not be readily available to
them in the London interbank market or the Euro-zone interbank market,
as applicable, in sufficient amounts in the ordinary course of business
to fund their respective Loans in such Borrowing for such Interest
Period; or
(B) while such deposits are so available, the cost of
such deposits exceeds the applicable LIBO Rate as determined in
relation to such Borrowing for such Interest Period; or
(ii) the Administrative Agent shall have received notification
from any Lender (an "Affected Lender") that by reason of any change in
or the introduction (or re-introduction) of or any change in the
interpretation, administration or application of applicable law or
regulation (in each such case after the date hereof or, if later, the
date on which the Affected Lender became a part to this Agreement) it
is unable to fund its Loan in such Borrowing during such Interest
Period by deposit(s) in the applicable Alternate Currency obtained in
the London interbank market or the Euro-zone interbank market, as
applicable, in the ordinary course of business;
the Administrative Agent shall promptly give written notice of such
determination or notification to the Company and each of the Lenders.
(c) After the giving of any notice by the Administrative Agent
pursuant to Section 2.11(b) to the effect that it has received notification in
accordance with Section 2.11(b)(i)(A) or 2.11(b)(ii), no Lender or, as the case
may be, no Affected Lender shall be obliged to participate in the Borrowing to
which such notification relates unless such Borrowing is already then
outstanding. The giving of any notice by the Administrative Agent pursuant to
Section 2.11(b)(i)(B) shall not relieve any Lender of any obligation it may have
under this Agreement to make a Loan (including any Loan for which a Borrowing
Request was given prior to such notice by the Administrative Agent).
(d) During the period of 15 days after the giving of any
notice by the Administrative Agent pursuant to Section 2.11(b), the
Administrative Agent (in consultation with the Lenders or the Affected Lender)
shall negotiate with the Company in good faith with a view to ascertaining
whether a substitute basis (a ASubstitute Basis@) may be agreed for the making
of further Borrowings and/or the maintaining of any existing Borrowings by the
Lenders or such Affected Lender (as the case may be) to which such notice by the
Administrative Agent related for the Interest Period(s) applicable to those
Borrowings. If a Substitute Basis is agreed by all the Lenders or by the
Affected Lender (as the case may be) and the Company it shall apply in
accordance with its terms from the commencement of such Interest Period. The
Administrative Agent shall not agree to any Substitute Basis on behalf of any
Lender or Affected Lender without the prior consent of that Lender or Affected
Lender (as the case may be).
(e) If a Substitute Basis is not so agreed by the Company and
all the Lenders or the Affected Lender (as the case may be) by the end of such
15 day period, each Lender's or Affected Lender's then existing Loan or Loans to
which the notice by the Administrative Agent related shall bear interest during
the current Interest Period relative thereto at the rate which is the sum of (a)
the per annum rate certified by such Lender or Affected Lender to be its cost of
funds (from such sources as it may reasonably select out of those sources then
available to it) for such Interest Period in relation to such Borrowing
multiplied by the Reserve Rate, plus (b) the Associated Costs Rate, plus (c) the
Applicable Rate.
(f) So long as any Substitute Basis is in force or Section
2.11(e) shall apply in relation to any Borrowing, the Administrative Agent, in
consultation with the Company and each Lender (or, if applicable, Affected
Lender) shall from time to time, but not less often then monthly, review whether
or not the circumstances referred to in Section 2.11(b) still prevail with a
view to returning to the normal interest provisions of this Agreement.
SECTION 2.12. Illegality; Increased Costs. (a) If any Change in Law
shall make it unlawful or impossible for any Lender to make, maintain or fund
its Loans, such Lender shall so notify the Administrative Agent, the
Administrative Agent shall immediately give notice thereof to the other Lenders
and to the Company, whereupon until such Lender notifies the Company and the
Administrative Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Lender to make such Loans shall be
suspended. If such Lender shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Loans to maturity and shall so specify
in such notice, the applicable Borrower shall immediately prepay in full the
then outstanding principal amount of such Loan together with the accrued
interest thereon.
(b) If any Change in Law, including, without limitation,
reserve requirements imposed by the European System of Central Banks with
respect to the Euro or the National Currencies on or after January 1, 1999,
shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted CD Rate, the Adjusted
Eurodollar LIBO Rate, the Adjusted Sterling LIBO Rate or Adjusted
EURIBOR); or
(ii) impose on any Lender, the London interbank market or the
Euro-zone interbank market any other condition affecting this Agreement
or any Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan (or of maintaining its obligation to
make any such Loan) or to increase the cost to such Lender or to reduce the
amount of any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the applicable Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(c) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the applicable Borrower will pay to
such Lender such additional amount or amounts as will compensate such Lender or
such Lender's holding company for any such reduction suffered.
(d) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (b) or (c) of this Section shall be delivered
to the applicable Borrower and shall be conclusive absent manifest error. The
applicable Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
(e) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the applicable
Borrower shall not be required to compensate a Lender pursuant to this Section
for any increased costs or reductions incurred more than 270 days prior to the
date that such Lender notifies the applicable Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's intention
to claim compensation therefor; provided further that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.13. Break Funding Payments. In the event of (a) the payment
of any principal of any CD Loan, EURIBOR Loan, or LIBOR Loan, other than on the
last day of an Interest Period applicable thereto (including as a result of an
Event of Default), (b) the conversion of any CD Loan, EURIBOR Loan or LIBOR Loan
other than on the last day of the Interest Period applicable thereto, (c) the
failure to borrow, convert, continue or prepay any Revolving Loan on the date
specified in any notice delivered pursuant hereto (regardless of whether such
notice may be revoked under Section 2.08(b) and is revoked in accordance
therewith), or (d) the assignment of any CD Loan, EURIBOR Loan, or LIBOR Loan
other than on the last day of the Interest Period applicable thereto as a result
of a request by the Company pursuant to Section 2.16, then, in any such event,
the applicable Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. In the case of a CD Loan, EURIBOR Loan or
LIBOR Loan, such loss, cost or expense to any Lender shall be deemed to include
an amount determined by such Lender to be the excess, if any, of (i) the amount
of interest which would have accrued on the principal amount of such Loan had
such event not occurred, at the Adjusted CD Rate (in the case of a CD Loan),
Adjusted EURIBOR (in the case of a EURIBOR Loan) or the Adjusted Eurodollar LIBO
Rate or the Adjusted Sterling LIBO Rate, as applicable, (in the case of a LIBOR
Loan), that would have been applicable to such Loan, for the period from the
date of such event to the last day of the then current Interest Period therefor
(or, in the case of a failure to borrow, convert or continue, for the period
that would have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period, for Dollar deposits of a comparable amount and period from other
banks in the eurodollar market. A certificate of any Lender setting forth any
amount or amounts that such Lender is entitled to receive pursuant to this
Section shall be delivered to the applicable Borrower and shall be conclusive
absent manifest error. The applicable Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.
SECTION 2.14. Taxes. (a) Any and all payments by or on account of any
obligation of any Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if any
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or a Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the applicable Borrower shall make such
deductions and (iii) the applicable Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, each Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) Each Borrower shall indemnify the Administrative Agent and
each Lender, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of such Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the applicable Borrower by a Lender or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by a Borrower to a Governmental Authority, the applicable
Borrower shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) As of the date on which any Lender becomes a party hereto,
such Lender confirms that with respect to its Loans to a United States person
(within the meaning of Section 7701(a)(30) of the Code), it is either (i) a
corporation organized under the laws of the United States of America or any
state thereof, entitled to complete exemption from United States withholding tax
imposed on or with respect to any payments, including fees, to be made to it
pursuant to this Agreement, or (ii) entitled to complete exemption from United
States withholding tax on interest imposed on or with respect to any payments of
interest to be made pursuant to this Agreement (A) under an applicable provision
of a U.S. Double Taxation Treaty, (B) because it is acting through a branch,
agency or office in the United States of America and any payment to be received
by it hereunder is effectively connected with a trade or business in the United
States of America, or (C) because it is a recipient of portfolio interest within
the meaning of Section 871(h) or 881(c) of the Code. Such Lender, as of such
date, also confirms that with respect to its Loans (or interest or other
payments relating thereto) regarding which the U.K. Tax Act could reasonably be
expected to result in withholding tax requirements under the U.K. Tax Act (but
for the applicable Lender qualifying for the immediately following exemptions)
it is either (x) a bank as defined in Section 840A of the U.K. Tax Act, which,
for the purposes of Sections 349 and 212 of the U.K. Tax Act, is within the
charge to United Kingdom corporation tax as regards, and is beneficially
entitled to, any interest received by it under this Agreement, except that, if
that Section is repealed, modified, extended or re-enacted, the Administrative
Agent may at any time and from time to time (acting reasonably) amend this
definition to reflect such repeal, modification, extension or enactment by
giving notice of the amended definition to the Company, or (y) a person carrying
on a bona fide banking business who is resident (as such term is defined in the
appropriate U.K. Double Taxation Treaty) in a country with which the United
Kingdom has an appropriate U.K. Double Taxation Treaty giving residents of that
country full exemption from United Kingdom taxation on interest and does not
carry on business in the United Kingdom through a permanent establishment with
which the indebtedness under this Agreement in respect of which the interest is
paid is effectively connected. Each Lender that is not a corporation organized
under the laws of the United States of America or any state thereof shall
provide to the Company and the Administrative Agent on or before the date of any
payment by any Borrower hereunder, or on the date of its delivery of the
Assignment and Acceptance pursuant to which it becomes a Lender, and at such
other times as required by United States law or as the Company or the
Administrative Agent shall reasonably request, two accurate and complete
original signed copies of either (A) Internal Revenue Service Form 4224 (or
successor form) certifying that all payments to be made to it hereunder will be
effectively connected to a United States trade or business (the "Form 4224
Certification"), or (B) Internal Revenue Service Form 1001 (or successor form)
certifying that it is entitled to the benefit of a provision of a U.S. Double
Taxation Treaty which completely exempts from United States withholding tax all
payments of interest to be made to it hereunder (the "Form 1001 Certification").
In addition, each Lender agrees that if it previously filed a Form 4224
Certification it will deliver to the Company and the Administrative Agent a new
Form 4224 Certification prior to the first payment date occurring in each of its
subsequent taxable years (or such other date as may be required in compliance
with applicable law); and if it previously filed a Form 1001 Certification, it
will deliver to the Company and the Administrative Agent a new certification
prior to the first payment date falling in the third year following the previous
filing of such certification (or such other date as may be required in
compliance with applicable law).
Each Lender also agrees to deliver to the Company and the Administrative Agent
such other or supplemental forms as may at any time be required in order to
confirm or maintain in effect its entitlement to exemption from United States or
United Kingdom withholding tax on any payments hereunder, provided that the
circumstances of the Lender at the relevant time and applicable laws permit it
to do so. Except as provided immediately below, if a Lender is organized under
the laws of a jurisdiction outside the United States of America, unless the
Company and the Administrative Agent have received a Form 1001 Certification or
Form 4224 Certification, reasonably satisfactory to them indicating that all
payments of interest, to be made to such Lender hereunder are not subject to
United States withholding tax, the Company shall be entitled to withhold taxes
from such payments at the applicable statutory rate, provided that such
withholding shall not increase the amount of payments for the account of such
Lender to be made by the Company pursuant to Subsection 2.14(a). If a Lender
determines, as a result of any change in either (i) applicable law, regulation
or treaty, or in any official application thereof or (ii) its circumstances,
that it is unable to submit any form or certificate that it is obligated to
submit pursuant to this Section, or that it is required to withdraw or cancel
any such form or certificate previously submitted, it shall promptly notify the
Company and the Administrative Agent of such fact and the Company shall be
entitled to withhold taxes from such payments at the applicable statutory rate,
it being understood that such withholding shall increase the amount of payments
for the account of such Lender to be made by the Company pursuant to Section
2.14(a). Each Lender agrees to indemnify and hold the Administrative Agent
harmless from any United States or United Kingdom taxes, penalties, interest and
other expenses, costs and losses incurred or payable by the Administrative Agent
(i) as a result of such Lender's failure to submit any form or certificate that
it is required to provide pursuant to this Section or (ii) as a result of the
Administrative Agent's reliance on any such form or certificate which such
Lender has provided to it pursuant to this Section. Each Person that shall
become a Lender or a Participant pursuant to Section 10.04 shall, upon the
effectiveness of the related transfer, be required to provide all of the forms,
certifications and statements required pursuant to this Section, provided that
in the case of a Participant the obligations of such Participant shall be the
same as if it were a Lender, except that such Participant shall furnish all such
required forms, certifications and statements to the Lender from which the
related participation shall have been purchased and such Lender shall provide
such forms to the Company and the Administrative Agent.
SECTION 2.15. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) Each Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or of amounts payable under
Section 2.12, 2.13 or 2.14, or otherwise) prior to 12:00 noon, New York City or
London time, as applicable, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the applicable Agency
Account for the account of the Lenders, except that payments pursuant to
Sections 2.12, 2.13, or 2.14 and 10.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in Dollars, except that with respect to any Loan that is
denominated in an Alternate Currency, all payments of principal and interest
with respect to such Loan shall be made in the Alternate Currency in which such
Loan is denominated; provided, however, that with respect to any Loan
denominated in a National Currency, all payments with respect thereto may be
made in Euros in accordance with Section 1.05.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied towards
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due to
such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by a Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to a Borrower or any Subsidiary or Affiliate thereof (as
to which the provisions of this paragraph shall apply). Each Borrower consents
to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from a Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that such Borrower
will not make such payment, the Administrative Agent may assume that the
applicable Borrower has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to the Lenders the amount
due. In such event, if the applicable Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(b) or 2.15(d), then the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender's obligations under such Sections
until all such unsatisfied obligations are fully paid.
SECTION 2.16. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.12, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.14, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or Affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.12 or 2.14, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. Each Borrower
hereby agrees to pay all reasonable costs and expenses incurred by such Lender
in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.12, or
if any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.14,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Company may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Company
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Company (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.12 or payments required to be made pursuant to Section 2.14, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Company to require such assignment and delegation cease to apply.
SECTION 2.17. Foreign Available Amount Designation. Once per Fiscal
Quarter, the Company, may, at its sole option, designate or redesignate the
amount of the Foreign Available Amount by delivering a written notice to the
Administrative Agent not less than five Business Days prior to the date the
Company proposes that the newly designated Foreign Available Amount would become
effective; provided, that no such designation of the Foreign Available Amount
may occur if a Default exists or if the sum of the Revolving Credit Exposures,
with respect to the Foreign Subsidiary Borrowers or the Company and the Domestic
Subsidiary Borrowers, as applicable, would, after giving effect to such
designation and any concurrent payments on such Loans, exceed the Foreign
Available Amount or the Domestic Available Amount, respectively.
SECTION 2.18. Extension of Stated Revolving Loan Maturity Date. (a) No
earlier than 90 days and no later than 60 days prior to the then applicable
Revolving Loan Maturity Date, the Company may, subject to satisfaction of the
conditions precedent for a Borrowing other than a Refunding Borrowing set forth
in Section 4.02, request in writing delivered to the Administrative Agent an
extension of the Revolving Loan Maturity Date for a period equal to 364 days
from the then applicable Revolving Loan Maturity Date (the "Extension Request").
The Revolving Loan Maturity Date shall be extended as provided in this Section
2.18 if at least the Required Lenders consent to such extension. No earlier than
30 days and no later than 25 days prior to the then applicable Revolving Loan
Maturity Date, each Lender shall notify the Company and the Administrative Agent
of its election to extend or not extend the Revolving Loan Maturity Date as
requested in such Extension Request. If the Required Lenders shall approve in
writing the extension of the Revolving Loan Maturity Date requested in such
Extension Request, the Revolving Loan Maturity Date shall automatically and
without any further action by any Person be extended for the period specified in
such Extension Request; provided that (i) each extension pursuant to this
Section 2.18 shall be for a maximum of 364 days, and (ii) the Commitment of any
Lender that does not consent in writing within 30 days after receiving from the
Administrative Agent the applicable Extension Request (a "Non-Extending Lender")
shall, unless earlier terminated in accordance with this Agreement, expire on
the Revolving Loan Maturity Date in effect on the date of such Extension Request
(such Revolving Loan Maturity Date, if any, referred to as the "Commitment
Expiration Date" with respect to such Non-Extending Lender). If, within 30 days
after receiving from the Administrative Agent the applicable Extension Request,
the Required Lenders shall not approve in writing the extension of the Revolving
Loan Maturity Date requested in an Extension Request, the Revolving Loan
Maturity Date shall not be extended pursuant to such Extension Request. The
Administrative Agent shall promptly notify (y) the Lenders and the Company of
any extension of the Revolving Loan Maturity Date pursuant to this Section 2.18
and (z) the Company and the Lenders of any Lender which becomes a Non-Extending
Lender.
(b) Loans owing to any Non-Extending Lender on the Commitment
Expiration Date with respect to such Lender shall be repaid in full on or before
the Commitment Expiration Date.
(c) Each Borrower shall have the right, so long as no Event of
Default has occurred and is then continuing, upon giving notice to the
Administrative Agent and the Non-Extending Lenders, to prepay in full the Loans
made to it owing to the Non-Extending Lenders, together with accrued interest
thereon, any amounts payable pursuant to Sections 2.10, 2.12, 2.13, 2.14 and
10.03(b) and any accrued and unpaid facility fee or other amounts payable to the
Non-Extending Lenders hereunder and/or, upon giving not less than three Business
Days' notice to the Non-Extending Lenders and the Administrative Agent, to
cancel the whole or part of the Commitments of the Non-Extending Lenders.
(d) Notwithstanding the foregoing, if any Lender becomes a
Non-Extending Lender, the Company may, at its own expense and in its sole
discretion and prior to the then stated Revolving Loan Maturity Date, require
such Lender to transfer or assign, in whole or in part, without recourse (in
accordance with Section 10.04), all or part of its interests, rights and
obligations under this Agreement to an assignee permitted under Section 10.04
(provided that the Company with the full cooperation of such Lender, can
identify such an assignee that is ready, willing and able to be an assignee with
respect thereto) which shall assume such assigned obligations (which assignee
may be another Lender, if such assignee Lender accepts such assignment);
provided that (i) the assignee or the Company, as the case may be, shall have
paid to such Lender in immediately available funds the principal of and interest
accrued to the date of such payment on the Loans made by it hereunder and all
other amounts owed to it hereunder, including, without limitation, any amounts
owing pursuant to Section 10.03(b) and any amounts that would be owing under
said Section if such Loans were prepaid on the date of such assignment, and (ii)
such assignment does not conflict with any applicable law of any Governmental
Authority. Any assignee which becomes a Lender as a result of such an assignment
made pursuant to this paragraph (d) shall be deemed to have consented to the
applicable Extension Request and, therefore, shall not be a Non-Extending
Lender.
SECTION 2.19. Addition or Termination of Subsidiary Borrowers. So long
as no Default exists, the Company may from time to time provide written notice
to the Administrative Agent, and the Administrative Agent shall immediately
thereafter provide a copy of such notice along with a copy of all documentation
relating thereto received from the Company to each of the Lenders:
(a) Designating any of its wholly owned, directly or
indirectly, Subsidiaries organized under the laws of the United States of
America, any State thereof or the District of Columbia, as an additional
Domestic Subsidiary Borrower and shall execute and deliver, and cause each such
newly designated Domestic Subsidiary Borrower to execute and deliver, to the
Administrative Agent a Joinder Agreement (together with all documents required
to be attached thereto) whereupon such Subsidiary shall thereafter qualify as a
Domestic Subsidiary Borrower.
(b) Designating any of its wholly owned, directly or
indirectly, Subsidiaries organized under the laws of the United Kingdom or any
Participating Member State and located in the United Kingdom or any
Participating Member State, as an additional Foreign Subsidiary Borrower and
shall execute and deliver, and cause each such newly designated Foreign
Subsidiary Borrower to execute and deliver, to the Administrative Agent a
Joinder Agreement (together with all documents required to be attached thereto)
whereupon such Subsidiary shall thereafter qualify as a Foreign Subsidiary
Borrower; provided, however, that for purposes of this Section 2.19(b), any
Subsidiary of the Company that is required by the applicable law of its
jurisdiction of organization or formation to be owned by a citizen of such
jurisdiction or Person organized or formed under the laws of such jurisdiction
in an amount equal to or less than one percent of the capital stock or equity
interest of such Subsidiary and such one percent or lesser amount of ownership
does not provide for voting or distribution rights in excess of such ownership
percentage or otherwise give a Controlling interest to such Person, then, for
purposes of this Section 2.19(b), such Subsidiary shall be deemed to be wholly
owned by the Company.
(c) With respect to any Subsidiary Borrower, that the Company
is terminating such Subsidiary's designation as a Domestic Subsidiary Borrower
or a Foreign Subsidiary Borrower, as the case may be, whereupon if all
obligations of such Subsidiary Borrower to the Administrative Agent and the
Lenders under or in connection with this Agreement have been indefeasibly paid
in full pursuant to the terms hereof, such Subsidiary shall thereafter no longer
be a Subsidiary Borrower hereunder.
SECTION 2.20. Change in Control. If a Change in Control shall occur (i)
the Company will, within ten days after the occurrence thereof, give each Lender
notice thereof and shall describe in reasonable detail the facts and
circumstances giving rise thereto and (ii) each Lender may, at any time at its
option by notice to the Borrowers and the Administrative Agent given not later
than 60 days after such Change in Control, (x) terminate its Commitment, which
Commitment shall thereupon be terminated, and (y) by three Business Days notice
to the Borrowers and the Administrative Agent declare the Loans held by it
(together with accrued interest thereon) and any other amounts payable hereunder
for its account to be, and such Loans and such other amounts shall thereupon
become, immediately due and payable without presentment, demand, protest, or
other notice of any kind, all of which are hereby waived by the Borrowers.
SECTION 2.21. Conversion to Term Loans. At the option of the Company
and subject to the satisfaction of the conditions precedent for a Borrowing
other than a Refunding Borrowing set forth in Section 4.02, upon written notice
delivered to the Administrative Agent no earlier than 60 days and no later than
30 days prior to the then applicable Revolving Loan Maturity Date, the aggregate
principal amount of any Revolving Loans remaining outstanding at the close of
the Administrative Agent's business on the then applicable Revolving Loan
Maturity Date, shall automatically convert to Term Loans with a maturity of two
years. Any portion of each Lender's Commitment not utilized on or before the
then applicable Revolving Loan Maturity Date shall be permanently cancelled. Any
Term Loans that are prepaid may not be reborrowed.
ARTICLE III
Representations and Warranties
To induce the Lenders to enter into this Agreement and to make the
Loans, each Borrower represents and warrants (such representations and
warranties to survive any investigation and the making of the Loans) to the
Lenders and the Administrative Agent that:
SECTION 3.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Each Material Subsidiary organized under the laws
of the United States of America, any State thereof, or the District of Columbia,
is a corporation duly incorporated, validly existing and in good standing (or,
if such Subsidiary is a limited liability company, is a limited liability
company duly formed, validly existing and in good standing) under the laws of
its jurisdiction of incorporation, organization or formation. Each Material
Subsidiary organized under the laws of a jurisdiction other than United States
of America, any State thereof, or the District of Columbia is a company duly
formed and validly existing under the laws of its jurisdiction of formation. The
Company and each Material Subsidiary has all requisite corporate or limited
liability company power and all material governmental licenses, permits,
authorizations, qualifications, consents and approvals required to carry on its
business as now conducted which, if not obtained, could reasonably be expected
to have a Material Adverse Effect.
SECTION 3.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance of this Agreement by the
Company and each Subsidiary Borrower are within each such Borrower's corporate
or limited liability company powers, have been duly authorized by all necessary
corporate or limited liability company action, require no approval of or filing
with any governmental body, agency or official or any other Person, do not
conflict with, contravene or constitute a default under any provision of
applicable law or regulation or of the certificate of incorporation, by-laws,
articles of association or memorandum of association of such Borrower or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
such Borrower unless such conflict could not reasonably be expected to have a
Material Adverse Effect, and will not result in the creation or imposition of
any mortgage, security interest or other lien or encumbrance on any asset or
revenues of such Borrower or any of its Subsidiaries.
SECTION 3.03. Binding Effect. This Agreement constitutes a legal, valid
and binding agreement of each of the Company and each Subsidiary Borrower
enforceable against each Borrower in accordance with its terms.
SECTION 3.04. Financial Information.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1997, and the related consolidated statements of
income, retained earnings and cash flows for the year then ended, reported on by
Arthur Andersen L.L.P. and set forth in the Company's 1997 Annual Report, a copy
of which has been delivered to each of the Lenders, fairly present, in
conformity with GAAP, the consolidated financial position of the Company and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such year.
(b) the unaudited consolidated statement of financial condition of the
Company and its Consolidated Subsidiaries at September 30, 1998, and the related
consolidated statements of income and retained earnings and cash flows of the
Company and its Consolidated Subsidiaries for the nine months ending September
30, 1998, heretofore furnished to the Lenders present fairly, in conformity with
GAAP, the consolidated financial condition of the Company at the date of said
statements for said periods, subject to year-end audit adjustments in the case
of such unaudited statements.
(c) At the Effective Date, there has been no material adverse change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Company and its Consolidated Subsidiaries, taken as a whole
since September 30, 1998, including with regard thereto the selected pro forma
financial information dated as of and for the nine months ended September 30,
1998, set forth in the Company's S-4 filed with the SEC, and effective as of
January 27, 1999.
SECTION 3.05. Litigation. Except as may have been disclosed in writing
to the Lenders prior to the signing hereof, there is no material action, suit or
proceeding pending, or to the knowledge of the Company threatened, against or
affecting the Company or any Subsidiary before any court or arbitrator or any
governmental body, agency or official which could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.06. Compliance with ERISA.
(a) Neither the Company nor any ERISA Affiliate has failed to comply in
any material respect with the applicable provisions of ERISA and the Code and
the regulations promulgated thereunder (including, without limitation, sections
4068, 4069 and 4212 of ERISA), where such failure could reasonably be expected
to result in a Material Adverse Effect.
(b) Other than premiums to the PBGC due in the normal course, no
liability to the PBGC (with respect to which the Company or any ERISA Affiliate
is delinquent) has been incurred and remains unsatisfied or is expected by the
Company to be incurred with respect to any Plan by the Company or any ERISA
Affiliate which could reasonably be expected to result in a Material Adverse
Effect.
(c) Neither the Company nor any ERISA Affiliate is obligated to
contribute to, or has incurred a withdrawal liability with respect to, any
Multiemployer Plan in an amount that would be materially adverse to the Company
and its Subsidiaries taken as a whole.
(d) Full payment has been made of all amounts that the Company or any
ERISA Affiliate is required under the terms of each Plan to have paid as
contributions to such Plan as of the last day of the most recent fiscal year of
such Plan ended prior to the date hereof (or will be made within the period
described in Section 404 of the Code) and no accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any Plan. Each Plan satisfies the minimum funding
standard of Section 412 of the Code.
(e) The amount of Benefit Liabilities under each Plan, determined as of
the end of the Company's most recently ended fiscal year (on the basis of
assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA) did
not exceed the current value of the assets of such Plans determined as of such
date in an amount that, individually or in the aggregate with such amount for
all Plans, exceeds $25,000,000.
SECTION 3.07. Environmental Matters. The Company and each Subsidiary,
and to the best of the Company's knowledge, any former subsidiary and any
predecessor in interest of the Company or of any Subsidiary, and with respect to
all of the Property of the Company and its Subsidiaries, and each of the plants,
sites and facilities presently or formerly owned, operated, controlled, or
leased by the Company or any of its Subsidiaries, has complied with all
applicable Environmental Laws during the period such Subsidiary, plant, site or
facility was owned, operated, controlled or leased by the Company or any of its
Subsidiaries, except in any such case, where such failure to so comply could not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries has received any notice of, or has knowledge of, any
actual or threatened claim, legal proceeding or investigation regarding the
Company or any of its Subsidiaries, or any of the respective plants, sites or
facilities currently or formerly owned, operated, leased or controlled by any of
them, related to Environmental Laws which alone or together with all other such
matters known to the Company could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.08. Taxes. The Company and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Company or any
Subsidiary, except such taxes or assessments, if any, as are being contested in
good faith by appropriate proceedings. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes are, in the
opinion of the Company, adequate.
SECTION 3.09. Investment Company Act. None of the Borrowers is an
investment company within the meaning of the Investment Company Act of 1940, as
amended, or directly or indirectly controlled by or acting on behalf of any
Person which is an investment company, within the meaning of such Act.
SECTION 3.10. Public Utility Holding Company Act. None of the Borrowers
is a "public utility company, or an "affiliate," or a "subsidiary company of a
"public utility company," or a "holding company," or an "affiliate" or a
"subsidiary company" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
SECTION 3.11. Use of Proceeds. No portion of the Loans will be used,
directly or indirectly, (a) to purchase or carry any Margin Stock, (b) to repay
or otherwise refinance indebtedness of any Borrower incurred to purchase or
carry any Margin Stock, or (c) to extend credit for the purpose of purchasing or
carrying any Margin Stock.
SECTION 3.12. Disclosure. The Company has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Material Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the other reports, financial statements,
certificates or other information furnished by or on behalf of the Company or
its Material Subsidiaries to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, each Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.13. Year 2000 Compliance. The Company believes that any
reprogramming required to permit the proper functioning, in and following the
year 2000, of (a) the Company's, or any Material Subsidiary's, computer systems
and (b) equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Company's, or any Material
Subsidiary's, systems interface) and the testing of all such systems and
equipment, as so reprogrammed, to the extent necessary to prevent any
significant disruptions to the business and operations of the Company and its
Subsidiaries on a consolidated basis, will be completed by September 30, 1999.
The cost to the Company and its Material Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Company (including, without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Default or other event or
circumstance that could reasonably be expected to have a Material Adverse
Effect.
SECTION 3.14. Material Subsidiaries. As of the Effective Date, the
Subsidiaries of the Company that qualify as Material Subsidiaries under this
Agreement and that are not Subsidiary Borrowers are those Subsidiaries listed on
Schedule 3.14 attached hereto.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Russell G. Horner, Jr., General Counsel of the Company,
substantially in the form of Exhibit B-1, and covering such other matters
relating to the Borrowers, this Agreement or the Transactions as the Required
Lenders shall reasonably request. Each Borrower hereby requests such counsel to
deliver such opinion.
(c) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Simpson Thacher & Bartlett, counsel for the Borrowers,
substantially in the form of Exhibit B-2, and covering such other matters
relating to the Borrowers, this Agreement or the Transactions as the Required
Lenders shall reasonably request. Each Borrower hereby requests such counsel to
deliver such opinion.
(d) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
each Borrower organized under the laws of the United States of America, any
State thereof, or the District of Columbia and relating to the organization and
existence of each Borrower organized under the laws of a jurisdiction other than
the United States, any State thereof, or the District of Columbia, the
authorization of the Transactions, and any other legal matters relating to such
Borrower, this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(e) The Administrative Agent shall have received a certificate
from each Borrower, dated the Effective Date and signed by the President, a Vice
President, a Financial Officer, or a director of such Borrower, confirming
compliance with the conditions set forth in paragraphs (a), (b), (c), and (d) of
Section 4.02.
(f) The Administrative Agent shall have received for its own
account, or for the account of the Lenders, as the case may be, all fees, costs
and expenses due and payable pursuant to the Fee Letter and Section 10.03.
(g) All conditions precedent related to the Company's merger
with Oryx Energy Company as detailed in the S-4 filed November 17, 1998 with the
SEC shall have been fulfilled.
(h) Each of the Oryx Facility and the ABN Facility A shall
have been terminated and all respective obligations thereunder have been
satisfied, subject only to funding of the initial Loans under this Agreement.
The Administrative Agent shall notify each Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 5:00 p.m., New York City time, on
March 31, 1999 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to
make, convert or continue a Loan on the occasion of any Borrowing is subject to
the satisfaction of the following conditions:
(a) On the occasion of any Borrowing other than a Refunding
Borrowing, each of the representations and warranties of the Borrowers set forth
in this Agreement shall be true and correct on and as of the date of such
Borrowing. On the occasion of any Refunding Borrowing, each of the
representations and warranties of the Borrowers set forth in this Agreement,
other than the representations and warranties set forth in Sections 3.04(c),
3.05 and 3.07, shall be true and correct on and as of the date of such
Borrowing.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
(c) At the time of and immediately after giving effect to such
Borrowing, the Consolidated Tangible Net Worth shall be equal to or greater than
$1,000,000,000.
(d) At the time of and immediately after giving effect to such
Borrowing, at any time when the Applicable Rate is determined by reference to
Level Three, Four, Five or Six as provided in the Pricing Schedule, the Debt
Leverage Ratio is equal to or less than 3.5:1.00.
(e) The Administrative Agent shall have received a Joinder
Agreement (together with all documents required to be attached thereto) executed
and delivered by the Company and each Subsidiary Borrower that is designated as
such by the Company subsequent to the Effective Date, and the Administrative
Agent shall have delivered a copy of such Joinder Agreement (together with a
copy of all documents required to be attached thereto) to each of the Lenders.
Each Borrowing shall be deemed to constitute a representation and warranty by
each Borrower on the date thereof as to the matters specified in paragraphs (a),
(b), (c) and (d) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, each Borrower covenants and agrees with the Lenders that it
will:
SECTION 5.01. Information. Deliver, or cause to be delivered, to
the Administrative Agent and each Lender:
(a) to the extent not already delivered pursuant to another clause of
this Section 5.01, as soon as available and in any event within 120 days after
the end of each fiscal year of the Company, (i) a consolidated balance sheet of
the Company and its Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of income, retained earnings and cash
flows for such fiscal year, setting in each case in comparative form the figures
from the previous fiscal year, all audited by Arthur Andersen L.L.P. or other
independent public accountants of nationally recognized standing, and (ii) an
audited consolidated balance sheet of each Subsidiary Borrower and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated profit and loss account and statements of retained earnings of such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, accompanied by (A) the report thereon of Arthur Andersen
L.L.P. or other independent public accounts of internationally recognized
standing, or (B) if such financial statements are not otherwise reported on by
independent public accountants, a certificate of the Financial Officer of such
Subsidiary Borrower as to fairness of presentation, GAAP and consistency;
(b) to the extent not already delivered pursuant to another clause of
this Section 5.01, (i) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year of the
Company, (A) a consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of the end of such quarter, (B) the related consolidated
statements of income for such quarter and for the portion of the Company's
fiscal year ended at the end of such quarter and (C) the related consolidated
statement of cash flows for the portion of the Company's fiscal year ended at
the end of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Company's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by the
Financial Officer of the Company; and (ii) as soon as available and in any event
within 90 days after the end of each of the first three quarters of each fiscal
year of each Subsidiary Borrower, (X) a consolidated balance sheet of such
Subsidiary Borrower and its Subsidiaries as of the end of such quarter, and (Y)
the related consolidated profit and loss account of such Subsidiary Borrower's
fiscal year ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the corresponding
portion of such Subsidiary Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation, GAAP
and consistency by an officer or director of such Subsidiary Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above or clause (g) below, a
certificate of the Financial Officer of the Company (i) stating whether to the
knowledge of such officer, there exists on the date of such certificate any
Default and, if any Default then exists, setting forth the details thereof and
the action which the Company or Subsidiary Borrower, as the case may be, is
taking or proposes to take with respect thereto and (ii) setting forth in
reasonable detail the computations necessary to determine the Consolidated
Tangible Net Worth and the Debt Leverage Ratio as at the end of the respective
fiscal quarter or fiscal year.
(d) simultaneously with the delivery of each set of audited year-end
financial statements referred to in clauses (a) or (g), a statement
substantially in the form attached hereto as Exhibit E of the firm of
independent public accountants which reported on such statements stating whether
anything has come to their attention to cause them to believe that there existed
on the date of such statements any Default;
(e) forthwith upon any executive officer (meaning any member of the
management committee, a Financial Officer or the general counsel) of the Company
or any officer or director of a Subsidiary Borrower obtaining knowledge of the
occurrence of any Default, a certificate of a Financial Officer of the Company
setting forth the details thereof and the action which the Company or such
Subsidiary Borrower, as the case may be, is taking or proposes to take with
respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, (i) a copy of each registration
statement (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) which the Company shall have filed with the SEC, and
a copy of each annual, quarterly or other report (other than the exhibits
thereto) which the Company shall have filed with the SEC and (ii) a copy of any
annual return (other than the exhibits thereto) which any Subsidiary Borrower
shall have filed with the Governmental Authority having jurisdiction over the
registration or issuance of securities in the country of such Subsidiary
Borrower's organization, formation or incorporation;
(h) if and when the Company or any ERISA Affiliate (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; or (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums under Section
4007 of ERISA) in respect of or appoint a trustee to administer any Plan, a copy
of such notice; and
(i) from time to time, upon receiving from the Lenders such assurances
of confidential treatment as the Company may reasonably request, such additional
information regarding the performance of this Agreement or the financial
position or business of any Borrower, as the Administrative Agent, at the
request of any Lender, may reasonably request.
SECTION 5.02. Payment of Taxes. Pay, will cause each of its
Subsidiaries to pay, all material taxes, assessments and other governmental
charges imposed upon it or any of its Properties or assets or in respect of any
of its franchises, business, income or profits before any penalty or interest
accrues thereon, and all material claims (including, without limitation, claims
for labor, services, materials and supplies) for sums which have become due and
payable and which by law have or might become a Lien upon any of its Properties
or assets, non-payment of which could reasonably be expected to have a Material
Adverse Effect, provided that no such tax, assessment, charge or claim need be
paid if being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted so long as no Lien has attached to any
Property of the Company or its Subsidiaries as a result thereof.
SECTION 5.03. Insurance. Maintain, or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
Properties and business and the Properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against by corporation
of established reputation engaged in the same or similar business and similarly
situated, of such types and in such amounts as are customarily carried under
similar circumstances by such other corporations; provided, however, that in
lieu of any such insurance, any Borrower or any such Subsidiary may maintain a
system or systems of self-insurance which are in accord with sound practices of
similarly situated corporations of established reputation maintaining such
systems and with respect to which such Borrower or such Subsidiary shall
maintain adequate insurance reserves in accordance with GAAP and in accordance
with sound actuarial and insurance principles.
SECTION 5.04. Conduct of Business and Maintenance of Existence. Except
as permitted by Section 6.03, at all times preserve and keep in full force and
effect, and cause each Material Subsidiary to preserve and keep in full force
and effect, its existence, and rights and franchises deemed material to the
Properties, business, prospects, profits, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole, except that
such rights and franchises and the existence of any Material Subsidiary (other
than those of a Subsidiary Borrower) may be terminated if, in the good faith
judgment of the Board of Directors of the Company, such termination is in the
best interest of the Company and is not disadvantageous to the Lenders.
SECTION 5.05. Compliance with Laws. Comply, and use its best efforts to
cause each of its Subsidiaries to comply, with all applicable laws, rules and
regulations and orders of any Governmental Authority, non-compliance with which
could reasonably be expected to have a Material Adverse Effect.
SECTION 5.06. Compliance with Environmental Laws. Comply, and use its
best efforts to cause each of its Subsidiaries and each of its Affiliates that
are controlled by it or its Subsidiaries to comply, in a timely fashion, with
the provisions of all Environmental Laws, failure with which to comply could
reasonably be expected to have a Material Adverse Effect. Each Borrower agrees
to defend, indemnify and hold the Administrative Agent and each Lender, and
their respective directors, officers, and employees ("Environmental
Indemnitees") harmless from any loss, liability, cost, damage, fines, response
costs, investigative and monitoring costs, abatement costs, attorneys' fees,
experts' or consultants' fees, claims or expenses or any other Environmental
Liabilities ("Costs") which any such person may incur or suffer as a result of a
breach by the Company or any Subsidiary Borrower of the preceding covenants, or
as the result of the breach of any representation or warranty contained in
Section 3.07 or as a result of any Environmental Liability, legal proceeding or
investigation regarding the Company or any of its Subsidiaries, or any of their
respective plants, sites or facilities currently or formerly owned, operated,
leased or controlled by any of them, related to Environmental Laws; provided,
however, that with respect to plants, sites, or facilities formerly owned,
operated, leased or controlled by the Company or any of its Subsidiaries, the
indemnification obligations hereunder shall relate only to Costs incurred or
suffered as a result of an Environmental Liability, legal proceeding or
investigation relating to the ownership, operation, lease, or control by the
Company or any of its Subsidiaries of such plants, sites or facilities or in
relation to any plant, site or facility jointly owned, operated, leased or
controlled with any other Person, to Costs incurred by virtue of this Agreement.
In no event shall any Environmental Indemnitee be required to make any
expenditure or bring any cause of action to enforce the Company's obligations
and liability under and pursuant to this Section. The Company and each
Subsidiary Borrower shall indemnify the respective Environmental Indemnitee
regardless of whether the act, omission, facts, circumstances or conditions
giving rise to such indemnification were caused in whole or in part by the
respective Environmental Indemnitee's simple (but not gross) negligence. The
indemnifications set out in this Section shall survive the termination of this
Agreement and shall continue to be the personal liability and obligation of the
Company and each Subsidiary Borrower, binding upon them. The indemnifications
set forth in this Section are also subject to the provisions of Section 10.03(b)
of this Agreement, except to the extent such provisions conflict with this
Section in which case the provisions of this Section shall control.
SECTION 5.07. Use of Proceeds. Use the proceeds of the Loans made under
this Agreement for working capital and general corporate purposes, including
non-contested acquisitions, refinancing of obligations under the ABN Facility A
and the Oryx Facility, and commercial paper back-up in the United States of
America and the European Union. No portion of the Loans will be used, directly
or indirectly, (a) to purchase or carry any Margin Stock, (b) to repay or
otherwise refinance indebtedness of any Borrower incurred to purchase or carry
any Margin Stock, or (c) to extend credit for the purpose of purchasing or
carrying any Margin Stock.
SECTION 5.08. Notice of Changed Credit Rating. Notify the
Administrative Agent promptly on becoming aware of any change or proposed
change in any Rating.
SECTION 5.09. Subsidiary Borrowers. In the case of the Company,
at all times own, directly or indirectly, all outstanding capital stock of the
Subsidiary Borrowers free and clear of all liens or encumbrances.
SECTION 5.10. Year 2000 Compliance. Perform, and, in the case of the
Company, cause each Material Subsidiary to perform, any reprogramming required
to permit the proper functioning, in and following the year 2000, of its
computer systems and equipment containing embedded microchips (including systems
and equipment supplied by others or with which its systems interface) and
perform the testing of all such systems and equipment, as so reprogrammed, to
the extent necessary to prevent any significant disruptions to the business and
operations of the Company and its Subsidiaries on a consolidated basis, which
testing shall be completed by September 30, 1999.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full:
SECTION 6.01. Compliance with ERISA. The Company will not, and will not
permit any of its Subsidiaries to, (i) engage in any transaction in connection
with which the Company or any of its Subsidiaries could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA, a tax imposed by
Section 4975 of the Code, or a lien pursuant to Section 412(n) of the Code, (ii)
terminate any Plan in a manner, or take any other action with respect to any
such Plan (including, without limitation, a substantial cessation of operations
within the meaning of Section 4068(f) of ERISA), which could result in any
liability of the Company or any of its Subsidiaries to the PBGC or to a trustee
appointed pursuant to Section 4042(b) or (c) of ERISA, or incur any liability to
the PBGC on account of a termination of a Plan under Section 4064 of ERISA,
(iii) fail to make full payment when due of all amounts which, under the
provisions of any Plan or Section 412(m) of the Code, the Company or any of its
Subsidiaries is required to pay as contributions thereto, (iv) incur any
complete or partial withdrawal liability under Title IV of ERISA with respect to
any Multiemployer Plan, or (v) permit to exist any accumulated funding
deficiency, whether or not waived, with respect to any Plan, if, in the
aggregate, such penalty or tax or such liability, or the failure to make such
payment, or the existence of such deficiency, as the case may be, exceeds
$25,000,000.
SECTION 6.02. Limitation on Secured Debt. Neither the Company nor a
Subsidiary Borrower will, and the Company will not, permit any Consolidated
Subsidiary to create, incur, assume or suffer to exist, any Indebtedness secured
by a Lien on any Restricted Property or any Indebtedness of the Company or any
Subsidiary, without effectively providing that the Loans and any other
Indebtedness evidenced by this Agreement shall be secured equally and ratably
with (or prior to) such secured Indebtedness, so long as such secured
Indebtedness shall be so secured, unless, after giving effect thereto, the
aggregate principal amount of all such secured Indebtedness (not including
secured Indebtedness permitted to be secured under clauses (a) to (j) below)
plus the aggregate "value" (as defined below) of all "sale and leaseback
transaction" (as defined below, but not including any sale or leaseback
transaction the proceeds of which have been or will be applied to funded
Indebtedness of the Company or its Subsidiaries within 120 days from the time of
such transaction) would not exceed five percent (5%) of Stockholders' Equity of
the Company; provided, however, that this Section 6.02 shall not apply to, and
there shall be excluded from secured Indebtedness in any computation for
purposes of this Section 6.02, any Indebtedness secured by:
(a) Liens existing on the date of this Agreement;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event and which does not extend to any other assets of the
Company or any Consolidated Subsidiary;
(c) any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring,
constructing or improving such asset, provided that such Lien attaches to such
asset concurrently with or within 24 months after the acquisition or completion
of construction or improvement thereof, and provided further that the
Indebtedness secured by such Lien shall not exceed the cost of acquiring,
constructing or improving such asset;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the Company or a
Consolidated Subsidiary and not created in contemplation of such event and which
does not extend to any other assets of the Company or any Consolidated
Subsidiary;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Company or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court proceedings
so long as the execution or other enforcement thereof is effectively stayed and
the claims secured thereby are being contested in good faith by appropriate
proceedings;
(g) Liens to secure indebtedness of the pollution control or
industrial revenue bond type and Liens in favor of the United States or any
State thereof, or any department, agency, instrumentality, or political
subdivision of any such jurisdiction, to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or cost of
constructing or improving the property subject thereto;
(h) any Lien (including Liens in respect of production
payments) to secure the payment of all or any part of the cost of exploration,
drilling, mining, or development of property which had prior to September 30,
1998, produced no material volumes of hydrocarbons, minerals, timber or other
products or by-products produced or extracted from such property, provided that
the Indebtedness secured by such Lien shall not exceed the cost of exploring,
drilling, mining or development such property; and provided further that such
Lien shall not extend to any property other than the property being explored,
drilled, mined or developed;
(i) Liens securing Indebtedness incurred by the Company or any
of its Subsidiaries to pay all or any part of the cost of exploration, drilling
or development any North Sea properties within the territorial waters of the
United Kingdom, provided, that the Indebtedness secured by such Liens shall not
exceed the cost of such exploration, drilling, or development; and provided
further that such Lien shall not extend to any property other than the property
being explored, drilled or developed; and
(j) any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted by any of
the foregoing clauses of this section, provided that the amount of such
Indebtedness is not increased and is not secured by any additional assets;
For purposes of this Section 6.02, the term "sale and leaseback
transaction" means any arrangement with any bank, insurance company or other
lender or investor or to which any such lender or investor is a party, providing
for the leasing by the Company or any of its Consolidated Subsidiaries for a
period, including renewals, in excess of three years on any Restricted Property
owned or leased by the Company or any of its Consolidated Subsidiaries which has
been sold or transferred, more than 120 days after the completion of
construction and commencement of full operation thereof, by the Company or any
of its Consolidated Subsidiaries to such lender or investor or to any Person to
whom funds have been or are to be advanced by such lender or investor on the
security of such Restricted Property. For purposes of this Section 6.02, the
term "value" means, with respect to a sale and leaseback transaction, as of any
particular time, an amount equal to the greater of (i) the net proceeds of sale
of the Restricted Property leased pursuant to such sale and leaseback
transaction, and (ii) the fair value of such Restricted Property at the time of
entering into such sale and leaseback transaction as determined by the Board of
Directors of the Company, in each case multiplied by a fraction of which the
numerator is the number of full years remaining in the term of the lease
(without regard to renewal options) and the denominator is the number of full
years of the full term of the lease (without regard to renewal options).
SECTION 6.03. Consolidations, Mergers and Sales of Assets.
(a) Neither the Company nor any Subsidiary Borrower will be a party to
any merger or consolidation or sell, lease or otherwise transfer all or
substantially all of its Property; provided that the Company may merge or
consolidate with another corporation and may sell, lease or otherwise transfer
all or substantially all of its Property as an entirety to another corporation
if (i) the surviving or acquiring corporation (if other than the Company) (A) is
organized under the laws of the United States or a jurisdiction thereof and (B)
expressly assumes by writing reasonably satisfactory to the Required Lenders the
covenants and obligations in this Agreement, and (ii) immediately after giving
effect to such transaction, (x) no condition or event shall exist which
constitutes a Default, (y) the Consolidated Tangible Net Worth shall not be less
than $1,000,000,000, and (z) in the event that any Rating or any expected Rating
(resulting from such merger, consolidation, sale, lease or transfer) for
determining the Applicable Rate is determined by reference to Level Three, Four,
Five or Six as provided in the Pricing Schedule, the Debt Leverage Ratio shall
be equal to or less than 3.5:1.00; and provided, further, that any Subsidiary
Borrower may merge or consolidate with another corporation and may sell, lease
or otherwise transfer all or substantially all of its Property as an entirety to
another corporation if (i) the surviving or acquiring corporation (if other than
another Subsidiary Borrower) (A) is organized under the laws of the country
under whose laws such Subsidiary Borrower is organized and (B) executes and
delivers to the Administrative Agent a Joinder Agreement, (ii) all outstanding
capital stock of the surviving or acquiring corporation is owned by the Company
free and clear of any Lien, and (iii) immediately after giving effect to such
transaction, no condition or event shall exist which constitutes a Default and
the conditions for a Borrowing other than a Refunding Borrowing as set forth in
Section 4.02 (whether or not a Borrowing occurs in connection therewith) are
satisfied.
(b) Concurrently with the public disclosure thereof, the Company shall
give written notice to the Administrative Agent and the Lenders describing in
reasonable detail any proposed transaction described in this Section, the date
on which it is proposed to be consummated and the identity and jurisdiction of
organization of the proposed successor or transferee corporation.
(c) Notwithstanding anything contained in this Section 6.03, the Oryx
Merger is hereby expressly permitted.
SECTION 6.04. Transactions with Affiliates. Neither the Company nor any
Subsidiary Borrower will engage, directly or indirectly, in any transaction
(including, without limitation, the purchase, sale or exchange of assets or the
rendering of any service) with any Affiliate, except in the ordinary course of
and pursuant to the reasonable requirements of the Company's or such Subsidiary
Borrower's or such Affiliate's business and upon fair and reasonable terms that
are substantially the same as those which might be obtained in an arm's length
transaction at the time from Persons which are not such an Affiliate or upon
terms which could not reasonably be expected to have a Material Adverse Effect;
provided, however, that taxes may be allocated among the Company and its
Affiliates in any manner consistent with Section 1552 (or any successor
provision) of the Code, general and administrative expenses may be allocated
among the Company and its Affiliates in any manner consistent with Section 482
(or any successor provision) of the Code, and interest may be charged or
credited to Affiliates in any reasonable manner not inconsistent with the Code.
ARTICLE VII
Guaranty
SECTION 7.01. The Guaranty. In order to induce the Lenders to enter
into this Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by the Company from the proceeds of the Loans
made to the Subsidiary Borrowers, the Company hereby, unconditionally and
irrevocably guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise, of
any and all of the Guaranteed Obligations of the Subsidiary Borrowers to the
Administrative Agent or the Lenders. If any or all of the Guaranteed Obligations
of the Subsidiary Borrowers to the Administrative Agent or the Lenders becomes
due and payable hereunder, the Company unconditionally in the applicable
currency of such Guaranteed Obligation, promises to pay such indebtedness to the
Administrative Agent for the account of each Lender on demand, together with any
and all reasonable expenses which may be incurred by the Administrative Agent or
the Lenders in collecting any of the Guaranteed Obligations. This Guaranty is a
guaranty of payment and not collection. All payments made by Company under this
Guaranty shall be made on the same basis as payments by the Company under
Sections 2.07 and 2.08.
SECTION 7.02. Bankruptcy. Additionally, the Company unconditionally and
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
of the Subsidiary Borrowers to the Administrative Agent and the Lenders whether
or not then due or payable by such Subsidiary Borrowers upon the occurrence in
respect of any Subsidiary Borrower of any of the events specified in Sections
8(h) or 8(i), and unconditionally and irrevocably promises to pay such
Guaranteed Obligations to the Administrative Agent for the account of each
Lender on demand, in the applicable currency of such Guaranteed Obligation.
SECTION 7.03. Nature of Liability. (a) The liability of the Company
hereunder is exclusive and independent of any security for or other guaranty of
the Guaranteed Obligations of the Subsidiary Borrowers whether executed by the
Company, any other guarantor or by any other party, and the liability of the
Company hereunder shall not be affected or impaired by (i) any direction as to
application of payment by any Subsidiary Borrower or by any other party, or (ii)
any other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations of the
Subsidiary Borrowers, or (iii) any payment on or in reduction of any such other
guaranty or undertaking, or (iv) any dissolution, termination or increase,
decrease or change in personnel by the Subsidiary Borrowers, or (v) any payment
made to the Administrative Agent or the Lenders on the Guaranteed Obligations
which the Administrative Agent or the Lenders repay to the Subsidiary Borrowers
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and the Company waives any right
to the deferral or modification of its obligations hereunder by reason of any
such proceeding.
(b) If claim is ever made upon the Administrative Agent or any
Lender for repayment or recovery of any amount or amounts received in payment or
on account of any of the Guaranteed Obligations and any of the aforesaid payees
repays all or part of said amount by reason of (i) any judgment, decree or order
of any court or administrative body having jurisdiction over such payee or any
of its property or (ii) any settlement or compromise of any such claim effected
by such payee with any such claimant (including any Subsidiary Borrower), then
and in such event the Company agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon the Company, notwithstanding any
revocation hereof or other instrument evidencing any liability of any Subsidiary
Borrower, and the Company shall be and remain liable to the aforesaid payees
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by any such payee.
SECTION 7.04. Independent Obligation. The obligations of the Company
hereunder are independent of the obligations of any other guarantor or the
Subsidiary Borrowers, and a separate action or actions may be brought and
prosecuted against the Company whether or not action is brought against any
other guarantor or the Subsidiary Borrowers and whether or not any other
guarantor or the Subsidiary Borrowers be joined in any such action or actions.
The Company waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by any Subsidiary Borrower or other circumstance which
operates to toll any statute of limitations as to such Subsidiary Borrower shall
operate to toll the statute of limitations as to the Company. This Guaranty is a
continuing one with respect to the Guaranteed Obligations, and all liabilities
to which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon.
SECTION 7.05. Authorization. The Company authorizes the Administrative
Agent and the Lenders without notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or impairing its
liability under this Article VII, from time to time to:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease in the
rate of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Guaranty herein made shall
apply to the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against
the Subsidiary Borrowers or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, the Subsidiary Borrowers or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Subsidiary Borrowers to their creditors
other than the Lenders;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Subsidiary Borrowers to the Lenders
regardless of what liability or liabilities of the Subsidiary Borrowers remain
unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements referred
to herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements; and/or
(h) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable discharge
of the Company from its liabilities under this Guaranty.
SECTION 7.06. Subordination. Any of the Indebtedness of the Subsidiary
Borrowers now or hereafter owing to the Guarantor is hereby subordinated to the
Guaranteed Obligations of the Subsidiary Borrowers owing to the Administrative
Agent and the Lenders; and if the Administrative Agent so requests at a time
when an Event of Default exists, all such Indebtedness of the Subsidiary
Borrowers to the Company shall be collected, enforced and received by the
Company for the benefit of the Lenders and be paid over to the Administrative
Agent on behalf of the Lenders on account of the Guaranteed Obligations of the
Subsidiary Borrowers to the Lenders, but without affecting or impairing in any
manner the liability of the Company under the other provisions of this Guaranty.
SECTION 7.07. Waiver. (a) The Company waives any right (except as shall
be required by applicable statute and cannot be waived) to require the
Administrative Agent or the Lenders to (i) proceed against any Subsidiary
Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Subsidiary Borrowers, any other guarantor or
any other party or (iii) pursue any other remedy in the Administrative Agent's
or the Lenders' power whatsoever. The Company waives any defense based on or
arising out of any defense of the Subsidiary Borrowers, any other guarantor or
any other party, other than payment in full of the Guaranteed Obligations, based
on or arising out of the disability of any Subsidiary Borrower, any other
guarantor or any other party, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Subsidiary Borrowers other than payment in full of the
Guaranteed Obligations. The Administrative Agent and the Lenders may, at their
election, foreclose on any security held by the Administrative Agent or the
Lenders by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative Agent and the Lenders may have against the Subsidiary Borrowers
or any other party, or any security, without affecting or impairing in any way
the liability of the Company hereunder except to the extent the Guaranteed
Obligations have been paid. The Company waives any defense arising out of any
such election by the Administrative Agent and the Lenders, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of the Company against any Subsidiary
Borrower or any other party or any security.
(b) The Company waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notices of protest, notice of acceleration, notices of intent to
accelerate, notices of dishonor, notices of acceptance of this Guaranty, and
notices of the existence, creation or incurring of new or additional Guaranteed
Obligations. The Company assumes all responsibility for being and keeping itself
informed of the Subsidiary Borrowers' financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which the Company
assumes and incurs hereunder, and agrees that the Administrative Agent and the
Lenders shall have no duty to advise the Company of information known to them
regarding such circumstances or risks.
SECTION 7.08. Legal Limitations of Liability. It is the desire and
intent of the Company, the Administrative Agent and the Lenders that this
Guaranty shall be enforced against the Company to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. If, however, and to the extent that, the obligations of
the Company under this Guaranty shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guaranteed Obligations of the Company shall
be deemed to be reduced and the Company shall pay the maximum amount of the
Guaranteed Obligations which would be permissible under applicable law.
SECTION 7.09. Discharge Only Upon Payment. The Company's obligations
hereunder shall remain in full force and effect until the Commitments have
terminated and the principal and interest on the Loans and all other amounts
payable by the Borrowers under this Agreement shall have been paid in full. The
provisions of this Section 7.09 shall survive the termination of this Agreement
and any satisfaction or discharge of any Subsidiary Borrower or the Company by
virtue of any payment, any court order or any applicable law. The obligations of
the Company under this Article VII constitute the full recourse obligations of
the Company enforceable against it to the full extent of all its Property.
SECTION 7.10. Subrogation. The Company irrevocably waives any and all
rights to which it may be entitled, by operation of law or otherwise, upon
making any payment hereunder to be subrogated to the rights of the payee against
any Subsidiary Borrower with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by any Subsidiary Borrower in respect
thereof in any bankruptcy, insolvency or similar proceeding involving any
Subsidiary Borrower as debtor commencing within one year after the making of any
payment by any Subsidiary Borrower under this Agreement or in respect of the
Loans. The Company hereby further waives any right to enforce via subrogation
any other remedy which the Administrative Agent or any Lender now has or may
hereafter have against any Subsidiary Borrower and any right of indemnity,
reimbursement or contribution against any Subsidiary Borrower the Company may
have by virtue of the Company's performance of its obligations hereunder until
such time as the Administrative Agent and the Lenders have been indefeasibly
paid in full and the Commitments have expired or been terminated.
ARTICLE VIII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) any Borrower shall fail to pay when due any principal on any Loan,
or within five days of the due date thereof any fee or interest on any Loan or
any other amount payable hereunder;
(b) any Borrower shall fail to observe or perform any covenant
contained in Section 5.01(e), Sections 5.07 through 5.10 inclusive, or Sections
6.02 through 6.04 inclusive;
(c) any Borrower shall fail to observe or perform any covenant
contained in subsections 5.01(a), (b), (c), (d), (f), (g), (h) or (i) for 30
days after written notice thereof has been given to the Company by the
Administrative Agent at the request of any Lender;
(d) any Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clauses (a),
(b) or (c) above) for 30 days;
(e) any representation, warranty, certification or statement made or
deemed, pursuant to the terms hereof, to have been made by any Borrower in this
Agreement or in any certificate, financial statement or other notice delivered
pursuant to this Agreement shall prove to have been incorrect in any material
respect when made or deemed to have been made.
(f) the Company or any of its Subsidiaries shall fail to make any
payment in respect of any Material Financial Obligations when due or within any
applicable grace period; or
(g) any event or condition occurs that results in any Material
Financial Obligation becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Financial Obligation or any trustee
or agent on its or their behalf to cause any Material Financial Obligation to
become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (g) shall
not apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness;
(h) Any Borrower or any Material Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or other similar law of any jurisdiction now or hereafter in effect
(herein called the "Bankruptcy Law") or shall seek the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its Property, or shall consent to, approve or acquiesce in
any such relief or to the commencement of any involuntary case or other
proceeding described in clause (i) below or to the appointment of or taking
possession by any such official in any involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced against
any Borrower or any Material Subsidiary seeking liquidation, reorganization or
other relief with respect to its debts under any Bankruptcy Law or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a period of
60 days; or an order for relief shall be entered against any Borrower or any
Material Subsidiary under any Bankruptcy Laws or an order, judgment or decree
shall be entered appointing any such trustee, receiver, custodian, liquidator or
similar official;
(j) Any Subsidiary Borrower becomes insolvent, is unable to pay its
debts as they fall due, stops, suspends or threatens to stop or suspend payment
of all or substantially all of its debts, begins negotiations to readjust,
reschedule or defer all or substantially all of its Indebtedness (which it will
otherwise be unable to pay when due) or proposes or makes a general assignment
or an arrangement or composition with or for the benefit of its creditors or a
moratorium is agreed or declared in respect of or affecting all or substantially
all of the Indebtedness of such Subsidiary Borrower;
(k) The Company or any ERISA Affiliate shall fail to pay when due (and
not being contested in good faith) an amount or amounts aggregating in excess of
the ERISA Obligation Threshold which it shall have become liable to pay to the
PBGC, the Internal Revenue Service or the Department of Labor or to a
Multiemployer Plan under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Benefit Liabilities in excess of
$50,000,000 (collectively, a "Material Plan") shall be filed under Title IV of
ERISA by the Company or any ERISA Affiliate, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of or to cause a trustee to be appointed
to administer any Material Plan; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which would cause the
Company or any ERISA Affiliate to incur a current payment obligation in excess
of $50,000,000; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;
(l) a final judgment or order for the payment of money in excess of the
Final Judgment Threshold not covered by insurance (as to which insurance
coverage there is delivered to the Administrative Agent an opinion of counsel
reasonably satisfactory to the Administrative Agent that such coverage applies
to such judgment or order and that the applicable insurance carrier has not
contested the payment thereof) shall be rendered against the Company or any
Material Subsidiary and such judgment or order shall continue unsatisfied and
not stayed, bonded, vacated or suspended by agreement with the beneficiary
thereof for a period of 60 days;
(m) any event occurs which, under the law of the relevant jurisdiction,
has a substantially equivalent effect to any of the events mentioned in
paragraphs (h), (i), (j) (k) or (l) of this Section; then, and in every such
event (other than an event with respect to any Borrower described in
clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, (i) the Administrative Agent may, and at
the request of the Required Lenders shall, by notice to the Company, take either
or both of the following actions, at the same or different times (A) terminate
the Commitments and thereupon the Commitments shall terminate immediately,
and/or (B) declare the Loans then outstanding (together with accrued interest
thereon and all fees and all other amounts payable hereunder) to be, and such
amounts shall thereupon become, immediately due and payable without presentment,
demand, protest, notice to accelerate, notice of intent to accelerate or other
notice of any kind, all of which are hereby waived by each Borrower; provided
that in the case of any of the Events of Default specified in clause (h) or (i)
above with respect to any Borrower, without any notice to any Borrower or any
other act by the Administrative Agent or the Lenders, (i) the Commitments shall
thereupon terminate and the Loans (together with accrued interest thereon and
all fees and all other amounts payable hereunder) shall become immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Borrower; (ii) each Lender may exercise
its rights of offset against each account and all other property of any Borrower
or both in the possession of such Lender, which right is hereby granted by the
Borrowers to the Lenders; and (iii) the Administrative Agent and each Lender may
exercise any and all other rights pursuant to this Agreement, at law and in
equity.
ARTICLE IX
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with each Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by any Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrowers), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders and each Borrower. Upon any such resignation, so
long as no Default exists, the Company shall have the right, with the consent of
the Required Lenders, such consent not to be unreasonably withheld, to appoint a
successor. If a Default exists, the Required Lenders shall have the right to
appoint a successor without the consent of the Company or any other Borrower. If
no successor shall have been so appointed by the Company or the Required
Lenders, as applicable, and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New York
City, New York, or an Affiliate of any such bank, and which has a combined
capital and surplus of at least $500,000,000. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Company to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Company and
such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 10.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Kerr-McGee Corporation, to it at 123 Robert S. Kerr
Avenue, Oklahoma City, Oklahoma, 73102, Attention of Melody Walke (Telecopy No.
(405) 270-3852);
(b) if to any Subsidiary Borrower, to its attention at the
address and the telephone and telecopy numbers set forth in clause (a) above;
(c) if to the Administrative Agent, to it at its offices
located at One Liberty Plaza, New York, New York, 10006-1404, Attention of
Manager, Agency Services (Telecopy No. (212) 428-2310);
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in the Notice Schedule.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by each Borrower and the Required Lenders, or each Borrower
and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) increase the maximum amount available
under the Foreign Available Amount without the written consent of each Lender
affected thereby, such consent not to be unreasonably withheld, (iii) reduce the
principal amount of any Loan or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iv) postpone the scheduled date of payment of the principal amount of
any Loan, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Commitment, without the written consent of each Lender
affected thereby, (v) change Section 2.15(b) or (c) in a manner that would alter
the pro rata sharing of payments required thereby, without the written consent
of each Lender, (vi) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender, (vii) change any of the provisions of Section
10.04(a) without the written consent of each Lender, (viii) change the Type of
Loans available or the currencies in which Loans are available without the
written consent of each Lender, (ix) permit a change in ownership of any
Subsidiary Borrower unless the Company maintains 100% direct or indirect
ownership without the written consent of each Lender, or (x) release the Company
from its obligations contained in Article VII without the written consent of
each Lender; provided further that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Administrative Agent hereunder
without the prior written consent of the Administrative Agent .
SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Borrowers
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of Vinson & Elkins L.L.P., counsel to the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, reasonable publicity expenses agreed to by the Company, the preparation
and administration of this Agreement or any amendments, modifications or waivers
of the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by
the Administrative Agent or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans.
(b) The Borrowers shall indemnify the Administrative Agent and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or the use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by any
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to any Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that any Borrower fails to pay any amount
required to be paid by it to the Administrative Agent under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative Agent
such Lender's Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, each Borrower
shall not assert, and hereby waive, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 10.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that a
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by a Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided, that
(i) except in the case of an assignment to a Lender, an Affiliate of a Lender,
or to the United States Federal Reserve Banks, each Borrower and the
Administrative Agent must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld), (ii) except in the case of
an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,500, and (v) the assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an
administrative questionnaire in the form supplied by the Administrative Agent;
and provided further that any consent of the Borrowers otherwise required under
this paragraph shall not be required if an Event of Default has occurred and is
continuing. Subject to acceptance and recording thereof pursuant to paragraph
(d) of this Section, from and after the effective date specified in each
Assignment and Acceptance, the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.12, 2.13, 2.14 and 10.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall
be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (e) of
this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of all Borrowers, shall maintain at one of its offices in New York City,
New York, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive, and each Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by any Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed administrative questionnaire in the form supplied by the
Administrative Agent (unless the assignee shall already be a Lender hereunder),
the processing and recordation fee referred to in paragraph (b) of this Section
and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of any Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) each
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.02(b) that affects such
Participant. Subject to paragraph (f) of this Section, each Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and
2.14 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.08 as
though it were a Lender; provided such Participant agrees to be subject to
Section 2.15(c) and 2.16 as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.12 or 2.14 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Company's prior written consent. A Participant that would be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 2.14 unless
each Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of each Borrower, to comply with Section
2.14(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a United States Federal Reserve Bank, and this Section shall not
apply to any such pledge or assignment of a security interest; provided that no
such pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(h) Any assignee or Participant under this Section 10.04 shall
have an office or a branch or an Affiliate available to it and located in the
appropriate jurisdiction through which such assignee or Participant can make any
Eurodollar Loan or a Loan denominated in an Alternate Currency as required under
this Agreement.
(i) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") sponsored by such Granting Lender, identified as such in writing from
time to time by the Granting Lender to the Administrative Agent and the Company,
the option to provide to the Company all or any part of any Loan that such
Granting Lender would otherwise be obligated to make to the Borrower pursuant to
this Agreement, provided that (i) nothing herein shall constitute a commitment
by any SPC to make any Loan and (ii) if an SPC elects not to exercise such
option or otherwise fails to provide all or any part of such Loan, the Granting
Lender shall be obligated to make such Loan pursuant to the terms hereof. The
making of a Loan by an SPC hereunder shall utilize the Commitment of the
Granting Lender to the same extent, and as if, such Loan were made by the
Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for
any payment under this Agreement for which a Lender would otherwise be liable
(all liability for which, if any, shall remain with the Granting Lender). In
furtherance of the foregoing, each party hereto hereby agrees (which agreement
shall survive the termination of this Agreement) that, prior to the date that is
one year and one day after the later of (A) the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPC and (B) the
Final Maturity Date, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or similar proceedings under the laws of
the United States or any state thereof. In addition, notwithstanding anything to
the contrary contained in this Section 10.04, any SPC may, with notice to, but
without prior written consent of, the Company, any Subsidiary Borrower or the
Administrative Agent and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Lender or to any
financial institutions providing liquidity and/or credit support to or for the
account of such SPC to fund the Loans made by such SPC or to support the
securities (if any) issued by such SPC to fund such Loans and disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
liquidity or credit enhancement to such SPC.
SECTION 10.05. Survival. All covenants, agreements, representations and
warranties made by any Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.12, 2.13, 2.14 and 10.03 shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Borrower against any of and all the obligations of such Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) Each Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against any Borrower or its properties in the courts of any
jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to
service of process to the General Counsel of the Company at Kerr-McGee
Corporation, 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma, 73102 (Telecopy
No. (405) 270-4211). Nothing in this Agreement will affect the right of any
party to this Agreement to serve process in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. Each party hereto hereby waives,
to the fullest extent permitted by applicable law, any right it may have to a
trial by jury in any legal proceeding directly or indirectly arising out of or
relating to this Agreement or the Transactions contemplated hereby (whether
based on contract, tort or any other theory). Each party hereto (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver and (b) acknowledges that it
and the other parties hereto have been induced to enter into this Agreement by,
among other things, the mutual waivers and certifications in this Section.
SECTION 10.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. Confidentiality. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Company
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than a Borrower. For the purposes of this Section, "Information" means all
information received from any Borrower relating to such Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by such Borrower; provided that, in the case of information received
from such Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 10.13. Currency Indemnity. (a) If any amount payable by any
Borrower under or in connection with any Loan or any other obligation under or
in connection herewith is received by any Lender in a currency (the "Payment
Currency") other than that agreed to be payable in this Agreement (the "Agreed
Currency"), whether as a result of any judgment or order or the enforcement of
the same, the liquidation of such Borrower or otherwise and the amount produced
by converting the Payment Currency so received into the Agreed Currency at
market rates prevailing at or about the time of receipt of the Payment Currency
is less than the amount of the Agreed Currency due with respect to such Loan,
then such Borrower and the Company shall and hereby does, as an independent and
additional obligation, indemnify each Lender for the deficiency and any loss
sustained as a result.
(b) The above indemnity shall constitute separate and
independent obligations of each Borrower from its other obligations under this
Agreement and shall apply irrespective of any indulgence granted by the
Administrative Agent or any Lender. The applicable Borrower shall pay reasonable
costs of making any conversion from the Payment Currency to the Agreed Currency.
(c) Each Borrower hereby waives any right it may have in any
jurisdiction to pay any amount due and owing hereunder in a currency other than
that which it is expressed to be payable under the terms and conditions of this
Agreement.
SECTION 10.14. Subsidiary Borrower Several Obligations. The obligations
of each Subsidiary Borrower under this Agreement are several and the failure of
any Subsidiary Borrower to perform its obligations under this Agreement shall
not affect the obligations of any Borrower towards any of the other parties to
this Agreement.
(b) No assurance, security or payment which may be avoided
under any laws relating to bankruptcy, insolvency or corporate reorganization
and no release, settlement or discharge of any of the Subsidiary Borrowers which
may have been given or made on the faith of any such assurance, security or
payment, shall prejudice or affect the right of the Administrative Agent or any
Lender to recover from any other Subsidiary Borrower to the full extent of its
obligations under this Agreement just as if such release, settlement or
discharge had not occurred.
(c) Each Subsidiary Borrower hereby waives any rights it may
have under applicable law which may at any time be inconsistent with any of the
provisions of this Agreement or which it may have of first requiring the
Administrative Agent or any Lender to proceed against or claim payment from
another Borrower or any other party or parties. It is further agreed that all or
any of the Administrative Agent and the Lenders, without notice to any of the
Subsidiary Borrowers and without affecting or impairing the obligations of such
Subsidiary Borrowers hereunder, may grant time, indulgences, concessions,
releases and discharges to, may take securities from and give the same, may
accept compositions from and may otherwise deal with each other Borrower and all
other parties as they may see fit and generally may otherwise do or omit to do
any act or thing which, but for this provision, might operate to affect or
impair the obligations of each of the Subsidiary Borrowers hereunder. The
obligations of the Subsidiary Borrowers hereunder shall not be affected or
impaired by any amendment or modification hereto.
SECTION 10.15. Joint and Several Obligations of the Company. (a) The
liability of the Company under this Agreement with respect to its own
obligations and the obligations of each Subsidiary Borrower is joint and several
and therefore, without prejudice to any other provision of this Agreement, the
Company hereby unconditionally and irrevocably undertakes, as principal obligor,
to the Administrative Agent and the Lenders the due and unconditional
performance and discharge by each of the other Borrowers of all the obligations
expressed to be binding upon such Borrowers hereunder as the same may be amended
from time to time (the "Relevant Obligations") and, without limitation, agrees
with the Administrative Agent and the Lenders that if and whenever at any time
and from time to time any of the other Borrowers shall fail to perform or
discharge or shall otherwise be in default in respect of any of the Relevant
Obligations it shall discharge and make good the default as if it instead of the
relevant other Borrower was expressed to be such Borrower hereunder.
(b) No assurance, security or payment which may be avoided
under any laws relating to bankruptcy, insolvency or corporate reorganization
and no release, settlement or discharge of any of the Subsidiary Borrowers which
may have been given or made on the faith of any such assurance, security or
payment, shall prejudice or affect the right of the Administrative Agent or any
Lender to recover from the Company to the full extent of the undertakings given
in this Section 10.15 just as if such release, settlement or discharge had not
occurred.
(c) The Company hereby waives any rights it may have under
applicable law which may at any time be inconsistent with any of the provisions
of this Agreement or which it may have of first requiring the Administrative
Agent or any Lender to proceed against or claim payment from another Borrower or
any other party or parties. It is further agreed that all or any of the
Administrative Agent and the Lenders, without notice to the Company and without
affecting or impairing the obligations of the Company hereunder, may grant time,
indulgences, concessions, releases and discharges to, may take securities from
and give the same, may accept compositions from and may otherwise deal with each
other Borrower and all other parties as they may see fit and generally may
otherwise do or omit to do any act or thing which, but for this provision, might
operate to affect or impair the obligations of the Company hereunder. The
obligations of the Company hereunder shall not be affected or impaired by any
amendment or modification hereto.
(d) The Company hereby waives notice of the acceptance of this
undertaking and of presentment, demand and protest and notices of non-payment
and dishonor and any other demands and notices required by applicable law.
SECTION 10.16. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 10.17. International Banking Facilities. Each Borrower
acknowledges by its execution and delivery hereof (or by its execution and
delivery of any applicable Joinder Agreement) that (a) it is the policy of the
Board that deposits received by international banking facilities may be used
only to support the non-U.S. operations of a depositor (or its foreign
affiliates) located outside the United States and that extensions of credit by
international banking facilities may be used only to finance the non-U.S.
operations of a Borrower (or its foreign affiliates) located outside the U.S.
and (b) funds deposited by any Borrower with an international banking facility
of any Lender will be used solely in support of such non-U.S. operations, or
that of such foreign affiliates, and that the proceeds of any Borrowings from
any such international banking facility will be used solely to finance such
non-U.S. operations, or that of such foreign affiliates. Any terms used in this
Section 10.17 that are not otherwise defined herein, shall have the meaning
assigned thereto in Regulation D of the Board (as amended from time to time).
[The remaining portion of this page is intentionally left blank.]
F:\KA0573\ROY200\KMG\CA364FNL.WPD
[Signature Page - 18]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
KERR-McGEE CORPORATION, as the Company and as guarantor
By:
John C. Linehan
Executive Vice President
By:
John M. Rauh
Vice President & Treasurer
KERR-McGEE CREDIT LLC,
as a Subsidiary Borrower
By:
John M. Rauh
Vice President & Treasurer
KERR-McGEE (G.B.) LIMITED,
as a Subsidiary Borrower
By:
John M. Rauh
Director
KERR-McGEE RESOURCES (U.K.) LIMITED,
as a Subsidiary Borrower
By: John M. Rauh
Director
KERR-McGEE OIL (U.K.) PLC,
as a Subsidiary Borrower
By:
John C. Linehan
Director
KERR-McGEE NORTH SEA (U.K.) LIMITED,
as a Subsidiary Borrower
By:
John M. Rauh
Director
KERR-McGEE GmbH,
as a Subsidiary Borrower
By: KM Investment Corporation, its
sole stockholder
By:
Kenneth W. Crouch
President
KERR-McGEE CHEMICAL GmbH,
as a Subsidiary Borrower
By:
John C. Linehan
Managing Director
ROYAL BANK OF CANADA, individually and
as Administrative Agent
By:
Linda M. Stephens
Senior Manager
KBC BANK N.V.
By
Name:
Title:
THE BANK OF NEW YORK
By
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By
Name:
Title:
By
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
Name:
Title:
BANCFIRST, A STATE BANKING ASSOCIATION
By
Name:
Title:
UMB OKLAHOMA BANK
By
Name:
Title:
BANQUE NATIONALE de PARIS
By
Name:
Title:
ABN AMRO BANK N.V.
By:
Name:
Title:
NATIONSBANK, N.A.
By:
Name:
Title:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By:
Name:
Title:
CITIBANK, N.A.
By:
Name:
Title:
MELLON BANK, N.A.
By:
Name:
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By:
Name:
Title:
BANK OF OKLAHOMA, N.A.
By:
Name:
Title:
BAYERISHE LANDESBANK
By:
Name:
Title:
[Schedule A - Page 1 of 1]
SCHEDULE A
COMMITMENTS
LENDER COMMITMENT TITLE
- ----------------------------------------------------------------------------
Royal Bank of Canada $36,666,666.66 Administrative Agent
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
NationsBank, N.A. $25,000,000.00 Syndication Agent
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
ABN AMRO Bank N.V. $25,000,000.00 Documentation Agent
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
The Bank of New York $21,666,666.67 Co-Agent
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Chase Bank of Texas, National $21,666,666.67 Co-Agent
Association
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Citibank, N.A. $21,666,666.67 Co-Agent
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
The First National Bank of Chicago $21,666,666.67 Co-Agent
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale, $21,666,666.67 Co-Agent
New York Branch
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Mellon Bank, N.A. $15,000,000.00 Manager
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Bank of Oklahoma, N.A. $8,333,333.33 Participant
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Banque Nationale de Paris $8,333,333.33 Participant
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
KBC Bank N.V. $8,333,333.33 Participant
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Wachovia Bank of Georgia, N.A. $8,333,333.33 Participant
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
UMB Oklahoma Bank $5,000,000.00 Participant
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
BancFirst, a State Banking Association $1,666,666.67 Participant
- ----------------------------------------------------------------------------
[Schedule B - Page 2 of 2]
SCHEDULE B
PRICING SCHEDULE
The Applicable Rate, for any day, with respect to any EURIBOR Loan or
LIBOR Loan, or with respect to the facility fees or utilization fees payable
hereunder, as the case may be, is the rate per annum set forth below based upon
the Ratings by Duff & Phelps, Moody's and S&P, respectively, applicable on such
date to the Rating Debt:
- -------------------------------------- --------------------------- ------------
Rating Facility Fee EURIBOR/LIBOR Loan Margin Utilization
Fee
greater than
or equal to
33% usage
- -------------------------------------- --------------------------- ------------
Level One 0.07% 0.23% 0.05%
greater than
or equal to A/A2
- -------------------------------------- --------------------------- ------------
Level Two 0.08% 0.27% 0.10%
greater than
or equal to A-/A3
- -------------------------------------- --------------------------- ------------
Level Three 0.09% 0.385% 0.10%
greater than
or equal to BBB+/Baa1
- -------------------------------------- --------------------------- ------------
Level Four 0.10% 0.50% 0.10%
$BBB/Baa2
- -------------------------------------- --------------------------- ------------
- -------------------------------------- --------------------------- ------------
Level Five 0.15% 0.575 % 0.15%
$BBB-/Baa3
- -------------------------------------- --------------------------- ------------
- -------------------------------------- --------------------------- ------------
Level Six 0.25% 0.75% 0.25%
greater than
BBB-/Baa3
- -------------------------------------- --------------------------- ------------
For purposes of the foregoing, (a) if the Ratings established or deemed
to have been established by Moody's, Duff & Phelps, and S&P for the Rating Debt
shall fall within different Levels, the Applicable Rate shall be based on the
two highest Ratings; provided, that if such two highest Ratings also fall within
different Levels, (i) where the split represents one subgrade the Applicable
Rate will be determined based on the lower of such two Levels; and (ii) where
the split represents two or more subgrades, the Applicable Rate will be
determined by reference to the Level at the midpoint of such highest ratings;
provided, that if such midpoint falls between Levels, the Applicable Rate will
be determined by reference to the Level immediately below such midpoint; (b) if
the Ratings established or deemed to have been established by Moody's, Duff &
Phelps, and S&P for the Rating Debt shall be changed (other than as a result of
a change in the rating system of Moody's, Duff & Phelps, or S&P), such change
shall be effective as of the date on which it is first announced by the
applicable Rating Agency; (c) if Moody's, Duff & Phelps, or S&P shall not have
in effect a Rating for the Rating Debt (other than by reason of the
circumstances referred to in the last sentence of this paragraph), then such
Rating Agency shall be deemed to have established a Rating in Level 6. Each
change in the Applicable Rate shall apply during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of Moody's, Duff &
Phelps, or S&P shall change, or if any such Rating Agency shall cease to be in
the business of rating corporate debt obligations, the Company and the Lenders
shall negotiate in good faith to amend this definition to reflect such changed
rating system or the unavailability of Ratings from such Rating Agency and,
pending the effectiveness of any such amendment, the Applicable Rate shall be
determined by reference to the Rating most recently in effect prior to such
change or cessation. Notwithstanding the foregoing, if on the Effective Date, at
least two of the Rating Agencies have not announced a Rating expressly to be
effective after the Oryx Merger, Level Three pricing shall apply from the
Effective Date until at least two of the Rating Agencies shall have announced
such Ratings.
[Schedule C - Page 3 of 3]
SCHEDULE C
NOTICE SCHEDULE
KBC BANK N.V.
Lynda Resuma, Loan Administration
KBC Bank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Telephone: (212) 541-0657
Telecopier: (212) 956-5581
THE BANK OF NEW YORK
Terry Foran, Energy Industries Division
The Bank of New York
One Wall Street, 19th Floor
New York, New York 10286
Telephone: (212) 635-7921
Telecopier: (212) 635-7923
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH Philip Green Westdeutsche
Landesbank Girozentrale, New York Branch 1211 Avenue of the americas
New York, New York 10036
Telephone: (212) 852-6152
Telecopier: (212) 302-7946
THE FIRST NATIONAL BANK OF CHICAGO
Bill Laird
The First National Bank of Chicago
One First National Plaza
0634, 1FNP, 10
Chicago, Illinois 60670
Telephone: (312) 732-5635
Telecopier: (312) 732-4840
BANCFIRST, A STATE BANKING ASSOCIATION
Cathie Wythe
BancFirst
101 North Broadway
P.O. Box 26788
Oklahoma City, Oklahoma 73126-0788
Telephone: (405) 270-4711
Telecopier: (405) 270-4790
UMB OKLAHOMA BANK
Richard J. Lehrter
UMB Oklahoma Bank
204 N. Robinson
Oklahoma City, Oklahoma 73102
Telephone: (405) 239-5925
Telecopier: (405) 236-1971
BANQUE NATIONALE de PARIS, HOUSTON AGENCY
Donna Rose
Banque Nationale de Paris, Houston Agency
333 Clay Street, Suite 3400
Houston, Texas 77002
Telephone: (713) 951-1240
Telecopier: (713) 659-1414
ROYAL BANK OF CANADA, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT Elizabeth
Gonzales Royal Bank of Canada One Liberty Plaza
New York, New York 10006-1404
Telephone: (212) 428-6439
Telecopier: (212) 428-2310
ABN AMRO BANK N.V.
ABN AMRO Bank N.V.
Attention: Loan Administration
208 South LaSalle, Suite 1500
Chicago, Illinois 60604-1003
Telephone: (312) 992-5152
Telecopier: (312) 992-5157
NATIONSBANK, N.A.
Betty Canales
901 Main Street, 14th Floor
Dallas, Texas 75283-0104
Telephone: (214) 508-1225
Telecopier: (214) 508-1215
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
Richard Sink
Chase Bank of Texas, National Association
2200 Ross Avenue, 3rd Floor
Dallas, Texas 75201
Telephone: (214) 965-2379
Telecopier: (214) 965-2389
CITIBANK, N.A.
James E. Reilly
Citibank, N.A.
2100 Citicorp Center
1200 Smith Street, Suite 2000
Houston, Texas 77002
Telephone: (713) 654-2820
Telecopier: (713) 654-2849
MELLON BANK, N.A.
Cathy Capp
Three Mellon Bank Center
Suite 1203
Pittsburgh, Pennsylvania 15259-0003
Telephone: (412) 234-1870
Telecopier: (412) 209-6111
WACHOVIA BANK OF GEORGIA, N.A.
John Cunningham
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telephone: (404) 332-1114
Telecopier: (404) 332-4320
BANK OF OKLAHOMA, N.A.
Laura Christofferson
Bank of Oklahoma, N.A.
201 Robert S. Kerr
P.O. Box 24128
Oklahoma City, Oklahoma 73124
Telephone: (405) 272-2327
Telecopier: (405) 272-2588
[Schedule 3.14 - Page 1 of 1]
SCHEDULE 3.14
MATERIAL SUBSIDIARIES
Kerr-McGee Oil and Gas Corporation
Kerr-McGee Chemical LLC
KM Investment Corporation
Sun Energy Partners, L.P.
[Exhibit A - Page 3 of 3]
EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the $250,000,000 364-Day Revolving Credit
Agreement dated as of ________, 1999 (as amended and in effect on the date
hereof, the "Credit Agreement"), among Kerr-McGee Corporation, a Delaware
corporation, the Subsidiary Borrowers parties thereto, the Lenders named
therein, and Royal Bank of Canada, as Administrative Agent. Terms defined in the
Credit Agreement are used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and assigns,
without recourse, to the Assignee named on the reverse hereof, and the Assignee
hereby purchases and assumes, without recourse, from the Assignor, effective as
of the Assignment Date set forth on the reverse hereof, the interests set forth
on the reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Loans owing to the Assignor which are outstanding on the
Assignment Date, but excluding accrued interest and fees to and excluding the
Assignment Date. The Assignee hereby acknowledges receipt of a copy of the
Credit Agreement. From and after the Assignment Date (i) the Assignee shall be a
party to and be bound by the provisions of the Credit Agreement and, to the
extent of the Assigned Interest, have the rights and obligations of a Lender
thereunder and (ii) the Assignor shall, to the extent of the Assigned Interest,
relinquish its rights and be released from its obligations under the Credit
Agreement.
This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 2.14(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an administrative
questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The Assignee/Assignor shall pay the fee payable to the
Administrative Agent pursuant to Section 10.04(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
Percentage Assigned of
Facility/Commitment (set forth,
to at least eight decimals, as a
Principal Amount Assigned percentage of the Facility and
the aggregate Commitments of all
Lenders thereunder)
Facility
- -------------------- ------------------------- ================================
- -------------------- ------------------------- ================================
Commitment Assigned: $ %
- -------------------- ------------------------- ================================
- -------------------- ------------------------- ================================
Loans:
- -------------------- ------------------------- ================================
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
By:
Name:
Title:
[Name of Assignee] , as Assignee
By:
Name:
Title:
The undersigned hereby consent to the within assignment:
[Kerr-McGee Corporation] Royal Bank of Canada,
as Administrative Agent
By: By:
Name: Name:
Title: Title:
[Exhibit B-1 - Page 2 of 2]
EXHIBIT B-1
FORM OF
OPINION OF RUSSELL G. HORNER, JR.
February 26, 1999
To the Lenders and the Administrative
Agent Referred to Below
c/o Royal Bank of Canada, as
Administrative Agent
Dear Sirs:
I have acted as counsel for Kerr-McGee Corporation, a Delaware
corporation (the "Company") and each Subsidiary Borrower (as defined in the
following described Credit Agreement), in connection with the $250,000,000
364-Day Revolving Credit Agreement dated as of February 26, 1999 (the "Credit
Agreement"), among the Company, the Subsidiary Borrowers, the banks and other
financial institutions identified therein as Lenders, and Royal Bank of Canada,
as Administrative Agent. Terms defined in the Credit Agreement are used herein
with the same meanings.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. Each
Domestic Subsidiary Borrower organized under the laws of the United States of
America, any State thereof, or the District of Columbia, is a corporation duly
incorporated, validly existing and in good standing (or, if such Domestic
Subsidiary Borrower is a limited liability company, is a limited liability
company duly formed, validly existing and in good standing) under the laws of
its jurisdiction of incorporation, organization or formation. Each Foreign
Subsidiary Borrower organized under the laws of a jurisdiction other than United
States of America, any State thereof, or the District of Columbia, is a company
duly established and validly existing under the laws of its jurisdiction of
formation.
2. The Company and each Subsidiary Borrower (a) has all
requisite corporate or limited liability company power and authority to carry on
its business as now conducted, and (b) except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
3. The Transactions are within the Company's and each
Subsidiary Borrower's corporate or limited liability company powers and have
been duly authorized by all necessary corporate or limited liability company,
and, if required, stockholder action. The Credit Agreement has been duly
executed and delivered by each Borrower.
4. The Transactions (a) do not require any consent or approval
of, registration or filing with, or any other action by, any Governmental
Authority, except such as have been obtained or made and are in full force and
effect, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of each Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon each Borrower or any of its Subsidiaries or its assets, or give rise to a
right thereunder to require any payment to be made by a Borrower or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of the Company or any of its Subsidiaries.
5. There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to my knowledge,
threatened against or affecting the Company or any of its Subsidiaries (a) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or (b) that involve the Credit
Agreement or the Transactions.
6. Neither the Company nor any of its Subsidiaries is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
I am a member of the bar of the State of Oklahoma and the
foregoing opinion is limited to the laws of the State of Oklahoma, the General
Corporation Law of the State of Delaware and the Federal laws of the United
States of America. This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other Person (other than your successors and assigns as
Lenders and Persons that acquire participations in your Loans) without our prior
written consent.
Very truly yours,
Russell G. Horner, Jr.
Senior Vice President &
General Counsel
[Exhibit B-2 - Page 4 of 4]
EXHIBIT B-2
FORM OF
OPINION OF SIMPSON THACHER & BARTLETT
February 26, 1999
Royal Bank of Canada, as Administrative Agent under the Credit Agreement, as
hereinafter defined (the "Agent")
and
The Lenders listed on Schedule I hereto which are parties to the Credit
Agreement on the date hereof
Ladies and Gentlemen:
We have acted as counsel to Kerr-McGee Corporation (the "Company") and
the subsidiaries of the Company named on Schedule II attached hereto (each, a
"Subsidiary Borrower" and, collectively, the "Subsidiary Borrowers"; the Company
and the Subsidiary Borrowers being referred to herein collectively as the
"Credit Parties") in connection with the preparation, execution and delivery of
the $250,000,000 364-Day Revolving Credit Agreement dated as of February 26,
1999 (the "Credit Agreement") among the Company, the Subsidiary Borrowers, the
lending institutions identified in the Credit Agreement (the "Lenders") and the
Agent. Unless otherwise indicated, capitalized terms used but not defined herein
shall have the respective meanings set forth in the Credit Agreement. This
opinion is furnished to you pursuant to Section 4.01(c) of the Credit Agreement.
In connection with this opinion, we have examined the Credit Agreement,
signed by each Credit Party thereto and by the Agent and certain of the Lenders.
We also have examined the originals, or duplicates or certified or conformed
copies, of such records, agreements, instruments and other documents and have
made such other investigations as we have deemed relevant and necessary in
connection with the opinions expressed herein. As to questions of fact material
to this opinion, we have relied upon certificates of public officials and of
officers and representatives of the Credit Parties. In addition, we have
examined, and have relied as to matters of fact upon, the representations made
in the Credit Agreement.
In rendering the opinions set forth below, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as duplicates or certified
or conformed copies, and the authenticity of the originals of such latter
documents.
Based upon and subject to the foregoing, and subject to the
qualifications and limitations set forth herein, we are of the opinion that:
1. Assuming that proceeds of borrowings will be used in accordance with
the terms of the Credit Agreement, the execution and delivery by any Credit
Party of the Credit Agreement, its borrowings in accordance with the terms of
the Credit Agreement and performance of its payment obligations thereunder will
not result in any violation of any New York statute or any rule or regulation
issued pursuant to any New York statute.
2. No consent, approval, authorization, order, filing, registration or
qualification of or with any New York governmental agency is required for the
execution and delivery by any Credit Party of the Credit Agreement or the
borrowings by any Credit Party in accordance with the terms of the Credit
Agreement.
3. Assuming that the Credit Agreement is a valid and legally binding
obligation of each of the Lenders party thereto and assuming that (a) each of
the Credit Parties is validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has duly authorized, executed and
delivered the Credit Agreement in accordance with its Certificate of
Incorporation and By-Laws, (b) execution, delivery and performance by each
Credit Party of the Credit Agreement do not violate the laws of the jurisdiction
in which it is organized or any other applicable laws (excepting the laws of the
State of New York), (c) execution, delivery and performance by each Credit Party
of the Credit Agreement do not constitute a breach or violation of any agreement
or instrument which is binding upon such Credit Party and (d) no Credit Party is
an "investment company" within the meaning of and subject to regulation under
the Investment Company Act of 1940, the Credit Agreement constitutes the valid
and legally binding obligation of each Credit Party, enforceable against such
Credit Party in accordance with its terms.
Our opinions in paragraph 3 above are subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, (ii)
general equitable principles (whether considered in a proceeding in equity or at
law), (iii) an implied covenant of good faith and fair dealing and (iv) the
effects of the possible judicial application of foreign laws or foreign
governmental or judicial action affecting creditors' rights.
We note that (A) a New York statute provides that with respect to a
foreign currency obligation a court of the State of New York shall render a
judgment or decree in such foreign currency and such judgment or decree shall be
converted into currency of the United States at the rate of exchange prevailing
on the date of entry of such judgment or decree and (B) with respect to a
foreign currency obligation a United States Federal court in New York may award
judgment in United States dollars, provided that we express no opinion as to the
rate of exchange such court would apply.
We express no opinion with respect to:
(A) the effect of any provision of the Credit Agreement which is
intended to permit modification thereof only by means of an agreement signed in
writing by the parties thereto;
(B) the effect of any provision of the Credit Agreement insofar as it
provides that any Person purchasing a participation from a Lender or other
Person may exercise set-off or similar rights with respect to such participation
or that any Lender or other Person may exercise set-off or similar rights other
than in accordance with applicable law;
(C) the effect of any provision of the Credit Agreement imposing
penalties or forfeitures; (D) the enforceability of any provision of
the Credit Agreement to the extent that such provision
constitutes a waiver of illegality as a defense to performance of contract
obligations; (E) the effect of any provision of the Credit Agreement relating to
indemnification or exculpation in connection with violations of any securities
laws or relating to indemnification, contribution or exculpation in connection
with willful, reckless or criminal acts or gross negligence of the indemnified
or exculpated Person or the Person receiving contribution.; and
(F) the effect of any provision of the Credit Agreement whereby the
Credit Parties submit to the jurisdiction of the United States District Court
for the Southern District of New York or the Supreme Court of the State of New
York.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York.
This opinion letter is rendered to you in connection with the above
described transactions. This opinion letter may not be relied upon by you for
any other purpose, or relied upon by any other person, firm or corporation
without our prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
[Exhibit B-2 - Schedule I - Page 1 of 1]
SCHEDULE I
THE LENDERS
Royal Bank of Canada
NationsBank, N.A.
ABN AMRO Bank, N.V.
The Bank of New York
Chase Bank of Texas, National Association
Citibank, N.A.
The First National Bank of Chicago
Westdeutsche Landesbank Girozentrale,
New York Branch
Mellon Bank, N.A.
Bank of Oklahoma, N.A.
Banque Nationale de Paris
KBC Bank N.V.
Wachovia Bank of Georgia, N.A.
UMB Oklahoma Bank
BancFirst, a State Banking Association
[Exhibit B-2 - Schedule II - Page 1 of 1]
SCHEDULE II
SUBSIDIARY BORROWERS
Kerr-McGee Chemical GmbH
Kerr-McGee Credit LLC
Kerr-McGee (G.B.) Limited
Kerr-McGee GmbH
Kerr-McGee North Sea (U.K.) Limited
Kerr-McGee Oil (U.K.) PLC
Kerr-McGee Resources (U.K.) Limited
[Exhibit C - Page 2 of 2]
EXHIBIT C
FORM OF
JOINDER AGREEMENT
Reference is made to the $250,000,000 364-Day Revolving Credit
Agreement, dated as of February 26, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; terms defined therein being
used herein as therein defined), among Kerr-McGee Corporation, a Delaware
corporation, the Subsidiary Borrowers parties thereto, the Lenders named
therein, and Royal Bank of Canada, as Administrative Agent.
The undersigned hereby acknowledges that it has received and
reviewed a copy (in execution form) of the Credit Agreement, and agrees to:
(i) join the Credit Agreement as a Subsidiary Borrower
party thereto;
(ii) be bound by all covenants, agreements and
acknowledgments attributable to a Borrower in the
Credit Agreement and any Note to which it is a party;
and
(iii) perform all obligations required of it by the Credit
Agreement and any Note to which it is a party.
The undersigned hereby represents and warrants that the
representations and warranties with respect to it contained in, or made or
deemed made by it in, Article III of the Credit Agreement are true and correct
on the date hereof.
The undersigned hereby certifies that attached hereto are (i)
the true and correct organizational documents of the undersigned, as amended,
(ii) certificates of continued existence and good standing or their equivalent
with respect to the undersigned, (iii) true and correct copies of any corporate
resolution, or such other appropriate evidence of authority, providing for the
undersigned to execute and deliver this Joinder Agreement and to become a party
to the Credit Agreement and (iv) an officers' incumbency certificate for the
undersigned.
THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Joinder
Agreement to be duly executed and delivered in New York City, New York by its
proper and duly authorized officer as of this day of
, [1999] [20__].
[SUBSIDIARY BORROWER]
By:
Title:
ACKNOWLEDGED AND AGREED TO:
KERR-McGEE CORPORATION
By:
Name:
Title:
[Exhibit D - Page 4 of 4]
EXHIBIT D
FORM OF
CASH COLLATERAL ACCOUNT AGREEMENT
[Between][Among]
[KERR-McGEE CORPORATION,
[SUBSIDIARY BORROWER]],
and
ROYAL BANK OF CANADA,
as Administrative Agent
Dated as of [ ]
THIS CASH COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is made and
entered into as of the __ day of _______, ____, [between][among] [KERR-McGEE
CORPORATION, a Delaware corporation (the "Company"), [______________________, a
____________________ (" "),]] and ROYAL BANK OF CANADA ("RBC"), as
administrative agent (in such capacity, the "Administrative Agent") for itself
and the Lenders (as defined in the Credit Agreement referred to below).
RECITALS
A. On February 26, 1999, the Company, the Subsidiary Borrowers (as
defined in the Credit Agreement), the Administrative Agent and the Lenders
executed that certain Revolving Credit Agreement (as amended from time to time,
the "Credit Agreement") whereby, upon the terms and conditions stated therein,
the Lenders agreed to make Loans (as defined in the Credit Agreement) (a) to the
Company and the Domestic Subsidiary Borrowers (as defined in the Credit
Agreement) or any one or more of them, up to the Domestic Available Amount (as
defined in the Credit Agreement) and (b) to the Foreign Subsidiary Borrowers (as
defined in the Credit Agreement) or any one or more of them up to the Foreign
Available Amount (as defined in the Credit Agreement).
B. Section 2.08(c) of the Credit Agreement provides that in the event
that (i) the aggregate principal amount of all Loans made to the Company and the
Domestic Subsidiary Borrowers exceeds the Domestic Available Amount or (ii) the
aggregate amount of all Loans made to the Company and the Foreign Subsidiary
Borrowers exceeds the Foreign Available Amount, the Company may, and may cause
one of more of the Subsidiary Borrowers to, in lieu of prepaying such excess
described in clause (i) or (ii) above, provide cash collateral equal to the
amount of such excess plus any accrued and unpaid interest thereon, to the
Administrative Agent for the benefit of the Lenders pursuant to the terms and
conditions of this Agreement.
C. Therefore, in accordance with the terms of Section 2.08(c) of the
Credit Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, [the Company and [Subsidiary
Borrower]] hereby [agrees][agree] and with the Administrative Agent as follows:
AGREEMENT
Section (1) Pursuant to Section 2.08(c) of the Credit Agreement,
simultaneously with the execution of this Agreement, [the Company and
[Subsidiary Borrower]] will make [a deposit][deposits] in an amount equal to the
excess as determined in accordance with Section 2.08(c)[(ii)][(iii)] of the
Credit Agreement plus all accrued and unpaid interest thereon (the "Cash
Collateral") in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders styled "Kerr-McGee Cash
Collateral Account," which is an interest bearing collateral account and is
subject to the exclusive dominion and control, including the exclusive right of
withdrawal, of the Administrative Agent (the "Cash Collateral Account").
Section (2) [The Company and [Subsidiary Borrower]] hereby
[pledge][pledges] and [grant][grants] to the Administrative Agent for the
account of the Lenders a security interest in the Cash Collateral and the Cash
Collateral Account to secure the payment and performance of the obligations of
the Company and the Subsidiary Borrowers under the Credit Agreement.
Section (3)
(a) The Cash Collateral may be invested by the Administrative
Agent at the option and sole discretion of the Administrative Agent and
at the risk and expense of [the Company and [Subsidiary Borrower]].
Interest or profits, in any, on such investments shall accumulate in
the Cash Collateral Account. Other than interest earned on such
investments, the Cash Collateral shall not bear interest. Moneys in the
Cash Collateral Account shall be applied by the Administrative Agent to
satisfy the obligations of the Company and the Subsidiary Borrowers
under the Credit Agreement.
(b) Moneys in the Cash Collateral Account shall be returned to
[the Company and [Subsidiary Borrower]] within three Business Days
after the earlier to occur of (i) the first Business Day of a month
that the Administrative Agent determines that the Cash Collateral is no
longer required pursuant to Section 2.08(c)[(ii)][(iii)] of the Credit
Agreement and (ii) a prepayment of the Loans in an amount equal to the
Cash Collateral. In such event, the Administrative Agent will execute
and deliver to [the Company and [Subsidiary Borrower]] an appropriate
release of the pledge, liens, security interests and obligations
created hereby and will release to [the Company and [Subsidiary
Borrower]] all funds then remaining in the Cash Collateral Account.
Section (4) [The Company and [subsidiary borrower]] [agrees][agree] to
reimburse and indemnify the Administrative Agent for and hold it harmless
against any loss, liability, claim, demand, cause of action, damages or
controversy at any time arising out of or in connection with performance by the
Administrative Agent of any of its duties and obligations under this Agreement,
as well as all costs and expenses, including but not limited to reasonable
attorneys' fees, incurred in the administration or preparation of this Agreement
or in defending against any claim or liability arising out of or relating to
this Agreement other than arising out of or relating to the wilful misconduct or
gross negligence of the Administrative Agent.
Section (5) [The Company and [Subsidiary Borrower]] will promptly at
[its][their] sole expense, upon reasonable request, execute and deliver all such
other documents in form and substance reasonably satisfactory to the
Administrative Agent and its legal counsel and take such other action as may be
reasonable and necessary to fully effectuate the terms and intent of this
Agreement.
Section 7. In the event that one or more of the provisions contained in
this Agreement shall, for any reason, be held invalid, illegal or unenforceable
in any respect (i) [the Company and [Subsidiary Borrower]] [agrees][agree] that
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, and (ii) [the Company,] [ Subsidiary Borrower] and
Administrative Agent (acting on behalf of and at the direction of the Lenders)
will negotiate in good faith to amend such provision so as to be legal, valid
and enforceable.
Section 8. This Agreement may be executed in counterparts, and it shall
not be necessary that the signatures of all parties hereto be contained on any
one counterpart hereof; each counterpart shall be deemed an original, but all of
which together shall constitute one and the same instrument.
WITNESS THE EXECUTION HEREOF, as of the date first above written.
[KERR-MCGEE CORPORATION
By:
Name:
Title: ]
[[SUBSIDIARY BORROWER]
By:
Name:
Title: ]
ROYAL BANK OF CANADA, as Administrative Agent
By:
Name:
Title:
[Exhibit E - Page 1 of 1]
EXHIBIT E
FORM OF
AUDITOR'S CERTIFICATE
To Kerr-McGee Corporation:
We have examined the consolidated balance sheet of Kerr-McGee
Corporation (a Delaware corporation) and subsidiary companies as of December 31,
____ and ____, and the related consolidated statements of income, retained
earnings and cash flows for each of the three years in the period ended December
31, ____ and have issued our report thereon dated February __, ____. Our
examination was made in accordance with generally accepted auditing standards
and, accordingly, included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances.
We have read the Credit Agreement dated as of February 26, 1999 among
Kerr-McGee Corporation (the "Company"), the lenders parties thereto and Royal
Bank of Canada, as Administrative Agent (as amended, modified, supplemented and
restated from time to time, the "Credit Agreement"), particularly Articles V, VI
and VII. These articles contain certain covenants of the Company and the
Subsidiary Borrowers relative to certain financial conditions and describe
Events of Default relative to such covenants. We have also read the accompanying
officer's certificate prepared by your chief accounting officer described in
Section 5.01(c) of the Credit Agreement.
In connection with our examination, nothing came to our attention that
caused us to believe that you were in default with any of the provisions of
Article VII of the Credit Agreement insofar as they pertain to accounting
matters. It should be noted that our examination was not directed primarily
toward obtaining knowledge of noncompliance.
Very truly yours,
KERR-MCGEE CORPORATION
--------------------------------------
$500,000,000 3-YEAR
REVOLVING CREDIT AGREEMENT
Dated as of February 26, 1999
---------------------------------------
ROYAL BANK OF CANADA,
as Administrative Agent and Arranger
and
The Lenders Now or Hereafter Parties Hereto
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C>
ARTICLE IDefinitions...................................................................1
SECTION 1.01. Defined Terms..................................................1
SECTION 1.02. Classification of Loans and Borrowings........................17
SECTION 1.03. Other Terms...................................................17
SECTION 1.04. Accounting Terms; GAAP........................................18
SECTION 1.05. Euros as Payment for National Currencies......................18
SECTION 1.06. Calculation of Dollar Equivalent Amounts......................18
ARTICLE IIThe Credits.................................................................18
SECTION 2.01. Commitments...................................................18
SECTION 2.02. Loans and Borrowings..........................................18
SECTION 2.03. Requests for Revolving Borrowings.............................19
SECTION 2.04. Competitive Bid Procedure.....................................20
SECTION 2.05. Funding of Borrowings.........................................22
SECTION 2.06. Interest Elections............................................23
SECTION 2.07. Termination or Reduction of Commitments.......................24
SECTION 2.08. Repayment of Loans; Evidence of Debt..........................25
SECTION 2.09. Prepayment of Loans...........................................25
SECTION 2.10. Fees..........................................................27
SECTION 2.11. Interest......................................................27
SECTION 2.12. Alternate Rate of Interest....................................28
SECTION 2.13. Illegality; Increased Costs...................................30
SECTION 2.14. Break Funding Payments........................................32
SECTION 2.15. Taxes.........................................................32
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs...34
SECTION 2.17. Mitigation Obligations; Replacement of Lenders................36
SECTION 2.18. Foreign Available Amount Designation..........................36
SECTION 2.19. Extension of Stated Maturity Date.............................36
SECTION 2.20. Addition or Termination of Subsidiary Borrowers...............37
SECTION 2.21. Change in Control.............................................38
ARTICLE IIIRepresentations and Warranties.............................................38
SECTION 3.01. Corporate Existence and Power.................................38
SECTION 3.02. Corporate and Governmental Authorization; No Contravention....39
SECTION 3.03. Binding Effect................................................39
SECTION 3.04. Financial Information.........................................39
SECTION 3.05. Litigation....................................................40
SECTION 3.06. Compliance with ERISA.........................................40
SECTION 3.07. Environmental Matters.........................................40
SECTION 3.08. Taxes.........................................................41
SECTION 3.09. Investment Company Act........................................41
SECTION 3.10. Public Utility Holding Company Act............................41
SECTION 3.11. Use of Proceeds...............................................41
SECTION 3.12. Disclosure....................................................41
SECTION 3.13. Year 2000 Compliance..........................................41
SECTION 3.14. Material Subsidiaries.........................................42
ARTICLE IVConditions..................................................................42
SECTION 4.01. Effective Date................................................42
SECTION 4.02. Each Credit Event.............................................43
ARTICLE VAffirmative Covenants........................................................43
SECTION 5.01. Information...................................................44
SECTION 5.02. Payment of Taxes..............................................45
SECTION 5.03. Insurance.....................................................45
SECTION 5.04. Conduct of Business and Maintenance of Existence..............46
SECTION 5.05. Compliance with Laws..........................................46
SECTION 5.06. Compliance with Environmental Laws............................46
SECTION 5.07. Use of Proceeds...............................................47
SECTION 5.08. Notice of Changed Credit Rating...............................47
SECTION 5.09. Subsidiary Borrowers..........................................47
SECTION 5.10. Year 2000 Compliance..........................................47
ARTICLE VINegative Covenants..........................................................47
SECTION 6.01. Compliance with ERISA.........................................47
SECTION 6.02. Limitation on Secured Debt....................................47
SECTION 6.03. Consolidations, Mergers and Sales of Assets...................49
SECTION 6.04. Transactions with Affiliates..................................50
ARTICLE VIIGuaranty...................................................................50
SECTION 7.01. The Guaranty..................................................50
SECTION 7.02. Bankruptcy....................................................50
SECTION 7.03. Nature of Liability...........................................51
SECTION 7.04. Independent Obligation........................................51
SECTION 7.05. Authorization.................................................51
SECTION 7.06. Subordination.................................................52
SECTION 7.07. Waiver........................................................52
SECTION 7.08. Legal Limitations of Liability................................53
SECTION 7.09. Discharge Only Upon Payment...................................53
SECTION 7.10. Subrogation...................................................53
ARTICLE VIIIEvents of Default.........................................................54
ARTICLE IXThe Administrative Agent....................................................56
ARTICLE XMiscellaneous................................................................58
SECTION 10.01. Notices......................................................58
SECTION 10.02. Waivers; Amendments..........................................58
SECTION 10.03. Expenses; Indemnity; Damage Waiver...........................59
SECTION 10.04. Successors and Assigns.......................................60
SECTION 10.05. Survival.....................................................62
SECTION 10.06. Counterparts; Integration; Effectiveness.....................63
SECTION 10.07. Severability.................................................63
SECTION 10.08. Right of Setoff..............................................63
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of Process...63
SECTION 10.10. WAIVER OF JURY TRIAL.........................................64
SECTION 10.11. Headings.....................................................64
SECTION 10.12. Confidentiality..............................................64
SECTION 10.13. Currency Indemnity...........................................64
SECTION 10.14. Subsidiary Borrower Several Obligations......................65
SECTION 10.15. Joint and Several Obligations of the Company.................65
SECTION 10.16. Interest Rate Limitation.....................................66
SECTION 10.17. International Banking Facilities.............................66
</TABLE>
SCHEDULES:
Schedule A -- Commitments
Schedule B -- Pricing Schedule
Schedule C -- Notice Schedule
Schedule 3.14 -- Material Subsidiaries
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance Exhibit B-1 -- Form of Opinion of
Russell G. Horner, Jr. Exhibit B-2 -- Form of Opinion of Simpson Thacher &
Bartlett Exhibit C -- Form of Joinder Agreement Exhibit D -- Form of Cash
Collateral Account Agreement Exhibit E -- Form of Auditor's Certificate
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT is dated as of February 26, 1999, by
and among KERR-MCGEE CORPORATION, a Delaware corporation (the "Company"), the
Subsidiary Borrowers parties hereto, the Lenders now or hereafter parties
hereto, and ROYAL BANK OF CANADA ("RBC"), as Administrative Agent.
IT IS AGREED by the parties hereto as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABN Facility A" means Facility A of and as defined in the Amended and
Restated Credit Agreement dated as of April 28, 1997 (as amended April 26, 1998)
with the Company and Kerr-McGee Oil (U.K.) PLC as Borrowers, the banks, and ABN
AMRO Bank N.V. as Agent.
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Adjusted CD Rate" means, with respect to any Dollar Borrowing based on
the Fixed CD Rate for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/100 of 1%) equal to the sum of (a) the
Fixed CD Rate for such Interest Period multiplied by the Reserve Rate, plus (b)
the Assessment Rate.
"Adjusted EURIBOR" means, with respect to any Euro Borrowing or NC
Borrowing based on EURIBOR, for any Interest Period, an interest rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the sum of (a)
EURIBOR applicable to Euro deposits for such Interest Period multiplied by the
Reserve Rate, plus (b) the Associated Costs Rate.
"Adjusted Eurodollar LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the sum of (a) the LIBO Rate
applicable to Eurodollar deposits for such Interest Period multiplied by the
Reserve Rate, plus (b) the Associated Costs Rate.
"Adjusted Sterling LIBO Rate" means, with respect to any Sterling
Borrowing based on the LIBO Rate for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the sum
of (a) the LIBO Rate applicable to Sterling deposits for such Interest Period
multiplied by the Reserve Rate, plus (b) the Associated Costs Rate.
"Administrative Agent" means RBC, in its capacity as administrative
agent for the Lenders hereunder.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agency Account" means the account of the Administrative Agent as
specified by the Administrative Agent in the relevant payment notice to the
Person by whom such payment is to be made.
"Agreed Currency" has the meaning ascribed thereto in Section 10.13.
"Agreement" means this Revolving Credit Agreement, as amended,
modified, supplemented or restated from time to time.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Royal Bank Prime Rate and (ii) the sum of one-half of one
percent per annum plus the Federal Funds Effective Rate for such day.
"Alternate Currency" means Sterling, Euro or any National Currency.
"Anniversary Date" means the day that falls on each calendar
anniversary of the date hereof.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentage for any
Lender shall be the percentage of the total Revolving Credit Exposure of all
Lenders represented by such Lender's Revolving Credit Exposure, in each case as
of the date of determination.
"Applicable Rate" means, for any day, with respect to any EURIBOR Loan
or LIBOR Loan, or with respect to the facility fees or utilization fees payable
hereunder, as the case may be, the applicable rate per annum set forth in the
Pricing Schedule.
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "A" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in Dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"Associated Costs Rate" means, in relation to each Loan or Borrowing
denominated in an Alternate Currency and each Eurodollar Loan or Borrowing, the
percentage rate from time to time determined by the Administrative Agent or by
any Lender (with written notice thereof to the Administrative Agent and the
Company) as reflecting the cost, loss or difference in return which would be
suffered or incurred by the Administrative Agent (if it funded such Loan or
Borrowing) or by such Lender with respect to such Loan or Borrowing as a result
of:
(a) funding any special deposit, cash ratio deposit or other reserve
required to be placed with the Bank of England (or any other
Governmental Authority which replaces all or any of its functions);
and/or
(b) any charge or other reserve requirement imposed by the Financial
Services Authority of the United Kingdom (or any other Governmental
Authority which replaces all or any of its functions); and/or
(c) any charge or other reserve requirement imposed by the European
Central Bank, the Governing Council thereof or the European System of
Central Banks (or any other Governmental Authority which replaces all
or any of such Persons' functions)
in respect of eligible liabilities (assuming these to be in excess of any stated
minimum) or any similar concept, which relate to funding such Loan or Borrowing
or which has or would have the effect of reducing the rate of return of the
Administrative Agent (if it funded such Loan or Borrowing) or of such Lender
with respect to such Loan or Borrowing. As used in this definition, "eligible
liabilities" shall have the meaning ascribed to it by the Bank of England Act
1998 or by the Bank of England (as may be appropriate) at the time of
determination.
"Availability Period" means the period from and including the Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Benefit Liabilities" has the meaning as defined in Section 4001(a)(16)
of ERISA.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means the Company or any Subsidiary Borrower, and
"Borrowers" means collectively the Company and the Subsidiary Borrowers.
"Borrowing" means (a) Revolving Loans of the same Type, made, converted
or continued on the same date, in the same currency, and, in the case of CD
Loans, EURIBOR Loans or LIBOR Loans, as to which a single Interest Period is in
effect, or (b) a Competitive Loan or group of Competitive Loans of the same Type
made on the same date, in the same currency, and as to which a single Interest
Period is in effect.
"Borrowing Request" means a request by any Borrower, for a Revolving
Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City, New York and London, England are
authorized or required by law to remain closed, unless such term is used in
connection with (i) a CD Borrowing or an ABR Borrowing, in which case such day
shall be a Business Day if commercial banks are open for business in New York
City, New York, and (ii) a National Currency Borrowing or Euro Borrowing for
which funds are to be paid or made available in such National Currency or in
Euros on such day, in which case such day shall not be a Business Day unless
commercial banks are open for international business (including dealing in
deposits in such National Currency or in Euros, as the case may be) in New York
City, New York, London, England, and the place where such funds are to be paid
or made available.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Cash Collateral Account Agreement" shall mean each Cash Collateral
Account Agreement entered into pursuant to Section 2.09(c), each such agreement
substantially in the form of Exhibit D.
"CD", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted CD Rate.
"Change in Control" means (a) the acquisition by any Person or two or
more Persons acting as a group (within the meaning Rule 13d-3 of the Securities
Exchange Act of 1934) of greater than 40% of the outstanding Voting Stock of the
Company or (b) any merger or consolidation to which the Company is a party, or
the transfer, conveyance or lease of all or substantially all of the assets of
the Company to another Person, if immediately following such merger,
consolidation, transfer, conveyance or lease a majority of the directors of the
surviving corporation (or the corporation that is the beneficial owner of the
assets transferred or conveyed or the lessee of the assets leased) are other
than Continuing Directors or (c) the Company ceases to own, directly or
indirectly, 100% of the capital stock of each Subsidiary Borrower. "Continuing
Director" means a member of the board of directors of the Company who either (i)
was a member of such board of directors on the date hereof or (ii) was
designated (before initial election as a director) as a Continuing Director by a
majority of the then Continuing Directors or (iii) was nominated or appointed to
such board of directors by a majority of the then Continuing Directors.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans
or Competitive Loans.
"Code" means the United States Internal Revenue Code of 1986, as
amended from time to time, or any successor statute, together with all
regulations and interpretations thereof or thereunder by the United States
Internal Revenue Service (or any successor).
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans hereunder, expressed as an amount representing
the maximum aggregate amount of such Lender's Revolving Credit Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.07 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 10.04. The initial amount
of each Lender's Commitment under the Agreement is set forth on Schedule A, or
in the Assignment and Acceptance pursuant to which such Lender shall have
assumed its Commitment, as applicable. The initial amount of the Lenders'
Commitments to make Loans hereunder is $500,000,000 in the aggregate at any one
time of Dollar Borrowings and the Dollar Equivalent of Alternate Currency
Borrowings at such time.
"Commitment Expiration Date" with respect to a Non-Extending Lender,
has the meaning ascribed thereto in Section 2.19.
"Company" means Kerr-McGee Corporation, a Delaware corporation.
"Competitive Bid" means an offer by a Lender to make a Competitive Loan
in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive Bid, the
Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" means a request by any Borrower, for
Competitive Bids in accordance with Section 2.04.
"Competitive Loan" means a Loan made pursuant to Section 2.04.
"Consolidated Subsidiary" means, at any date, any Subsidiary of the
Company or other entity the accounts of which would be consolidated with those
of the Company in its consolidated financial statements if such statements were
prepared as of such date.
"Consolidated Tangible Net Worth" means at any date the consolidated
Stockholders' Equity of the Company and its Consolidated Subsidiaries less their
consolidated Intangible Assets plus the aggregate amount of non-cash write
downs, all determined as of such date. For purposes of this definition,
"Intangible Assets" means the amount of (i) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within 12 months after the acquisition of such business)
subsequent to December 31, 1997 in the book value of any asset owned by the
Company or a Subsidiary of the Company, and (ii) all unamortized debt discount
and expense (to the extent, if any, recorded as an unamortized deferred charge),
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, anticipated future benefit of tax loss carry-forwards, copyrights,
organization or developmental expenses.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,\
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Debt Leverage Ratio" means, on any day, the ratio of (a) the Total
Indebtedness of the Company and its Subsidiaries on a consolidated basis as of
the date of determination to (b) EBITDAX for the Rolling Period ending on the
last day of the most recent Fiscal Quarter as of the date of determination.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Dollars" and "$" mean United States Dollars, and "Dollar" when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are denominated in United States Dollars.
"Dollar Equivalent" means the amount of Dollars equivalent to a given
amount of an Alternate Currency determined by using the quoted spot rate at
which the Administrative Agent offers to exchange Dollars for such Alternate
Currency in New York City at 10:00 a.m. (New York City time) on the date of
determination.
"Domestic Available Amount" means the aggregate amount of Loans
available to the Company and the Domestic Subsidiary Borrowers under this
Agreement, which amount shall not at any time exceed the Lenders' total
aggregate Commitments less the Foreign Available Amount. The initial Domestic
Available Amount is $335,000,000 of availability in the aggregate at any one
time of Dollar Borrowings and the Dollar Equivalent of Alternate Currency
Borrowings at such time.
"Domestic Subsidiary Borrower" means, as of the date hereof, Kerr-McGee
Credit LLC, together with any of the Company's Subsidiaries designated as a
"Domestic Subsidiary Borrower" pursuant to and in accordance with Section
2.20(a), other than any such Subsidiary that ceases to be a Subsidiary Borrower
pursuant to and in accordance with Section 2.20(c).
"Duff & Phelps" means Duff & Phelps Credit Rating Co.
"EBITDAX" means, as to the Company and its Subsidiaries on a
consolidated basis and for any period, without duplication, the amount equal to
net income determined in accordance with GAAP, plus to the extent deducted from
net income, Interest Expense, depreciation, oil and gas exploration expenses,
including, without limitation, dry-hole costs, deferred management fees
permitted under Section 6.06, other non-cash expenses, and income and state
franchise tax expenses; provided, that, extraordinary gains or losses for any
such period, including but not limited to gains or losses on the disposition of
assets, shall not be included in EBITDAX.
"EC Treaty" means the Treaty establishing the European Community
(signed in Rome on March 25, 1957), as amended by the Treaty on European Union
(signed in Maastricht on February 7, 1992), as further amended or supplemented
from time to time.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).
"Effective Modification Date" means the date on which the Existing
Agreement shall have been amended, modified, restated, or replaced to the
satisfaction of the Administrative Agent so that the provisions corresponding to
the definitions of Indebtedness Threshold, ERISA Obligations Threshold, Material
Financial Obligations and Final Judgment Threshold as set forth therein are
substantively identical to those set forth herein and to be effective on and
after the Effective Modification Date.
"EMU Legislation" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by the European Council, the
Participating Member States or other Governmental Authority of the European
Union, relating in any way to the Euro and the European Economic and Monetary
Union.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary of the Company
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Company (and other ERISA Affiliates), is
treated as a single employer under Section 414(b) or (c) of the Code or, solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA Obligation Threshold" means (a) $5,000,000 prior to the
Effective Modification Date and (b) $50,000,000 on and after the Effective
Modification Date.
"EURIBOR" means, on any day, the rate appearing on Page 248 of the
Telerate Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to Euro deposits in the
Euro-zone interbank market) at approximately 11:00 a.m., Brussels time, two
TARGET Business Days prior to such day, as the average rate for time deposits in
Euros offered in the Euro-zone interbank market as calculated by the Banking
Federation of the European Union and the Financial Market Association. In the
event that such rates are not available at such time for any reason, then
"EURIBOR" shall mean, for any day, an interest rate per annum equal to the
Euro-zone interbank market offering rate for time deposits of 5,000,000 Euros
designated as "EURIBOR" and sponsored jointly by the Banking Federation of the
European Union and the Financial Market Association (or such rate as designated
by any company established or designated by such joint sponsors for the purposes
of compiling and publishing such rate). "EURIBOR", when used in reference to any
Loan or Borrowing, indicates that such Loan, or the Loans comprising such
Borrowing, are denominated in either Euros or a National Currency and bearing
interest at a rate determined by reference to Adjusted EURIBOR.
"Euro" means the lawful single currency of Participating Member States
of the European Union adopted in accordance with the EC Treaty and, when used in
reference to any Loan or Borrowing, indicates that such Loan, or the Loans
comprising such Borrowing, are denominated in such currency.
"Eurodollar", when used in reference to any Loan or Borrowing,
indicates that such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted Eurodollar LIBO Rate
(or, in the case of a Competitive Loan, the LIBO Rate for Eurodollars).
"European Council" means the council of 15 member states of the
European Union.
"European Union" means the European Union established under the EC
Treaty.
"Euro-zone" means the region comprised of the Participating Member
States.
"Event of Default" has the meaning assigned to such term in Article
VIII.
"Existing Agreement" means the Amended and Restated Credit Agreement
for $325,000,000 dated as of December 4, 1996 (as amended) with the Company and
Kerr-McGee Credit LLC, as borrowers, the banks, and Morgan Guaranty Trust
Company of New York as agent.
"Extension Request" shall have the meaning ascribed thereto in Section
2.20.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the United States Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Letter" means the letter agreement dated February 25, 1999,
regarding fees, executed by RBC in its capacity as the Administrative Agent and
accepted and agreed to by the Company, as amended or modified from time to time.
"Final Judgment Threshold" means a final judgment in the aggregate
amount of (a) $10,000,000 prior to the Effective Modification Date and (b)
$50,000,000 on or after the Effective Modification Date.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of any Person.
"Fiscal Quarter" shall mean the fiscal quarter of the Company, ending
on the last day of each March, June, September and December of each year.
"Fixed CD Rate" means, with respect to any CD Borrowing for any
Interest Period, the arithmetic average (rounded upwards, if necessary, to the
next 1/100 of 1%) of the prevailing rates per annum bid at or about 10:00 a.m.,
New York City time, to the Administrative Agent on the first Business Day of
such Interest Period by three negotiable certificate of deposit dealers of
recognized standing selected by the Administrative Agent for the purchase at
face value of negotiable certificates of deposit of major United States money
center banks in a principal amount of $5,000,000 and with a maturity comparable
to such Interest Period.
"Fixed Rate" means, with respect to any Competitive Loan (other than a
LIBOR or EURIBOR Competitive Loan), the fixed rate of interest per annum
specified by the Lender making such Competitive Loan in its related Competitive
Bid.
"Fixed Rate Loan" means a Competitive Loan denominated in Dollars
bearing interest at a Fixed Rate.
"Foreign Available Amount" means the aggregate amount of Loans
available to the Foreign Subsidiary Borrowers under this Agreement, which amount
shall equal initially $165,000,000 of availability in the aggregate at any time
of Dollar Borrowings and the Dollar Equivalent of Alternate Currency Borrowings
at such time. The Foreign Available Amount may be increased or decreased from
time to time at the option of the Company pursuant to the terms of Section 2.18;
provided, however, that the Foreign Available Amount shall not at any time
exceed $230,000,000 in the aggregate of Dollar Borrowings and the Dollar
Equivalent of Alternate Currency Borrowings at such time.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than United States of America, any State thereof or the
District of Columbia.
"Foreign Subsidiary Borrower" means, as of the date hereof, Kerr-McGee
(G.B.) Limited, Kerr-McGee Resources (U.K.) Limited, Kerr-McGee Oil (U.K.) PLC,
Kerr-McGee North Sea (U.K.) Limited, Kerr-McGee GmbH and Kerr-McGee Chemical
GmbH, together with any of the Company's Subsidiaries designated as a "Foreign
Subsidiary Borrower" pursuant to and in accordance with Section 2.20(b), other
than any such Subsidiary that ceases to be a Subsidiary Borrower pursuant to and
in accordance with Section 2.20(c).
"GAAP" means generally accepted accounting principles in the United
States of America, the United Kingdom or any Participating Member State, as
applicable.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, including,
without limitation, the European Union and the European Council, whether
federal, state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Guaranteed Obligations" means all obligations of the Subsidiary
Borrowers (i) to each Lender for the full and prompt payment when due (whether
at the stated maturity, by acceleration or otherwise) of the principal and
interest on each note, if any, issued by such Borrowers to such Lender, and
Loans made under this Agreement, together with all the other obligations and
liabilities (including, without limitation, indemnities, fees and interest
thereon) of the Subsidiary Borrowers to such Lender now existing or hereafter
incurred under, arising out of or in connection with this Agreement and the due
performance and compliance with all the terms, conditions and agreements
contained in this Agreement by the Subsidiary Borrowers and (ii) to each Lender
and each Affiliate of a Lender which enters into a Hedging Agreement with a
Subsidiary Borrower, which by its express terms are entitled to the benefit of
the Guaranty of the Company pursuant to Article VII, the full and prompt payment
when due (whether by acceleration or otherwise) of all obligations of such
Subsidiary Borrower owing under such Hedging Agreement, whether now in existence
or hereafter arising, and the due performance and compliance with all terms,
conditions and agreements contained therein.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances, (k)
all production payments, proceeds production payments or similar obligations of
such Person, and (l) the net amount of obligations of such Person under Hedging
Agreements. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indemnified Taxes" means Taxes other than, with respect to the
Administrative Agent, any Lender or any other recipient of any payment to be
made by or on account of any obligation of the Company or any Subsidiary
Borrower hereunder, (a) income or franchise taxes imposed on (or measured by)
its net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is
located, (b) any branch profits taxes imposed by the United States of America or
any similar tax imposed by any other jurisdiction in which any Borrower is
located and (c) in the case of a Foreign Lender (other than an assignee pursuant
to a request by the Company under Section 2.17(b) or 2.19(d)), any withholding
tax that is imposed on amounts payable to such Foreign Lender at the time such
Foreign Lender becomes a party to this Agreement (or designates a new lending
office) or is attributable to such Foreign Lender's failure to comply with
Section 2.15(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Company with respect to such
withholding tax pursuant to Section 2.15(a).
"Interest Election Request" means a request by a Borrower to convert or
continue a Revolving Borrowing in accordance with Section 2.06.
"Interest Expense" shall mean, as to the Company and its Subsidiaries
on a consolidated basis and for any period, without duplication, total interest
expenses, whether paid or accrued as liabilities (including the interest
component of Capital Lease Obligations), with respect to all outstanding
Indebtedness, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to any financing or letters of credit
and net costs under any Hedging Agreement to the extent that such costs are
included within interest expense under GAAP.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, (b) with respect to any CD
Loan, EURIBOR Loan or LIBOR Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a EURIBOR
Borrowing or a LIBOR Borrowing, with an Interest Period of more than three
months' duration or a CD Borrowing with an Interest Period of more than 90 days'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration or 90 days' duration, as the case may be,
after the first day of such Interest Period, and (c) with respect to any Fixed
Rate Loan, the last day of the Interest Period applicable to the Borrowing of
which such Loan is a part and, in the case of a Fixed Rate Borrowing with an
Interest Period of more than 90 days' duration (unless otherwise specified in
the applicable Competitive Bid Request), each day prior to the last day of such
Interest Period that occurs at intervals of 90 days' duration after the first
day of such Interest Period, and any other dates that are specified in the
applicable Competitive Bid Request as Interest Payment Dates with respect to
such Borrowing.
"Interest Period" means (a) with respect to any EURIBOR Borrowing or
LIBOR Borrowing, the period commencing on the date of such Borrowing and ending
on the numerically corresponding day in the calendar month that is one, two,
three or six months thereafter, or (if available to all Lenders) ending on the
day that is one, two or three weeks thereafter, as the Company may elect, (b)
with respect to any CD Borrowing, the period commencing on the date of such
Borrowing and ending 30, 60, 90 or 120 days thereafter, as the Company may
elect, and (c) with respect to any Fixed Rate Borrowing, the period (which shall
not be less than seven days or more than 180 days) commencing on the date of
such Fixed Rate Borrowing and ending on the date specified in the applicable
Competitive Bid Request; provided, that (i) if any Interest Period would end on
a day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, in the case of a EURIBOR Borrowing or a
LIBOR Borrowing, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day, and (ii) any Interest Period pertaining to a EURIBOR
Borrowing or a LIBOR Borrowing that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes
hereof, the date of a Borrowing initially shall be the date on which such
Borrowing is made and, in the case of a Revolving Borrowing, thereafter shall be
the effective date of the most recent conversion or continuation of such
Borrowing.
"Joinder Agreement" means a Joinder Agreement, substantially in the
form of Exhibit C hereto, duly executed and delivered by the Company and the
Subsidiary Borrower party thereto.
"Kerr-McGee Chemical GmbH" means Kerr-McGee Chemical GmbH, a company
duly formed with limited liability in the Federal Republic of Germany.
"Kerr-McGee Credit LLC" means Kerr-McGee Credit LLC, a limited
liability company organized under the laws of Delaware.
"Kerr-McGee (G.B.) Limited" means Kerr-McGee (G.B.) Limited, a company
organized under the laws of England.
"Kerr-McGee GmbH" means Kerr-McGee GmbH, a company duly formed with
limited liability in the Federal Republic of Germany.
"Kerr-McGee North Sea (U.K.) Limited" means Kerr-McGee North Sea
(U.K.) Limited, a company organized under the laws of England.
"Kerr-McGee Oil (U.K.) PLC" means Kerr-McGee Oil (U.K.) PLC, a company
organized under the laws of England.
"Kerr-McGee Resources (U.K.) Limited" means Kerr-McGee Resources
(U.K.) Limited, a company organized under the laws of England.
"Lenders" means the Persons listed on Schedule A and any other Person
that shall have become a party hereto pursuant to an Assignment and Acceptance,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Acceptance.
"LIBOR", when used in reference to any Loan or Borrowing, indicates
that such Loan, or the Loans comprising such Borrowing, are bearing interest at
a rate determined by reference to the Adjusted Eurodollar LIBO Rate or the
Adjusted Sterling LIBO Rate, as the case may be.
"LIBO Rate" means, with respect to any LIBOR Borrowing, for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to Dollar deposits or Sterling deposits, as
applicable, in each case in the London interbank market) at approximately 11:00
a.m., London time, two Business Days prior to the commencement of such Interest
Period, as the rate for Dollar deposits or Sterling deposits, as applicable,
with a maturity comparable to such Interest Period. In the event that such rate
is not available at such time for any reason, then the "LIBO Rate" with respect
to such LIBOR Borrowing for such Interest Period shall be the average of the
respective rates (rounded upwards if necessary, to the next 1/16 of 1%) at which
Dollar deposits or Sterling deposits, as applicable, of 5,000,000 units of the
applicable currency and for a maturity comparable to such Interest Period are
offered by the principal London office of the Reference Banks in immediately
available funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset.
"Loans" means the loans made by the Lenders to any Borrower pursuant to
this Agreement.
"Margin" means, with respect to any Competitive Loan bearing interest
at a rate based on the LIBO Rate or EURIBOR, as applicable, the marginal rate of
interest, if any, to be added to or subtracted from the LIBO Rate or EURIBOR, as
applicable, to determine the rate of interest applicable to such Loan, as
specified by the Lender making such Loan in its related Competitive Bid.
"Margin Stock" means, "margin stock" as such term is defined in
Regulation T, U or X of the Board.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Company and its Consolidated Subsidiaries taken as a whole or (b) the
ability of the Company to perform any of its obligations under this Agreement.
"Material Financial Obligation(s)" means a principal or face amount of
Indebtedness of the Company and/or one or more of its Subsidiaries exceeding in
the aggregate (a) $10,000,000 prior to the Effective Modification Date and (b)
$50,000,000 on or after the Effective Modification Date.
"Material Subsidiary" means, at any time, any Subsidiary of the Company
either (a) meeting the definition of a "significant subsidiary" with respect to
the Company contained as of the date hereof in Regulation S-X of the SEC or (b)
constituting a Subsidiary Borrower.
"Maturity Date" means the later of (a) February 26, 2002 and (b) if
maturity is extended pursuant to Section 2.20, such extended maturity date as
determined pursuant to such Section.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means any employee pension benefit plan within the
meaning of Section 4001(a)(3) of ERISA or any employee pension benefit plan as
to which the Company or any of its ERISA Affiliates would be treated as a
contributing employer under Section 4212(c) of ERISA if it were to be
terminated.
"National Currency" or "NC" means the lawful currency (other than the
Euro) of any Participating Member State, which is freely transferable in
accordance with EMU Legislation and in which dealings in deposits of which are
carried out in the Euro-zone interbank market, and, when used in reference to
any Loan or Borrowing, indicates that such Loan, or the Loans comprising such
Borrowing, are denominated in a National Currency. Any given National Currency
shall be available hereunder only as and to the extent permitted by EMU
Legislation.
"Non-Extending Lender" has the meaning ascribed thereto in Section
2.19.
"Notice Schedule" means the schedule of addresses for notice of the
Lenders attached as Schedule C.
"Oryx Facility" means the $500,000,000 Revolving Credit Facility dated
October 17, 1997 with Oryx Energy Company, as borrower, NationsBank of Texas,
N.A., as administrative agent, NationsBank Montgomery Securities, Inc., as
arranger, Chase Securities Inc., as syndication agent, Barclays Bank PLC, as
documentation agent, and the lenders party thereto.
"Oryx Merger" means the merger between the Company and Oryx Energy
Company as described in the Agreement and Plan of Merger, dated October 14,
1998, between the Company and Oryx Energy Company.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participating Member State" shall mean each member state so described
in any legislative measures of the European Council for the introduction of,
changeover to, or operation of, a single or unified European currency being in
part the implementation of the third stage of the economic and monetary union as
contemplated in the EC Treaty.
"Payment Currency" has the meaning ascribed thereto in Section 10.13.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions under
ERISA.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Company or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pricing Schedule" means the Pricing Schedule attached as Schedule B.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
"Rating" means each rating with respect to the Company's Rating Debt as
determined from time to time by each Rating Agency. In each occurrence within
this Agreement (and the Schedules) where the possible Levels of Ratings are
indicated, the first listed Rating is the Rating available from S&P and/or Duff
& Phelps and the second listed Rating is the Rating available from Moody's.
"Rating Agencies" shall mean Duff & Phelps, Moody's and S&P.
"Rating Debt" means senior, unsecured, long-term indebtedness for
borrowed money of the Company that is not guaranteed by any other Person or
subject to any other credit enhancement.
"RBC" means Royal Bank of Canada, a Canadian chartered bank, in its
individual capacity.
"Reference Banks" means Royal Bank of Canada, ABN AMRO Bank N.V., and
NationsBank, N.A.
"Refunding Borrowing" means any Borrowing or that portion thereof,
which, after application of the proceeds thereof, results in no net increase in
the outstanding principal amount of Loans made by the Lenders to any Borrower.
"Register" has the meaning set forth in Section 10.04.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing 66 2/3% or more of the sum of the
total Revolving Credit Exposures and unused Commitments at such time; provided
that, for purposes of declaring the Loans to be due and payable pursuant to
Article VIII (provided, further, that any such vote to declare the Loans to be
due and payable by a Lender with outstanding Competitive Loans shall in all
cases also constitute a vote by such Lender to terminate the Commitments), and
for all purposes after the Loans become due and payable pursuant to Article VIII
or the Commitments expire or terminate, the outstanding Competitive Loans of the
Lenders shall be included in their respective Revolving Credit Exposures and in
the total Revolving Credit Exposures in determining the Required Lenders.
"Reserve Rate" means a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a decimal established
by the Board (a) with respect to the Adjusted CD Rate for new negotiable
nonpersonal time deposits in Dollars of over $100,000 with maturities
approximately equal to the applicable Interest Period, and (b) with respect to
EURIBOR, or the LIBO Rate for funding of Borrowings denominated in Dollars or
Alternate Currencies (currently referred to as "Eurocurrency Liabilities" in
Regulation D of the Board). To the extent any Loans are subject to such reserve
requirements the amount of such reserve requirements shall be calculated without
benefit of or credit for proration, exemptions or offsets that may be available
from time to time to any Lender under the applicable regulations. The Reserve
Rate shall be adjusted automatically on and as of the effective date of any
change in any reserve percentage.
"Restricted Property", to the extent of the Company's direct or
indirect interest therein, means:
(a) any property interest owned by the Company or any
Consolidated Subsidiary in reserves of oil, gas or other minerals which
are "proved reserves", as defined in the regulations promulgated by the
SEC or, in the absence of any applicable definition, reserves which
geological, geophysical and engineering data demonstrate with
reasonable certainty to be recoverable in future years from known
reservoirs or deposits under existing economic and operating
conditions, i.e. existing prices (with consideration of changes in
existing prices provided by contractual arrangements) and costs; and
(b) any manufacturing property and related equipment of the
Company or any Consolidated Subsidiary.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"Rolling Period" means any period of four consecutive Fiscal Quarters.
"Royal Bank Prime Rate" means the rate of interest per annum determined
by RBC, acting through its New York Branch, in New York City from time to time
in its sole discretion as its Dollar prime commercial lending rate for such day.
"S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc.
"SEC" means United States Securities and Exchange Commission or any
successor entity.
"Sterling" means Great Britain Pounds Sterling and, when used in
reference to any Loan or Borrowing, indicates that such Loan, or the Loans
comprising such Borrowing, are denominated in Great Britain Pounds Sterling.
"Stockholders' Equity" means, at any date, the consolidated
stockholders' equity of the Company and its Consolidated Subsidiaries as would
be shown on a balance sheet prepared in accordance with GAAP of such date.
"Subsidiary" means, with respect to any Person at any date, any
corporation, limited liability company, partnership, association or other entity
the accounts of which would be consolidated with those of such Person in its
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity (a) of which
securities or other ownership interests representing more than 50% of the equity
or more than 50% of the Voting Stock or, in the case of a partnership, more than
50% of the general partnership interests are, as of such date, owned, Controlled
or held, or (b) that is, as of such date, otherwise Controlled, by such Person
or one or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries of such Person.
"Subsidiary Borrower" means any Domestic Subsidiary Borrower or any
Foreign Subsidiary Borrower.
"TARGET" means the Trans-European Automated Real-time Gross Settlement
Express Transfer system.
"TARGET Business Day" means any Business Day that is not a day on which
TARGET is authorized or required by law to remain closed.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Total Indebtedness" shall mean, at any time and without duplication,
(a) all obligations of the Company and its Subsidiaries on a consolidated basis
for borrowed money and any other obligations evidenced by bonds, debentures,
notes, or other similar instruments plus (b) all Guarantees by the Company and
its Subsidiaries on a consolidated basis of the type of obligations described in
clause (a) of this definition.
"Transactions" means the execution, delivery and performance by each of
the Borrowers of this Agreement, the borrowing of Loans and the use of the
proceeds thereof.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted Eurodollar LIBO Rate, the
Adjusted Sterling LIBO Rate, the Adjusted CD Rate, the Alternate Base Rate, the
Fixed Rate or Adjusted EURIBOR.
"U.K. Double Taxation Treaty" shall mean any convention between the
government of the United Kingdom and any other government for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income and capital gains.
"U.K. Tax Act" means the United Kingdom Income and Corporation Taxes
Act of 1988, as amended from time to time, or any successor statute, together
with all regulations and interpretations thereof or thereunder by the United
Kingdom Inland Revenue (or any successor).
"Unfunded Benefit Liabilities" means the "amount of unfunded benefit
liabilities" as defined in Section 4001(a)(18) of ERISA).
"U.S. Double Taxation Treaty" shall mean any convention between the
government of the United States and any other government for the avoidance of
double taxation and the prevention of fiscal evasion with respect to taxes on
income and capital gains.
"Voting Stock" means capital stock of any class or classes (however
designated) having ordinary voting power for the election of directors of the
Company, other than stock having such power only by reason of the happening of a
contingency.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, the term "Borrowing" denotes the aggregation of Loans of one or
more Lenders to be made to a single Borrower pursuant to Article II on a single
date and for a single Interest Period. Borrowings are classified for purposes of
this Agreement by reference to the Type of Loans comprising such Borrowing
(e.g., a "Sterling LIBOR Borrowing") or the Class of Loans comprising such
Borrowing (e.g., a "Revolving Borrowing") or the Type and Class of Loans
comprising such Borrowing (e.g., a "Sterling LIBOR Revolving Borrowing"). Loans
are classified for purposes of this Agreement by reference to the Class of such
Loans (e.g., a "Revolving Loan") or the Type of such Loan (e.g., a "Sterling
LIBOR Loan") or the Type and Class (e.g., a "Sterling LIBOR Revolving Loan").
SECTION 1.03. Other Terms. The words "hereof," "herein" and "hereunder"
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement, and
article, section, schedule, exhibit and like references are to this Agreement
unless otherwise specified. The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the
context requires otherwise, any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), any reference herein
to any Person shall be construed to include such Person's successors and
assigns, and the words "asset" and "property" shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP, as in effect
from time to time, applied on a basis consistent (except for changes concurred
in by the Company's independent public accountants and disclosed in the
financial statements) with the most recent audited consolidated financial
statements of the Company and its Consolidated Subsidiaries delivered to the
Lenders.
SECTION 1.05. Euros as Payment for National Currencies. Subject to any
applicable EMU Legislation, with respect to each Loan made hereunder and
denominated in a National Currency, it is agreed that the applicable Borrower
may make any payment with respect thereto, whether of principal or interest, in
either such National Currency or in Euros, and if in Euros, then in an amount in
Euros equal to the applicable National Currency calculated pursuant to the then
applicable conversion rate between the Euro and such National Currency. As of
December 31, 1998, the European Council caused the conversion rates for the
National Currencies and the Euro to be irrevocably fixed.
SECTION 1.06. Calculation of Dollar Equivalent Amounts. For all
purposes of this Agreement where it is or becomes necessary to calculate the
amount of availability of the Commitments, the Domestic Available Amount or the
Foreign Available Amount or, in connection therewith, the outstanding amount of
the Loans, or the Revolving Credit Exposure, each such calculation shall be made
in accordance with the context of how any such term is used, by determining the
Dollar amount, the Dollar Equivalent of the applicable Alternative Currencies or
the sum of the Dollar amount plus the Dollar Equivalent of the applicable
Alternate Currencies, as applicable.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender severally agrees to make Revolving Loans (a) to the
Company and the Domestic Subsidiary Borrowers or any one or more of them, up to
the Domestic Available Amount, and (b) to the Foreign Subsidiary Borrowers or
any one or more of them, up to the Foreign Available Amount, from time to time
during the Availability Period in an aggregate principal amount that will not
result in (i) such Lender's Revolving Credit Exposure exceeding such Lender's
Commitment or (ii) the sum of the total Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans exceeding the total
Commitments. Within the foregoing limits and subject to the terms and conditions
set forth herein, any Borrower may make more than one Borrowing on any Business
Day and may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be
made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.04. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments and Competitive Bids of the Lenders are several and no Lender shall
be responsible for any other Lender's failure to make Loans as required.
(b) Subject to Section 2.12, (i) each Revolving Borrowing
shall be made entirely in LIBOR Loans, EURIBOR Loans, CD Loans or ABR Loans, as
the Company may request in accordance herewith; and (ii) each Competitive
Borrowing shall be made (A) in the case of Dollar Competitive Borrowings,
entirely in LIBOR Loans or Fixed Rate Loans and (B) in the case of Alternate
Currency Competitive Borrowings, entirely in LIBOR Loans or EURIBOR Loans, as
the Company may request in accordance herewith. Each Lender, at its option, may
make any LIBOR Loan or EURIBOR Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of a Borrower to repay such Loans made to
it in accordance with the terms of this Agreement; and provided further that
each Lender shall have an office, or a branch, or an Affiliate available to it
and located in the appropriate jurisdiction through which such Lender can make
any Eurodollar Loan or any Loan denominated in an Alternate Currency as required
under this Agreement.
(c) At the commencement of each initial Interest Period for
(i) any Revolving Borrowing comprised of LIBOR Loans, EURIBOR Loans or CD Loans,
such Borrowing shall be in an aggregate amount that is an integral multiple of
1,000,000 units of the applicable currency thereof and not less than 10,000,000
units of such currency. At the time that each Revolving Borrowing comprised of
ABR Loans is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $10,000,000; provided that
such ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the Domestic Available Amount or the Foreign Available
Amount, as applicable. Each Competitive Borrowing shall be in an aggregate
amount that is an integral multiple of 1,000,000 units of the applicable
currency thereof and not less than 10,000,000 units of such currency. Borrowings
of more than one Type and Class may be outstanding at the same time; provided
that there shall not at any time be more than a total of 10 CD, EURIBOR and
LIBOR Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Company, on behalf of itself or any Borrower, shall not be entitled to request,
or to elect to convert or continue, any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the Company shall notify the Administrative Agent of such request by
hand delivery or telecopy of a Borrowing Request or by telephone (a) in the case
of a Eurodollar LIBOR Borrowing, not later than 11:00 a.m., New York City time,
three Business Days before the date of the proposed Borrowing, (b) in the case
of a Sterling LIBOR Borrowing or a EURIBOR Borrowing, not later than 11:00 a.m.,
New York City time, four Business Days before the date of the proposed
Borrowing, (c) in the case of a CD Borrowing, not later than 11:00 a.m., New
York City time, two Business Days before the date of the proposed Borrowing, and
(d) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City
time, one Business Day before the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Company. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
(i) the applicable Borrower;
(ii) the aggregate amount of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business
Day;
(iv) whether such Borrowing is to be made in Dollars or an
Alternate Currency, and if such Borrowing is to be made in an Alternate
Currency, which Alternate Currency;
(v) whether such Borrowing is to be a CD Borrowing, an ABR
Borrowing, a EURIBOR Borrowing or a LIBOR Borrowing;
(vi) in the case of a CD Borrowing, a EURIBOR Borrowing or
LIBOR Borrowing, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term
"Interest Period"; and
(vii) the location and number of the applicable Borrower's
account to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
If no election as to the Type of any Revolving Borrowing denominated in Dollars
is specified, then the requested Revolving Borrowing shall be an ABR Borrowing.
If no Interest Period is specified with respect to any requested CD, EURIBOR or
LIBOR Revolving Borrowing, then the Company shall be deemed to have selected an
Interest Period of 30 days' duration, in the case of a CD Borrowing, or one
month's duration, in the case of a EURIBOR Borrowing or a LIBOR Borrowing. If no
election as to the currency of the Borrowing is specified, then the Company
shall be deemed to have selected Dollars; provided that in no event shall a
Borrowing deemed to be denominated in Dollars bear interest at a rate other than
the Adjusted Eurodollar LIBO Rate, the Adjusted CD Rate or the Alternate Base
Rate. Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. Competitive Bid Procedure. (a) Subject to the terms and
conditions set forth herein, from time to time during the Availability Period
the Company may request Competitive Bids and may (but shall not have any
obligation to) accept Competitive Bids and borrow Competitive Loans; provided
that (i) the sum of the total Revolving Credit Exposures plus the aggregate
principal amount of outstanding Competitive Loans at any time shall not exceed
the total Commitments, (ii) with respect to the Company and the Domestic
Subsidiary Borrowers, the sum of the Revolving Credit Exposures attributable to
such Borrowers plus the aggregate principal amount of outstanding Competitive
Loans at any time made to such Borrowers shall not exceed the Domestic Available
Amount, and (iii) with respect to the Foreign Subsidiary Borrowers, the sum of
the Revolving Credit Exposures attributable to such Borrowers plus the aggregate
principal amount of outstanding Competitive Loans at any time made to such
Borrowers shall not exceed the Foreign Available Amount. To request Competitive
Bids, the Company shall notify the Administrative Agent of such request by hand
delivery or telecopy of a competitive Borrowing Request or by telephone, in the
case of (w) a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, four Business Days before the date of the proposed Borrowing, (x) a
Sterling LIBOR Borrowing or a EURIBOR Borrowing, not later than 11:00 a.m., New
York City time, five Business Days before the date of the proposed Borrowing and
(y) in the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York
City time, as applicable, one Business Day before the date of the proposed
Borrowing; provided that the Company may submit up to (but not more than) four
Competitive Bid Requests on the same day, but a Competitive Bid Request shall
not be made within five Business Days, after the date of any previous
Competitive Bid Request, unless any and all such previous Competitive Bid
Requests shall have been withdrawn or all Competitive Bids received in response
thereto rejected. Each such telephonic Competitive Bid Request shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Competitive Bid Request in a form approved by the Administrative Agent
and signed by the Company. Each such telephonic and written Competitive Bid
Request shall specify the following information in compliance with Section 2.02:
(i) the applicable Borrower;
(ii) the aggregate amount of the requested Borrowing;
(iii) the date of such Borrowing, which shall be a Business
Day;
(iv) whether such Borrowing is to be made in Dollars or an
Alternate Currency, and if such Borrowing is to be made in an Alternate
Currency, which Alternate Currency;
(v) whether such Borrowing is to be a Fixed Rate Borrowing, a
EURIBOR Borrowing or a LIBOR Borrowing;
(vi) the Interest Period to be applicable to such Borrowing,
which shall be a period contemplated by the definition of the term
"Interest Period"; and
(vii) the location and number of the applicable Borrower's
account to which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
(b) Each Lender may (but shall not have any obligation to)
make one or more Competitive Bids to the Company in response to a Competitive
Bid Request. Each Competitive Bid by a Lender must be in a form approved by the
Administrative Agent and must be received by the Administrative Agent by
telecopy, (i) in the case of a Eurodollar Competitive Borrowing, not later than
9:30 a.m., New York City time, three Business Days before the proposed date of
such Competitive Borrowing, (ii) in the case of a Sterling LIBOR Competitive
Borrowing or a EURIBOR Competitive Borrowing, not later than 9:30 a.m., New York
City time, four Business Days before the proposed date of such Competitive
Borrowing, and (iii) in the case of a Fixed Rate Borrowing, not later than 9:30
a.m., New York City time, on the proposed date of such Competitive Borrowing.
Competitive Bids that do not conform substantially to the form approved by the
Administrative Agent may be rejected by the Administrative Agent, and the
Administrative Agent shall notify the applicable Lender as promptly as
practicable. Each Competitive Bid shall specify (i) the principal amount (which
shall be a minimum of 10,000,000 units of the applicable currency and an
integral multiple of 1,000,000 units of such currency and which may equal the
entire principal amount of the Competitive Borrowing requested by the Company on
behalf of the applicable Borrower) of the Competitive Loan or Loans that the
Lender is willing to make, (ii) the Competitive Bid Rate or Rates at which the
Lender is prepared to make such Loan or Loans (expressed as a percentage rate
per annum in the form of a decimal to no more than four decimal places) and
(iii) the Interest Period applicable to each such Loan and the last day thereof.
(c) The Administrative Agent shall promptly notify the Company
by telecopy of the Competitive Bid Rate and the principal amount specified in
each Competitive Bid and the identity of the Lender that shall have made such
Competitive Bid.
(d) Subject only to the provisions of this paragraph, the
Company may accept or reject any Competitive Bid on behalf of any applicable
Borrower. The Company shall notify the Administrative Agent by telephone,
confirmed by telecopy in a form approved by the Administrative Agent, whether
and to what extent it has decided to accept or reject each Competitive Bid, (i)
in the case of a Eurodollar Competitive Borrowing, not later than 10:30 a.m.,
New York City time, three Business Days before the date of the proposed
Competitive Borrowing, (ii) in the case of a Sterling LIBOR Competitive
Borrowing or a EURIBOR Competitive Borrowing, not later than 10:30 a.m., New
York City time, four Business Days before the date of the proposed Competitive
Borrowing, and (iii) in the case of a Fixed Rate Borrowing, not later than 10:30
a.m., New York City time, on the proposed date of the Competitive Borrowing;
provided that (i) the failure of the Company to give such notice shall be deemed
to be a rejection of each Competitive Bid, (ii) the Company shall not accept a
Competitive Bid made at a particular Competitive Bid Rate if the Company rejects
a Competitive Bid made at a lower Competitive Bid Rate, (iii) the aggregate
amount of the Competitive Bids accepted by the Company shall not exceed the
aggregate amount of the requested Competitive Borrowing specified in the related
Competitive Bid Request, (iv) to the extent necessary to comply with clause
(iii) above, the Company may accept Competitive Bids at the same Competitive Bid
Rate in part, which acceptance, in the case of multiple Competitive Bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such Competitive Bid, and (v) except pursuant to clause (iv) above, no
Competitive Bid shall be accepted for a Competitive Loan unless such Competitive
Loan is in a minimum principal amount of 10,000,000 units of the applicable
currency and an integral multiple of 1,000,000 units of such currency; provided
further that if a Competitive Loan must be in an amount less than 10,000,000
units of the applicable currency because of the provisions of clause (iv) above,
such Competitive Loan may be for a minimum of 1,000,000 units of such currency
or any integral multiple thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple Competitive Bids at a particular Competitive
Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral
multiples of 1,000,000 units of the applicable currency in a manner determined
by the Company. A notice given by the Company pursuant to this paragraph shall
be irrevocable with respect to the Company and any applicable Borrower.
(e) The Administrative Agent shall promptly notify each
bidding Lender by telecopy whether or not its Competitive Bid has been accepted
(and, if so, the amount and Competitive Bid Rate so accepted), and each
successful bidder will thereupon become bound, subject to the terms and
conditions hereof, to make the Competitive Loan in respect of which its
Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such Competitive
Bid directly to the Company at least one quarter of an hour earlier than the
time by which the other Lenders are required to submit their Competitive Bids to
the Administrative Agent pursuant to paragraph (b) of this Section.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, in the case of
Dollar Borrowings, and by 12:00 noon, London time, in the case of Borrowings
denominated in an Alternate Currency, to the applicable Agency Account for the
account of the applicable Borrower. The Administrative Agent will make such
Loans available to the applicable Borrower by promptly crediting the amounts so
received, in like funds, to an account of such Borrower designated by the
Company in the applicable Borrowing Request or Competitive Bid Request.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the applicable Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the applicable Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the applicable Borrower, the interest rate applicable to ABR Loans.
If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a CD, EURIBOR or LIBOR Revolving Borrowing, shall have an
initial Interest Period as specified in such Borrowing Request. Thereafter, the
Company may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a CD, EURIBOR or LIBOR Revolving Borrowing,
may elect Interest Periods therefor, all as provided in this Section. The
Company may elect different options with respect to different portions of the
affected Borrowing, in which case each such portion shall be allocated ratably
among the Lenders holding the Loans comprising such Borrowing, and the Loans
comprising each such portion shall be considered a separate Borrowing. This
Section shall not apply to Competitive Borrowings, which may not be converted or
continued.
(b) To make an election pursuant to this Section, the Company
shall notify the Administrative Agent of such election by hand delivery or
telecopy of an Interest Election Request or by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Company were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Company.
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing, a CD Borrowing, a EURIBOR Borrowing or a LIBOR Borrowing;
(iv) if the resulting Borrowing is a CD Borrowing, a EURIBOR
Borrowing or a LIBOR Borrowing, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term "Interest Period".
If any such Interest Election Request requests a CD Borrowing, a EURIBOR
Borrowing or a LIBOR Borrowing, but does not specify an Interest Period, then
the Company shall be deemed to have selected an Interest Period of 30 days'
duration, in the case of a CD Borrowing, or one month's duration, in the case of
a EURIBOR Borrowing or a LIBOR Borrowing.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each Lender of the details
thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Company fails to deliver a timely Interest Election
Request with respect to a CD Revolving Borrowing, a EURIBOR Revolving Borrowing
or a LIBOR Revolving Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period, (i) if such Borrowing is denominated in
Dollars, it shall be converted to an ABR Revolving Borrowing and (ii) if such
Borrowing is denominated in an Alternate Currency, the Company shall be deemed
to have selected an Interest Period of one month's duration. Notwithstanding any
contrary provision hereof, if an Event of Default has occurred and is continuing
and the Administrative Agent, at the request of the Required Lenders, so
notifies the Company, then, so long as an Event of Default is continuing (i) no
outstanding Revolving Borrowing denominated in Dollars may be converted to or
continued as a CD Borrowing or a LIBOR Borrowing and (ii) unless repaid, (A) in
the case of Borrowings denominated in Dollars, each CD Revolving Borrowing and
each LIBOR Revolving Borrowing shall be converted to an ABR Revolving Borrowing
at the end of the Interest Period applicable thereto, and (B) in the case of
Borrowings denominated in an Alternate Currency, the Company shall be deemed to
have selected an Interest Period of one month's duration.
SECTION 2.07. Termination or Reduction of Commitments.
(a) Unless previously terminated the Commitments shall
terminate on the Maturity Date.
(b) The Company may at any time terminate, or from time to
time reduce, the Commitments with such reductions applicable in whole or in part
to the Domestic Available Amount or the Foreign Available Amount, at the option
of the Company; provided that (i) each reduction of the Commitments shall be in
an amount that is an integral multiple of $5,000,000 and not less than
$20,000,000 and (ii) the Company shall not terminate or reduce the Commitments
if, after giving effect to any concurrent prepayment of the Loans in accordance
with Section 2.09, (A) the sum of the Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans would exceed the
total Commitments, (B) with respect to the Company and the Domestic Subsidiary
Borrowers, the sum of the Revolving Credit Exposures attributable to such
Borrowers plus the aggregate principal amount of outstanding Competitive Loans
made to such Borrowers would exceed the Domestic Available Amount, and (C) with
respect to the Foreign Subsidiary Borrowers, the sum of the Revolving Credit
Exposures attributable to such Borrowers plus the aggregate principal amount of
outstanding Competitive Loans made to such Borrowers would exceed the Foreign
Available Amount.
(c) The Company shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least five Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Company pursuant to this Section shall be irrevocable; provided that a notice of
termination of the Commitments delivered by the Company may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Company (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) Each Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each of its Revolving
Loans on the Maturity Date and (ii) to the Administrative Agent for the account
of each Lender the then unpaid principal amount of each of its Competitive Loans
on the last day of the Interest Period applicable to such Loan provided, that
the Revolving Loans and Competitive Loans made by a Non-Extending Lender shall
be repaid as provided in Section 2.19.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of each Borrower to
such Lender resulting from each Loan made by such Lender to such Borrower,
including the amounts of principal and interest payable and paid to such Lender
from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from a Borrower for the account of the
Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of each Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced
by a promissory note. In such event, the applicable Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 10.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
(f) Any Loan made hereunder shall be repaid by the applicable
Borrower or Borrowers in the currency that such Loan was originally denominated
or deemed to be denominated; provided, however, that any Loan denominated in a
National Currency may be repaid in Euros in accordance with Section 1.05.
SECTION 2.09. Prepayment of Loans. (a) Any Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section;
provided that (i) each prepayment of a Borrowing shall be in an amount that is
an integral multiple of $1,000,000 and not less than $10,000,000, and (ii) such
Borrower shall not have the right to prepay a Competitive Loan without the prior
consent of the Lender thereof.
(b) The applicable Borrower shall notify the Administrative
Agent by telephone (confirmed immediately by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Revolving Borrowing, not
later than 11:00 a.m., New York City time, three Business Days before the date
of prepayment, (ii) in the case of prepayment of a Sterling LIBOR Revolving
Borrowing or a EURIBOR Revolving Borrowing, not later than 11:00 a.m., New York
City time, four Business Days before the date of prepayment,(iii) in the case of
prepayment of a CD Borrowing, not later than 11:00 a.m., New York City time, two
Business Days before the date of prepayment, or (iv) in the case of prepayment
of an ABR Revolving Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given in connection with a conditional notice of termination of
the Commitments as contemplated by Section 2.07, then such notice of prepayment
may be revoked if such notice of termination is revoked in accordance with
Section 2.07. Promptly following receipt of any such notice relating to a
Revolving Borrowing, the Administrative Agent shall advise the Lenders of the
contents thereof. Each partial prepayment of any Revolving Borrowing shall be in
an amount that would be permitted in the case of an advance of a Revolving
Borrowing of the same Type as provided in Section 2.02. Each prepayment of a
Revolving Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.11. Each prepayment shall include break funding
payments to the extent required by Section 2.14.
(c) In the event that (i) the aggregate principal amount of
all Loans under this Agreement exceeds the total aggregate Lenders' Commitments;
(ii) the aggregate principal amount of all Loans made to the Company and the
Domestic Subsidiary Borrowers exceeds the Domestic Available Amount; or (iii)
the aggregate principal amount of all Loans made to the Foreign Subsidiary
Borrowers exceeds the Foreign Available Amount; in each case as determined by
the aggregate of all applicable Dollar Borrowings and the Dollar Equivalent of
all applicable Alternate Currency Borrowings on the first Business Day of each
month then, at the request of the Administrative Agent, the Company shall, and
shall cause each Subsidiary Borrower to, prepay (A) in the case of clause (i)
above, immediately, and (B) in the case of clauses (ii) or (iii) above, within
three Business Days of such request, an amount equal to the excess described in
clauses (i), (ii), and (iii) above, as applicable, or in the case of clauses
(ii) and (iii) above, provide cash collateral by making a deposit in an account
with the Administrative Agent, in the name of the Administrative Agent and for
the benefit of the Lenders, of an amount in cash and in the same currency so as
to equal such excess as of such date plus any accrued and unpaid interest
thereon, which cash collateral shall be collaterally assigned as security
pursuant to the Cash Collateral Account Agreement, which agreement shall be
executed and delivered by the Borrowers to the Administrative Agent
contemporaneously with the payment of such cash collateral; provided that the
obligation to deposit such cash collateral shall become effective immediately,
and such deposit shall become immediately due and payable, without demand or
other notice of any kind, upon the occurrence of any Event of Default with
respect to any Borrower described in clause (h) or (i) of Article VIII. Such
deposit shall be held by the Administrative Agent as collateral for the payment
and performance of the obligations of the Borrowers under this Agreement. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the Borrowers'
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to satisfy obligations of
the Borrowers under this Agreement. If any Borrower is required to provide an
amount of cash collateral hereunder as a result of a request from the
Administrative Agent for a prepayment under this Section, such amount (to the
extent not applied as aforesaid) shall be returned to such Borrower within three
Business Days after the earlier of (x) the first Business Day of a month that
the Administrative Agent determines that such cash collateral is no longer
required pursuant to the terms of the first sentence of this Section and (y) a
prepayment of the Loans in an amount equal to such cash collateral.
(d) If at any time the Borrowers' fail to satisfy any one or
more of the conditions precedent set forth in Section 4.02 for any Refunding
Borrowing, the Company and each Subsidiary Borrower shall prepay its Loans (i)
in the case of LIBOR Loans, EURIBOR Loans or CD Loans, on the last day of the
Interest Period applicable thereto, and (ii) in the case of Base Rate Loans, on
or before the fifteenth day following the day on which notice is given by the
Company or the Administrative Agent of the failure to satisfy any such condition
precedent.
SECTION 2.10. Fees. (a) The Company agrees to pay to the
Administrative Agent for the account of each Lender a facility fee, which shall
accrue at the Applicable Rate for facility fees on the daily amount of the
Commitment of such Lender (whether used or unused) during the period from and
including the Closing Date to but excluding the date on which such Commitment
terminates; provided that, if such Lender continues to have any Revolving Credit
Exposure after its Commitment terminates, then such facility fee shall continue
to accrue on the daily amount of such Lender's Revolving Credit Exposure from
and including the date on which its Commitment terminates to but excluding the
date on which such Lender ceases to have any Revolving Credit Exposure. Accrued
facility fees shall be payable in arrears on the last day of March, June,
September and December of each year and on the date on which the Commitments
terminate, commencing on the first such date to occur after the date hereof;
provided that any facility fees accruing after the date on which the Commitments
terminate shall be payable on demand. All facility fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(b) The Borrowers agree to pay to the Administrative Agent for
the account of each Lender a utilization fee which shall accrue at the
Applicable Rate for utilization fees on the daily amount of such Lender's
Revolving Credit Exposure plus the aggregate principal amount of its Competitive
Loans during the time the sum of the total Revolving Credit Exposures plus the
aggregate principal amount of all outstanding Competitive Loans equals or
exceeds 33% of the total Commitments. Utilization fees shall be computed on the
basis of a year of 360 days and shall be payable in arrears on the last day of
March, June, September and December of each year. Each Subsidiary Borrower shall
be severally obligated to pay its portion of such fees with regard to its
Borrowings hereunder. Notwithstanding the foregoing, the Company agrees that it
will remain obligated for all such fees.
(c) The Company agrees to pay to the Administrative Agent, for
its own account, such fees as are set forth in the Fee Letter, on the dates and
in the manner specified therein.
(d) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, to the Administrative Agent, for its own account
or for distribution, in the case of facility fees and utilization fees, to the
Lenders.
Fees paid shall not be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest for each day such Loans are outstanding at the Alternate
Base Rate for such day. Any change in the Alternate Base Rate due to a change in
the Royal Bank Prime Rate or the Federal Funds Effective Rate shall be effective
from and including the effective date of such change in the Royal Bank Prime
Rate or the Federal Funds Effective Rate, as applicable.
(b) The Loans comprising each CD Borrowing shall bear interest
at the Adjusted CD Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate for LIBOR Borrowings plus 0.125% per annum.
(c) The Loans comprising each LIBOR Revolving Borrowing shall
bear interest at the Adjusted Eurodollar LIBO Rate or the Adjusted Sterling LIBO
Rate, as applicable, for the Interest Period in effect for such Borrowing plus
the Applicable Rate.
(d) The Loans comprising each LIBOR Competitive Borrowing
shall bear interest at the Adjusted Eurodollar LIBO Rate or the Adjusted
Sterling LIBO Rate, as applicable, for the Interest Period in effect for such
Borrowing plus (or minus, as applicable) the Margin applicable to such Loan.
(e) The Loans comprising each EURIBOR Revolving Borrowing
shall bear interest at Adjusted EURIBOR for the Interest Period in effect for
such Borrowing plus the Applicable Rate.
(f) The Loans comprising each EURIBOR Competitive Borrowing
shall bear interest at Adjusted EURIBOR for the Interest Period in effect for
such Borrowing plus (or minus, as applicable) the Margin applicable to such
Loan.
(g) Each Fixed Rate Loan shall bear interest at the Fixed Rate
applicable to such Loan.
(h) Notwithstanding the foregoing, if any principal of or
interest on any Loan or any fee or other amount payable by the applicable
Borrower hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to 2% plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section.
(i) Accrued interest on each Loan shall be payable in arrears
on each Interest Payment Date for such Loan and, in the case of Revolving Loans,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph (h) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any EURIBOR,
CD or LIBOR Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.
(j) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest on ABR Loans calculated by reference to
the Royal Bank Prime Rate shall be computed on the basis of a year of 365 days
(or 366 days in a leap year), and in each case shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
applicable interest rates shall be determined by the Administrative Agent in
accordance with the terms of this Agreement, and such determination shall be
conclusive absent manifest error.
(k) All interest accruing on any Loan hereunder shall be paid
in the currency in which such Loan is denominated or deemed to be denominated;
provided, however, that the interest accruing on any Loan denominated in a
National Currency may be paid in Euros in accordance with Section 1.05.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a CD Borrowing, a EURIBOR Borrowing or a LIBOR
Borrowing:
(a) the Administrative Agent:
(i) determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the Adjusted CD Rate, the Adjusted Eurodollar LIBO Rate,
the Adjusted Sterling LIBO Rate or Adjusted EURIBOR, as applicable, for
such Interest Period; or
(ii) is advised by the Required Lenders (or, in the case of a
EURIBOR Competitive Loan or a LIBOR Competitive Loan, the Lender that
is required to make such Loan) that the Adjusted CD Rate, the Adjusted
Eurodollar LIBO Rate, the Adjusted Sterling LIBO Rate or Adjusted
EURIBOR, as applicable, for such Interest Period will not adequately
and fairly reflect the cost to such Lenders (or Lender) of making or
maintaining their Loans (or its Loan) included in such Borrowing for
such Interest Period;
then the Administrative Agent shall give notice thereof to the Company, the
applicable Borrower and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent notifies the Company,
the applicable Borrower and the Lenders that the circumstances giving rise to
such notice no longer exist, (A) any Interest Election Request that requests the
conversion of any Revolving Borrowing to, or continuation of any Revolving
Borrowing as, a CD Borrowing, a EURIBOR Borrowing, or a LIBOR Borrowing, as
applicable, shall be ineffective, (B) if any Borrowing Request requests a CD
Borrowing or a LIBOR Revolving Borrowing, as applicable, if such Borrowing is to
be denominated in Dollars, it shall be made as an ABR Borrowing, (C) any request
by the Company for a EURIBOR or LIBOR Competitive Borrowing shall be ineffective
and (D) any request for a EURIBOR or LIBOR Borrowing denominated in an Alternate
Currency shall be ineffective; provided that (I) if the circumstances giving
rise to such notice do not affect all the Lenders, then requests by the Company
for EURIBOR or LIBOR Competitive Borrowings may be made to Lenders that are not
affected thereby and (II) if the circumstances giving rise to such notice do not
affect all such Types of Borrowings, then the other unaffected Types of
Borrowings shall be permitted.
(b) If, in relation to any Borrowing or proposed Borrowing to
be denominated in an Alternate Currency, and with respect to any Interest Period
relative thereto:
(i) the Administrative Agent shall have received notification
from a Lender or Lenders whose participations in such Borrowing
constitute at least 50% by value of such Borrowing, that by reason of
circumstances affecting the London interbank market or the Euro-zone
interbank market, as applicable:
(A) deposits in the applicable Alternate Currency for
the same period as such Interest Period will not be readily available
to them in the London interbank market or the Euro-zone interbank
market, as applicable, in sufficient amounts in the ordinary course of
business to fund their respective Loans in such Borrowing for such
Interest Period; or
(B) while such deposits are so available, the cost of
such deposits exceeds the applicable LIBO Rate or EURIBOR as determined
in relation to such Borrowing for such Interest Period; or
(ii) the Administrative Agent shall have received notification
from any Lender (an "Affected Lender") that by reason of any change in
or the introduction (or re-introduction) of or any change in the
interpretation, administration or application of applicable law or
regulation (in each such case after the date hereof or, if later, the
date on which the Affected Lender became a part to this Agreement) it
is unable to fund its Loan in such Borrowing during such Interest
Period by deposit(s) in the applicable Alternate Currency obtained in
the London interbank market or the Euro-zone interbank market, as
applicable, in the ordinary course of business;
the Administrative Agent shall promptly give written notice of such
determination or notification to the Company and each of the Lenders.
(c) After the giving of any notice by the Administrative Agent
pursuant to Section 2.12(b) to the effect that it has received notification in
accordance with Section 2.12(b)(i)(A) or 2.12(b)(ii), no Lender or, as the case
may be, no Affected Lender shall be obliged to participate in the Borrowing to
which such notification relates unless such Borrowing is already then
outstanding. The giving of any notice by the Administrative Agent pursuant to
Section 2.12(b)(i)(B) shall not relieve any Lender of any obligation it may have
under this Agreement to make a Loan (including any Loan for which a Borrowing
Request was given prior to such notice by the Administrative Agent).
(d) During the period of 15 days after the giving of any
notice by the Administrative Agent pursuant to Section 2.12(b), the
Administrative Agent (in consultation with the Lenders or the Affected Lender)
shall negotiate with the Company in good faith with a view to ascertaining
whether a substitute basis (a "Substitute Basis") may be agreed for the making
of further Borrowings and/or the maintaining of any existing Borrowings by the
Lenders or such Affected Lender (as the case may be) to which such notice by the
Administrative Agent related for the Interest Period(s) applicable to those
Borrowings. If a Substitute Basis is agreed by all the Lenders or by the
Affected Lender (as the case may be) and the Company it shall apply in
accordance with its terms from the commencement of such Interest Period. The
Administrative Agent shall not agree to any Substitute Basis on behalf of any
Lender or Affected Lender without the prior consent of that Lender or Affected
Lender (as the case may be).
(e) If a Substitute Basis is not so agreed by the Company and
all the Lenders or the Affected Lender (as the case may be) by the end of such
15 day period, each Lender's or Affected Lender's then existing Loan or Loans to
which the notice by the Administrative Agent related shall bear interest during
the current Interest Period relative thereto at the rate which is the sum of (a)
the per annum rate certified by such Lender or Affected Lender to be its cost of
funds (from such sources as it may reasonably select out of those sources then
available to it) for such Interest Period in relation to such Borrowing
multiplied by the Reserve Rate, plus (b) the Associated Costs Rate, plus (c) the
Applicable Rate.
(f) So long as any Substitute Basis is in force or Section
2.12(e) shall apply in relation to any Borrowing, the Administrative Agent, in
consultation with the Company and each Lender (or, if applicable, Affected
Lender) shall from time to time, but not less often then monthly, review whether
or not the circumstances referred to in Section 2.12(b) still prevail with a
view to returning to the normal interest provisions of this Agreement.
SECTION 2.13. Illegality; Increased Costs. (a) If any Change in Law
shall make it unlawful or impossible for any Lender to make, maintain or fund
its Loans, such Lender shall so notify the Administrative Agent, the
Administrative Agent shall immediately give notice thereof to the other Lenders
and to the Company, whereupon until such Lender notifies the Company and the
Administrative Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Lender to make such Loans shall be
suspended. If such Lender shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Loans to maturity and shall so specify
in such notice, the applicable Borrower shall immediately prepay in full the
then outstanding principal amount of such Loan together with the accrued
interest thereon.
(b) If any Change in Law, including, without limitation,
reserve requirements imposed by the European System of Central Banks with
respect to the Euro or the National Currencies on or after January 1, 1999,
shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted CD Rate, the Adjusted
Eurodollar LIBO Rate, the Adjusted Sterling LIBO Rate or Adjusted
EURIBOR); or
(ii) impose on any Lender, the London interbank market or the
Euro-zone interbank market any other condition affecting this Agreement
or any Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan (or of maintaining its obligation to
make any such Loan) or to increase the cost to such Lender or to reduce the
amount of any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the applicable Borrower will pay to such
Lender such additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(c) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the applicable Borrower will pay to
such Lender such additional amount or amounts as will compensate such Lender or
such Lender's holding company for any such reduction suffered.
(d) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (b) or (c) of this Section shall be delivered
to the applicable Borrower and shall be conclusive absent manifest error. The
applicable Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
(e) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; provided that the applicable
Borrower shall not be required to compensate a Lender pursuant to this Section
for any increased costs or reductions incurred more than 270 days prior to the
date that such Lender notifies the applicable Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's intention
to claim compensation therefor; provided further that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
270-day period referred to above shall be extended to include the period of
retroactive effect thereof.
(f) Notwithstanding the foregoing provisions of this Section,
a Lender shall not be entitled to compensation pursuant to this Section in
respect of any Competitive Loan if the Change in Law that would otherwise
entitle it to such compensation shall have been publicly announced prior to
submission of the Competitive Bid pursuant to which such Loan was made.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment
of any principal of any CD Loan, EURIBOR Loan, LIBOR Loan, or Fixed Rate Loan
other than on the last day of an Interest Period applicable thereto (including
as a result of an Event of Default), (b) the conversion of any CD Loan, EURIBOR
Loan or LIBOR Loan other than on the last day of the Interest Period applicable
thereto, (c) the failure to borrow, convert, continue or prepay any Revolving
Loan on the date specified in any notice delivered pursuant hereto (regardless
of whether such notice may be revoked under Section 2.09(b) and is revoked in
accordance therewith), (d) the failure to borrow any Competitive Loan after
accepting the Competitive Bid to make such Loan, or (e) the assignment of any CD
Loan, EURIBOR Loan, LIBOR Loan or Fixed Rate Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Company
pursuant to Section 2.17, then, in any such event, the applicable Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a CD Loan, EURIBOR Loan or LIBOR Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted CD Rate (in the case of a CD Loan), Adjusted EURIBOR (in the case of a
EURIBOR Loan) or the Adjusted Eurodollar LIBO Rate or the Adjusted Sterling LIBO
Rate, as applicable, (in the case of a LIBOR Loan), that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for Dollar
deposits of a comparable amount and period from other banks in the eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the applicable Borrower and shall be conclusive absent manifest error. The
applicable Borrower shall pay such Lender the amount shown as due on any such
certificate within 10 days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of any Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if any
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or a Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the applicable Borrower shall make such
deductions and (iii) the applicable Borrower shall pay the full amount deducted
to the relevant Governmental Authority in accordance with applicable law.
(b) In addition, each Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) Each Borrower shall indemnify the Administrative Agent and
each Lender, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender, as the case may be, on or with respect to any payment by or on account
of any obligation of such Borrower hereunder (including Indemnified Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto, whether or not such Indemnified Taxes or Other Taxes
were correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the applicable Borrower by a Lender or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by a Borrower to a Governmental Authority, the applicable
Borrower shall deliver to the Administrative Agent the original or a certified
copy of a receipt issued by such Governmental Authority evidencing such payment,
a copy of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) As of the date on which any Lender becomes a party hereto,
such Lender confirms that with respect to its Loans to a United States person
(within the meaning of Section 7701(a)(30) of the Code), it is either (i) a
corporation organized under the laws of the United States of America or any
state thereof, entitled to complete exemption from United States withholding tax
imposed on or with respect to any payments, including fees, to be made to it
pursuant to this Agreement, or (ii) entitled to complete exemption from United
States withholding tax on interest imposed on or with respect to any payments of
interest to be made pursuant to this Agreement (A) under an applicable provision
of a U.S. Double Taxation Treaty, (B) because it is acting through a branch,
agency or office in the United States of America and any payment to be received
by it hereunder is effectively connected with a trade or business in the United
States of America, or (C) because it is a recipient of portfolio interest within
the meaning of Section 871(h) or 881(c) of the Code. Such Lender, as of such
date, also confirms that with respect to its Loans (or interest or other
payments relating thereto) regarding which the U.K. Tax Act could reasonably be
expected to result in withholding tax requirements under the U.K. Tax Act (but
for the applicable Lender qualifying for the immediately following exemptions)
it is either (x) a bank as defined in Section 840A of the U.K. Tax Act, which,
for the purposes of Sections 349 and 212 of the U.K. Tax Act, is within the
charge to United Kingdom corporation tax as regards, and is beneficially
entitled to, any interest received by it under this Agreement, except that, if
that Section is repealed, modified, extended or re-enacted, the Administrative
Agent may at any time and from time to time (acting reasonably) amend this
definition to reflect such repeal, modification, extension or enactment by
giving notice of the amended definition to the Company, or (y) a person carrying
on a bona fide banking business who is resident (as such term is defined in the
appropriate U.K. Double Taxation Treaty) in a country with which the United
Kingdom has an appropriate U.K. Double Taxation Treaty giving residents of that
country full exemption from United Kingdom taxation on interest and does not
carry on business in the United Kingdom through a permanent establishment with
which the indebtedness under this Agreement in respect of which the interest is
paid is effectively connected. Each Lender that is not a corporation organized
under the laws of the United States of America or any state thereof shall
provide to the Company and the Administrative Agent on or before the date of any
payment by any Borrower hereunder, or on the date of its delivery of the
Assignment and Acceptance pursuant to which it becomes a Lender, and at such
other times as required by United States law or as the Company or the
Administrative Agent shall reasonably request, two accurate and complete
original signed copies of either (A) Internal Revenue Service Form 4224 (or
successor form) certifying that all payments to be made to it hereunder will be
effectively connected to a United States trade or business (the "Form 4224
Certification"), or (B) Internal Revenue Service Form 1001 (or successor form)
certifying that it is entitled to the benefit of a provision of a U.S. Double
Taxation Treaty which completely exempts from United States withholding tax all
payments of interest to be made to it hereunder (the "Form 1001 Certification").
In addition, each Lender agrees that if it previously filed a Form 4224
Certification it will deliver to the Company and the Administrative Agent a new
Form 4224 Certification prior to the first payment date occurring in each of its
subsequent taxable years (or such other date as may be required in compliance
with applicable law); and if it previously filed a Form 1001 Certification, it
will deliver to the Company and the Administrative Agent a new certification
prior to the first payment date falling in the third year following the previous
filing of such certification (or such other date as may be required in
compliance with applicable law).
Each Lender also agrees to deliver to the Company and the Administrative Agent
such other or supplemental forms as may at any time be required in order to
confirm or maintain in effect its entitlement to exemption from United States or
United Kingdom withholding tax on any payments hereunder, provided that the
circumstances of the Lender at the relevant time and applicable laws permit it
to do so. Except as provided immediately below, if a Lender is organized under
the laws of a jurisdiction outside the United States of America, unless the
Company and the Administrative Agent have received a Form 1001 Certification or
Form 4224 Certification, reasonably satisfactory to them indicating that all
payments of interest, to be made to such Lender hereunder are not subject to
United States withholding tax, the Company shall be entitled to withhold taxes
from such payments at the applicable statutory rate, provided that such
withholding shall not increase the amount of payments for the account of such
Lender to be made by the Company pursuant to Subsection 2.15(a). If a Lender
determines, as a result of any change in either (i) applicable law, regulation
or treaty, or in any official application thereof or (ii) its circumstances,
that it is unable to submit any form or certificate that it is obligated to
submit pursuant to this Section, or that it is required to withdraw or cancel
any such form or certificate previously submitted, it shall promptly notify the
Company and the Administrative Agent of such fact and the Company shall be
entitled to withhold taxes from such payments at the applicable statutory rate,
it being understood that such withholding shall increase the amount of payments
for the account of such Lender to be made by the Company pursuant to Section
2.15(a). Each Lender agrees to indemnify and hold the Administrative Agent
harmless from any United States or United Kingdom taxes, penalties, interest and
other expenses, costs and losses incurred or payable by the Administrative Agent
(i) as a result of such Lender's failure to submit any form or certificate that
it is required to provide pursuant to this Section or (ii) as a result of the
Administrative Agent's reliance on any such form or certificate which such
Lender has provided to it pursuant to this Section. Each Person that shall
become a Lender or a Participant pursuant to Section 10.04 shall, upon the
effectiveness of the related transfer, be required to provide all of the forms,
certifications and statements required pursuant to this Section, provided that
in the case of a Participant the obligations of such Participant shall be the
same as if it were a Lender, except that such Participant shall furnish all such
required forms, certifications and statements to the Lender from which the
related participation shall have been purchased and such Lender shall provide
such forms to the Company and the Administrative Agent.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) Each Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or of amounts payable under
Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon, New York City or
London time, as applicable, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in the discretion of the Administrative Agent, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon. All such payments shall be made to the applicable Agency
Account for the account of the Lenders, except that payments pursuant to
Sections 2.13, 2.14, 2.15 and 10.03 shall be made directly to the Persons
entitled thereto. The Administrative Agent shall distribute any such payments
received by it for the account of any other Person to the appropriate recipient
promptly following receipt thereof. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
hereunder shall be made in Dollars, except that with respect to any Loan that is
denominated in an Alternate Currency, all payments of principal and interest
with respect to such Loan shall be made in the Alternate Currency in which such
Loan is denominated; provided, however, that with respect to any Loan
denominated in a National Currency, all payments with respect thereto may be
made in Euros in accordance with Section 1.05.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied towards
payment of interest and fees then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of interest and fees then due to
such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by a Borrower pursuant to and in accordance with the express terms
of this Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to a Borrower or any Subsidiary or Affiliate thereof (as
to which the provisions of this paragraph shall apply). Each Borrower consents
to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of such Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from a Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that such Borrower
will not make such payment, the Administrative Agent may assume that the
applicable Borrower has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to the Lenders the amount
due. In such event, if the applicable Borrower has not in fact made such
payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to 2.05(b) or 2.16(d), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.13, or if any Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or Affiliates, if, in the judgment
of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 2.13 or 2.15, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. Each Borrower
hereby agrees to pay all reasonable costs and expenses incurred by such Lender
in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or
if any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Company may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 10.04), all its interests, rights and obligations under this Agreement
(other than any outstanding Competitive Loans held by it) to an assignee that
shall assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided that (i) the Company shall have received the
prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an
amount equal to the outstanding principal of its Loans (other than Competitive
Loans), accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Company (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for compensation
under Section 2.13 or payments required to be made pursuant to Section 2.15,
such assignment will result in a reduction in such compensation or payments. A
Lender shall not be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Company to require such assignment and delegation
cease to apply.
SECTION 2.18. Foreign Available Amount Designation. Once per Fiscal
Quarter, the Company, may, at its sole option, designate or redesignate the
amount of the Foreign Available Amount by delivering a written notice to the
Administrative Agent not less than five Business Days prior to the date the
Company proposes that the newly designated Foreign Available Amount would become
effective; provided, that no such designation of the Foreign Available Amount
may occur if a Default exists or if the sum of the Revolving Credit Exposures
plus the aggregate principal amount of outstanding Competitive Loans, at such
time, with respect to the Foreign Subsidiary Borrowers or the Company and the
Domestic Subsidiary Borrowers, as applicable, would, after giving effect to such
designation and any concurrent payments on such Loans, exceed the Foreign
Available Amount or the Domestic Available Amount, respectively.
SECTION 2.19. Extension of Stated Maturity Date. (a) No earlier than 90
days and no later than 60 days prior to an Anniversary Date, the Company may,
subject to satisfaction of the conditions precedent for a Borrowing other than a
Refunding Borrowing set forth in Section 4.02, request in writing delivered to
the Administrative Agent an extension of the Maturity Date for a period equal to
one year from the then applicable Maturity Date (the "Extension Request"). The
Maturity Date shall be extended as provided in this Section 2.19 if at least the
Required Lenders consent to such extension. Each Lender shall, no later than 30
days after receiving from the Administrative Agent the applicable Extension
Request, notify the Company and the Administrative Agent of its election to
extend or not extend the Maturity Date as requested in such Extension Request.
If the Required Lenders shall approve in writing the extension of the Maturity
Date requested in such Extension Request, the Maturity Date shall automatically
and without any further action by any Person be extended for the period
specified in such Extension Request; provided that (i) each extension pursuant
to this Section 2.19 shall be for a maximum of one year, and (ii) the Commitment
of any Lender that does not consent in writing within 30 days after receiving
from the Administrative Agent the applicable Extension Request (a "Non-Extending
Lender") shall, unless earlier terminated in accordance with this Agreement,
expire on the Maturity Date in effect on the date of such Extension Request
(such Maturity Date, if any, referred to as the "Commitment Expiration Date"
with respect to such Non-Extending Lender). If, within 30 days after receiving
from the Administrative Agent the applicable Extension Request, the Required
Lenders shall not approve in writing the extension of the Maturity Date
requested in an Extension Request, the Maturity Date shall not be extended
pursuant to such Extension Request. The Administrative Agent shall promptly
notify (y) the Lenders and the Company of any extension of the Maturity Date
pursuant to this Section 2.19 and (z) the Company and the Lenders of any Lender
which becomes a Non-Extending Lender.
(b) Loans owing to any Non-Extending Lender on the Commitment
Expiration Date with respect to such Lender shall be repaid in full on or before
the Commitment Expiration Date.
(c) Each Borrower shall have the right, so long as no Event of
Default has occurred and is then continuing, upon giving notice to the
Administrative Agent and the Non-Extending Lenders, to prepay in full the Loans
made to it owing to the Non-Extending Lenders, together with accrued interest
thereon, any amounts payable pursuant to Sections 2.11, 2.13, 2.14, 2.15 and
10.03(b) and any accrued and unpaid facility fee or other amounts payable to the
Non-Extending Lenders hereunder and/or, upon giving not less than three Business
Days' notice to the Non-Extending Lenders and the Administrative Agent, to
cancel the whole or part of the Commitments of the Non-Extending Lenders.
(d) Notwithstanding the foregoing, if any Lender becomes a
Non-Extending Lender, the Company may, at its own expense and in its sole
discretion and prior to the then stated Maturity Date, require such Lender to
transfer or assign, in whole or in part, without recourse (in accordance with
Section 10.04), all or part of its interests, rights and obligations under this
Agreement to an assignee permitted under Section 10.04 (provided that the
Company with the full cooperation of such Lender, can identify such an assignee
that is ready, willing and able to be an assignee with respect thereto) which
shall assume such assigned obligations (which assignee may be another Lender, if
such assignee Lender accepts such assignment); provided that (i) the assignee or
the Company, as the case may be, shall have paid to such Lender in immediately
available funds the principal of and interest accrued to the date of such
payment on the Loans made by it hereunder and all other amounts owed to it
hereunder, including, without limitation, any amounts owing pursuant to Section
10.03(b) and any amounts that would be owing under said Section if such Loans
were prepaid on the date of such assignment, and (ii) such assignment does not
conflict with any applicable law of any Governmental Authority. Any assignee
which becomes a Lender as a result of such an assignment made pursuant to this
paragraph (d) shall be deemed to have consented to the applicable Extension
Request and, therefore, shall not be a Non-Extending Lender.
SECTION 2.20. Addition or Termination of Subsidiary Borrowers. So long
as no Default exists, the Company may from time to time provide written notice
to the Administrative Agent, and the Administrative Agent shall immediately
thereafter provide a copy of such notice along with a copy of all documentation
relating thereto received from the Company to each of the Lenders:
(a) Designating any of its wholly owned, directly or
indirectly, Subsidiaries organized under the laws of the United States of
America, any State thereof or the District of Columbia, as an additional
Domestic Subsidiary Borrower and shall execute and deliver, and cause each such
newly designated Domestic Subsidiary Borrower to execute and deliver, to the
Administrative Agent a Joinder Agreement (together with all documents required
to be attached thereto) whereupon such Subsidiary shall thereafter qualify as a
Domestic Subsidiary Borrower.
(b) Designating any of its wholly owned, directly or
indirectly, Subsidiaries organized under the laws of the United Kingdom or any
Participating Member State and located in the United Kingdom or any
Participating Member State, as an additional Foreign Subsidiary Borrower and
shall execute and deliver, and cause each such newly designated Foreign
Subsidiary Borrower to execute and deliver, to the Administrative Agent a
Joinder Agreement (together with all documents required to be attached thereto)
whereupon such Subsidiary shall thereafter qualify as a Foreign Subsidiary
Borrower; provided, however, that for purposes of this Section 2.20(b), any
Subsidiary of the Company that is required by the applicable law of its
jurisdiction of organization or formation to be owned by a citizen of such
jurisdiction or Person organized or formed under the laws of such jurisdiction
in an amount equal to or less than one percent of the capital stock or equity
interest of such Subsidiary and such one percent or lesser amount of ownership
does not provide for voting or distribution rights in excess of such ownership
percentage or otherwise give a Controlling interest to such Person, then, for
purposes of this Section 2.20(b), such Subsidiary shall be deemed to be wholly
owned by the Company.
(c) With respect to any Subsidiary Borrower, that the Company
is terminating such Subsidiary's designation as a Domestic Subsidiary Borrower
or a Foreign Subsidiary Borrower, as the case may be, whereupon if all
obligations of such Subsidiary Borrower to the Administrative Agent and the
Lenders under or in connection with this Agreement have been indefeasibly paid
in full pursuant to the terms hereof, such Subsidiary shall thereafter no longer
be a Subsidiary Borrower hereunder.
SECTION 2.21. Change in Control. If a Change in Control shall occur (i)
the Company will, ten days after the occurrence thereof, give each Lender notice
thereof and shall describe in reasonable detail the facts and circumstances
giving rise thereto and (ii) each Lender may, at any time at its option by
notice to the Borrowers and the Administrative Agent given not later than 60
days after such Change in Control, (x) terminate its Commitment, which
Commitment shall thereupon be terminated, and (y) by three Business Days notice
to the Borrowers and the Administrative Agent declare the Loans held by it
(together with accrued interest thereon) and any other amounts payable hereunder
for its account to be, and such Loans and such other amounts shall thereupon
become, immediately due and payable without presentment, demand, protest, or
other notice of any kind, all of which are hereby waived by the Borrowers.
ARTICLE III
Representations and Warranties
To induce the Lenders to enter into this Agreement and to make the
Loans, each Borrower represents and warrants (such representations and
warranties to survive any investigation and the making of the Loans) to the
Lenders and the Administrative Agent that:
SECTION 3.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Each Material Subsidiary organized under the laws
of the United States of America, any State thereof, or the District of Columbia,
is a corporation duly incorporated, validly existing and in good standing (or,
if such Subsidiary is a limited liability company, is a limited liability
company duly formed, validly existing and in good standing) under the laws of
its jurisdiction of incorporation, organization or formation. Each Material
Subsidiary organized under the laws of a jurisdiction other than United States
of America, any State thereof, or the District of Columbia is a company duly
formed and validly existing under the laws of its jurisdiction of formation. The
Company and each Material Subsidiary has all requisite corporate or limited
liability company power and all material governmental licenses, permits,
authorizations, qualifications, consents and approvals required to carry on its
business as now conducted which, if not obtained, could reasonably be expected
to have a Material Adverse Effect.
SECTION 3.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance of this Agreement by the
Company and each Subsidiary Borrower are within each such Borrower's corporate
or limited liability company powers, have been duly authorized by all necessary
corporate or limited liability company action, require no approval of or filing
with any governmental body, agency or official or any other Person, do not
conflict with, contravene or constitute a default under any provision of
applicable law or regulation or of the certificate of incorporation, by-laws,
articles of association or memorandum of association of such Borrower or of any
agreement, judgment, injunction, order, decree or other instrument binding upon
such Borrower unless such conflict could not reasonably be expected to have a
Material Adverse Effect, and will not result in the creation or imposition of
any mortgage, security interest or other lien or encumbrance on any asset or
revenues of such Borrower or any of its Subsidiaries.
SECTION 3.03. Binding Effect. This Agreement constitutes a legal, valid
and binding agreement of each of the Company and each Subsidiary Borrower
enforceable against each Borrower in accordance with its terms.
SECTION 3.04. Financial Information.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1997, and the related consolidated statements of
income, retained earnings and cash flows for the year then ended, reported on by
Arthur Andersen L.L.P. and set forth in the Company's 1997 Annual Report, a copy
of which has been delivered to each of the Lenders, fairly present, in
conformity with GAAP, the consolidated financial position of the Company and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such year.
(b) the unaudited consolidated statement of financial condition of the
Company and its Consolidated Subsidiaries at September 30, 1998, and the related
consolidated statements of income and retained earnings and cash flows of the
Company and its Consolidated Subsidiaries for the nine months ending September
30, 1998, heretofore furnished to the Lenders present fairly, in conformity with
GAAP, the consolidated financial condition of the Company at the date of said
statements for said periods, subject to year-end audit adjustments in the case
of such unaudited statements.
(c) At the Effective Date, there has been no material adverse change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Company and its Consolidated Subsidiaries, taken as a whole
since September 30, 1998, including with regard thereto the selected pro forma
financial information dated as of and for the nine months ended September 30,
1998, set forth in the Company's S-4 filed with the SEC, and effective as of
January 27, 1999.
SECTION 3.05. Litigation. Except as may have been disclosed in writing
to the Lenders prior to the signing hereof, there is no material action, suit or
proceeding pending, or to the knowledge of the Company threatened, against or
affecting the Company or any Subsidiary before any court or arbitrator or any
governmental body, agency or official which could reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.06. Compliance with ERISA.
(a) Neither the Company nor any ERISA Affiliate has failed to comply in
any material respect with the applicable provisions of ERISA and the Code and
the regulations promulgated thereunder (including, without limitation, sections
4068, 4069 and 4212 of ERISA), where such failure could reasonably be expected
to result in a Material Adverse Effect.
(b) Other than premiums to the PBGC due in the normal course, no
liability to the PBGC (with respect to which the Company or any ERISA Affiliate
is delinquent) has been incurred and remains unsatisfied or is expected by the
Company to be incurred with respect to any Plan by the Company or any ERISA
Affiliate which could reasonably be expected to result in a Material Adverse
Effect.
(c) Neither the Company nor any ERISA Affiliate is obligated to
contribute to, or has incurred a withdrawal liability with respect to, any
Multiemployer Plan in an amount that would be materially adverse to the Company
and its Subsidiaries taken as a whole.
(d) Full payment has been made of all amounts that the Company or any
ERISA Affiliate is required under the terms of each Plan to have paid as
contributions to such Plan as of the last day of the most recent fiscal year of
such Plan ended prior to the date hereof (or will be made within the period
described in Section 404 of the Code) and no accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, exists with respect to any Plan. Each Plan satisfies the minimum funding
standard of Section 412 of the Code.
(e) The amount of Benefit Liabilities under each Plan, determined as of
the end of the Company's most recently ended fiscal year (on the basis of
assumptions prescribed by the PBGC for purposes of Section 4044 of ERISA) did
not exceed the current value of the assets of such Plans determined as of such
date in an amount that, individually or in the aggregate with such amount for
all Plans, exceeds $25,000,000.
SECTION 3.07. Environmental Matters. The Company and each Subsidiary,
and to the best of the Company's knowledge, any former subsidiary and any
predecessor in interest of the Company or of any Subsidiary, and with respect to
all of the Property of the Company and its Subsidiaries, and each of the plants,
sites and facilities presently or formerly owned, operated, controlled, or
leased by the Company or any of its Subsidiaries, has complied with all
applicable Environmental Laws during the period such Subsidiary, plant, site or
facility was owned, operated, controlled or leased by the Company or any of its
Subsidiaries, except in any such case, where such failure to so comply could not
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries has received any notice of, or has knowledge of, any
actual or threatened claim, legal proceeding or investigation regarding the
Company or any of its Subsidiaries, or any of the respective plants, sites or
facilities currently or formerly owned, operated, leased or controlled by any of
them, related to Environmental Laws which alone or together with all other such
matters known to the Company could reasonably be expected to have a Material
Adverse Effect.
SECTION 3.08. Taxes. The Company and its Subsidiaries have filed all
United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by the Company or any
Subsidiary, except such taxes or assessments, if any, as are being contested in
good faith by appropriate proceedings. The charges, accruals and reserves on the
books of the Company and its Subsidiaries in respect of taxes are, in the
opinion of the Company, adequate.
SECTION 3.09. Investment Company Act. None of the Borrowers is an
investment company within the meaning of the Investment Company Act of 1940, as
amended, or directly or indirectly controlled by or acting on behalf of any
Person which is an investment company, within the meaning of such Act.
SECTION 3.10. Public Utility Holding Company Act. None of the Borrowers
is a "public utility company, or an "affiliate," or a "subsidiary company of a
"public utility company," or a "holding company," or an "affiliate" or a
"subsidiary company" of a "holding company" or of a "subsidiary company" of a
"holding company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
SECTION 3.11. Use of Proceeds. No portion of the Loans will be used,
directly or indirectly, (a) to purchase or carry any Margin Stock, (b) to repay
or otherwise refinance indebtedness of any Borrower incurred to purchase or
carry any Margin Stock, or (c) to extend credit for the purpose of purchasing or
carrying any Margin Stock.
SECTION 3.12. Disclosure. The Company has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it or any
of its Material Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect. None of the other reports, financial statements,
certificates or other information furnished by or on behalf of the Company or
its Material Subsidiaries to the Administrative Agent or any Lender in
connection with the negotiation of this Agreement or delivered hereunder (as
modified or supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that, with respect to projected financial
information, each Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.13. Year 2000 Compliance. The Company believes that any
reprogramming required to permit the proper functioning, in and following the
year 2000, of (a) the Company's, or any Material Subsidiary's, computer systems
and (b) equipment containing embedded microchips (including systems and
equipment supplied by others or with which the Company's, or any Material
Subsidiary's, systems interface) and the testing of all such systems and
equipment, as so reprogrammed, to the extent necessary to prevent any
significant disruptions to the business and operations of the Company and its
Subsidiaries on a consolidated basis, will be completed by September 30, 1999.
The cost to the Company and its Material Subsidiaries of such reprogramming and
testing and of the reasonably foreseeable consequences of year 2000 to the
Company (including, without limitation, reprogramming errors and the failure of
others' systems or equipment) will not result in a Default or other event or
circumstance that could reasonably be expected to have a Material Adverse
Effect.
SECTION 3.14. Material Subsidiaries. As of the Effective Date, the
Subsidiaries of the Company that qualify as Material Subsidiaries under this
Agreement and that are not Subsidiary Borrowers are those Subsidiaries listed on
Schedule 3.14 attached hereto.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement.
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Russell G. Horner, Jr., General Counsel of the Company,
substantially in the form of Exhibit B-1, and covering such other matters
relating to the Borrowers, this Agreement or the Transactions as the Required
Lenders shall reasonably request. Each Borrower hereby requests such counsel to
deliver such opinion.
(c) The Administrative Agent shall have received a favorable
written opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of Simpson Thacher & Bartlett, counsel for the Borrowers,
substantially in the form of Exhibit B-2, and covering such other matters
relating to the Borrowers, this Agreement or the Transactions as the Required
Lenders shall reasonably request. Each Borrower hereby requests such counsel to
deliver such opinion.
(d) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
each Borrower organized under the laws of the United States of America, any
State thereof, or the District of Columbia and relating to the organization and
existence of each Borrower organized under the laws of a jurisdiction other than
the United States, any State thereof, or the District of Columbia, the
authorization of the Transactions, and any other legal matters relating to such
Borrower, this Agreement or the Transactions, all in form and substance
satisfactory to the Administrative Agent and its counsel.
(e) The Administrative Agent shall have received a certificate
from each Borrower, dated the Effective Date and signed by the President, a Vice
President, a Financial Officer, or a director of such Borrower, confirming
compliance with the conditions set forth in paragraphs (a), (b), (c), and (d) of
Section 4.02.
(f) The Administrative Agent shall have received for its own
account, or for the account of the Lenders, as the case may be, all fees, costs
and expenses due and payable pursuant to the Fee Letter and Section 10.03.
(g) All conditions precedent related to the Company's merger
with Oryx Energy Company as detailed in the S-4 filed November 17, 1998 with the
SEC shall have been fulfilled.
(h) Each of the Oryx Facility and the ABN Facility A shall
have been terminated and all respective obligations thereunder have been
satisfied, subject only to funding of the initial Loans under this Agreement.
The Administrative Agent shall notify each Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 5:00 p.m., New York City time, on
March 31, 1999 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to
make, convert or continue a Loan on the occasion of any Borrowing is subject to
the satisfaction of the following conditions:
(a) On the occasion of any Borrowing other than a Refunding
Borrowing, each of the representations and warranties of the Borrowers set forth
in this Agreement shall be true and correct on and as of the date of such
Borrowing. On the occasion of any Refunding Borrowing, each of the
representations and warranties of the Borrowers set forth in this Agreement,
other than the representations and warranties set forth in Sections 3.04(c),
3.05 and 3.07, shall be true and correct on and as of the date of such
Borrowing.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default shall have occurred and be continuing.
(c) At the time of and immediately after giving effect to such
Borrowing, the Consolidated Tangible Net Worth shall be equal to or greater than
$1,000,000,000.
(d) At the time of and immediately after giving effect to such
Borrowing, at any time when the Applicable Rate is determined by reference to
Level Three, Four, Five or Six as provided in the Pricing Schedule, the Debt
Leverage Ratio is equal to or less than 3.5:1.00.
(e) The Administrative Agent shall have received a Joinder
Agreement (together with all documents required to be attached thereto) executed
and delivered by the Company and each Subsidiary Borrower that is designated as
such by the Company subsequent to the Effective Date, and the Administrative
Agent shall have delivered a copy of such Joinder Agreement (together with a
copy of all documents required to be attached thereto) to each of the Lenders.
Each Borrowing shall be deemed to constitute a representation and warranty by
each Borrower on the date thereof as to the matters specified in paragraphs (a),
(b), (c) and (d) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, each Borrower covenants and agrees with the Lenders that it
will:
SECTION 5.01. Information. Deliver, or cause to be delivered, to the
Administrative Agent and each Lender:
(a) to the extent not already delivered pursuant to another clause of
this Section 5.01, as soon as available and in any event within 120 days after
the end of each fiscal year of the Company, (i) a consolidated balance sheet of
the Company and its Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of income, retained earnings and cash
flows for such fiscal year, setting in each case in comparative form the figures
from the previous fiscal year, all audited by Arthur Andersen L.L.P. or other
independent public accountants of nationally recognized standing, and (ii) an
audited consolidated balance sheet of each Subsidiary Borrower and its
Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated profit and loss account and statements of retained earnings of such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, accompanied by (A) the report thereon of Arthur Andersen
L.L.P. or other independent public accounts of internationally recognized
standing, or (B) if such financial statements are not otherwise reported on by
independent public accountants, a certificate of the Financial Officer of such
Subsidiary Borrower as to fairness of presentation, GAAP and consistency;
(b) to the extent not already delivered pursuant to another clause of
this Section 5.01, (i) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year of the
Company, (A) a consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of the end of such quarter, (B) the related consolidated
statements of income for such quarter and for the portion of the Company's
fiscal year ended at the end of such quarter and (C) the related consolidated
statement of cash flows for the portion of the Company's fiscal year ended at
the end of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
Company's previous fiscal year, all certified (subject to normal year-end
adjustments) as to fairness of presentation, GAAP and consistency by the
Financial Officer of the Company; and (ii) as soon as available and in any event
within 90 days after the end of each of the first three quarters of each fiscal
year of each Subsidiary Borrower, (X) a consolidated balance sheet of such
Subsidiary Borrower and its Subsidiaries as of the end of such quarter, and (Y)
the related consolidated profit and loss account of such Subsidiary Borrower's
fiscal year ended at the end of such quarter, setting forth in each case in
comparative form the figures for the corresponding quarter and the corresponding
portion of such Subsidiary Borrower's previous fiscal year, all certified
(subject to normal year-end adjustments) as to fairness of presentation, GAAP
and consistency by an officer or director of such Subsidiary Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above or clause (g) below, a
certificate of the Financial Officer of the Company (i) stating whether to the
knowledge of such officer, there exists on the date of such certificate any
Default and, if any Default then exists, setting forth the details thereof and
the action which the Company or Subsidiary Borrower, as the case may be, is
taking or proposes to take with respect thereto and (ii) setting forth in
reasonable detail the computations necessary to determine the Consolidated
Tangible Net Worth and the Debt Leverage Ratio as at the end of the respective
fiscal quarter or fiscal year.
(d) simultaneously with the delivery of each set of audited year-end
financial statements referred to in clauses (a) or (g), a statement
substantially in the form attached hereto as Exhibit E of the firm of
independent public accountants which reported on such statements stating whether
anything has come to their attention to cause them to believe that there existed
on the date of such statements any Default;
(e) forthwith upon any executive officer (meaning any member of the
management committee, a Financial Officer or the general counsel) of the Company
or any officer or director of a Subsidiary Borrower obtaining knowledge of the
occurrence of any Default, a certificate of a Financial Officer of the Company
setting forth the details thereof and the action which the Company or such
Subsidiary Borrower, as the case may be, is taking or proposes to take with
respect thereto;
(f) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, (i) a copy of each registration
statement (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) which the Company shall have filed with the SEC, and
a copy of each annual, quarterly or other report (other than the exhibits
thereto) which the Company shall have filed with the SEC and (ii) a copy of any
annual return (other than the exhibits thereto) which any Subsidiary Borrower
shall have filed with the Governmental Authority having jurisdiction over the
registration or issuance of securities in the country of such Subsidiary
Borrower's organization, formation or incorporation;
(h) if and when the Company or any ERISA Affiliate (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; or (iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, impose liability (other than for premiums under Section
4007 of ERISA) in respect of or appoint a trustee to administer any Plan, a copy
of such notice; and
(i) from time to time, upon receiving from the Lenders such assurances
of confidential treatment as the Company may reasonably request, such additional
information regarding the performance of this Agreement or the financial
position or business of any Borrower, as the Administrative Agent, at the
request of any Lender, may reasonably request.
SECTION 5.02. Payment of Taxes. Pay, will cause each of its
Subsidiaries to pay, all material taxes, assessments and other governmental
charges imposed upon it or any of its Properties or assets or in respect of any
of its franchises, business, income or profits before any penalty or interest
accrues thereon, and all material claims (including, without limitation, claims
for labor, services, materials and supplies) for sums which have become due and
payable and which by law have or might become a Lien upon any of its Properties
or assets, non-payment of which could reasonably be expected to have a Material
Adverse Effect, provided that no such tax, assessment, charge or claim need be
paid if being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted so long as no Lien has attached to any
Property of the Company or its Subsidiaries as a result thereof.
SECTION 5.03. Insurance. Maintain, or cause to be maintained, with
financially sound and reputable insurers, insurance with respect to its
Properties and business and the Properties and business of its Subsidiaries
against loss or damage of the kinds customarily insured against by corporation
of established reputation engaged in the same or similar business and similarly
situated, of such types and in such amounts as are customarily carried under
similar circumstances by such other corporations; provided, however, that in
lieu of any such insurance, any Borrower or any such Subsidiary may maintain a
system or systems of self-insurance which are in accord with sound practices of
similarly situated corporations of established reputation maintaining such
systems and with respect to which such Borrower or such Subsidiary shall
maintain adequate insurance reserves in accordance with GAAP and in accordance
with sound actuarial and insurance principles.
SECTION 5.04. Conduct of Business and Maintenance of Existence. Except
as permitted by Section 6.03, at all times preserve and keep in full force and
effect, and cause each Material Subsidiary to preserve and keep in full force
and effect, its existence, and rights and franchises deemed material to the
Properties, business, prospects, profits, condition (financial or otherwise) or
operations of the Company and its Subsidiaries taken as a whole, except that
such rights and franchises and the existence of any Material Subsidiary (other
than those of a Subsidiary Borrower) may be terminated if, in the good faith
judgment of the Board of Directors of the Company, such termination is in the
best interest of the Company and is not disadvantageous to the Lenders.
SECTION 5.05. Compliance with Laws. Comply, and use its best efforts to
cause each of its Subsidiaries to comply, with all applicable laws, rules and
regulations and orders of any Governmental Authority, non-compliance with which
could reasonably be expected to have a Material Adverse Effect.
SECTION 5.06. Compliance with Environmental Laws. Comply, and use its
best efforts to cause each of its Subsidiaries and each of its Affiliates that
are controlled by it or its Subsidiaries to comply, in a timely fashion, with
the provisions of all Environmental Laws, failure with which to comply could
reasonably be expected to have a Material Adverse Effect. Each Borrower agrees
to defend, indemnify and hold the Administrative Agent and each Lender, and
their respective directors, officers, and employees ("Environmental
Indemnitees") harmless from any loss, liability, cost, damage, fines, response
costs, investigative and monitoring costs, abatement costs, attorneys' fees,
experts' or consultants' fees, claims or expenses or any other Environmental
Liabilities ("Costs") which any such person may incur or suffer as a result of a
breach by the Company or any Subsidiary Borrower of the preceding covenants, or
as the result of the breach of any representation or warranty contained in
Section 3.07 or as a result of any Environmental Liability, legal proceeding or
investigation regarding the Company or any of its Subsidiaries, or any of their
respective plants, sites or facilities currently or formerly owned, operated,
leased or controlled by any of them, related to Environmental Laws; provided,
however, that with respect to plants, sites, or facilities formerly owned,
operated, leased or controlled by the Company or any of its Subsidiaries, the
indemnification obligations hereunder shall relate only to Costs incurred or
suffered as a result of an Environmental Liability, legal proceeding or
investigation relating to the ownership, operation, lease, or control by the
Company or any of its Subsidiaries of such plants, sites or facilities or in
relation to any plant, site or facility jointly owned, operated, leased or
controlled with any other Person, to Costs incurred by virtue of this Agreement.
In no event shall any Environmental Indemnitee be required to make any
expenditure or bring any cause of action to enforce the Company's obligations
and liability under and pursuant to this Section. THE COMPANY AND EACH
SUBSIDIARY BORROWER SHALL INDEMNIFY THE RESPECTIVE ENVIRONMENTAL INDEMNITEE
REGARDLESS OF WHETHER THE ACT, OMISSION, FACTS, CIRCUMSTANCES OR CONDITIONS
GIVING RISE TO SUCH INDEMNIFICATION WERE CAUSED IN WHOLE OR IN PART BY THE
RESPECTIVE ENVIRONMENTAL INDEMNITEE'S SIMPLE (BUT NOT GROSS) NEGLIGENCE. The
indemnifications set out in this Section shall survive the termination of this
Agreement and shall continue to be the personal liability and obligation of the
Company and each Subsidiary Borrower, binding upon them. The indemnifications
set forth in this Section are also subject to the provisions of Section 10.03(b)
of this Agreement, except to the extent such provisions conflict with this
Section in which case the provisions of this Section shall control.
SECTION 5.07. Use of Proceeds. Use the proceeds of the Loans made under
this Agreement for working capital and general corporate purposes, including
non-contested acquisitions, refinancing of obligations under the ABN Facility A
and the Oryx Facility, and commercial paper back-up in the United States of
America and the European Union. No portion of the Loans will be used, directly
or indirectly, (a) to purchase or carry any Margin Stock, (b) to repay or
otherwise refinance indebtedness of any Borrower incurred to purchase or carry
any Margin Stock, or (c) to extend credit for the purpose of purchasing or
carrying any Margin Stock.
SECTION 5.08. Notice of Changed Credit Rating. Notify the
Administrative Agent promptly on becoming aware of any change or proposed change
in any Rating.
SECTION 5.09. Subsidiary Borrowers. In the case of the Company, at
all times own, directly or indirectly, all outstanding capital stock of the
Subsidiary Borrowers free and clear of all liens or encumbrances.
SECTION 5.10. Year 2000 Compliance. Perform, and, in the case of the
Company, cause each Material Subsidiary to perform, any reprogramming required
to permit the proper functioning, in and following the year 2000, of its
computer systems and equipment containing embedded microchips (including systems
and equipment supplied by others or with which its systems interface) and
perform the testing of all such systems and equipment, as so reprogrammed, to
the extent necessary to prevent any significant disruptions to the business and
operations of the Company and its Subsidiaries on a consolidated basis, which
testing shall be completed by September 30, 1999.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full:
SECTION 6.01. Compliance with ERISA. The Company will not, and will not
permit any of its Subsidiaries to, (i) engage in any transaction in connection
with which the Company or any of its Subsidiaries could be subject to either a
civil penalty assessed pursuant to Section 502(i) of ERISA, a tax imposed by
Section 4975 of the Code, or a lien pursuant to Section 412(n) of the Code, (ii)
terminate any Plan in a manner, or take any other action with respect to any
such Plan (including, without limitation, a substantial cessation of operations
within the meaning of Section 4068(f) of ERISA), which could result in any
liability of the Company or any of its Subsidiaries to the PBGC or to a trustee
appointed pursuant to Section 4042(b) or (c) of ERISA, or incur any liability to
the PBGC on account of a termination of a Plan under Section 4064 of ERISA,
(iii) fail to make full payment when due of all amounts which, under the
provisions of any Plan or Section 412(m) of the Code, the Company or any of its
Subsidiaries is required to pay as contributions thereto, (iv) incur any
complete or partial withdrawal liability under Title IV of ERISA with respect to
any Multiemployer Plan, or (v) permit to exist any accumulated funding
deficiency, whether or not waived, with respect to any Plan, if, in the
aggregate, such penalty or tax or such liability, or the failure to make such
payment, or the existence of such deficiency, as the case may be, exceeds
$25,000,000.
SECTION 6.02. Limitation on Secured Debt. Neither the Company nor a
Subsidiary Borrower will, and the Company will not, permit any Consolidated
Subsidiary to create, incur, assume or suffer to exist, any Indebtedness secured
by a Lien on any Restricted Property or any Indebtedness of the Company or any
Subsidiary, without effectively providing that the Loans and any other
Indebtedness evidenced by this Agreement shall be secured equally and ratably
with (or prior to) such secured Indebtedness, so long as such secured
Indebtedness shall be so secured, unless, after giving effect thereto, the
aggregate principal amount of all such secured Indebtedness (not including
secured Indebtedness permitted to be secured under clauses (a) to (j) below)
plus the aggregate "value" (as defined below) of all "sale and leaseback
transaction" (as defined below, but not including any sale or leaseback
transaction the proceeds of which have been or will be applied to funded
Indebtedness of the Company or its Subsidiaries within 120 days from the time of
such transaction) would not exceed five percent (5%) of Stockholders' Equity of
the Company; provided, however, that this Section 6.02 shall not apply to, and
there shall be excluded from secured Indebtedness in any computation for
purposes of this Section 6.02, any Indebtedness secured by:
(a) Liens existing on the date of this Agreement;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event and which does not extend to any other assets of the
Company or any Consolidated Subsidiary;
(c) any Lien on any asset securing Indebtedness incurred or
assumed for the purpose of financing all or any part of the cost of acquiring,
constructing or improving such asset, provided that such Lien attaches to such
asset concurrently with or within 24 months after the acquisition or completion
of construction or improvement thereof, and provided further that the
Indebtedness secured by such Lien shall not exceed the cost of acquiring,
constructing or improving such asset;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the Company or a
Consolidated Subsidiary and not created in contemplation of such event and which
does not extend to any other assets of the Company or any Consolidated
Subsidiary;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Company or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) any Lien arising pursuant to any order of attachment,
distraint or similar legal process arising in connection with court proceedings
so long as the execution or other enforcement thereof is effectively stayed and
the claims secured thereby are being contested in good faith by appropriate
proceedings;
(g) Liens to secure indebtedness of the pollution control or
industrial revenue bond type and Liens in favor of the United States or any
State thereof, or any department, agency, instrumentality, or political
subdivision of any such jurisdiction, to secure any indebtedness incurred for
the purpose of financing all or any part of the purchase price or cost of
constructing or improving the property subject thereto;
(h) any Lien (including Liens in respect of production
payments) to secure the payment of all or any part of the cost of exploration,
drilling, mining, or development of property which had prior to September 30,
1998, produced no material volumes of hydrocarbons, minerals, timber or other
products or by-products produced or extracted from such property, provided that
the Indebtedness secured by such Lien shall not exceed the cost of exploring,
drilling, mining or development such property; and provided further that such
Lien shall not extend to any property other than the property being explored,
drilled, mined or developed;
(i) Liens securing Indebtedness incurred by the Company or any
of its Subsidiaries to pay all or any part of the cost of exploration, drilling
or development any North Sea properties within the territorial waters of the
United Kingdom, provided, that the Indebtedness secured by such Liens shall not
exceed the cost of such exploration, drilling, or development; and provided
further that such Lien shall not extend to any property other than the property
being explored, drilled or developed; and
(j) any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by any Lien permitted by any of
the foregoing clauses of this section, provided that the amount of such
Indebtedness is not increased and is not secured by any additional assets;
For purposes of this Section 6.02, the term "sale and leaseback
transaction" means any arrangement with any bank, insurance company or other
lender or investor or to which any such lender or investor is a party, providing
for the leasing by the Company or any of its Consolidated Subsidiaries for a
period, including renewals, in excess of three years on any Restricted Property
owned or leased by the Company or any of its Consolidated Subsidiaries which has
been sold or transferred, more than 120 days after the completion of
construction and commencement of full operation thereof, by the Company or any
of its Consolidated Subsidiaries to such lender or investor or to any Person to
whom funds have been or are to be advanced by such lender or investor on the
security of such Restricted Property. For purposes of this Section 6.02, the
term Avalue@ means, with respect to a sale and leaseback transaction, as of any
particular time, an amount equal to the greater of (i) the net proceeds of sale
of the Restricted Property leased pursuant to such sale and leaseback
transaction, and (ii) the fair value of such Restricted Property at the time of
entering into such sale and leaseback transaction as determined by the Board of
Directors of the Company, in each case multiplied by a fraction of which the
numerator is the number of full years remaining in the term of the lease
(without regard to renewal options) and the denominator is the number of full
years of the full term of the lease (without regard to renewal options).
SECTION 6.03. Consolidations, Mergers and Sales of Assets.
(a) Neither the Company nor any Subsidiary Borrower will be a party to
any merger or consolidation or sell, lease or otherwise transfer all or
substantially all of its Property; provided that the Company may merge or
consolidate with another corporation and may sell, lease or otherwise transfer
all or substantially all of its Property as an entirety to another corporation
if (i) the surviving or acquiring corporation (if other than the Company) (A) is
organized under the laws of the United States or a jurisdiction thereof and (B)
expressly assumes by writing reasonably satisfactory to the Required Lenders the
covenants and obligations in this Agreement, and (ii) immediately after giving
effect to such transaction, (x) no condition or event shall exist which
constitutes a Default, (y) the Consolidated Tangible Net Worth shall not be less
than $1,000,000,000, and (z) in the event that any Rating or any expected Rating
(resulting from such merger, consolidation, sale, lease or transfer) for
determining the Applicable Rate is determined by reference to Level Three, Four,
Five or Six as provided in the Pricing Schedule, the Debt Leverage Ratio shall
be equal to or less than 3.5:1.00; and provided, further, that any Subsidiary
Borrower may merge or consolidate with another corporation and may sell, lease
or otherwise transfer all or substantially all of its Property as an entirety to
another corporation if (i) the surviving or acquiring corporation (if other than
another Subsidiary Borrower) (A) is organized under the laws of the country
under whose laws such Subsidiary Borrower is organized and (B) executes and
delivers to the Administrative Agent a Joinder Agreement, (ii) all outstanding
capital stock of the surviving or acquiring corporation is owned by the Company
free and clear of any Lien, and (iii) immediately after giving effect to such
transaction, no condition or event shall exist which constitutes a Default and
the conditions for a Borrowing other than a Refunding Borrowing as set forth in
Section 4.02 (whether or not a Borrowing occurs in connection therewith) are
satisfied.
(b) Concurrently with the public disclosure thereof, the Company shall
give written notice to the Administrative Agent and the Lenders describing in
reasonable detail any proposed transaction described in this Section, the date
on which it is proposed to be consummated and the identity and jurisdiction of
organization of the proposed successor or transferee corporation.
(c) Notwithstanding anything contained in this Section 6.03, the Oryx
Merger is hereby expressly permitted.
SECTION 6.04. Transactions with Affiliates. Neither the Company nor any
Subsidiary Borrower will engage, directly or indirectly, in any transaction
(including, without limitation, the purchase, sale or exchange of assets or the
rendering of any service) with any Affiliate, except in the ordinary course of
and pursuant to the reasonable requirements of the Company's or such Subsidiary
Borrower's or such Affiliate's business and upon fair and reasonable terms that
are substantially the same as those which might be obtained in an arm's length
transaction at the time from Persons which are not such an Affiliate or upon
terms which could not reasonably be expected to have a Material Adverse Effect;
provided, however, that taxes may be allocated among the Company and its
Affiliates in any manner consistent with Section 1552 (or any successor
provision) of the Code, general and administrative expenses may be allocated
among the Company and its Affiliates in any manner consistent with Section 482
(or any successor provision) of the Code, and interest may be charged or
credited to Affiliates in any reasonable manner not inconsistent with the Code.
ARTICLE VII
Guaranty
SECTION 7.01. The Guaranty. In order to induce the Lenders to enter
into this Agreement and to extend credit hereunder and in recognition of the
direct benefits to be received by the Company from the proceeds of the Loans
made to the Subsidiary Borrowers, the Company hereby, unconditionally and
irrevocably guarantees as primary obligor and not merely as surety the full and
prompt payment when due, whether upon maturity, by acceleration or otherwise, of
any and all of the Guaranteed Obligations of the Subsidiary Borrowers to the
Administrative Agent or the Lenders. If any or all of the Guaranteed Obligations
of the Subsidiary Borrowers to the Administrative Agent or the Lenders becomes
due and payable hereunder, the Company unconditionally promises to pay such
indebtedness to the Administrative Agent for the account of each Lender on
demand, in the applicable currency of such Guaranteed Obligation, together with
any and all reasonable expenses which may be incurred by the Administrative
Agent or the Lenders in collecting any of the Guaranteed Obligations. This
Guaranty is a guaranty of payment and not collection. All payments made by
Company under this Guaranty shall be made on the same basis as payments by the
Company under Sections 2.08 and 2.09.
SECTION 7.02. Bankruptcy. Additionally, the Company unconditionally and
irrevocably guarantees the payment of any and all of the Guaranteed Obligations
of the Subsidiary Borrowers to the Administrative Agent and the Lenders whether
or not then due or payable by such Subsidiary Borrowers upon the occurrence in
respect of any Subsidiary Borrower of any of the events specified in Sections
8(h) or 8(i), and unconditionally and irrevocably promises to pay such
Guaranteed Obligations to the Administrative Agent for the account of each
Lender on demand, in the applicable currency of such Guaranteed Obligation.
SECTION 7.03. Nature of Liability. (a) The liability of the Company
hereunder is exclusive and independent of any security for or other guaranty of
the Guaranteed Obligations of the Subsidiary Borrowers whether executed by the
Company, any other guarantor or by any other party, and the liability of the
Company hereunder shall not be affected or impaired by (i) any direction as to
application of payment by any Subsidiary Borrower or by any other party, or (ii)
any other continuing or other guaranty, undertaking or maximum liability of a
guarantor or of any other party as to the Guaranteed Obligations of the
Subsidiary Borrowers, or (iii) any payment on or in reduction of any such other
guaranty or undertaking, or (iv) any dissolution, termination or increase,
decrease or change in personnel by the Subsidiary Borrowers, or (v) any payment
made to the Administrative Agent or the Lenders on the Guaranteed Obligations
which the Administrative Agent or the Lenders repay to the Subsidiary Borrowers
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and the Company waives any right
to the deferral or modification of its obligations hereunder by reason of any
such proceeding.
(b) If claim is ever made upon the Administrative Agent or any
Lender for repayment or recovery of any amount or amounts received in payment or
on account of any of the Guaranteed Obligations and any of the aforesaid payees
repays all or part of said amount by reason of (i) any judgment, decree or order
of any court or administrative body having jurisdiction over such payee or any
of its property or (ii) any settlement or compromise of any such claim effected
by such payee with any such claimant (including any Subsidiary Borrower), then
and in such event the Company agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon the Company, notwithstanding any
revocation hereof or other instrument evidencing any liability of any Subsidiary
Borrower, and the Company shall be and remain liable to the aforesaid payees
hereunder for the amount so repaid or recovered to the same extent as if such
amount had never originally been received by any such payee.
SECTION 7.04. Independent Obligation. The obligations of the Company
hereunder are independent of the obligations of any other guarantor or the
Subsidiary Borrowers, and a separate action or actions may be brought and
prosecuted against the Company whether or not action is brought against any
other guarantor or the Subsidiary Borrowers and whether or not any other
guarantor or the Subsidiary Borrowers be joined in any such action or actions.
The Company waives, to the fullest extent permitted by law, the benefit of any
statute of limitations affecting its liability hereunder or the enforcement
thereof. Any payment by any Subsidiary Borrower or other circumstance which
operates to toll any statute of limitations as to such Subsidiary Borrower shall
operate to toll the statute of limitations as to the Company. This Guaranty is a
continuing one with respect to the Guaranteed Obligations, and all liabilities
to which it applies or may apply under the terms hereof shall be conclusively
presumed to have been created in reliance hereon.
SECTION 7.05. Authorization. The Company authorizes the Administrative
Agent and the Lenders without notice or demand (except as shall be required by
applicable statute and cannot be waived), and without affecting or impairing its
liability under this Article VII, from time to time to:
(a) change the manner, place or terms of payment of, and/or
change or extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease in the
rate of interest thereon), any security therefor, or any liability incurred
directly or indirectly in respect thereof, and the Guaranty herein made shall
apply to the Guaranteed Obligations as so changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against
the Subsidiary Borrowers or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers,
guarantors, the Subsidiary Borrowers or other obligors;
(e) settle or compromise any of the Guaranteed Obligations,
any security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Subsidiary Borrowers to their creditors
other than the Lenders;
(f) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Subsidiary Borrowers to the Lenders
regardless of what liability or liabilities of the Subsidiary Borrowers remain
unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement or any of the instruments or agreements referred
to herein, or otherwise amend, modify or supplement this Agreement or any of
such other instruments or agreements; and/or
(h) take any other action which would, under otherwise
applicable principles of common law, give rise to a legal or equitable discharge
of the Company from its liabilities under this Guaranty.
SECTION 7.06. Subordination. Any of the Indebtedness of the Subsidiary
Borrowers now or hereafter owing to the Guarantor is hereby subordinated to the
Guaranteed Obligations of the Subsidiary Borrowers owing to the Administrative
Agent and the Lenders; and if the Administrative Agent so requests at a time
when an Event of Default exists, all such Indebtedness of the Subsidiary
Borrowers to the Company shall be collected, enforced and received by the
Company for the benefit of the Lenders and be paid over to the Administrative
Agent on behalf of the Lenders on account of the Guaranteed Obligations of the
Subsidiary Borrowers to the Lenders, but without affecting or impairing in any
manner the liability of the Company under the other provisions of this Guaranty.
SECTION 7.07. Waiver. (a) The Company waives any right (except as shall
be required by applicable statute and cannot be waived) to require the
Administrative Agent or the Lenders to (i) proceed against any Subsidiary
Borrower, any other guarantor or any other party, (ii) proceed against or
exhaust any security held from the Subsidiary Borrowers, any other guarantor or
any other party or (iii) pursue any other remedy in the Administrative Agent's
or the Lenders' power whatsoever. The Company waives any defense based on or
arising out of any defense of the Subsidiary Borrowers, any other guarantor or
any other party, other than payment in full of the Guaranteed Obligations, based
on or arising out of the disability of any Subsidiary Borrower, any other
guarantor or any other party, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Subsidiary Borrowers other than payment in full of the
Guaranteed Obligations. The Administrative Agent and the Lenders may, at their
election, foreclose on any security held by the Administrative Agent or the
Lenders by one or more judicial or nonjudicial sales, whether or not every
aspect of any such sale is commercially reasonable (to the extent such sale is
permitted by applicable law), or exercise any other right or remedy the
Administrative Agent and the Lenders may have against the Subsidiary Borrowers
or any other party, or any security, without affecting or impairing in any way
the liability of the Company hereunder except to the extent the Guaranteed
Obligations have been paid. The Company waives any defense arising out of any
such election by the Administrative Agent and the Lenders, even though such
election operates to impair or extinguish any right of reimbursement or
subrogation or other right or remedy of the Company against any Subsidiary
Borrower or any other party or any security.
(b) The Company waives all presentments, demands for
performance, protests and notices, including without limitation notices of
nonperformance, notices of protest, notice of acceleration, notices of intent to
accelerate, notices of dishonor, notices of acceptance of this Guaranty, and
notices of the existence, creation or incurring of new or additional Guaranteed
Obligations. The Company assumes all responsibility for being and keeping itself
informed of the Subsidiary Borrowers' financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which the Company
assumes and incurs hereunder, and agrees that the Administrative Agent and the
Lenders shall have no duty to advise the Company of information known to them
regarding such circumstances or risks.
SECTION 7.08. Legal Limitations of Liability. It is the desire and
intent of the Company, the Administrative Agent and the Lenders that this
Guaranty shall be enforced against the Company to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. If, however, and to the extent that, the obligations of
the Company under this Guaranty shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because of any
applicable state or federal law relating to fraudulent conveyances or
transfers), then the amount of the Guaranteed Obligations of the Company shall
be deemed to be reduced and the Company shall pay the maximum amount of the
Guaranteed Obligations which would be permissible under applicable law.
SECTION 7.09. Discharge Only Upon Payment. The Company's obligations
hereunder shall remain in full force and effect until the Commitments have
terminated and the principal and interest on the Loans and all other amounts
payable by the Borrowers under this Agreement shall have been paid in full. The
provisions of this Section 7.09 shall survive the termination of this Agreement
and any satisfaction or discharge of any Subsidiary Borrower or the Company by
virtue of any payment, any court order or any applicable law. The obligations of
the Company under this Article VII constitute the full recourse obligations of
the Company enforceable against it to the full extent of all its Property.
SECTION 7.10. Subrogation. The Company irrevocably waives any and all
rights to which it may be entitled, by operation of law or otherwise, upon
making any payment hereunder to be subrogated to the rights of the payee against
any Subsidiary Borrower with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by any Subsidiary Borrower in respect
thereof in any bankruptcy, insolvency or similar proceeding involving any
Subsidiary Borrower as debtor commencing within one year after the making of any
payment by any Subsidiary Borrower under this Agreement or in respect of the
Loans. The Company hereby further waives any right to enforce via subrogation
any other remedy which the Administrative Agent or any Lender now has or may
hereafter have against any Subsidiary Borrower and any right of indemnity,
reimbursement or contribution against any Subsidiary Borrower the Company may
have by virtue of the Company's performance of its obligations hereunder until
such time as the Administrative Agent and the Lenders have been indefeasibly
paid in full and the Commitments have expired or been terminated.
ARTICLE VIII
Events of Default
If any of the following events ("Events of Default") shall occur:
(a) any Borrower shall fail to pay when due any principal on any Loan,
or within five days of the due date thereof any fee or interest on any Loan or
any other amount payable hereunder;
(b) any Borrower shall fail to observe or perform any covenant
contained in Section 5.01(e), Sections 5.07 through 5.10 inclusive, or Sections
6.02 through 6.04 inclusive;
(c) any Borrower shall fail to observe or perform any covenant
contained in subsections 5.01(a), (b), (c), (d), (f), (g), (h) or (i) for 30
days after written notice thereof has been given to the Company by the
Administrative Agent at the request of any Lender;
(d) any Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clauses (a),
(b) or (c) above) for 30 days;
(e) any representation, warranty, certification or statement made or
deemed, pursuant to the terms hereof, to have been made by any Borrower in this
Agreement or in any certificate, financial statement or other notice delivered
pursuant to this Agreement shall prove to have been incorrect in any material
respect when made or deemed to have been made.
(f) the Company or any of its Subsidiaries shall fail to make any
payment in respect of any Material Financial Obligations when due or within any
applicable grace period; or
(g) any event or condition occurs that results in any Material
Financial Obligation becoming due prior to its scheduled maturity or that
enables or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Financial Obligation or any trustee
or agent on its or their behalf to cause any Material Financial Obligation to
become due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (g) shall
not apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness;
(h) Any Borrower or any Material Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution,
liquidation or other similar law of any jurisdiction now or hereafter in effect
(herein called the "Bankruptcy Law") or shall seek the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its Property, or shall consent to, approve or acquiesce in
any such relief or to the commencement of any involuntary case or other
proceeding described in clause (i) below or to the appointment of or taking
possession by any such official in any involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(i) an involuntary case or other proceeding shall be commenced against
any Borrower or any Material Subsidiary seeking liquidation, reorganization or
other relief with respect to its debts under any Bankruptcy Law or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed for a period of
60 days; or an order for relief shall be entered against any Borrower or any
Material Subsidiary under any Bankruptcy Laws or an order, judgment or decree
shall be entered appointing any such trustee, receiver, custodian, liquidator or
similar official;
(j) Any Subsidiary Borrower becomes insolvent, is unable to pay its
debts as they fall due, stops, suspends or threatens to stop or suspend payment
of all or substantially all of its debts, begins negotiations to readjust,
reschedule or defer all or substantially all of its Indebtedness (which it will
otherwise be unable to pay when due) or proposes or makes a general assignment
or an arrangement or composition with or for the benefit of its creditors or a
moratorium is agreed or declared in respect of or affecting all or substantially
all of the Indebtedness of such Subsidiary Borrower;
(k) The Company or any ERISA Affiliate shall fail to pay when due (and
not being contested in good faith) an amount or amounts aggregating in excess of
the ERISA Obligation Threshold which it shall have become liable to pay to the
PBGC, the Internal Revenue Service or the Department of Labor or to a
Multiemployer Plan under Title IV of ERISA; or notice of intent to terminate a
Plan or Plans having aggregate Unfunded Benefit Liabilities in excess of
$50,000,000 (collectively, a "Material Plan") shall be filed under Title IV of
ERISA by the Company or any ERISA Affiliate, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate, to impose liability (other than for premiums
under Section 4007 of ERISA) in respect of or to cause a trustee to be appointed
to administer any Material Plan; or there shall occur a complete or partial
withdrawal from, or a default, within the meaning of Section 4219(c)(5) of
ERISA, with respect to, one or more Multiemployer Plans which would cause the
Company or any ERISA Affiliate to incur a current payment obligation in excess
of $50,000,000; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;
(l) a final judgment or order for the payment of money in excess of the
Final Judgment Threshold not covered by insurance (as to which insurance
coverage there is delivered to the Administrative Agent an opinion of counsel
reasonably satisfactory to the Administrative Agent that such coverage applies
to such judgment or order and that the applicable insurance carrier has not
contested the payment thereof) shall be rendered against the Company or any
Material Subsidiary and such judgment or order shall continue unsatisfied and
not stayed, bonded, vacated or suspended by agreement with the beneficiary
thereof for a period of 60 days;
(m) any event occurs which, under the law of the relevant jurisdiction,
has a substantially equivalent effect to any of the events mentioned in
paragraphs (h), (i), (j) (k) or (l) of this Section;
then, and in every such event (other than an event with respect to any Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, (i) the Administrative Agent may, and at
the request of the Required Lenders shall, by notice to the Company, take either
or both of the following actions, at the same or different times (A) terminate
the Commitments and thereupon the Commitments shall terminate immediately,
and/or (B) declare the Loans then outstanding (together with accrued interest
thereon and all fees and all other amounts payable hereunder) to be, and such
amounts shall thereupon become, immediately due and payable without presentment,
demand, protest, notice to accelerate, notice of intent to accelerate or other
notice of any kind, all of which are hereby waived by each Borrower; provided
that in the case of any of the Events of Default specified in clause (h) or (i)
above with respect to any Borrower, without any notice to any Borrower or any
other act by the Administrative Agent or the Lenders, (i) the Commitments shall
thereupon terminate and the Loans (together with accrued interest thereon and
all fees and all other amounts payable hereunder) shall become immediately due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Borrower; (ii) each Lender may exercise
its rights of offset against each account and all other property of any Borrower
or both in the possession of such Lender, which right is hereby granted by the
Borrowers to the Lenders; and (iii) the Administrative Agent and each Lender may
exercise any and all other rights pursuant to this Agreement, at law and in
equity.
ARTICLE IX
The Administrative Agent
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the terms hereof, together with such actions and powers as are
reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with each Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to any Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 10.02) or in the absence of its own gross negligence or
wilful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by any Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrowers), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders and each Borrower. Upon any such resignation, so
long as no Default exists, the Company shall have the right, with the consent of
the Required Lenders, such consent not to be unreasonably withheld, to appoint a
successor. If a Default exists, the Required Lenders shall have the right to
appoint a successor without the consent of the Company or any other Borrower. If
no successor shall have been so appointed by the Company or the Required
Lenders, as applicable, and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New York
City, New York, or an Affiliate of any such bank, and which has a combined
capital and surplus of at least $500,000,000. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Company to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Company and
such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 10.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to Kerr-McGee Corporation, to it at 123 Robert S. Kerr
Avenue, Oklahoma City, Oklahoma, 73102, Attention of Melody Walke (Telecopy No.
(405) 270-3852);
(b) if to any Subsidiary Borrower, to its attention at the
address and the telephone and telecopy numbers set forth in clause (a) above;
(c) if to the Administrative Agent, to it at its offices
located at One Liberty Plaza, New York, New York, 10006-1404, Attention of
Manager, Agency Services (Telecopy No. (212) 428-2310);
(d) if to any other Lender, to it at its address (or telecopy
number) set forth in the Notice Schedule.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by any Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by each Borrower and the Required Lenders, or each Borrower
and the Administrative Agent with the consent of the Required Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) increase the maximum amount available
under the Foreign Available Amount without the written consent of each Lender
affected thereby, such consent not to be unreasonably withheld, (iii) reduce the
principal amount of any Loan or reduce the rate of interest thereon, or reduce
any fees payable hereunder, without the written consent of each Lender affected
thereby, (iv) postpone the scheduled date of payment of the principal amount of
any Loan, or any interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the scheduled date of
expiration of any Commitment, without the written consent of each Lender
affected thereby, (v) change Section 2.16(b) or (c) in a manner that would alter
the pro rata sharing of payments required thereby, without the written consent
of each Lender, (vi) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender, (vii) change any of the provisions of Section
10.04(a) without the written consent of each Lender, (viii) change the Type of
Loans available or the currencies in which Loans are available without the
written consent of each Lender, (ix) permit a change in ownership of any
Subsidiary Borrower unless the Company maintains 100% direct or indirect
ownership without the written consent of each Lender or (x) release the Company
from its obligations under Article VII without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent hereunder without the
prior written consent of the Administrative Agent.
SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Borrowers
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of Vinson & Elkins L.L.P., counsel to the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, reasonable publicity expenses agreed to by the Company, the preparation
and administration of this Agreement or any amendments, modifications or waivers
of the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by
the Administrative Agent or any Lender, including the fees, charges and
disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of such Loans.
(b) The Borrowers shall indemnify the Administrative Agent and
each Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or the use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by any
Borrower or any of its Subsidiaries, or any Environmental Liability related in
any way to any Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that any Borrower fails to pay any amount
required to be paid by it to the Administrative Agent under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to the Administrative
Agent, such Lender's Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, each Borrower
shall not assert, and hereby waive, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
SECTION 10.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that a
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by a Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided, that
(i) except in the case of an assignment to a Lender, an Affiliate of a Lender,
or to the United States Federal Reserve Banks, each Borrower and the
Administrative Agent must give their prior written consent to such assignment
(which consent shall not be unreasonably withheld), (ii) except in the case of
an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000, (iii) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender's rights and
obligations under this Agreement, except that this clause (iii) shall not apply
to rights in respect of outstanding Competitive Loans, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire in the form supplied by the
Administrative Agent; and provided further that any consent of the Borrowers
otherwise required under this paragraph shall not be required if an Event of
Default has occurred and is continuing. Subject to acceptance and recording
thereof pursuant to paragraph (d) of this Section, from and after the effective
date specified in each Assignment and Acceptance, the assignee thereunder shall
be a party hereto and, to the extent of the interest assigned by such Assignment
and Acceptance, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of all Borrowers, shall maintain at one of its offices in New York City,
New York, a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to, each Lender pursuant
to the terms hereof from time to time (the "Register"). The entries in the
Register shall be conclusive, and each Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by any Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed administrative questionnaire in the form supplied by the
Administrative Agent (unless the assignee shall already be a Lender hereunder),
the processing and recordation fee referred to in paragraph (b) of this Section
and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
(e) Any Lender may, without the consent of any Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) each
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 10.02(b) that affects such
Participant. Subject to paragraph (f) of this Section, each Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.13, 2.14 and
2.15 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 10.08 as
though it were a Lender; provided such Participant agrees to be subject to
Section 2.16(c) and 2.17 as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Company's prior written consent. A Participant that would be a Foreign Lender if
it were a Lender shall not be entitled to the benefits of Section 2.15 unless
each Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of each Borrower, to comply with Section
2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a United States Federal Reserve Bank, and this Section shall not
apply to any such pledge or assignment of a security interest; provided that no
such pledge or assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(h) Any assignee or Participant under this Section 10.04 shall
have an office or a branch or an Affiliate available to it and located in the
appropriate jurisdiction through which such assignee or Participant can make any
Eurodollar Loan or a Loan denominated in an Alternate Currency as required under
this Agreement.
(i) Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC") sponsored by such Granting Lender, identified as such in writing from
time to time by the Granting Lender to the Administrative Agent and the Company,
the option to provide to the Company all or any part of any Loan that such
Granting Lender would otherwise be obligated to make to the Borrower pursuant to
this Agreement, provided that (i) nothing herein shall constitute a commitment
by any SPC to make any Loan and (ii) if an SPC elects not to exercise such
option or otherwise fails to provide all or any part of such Loan, the Granting
Lender shall be obligated to make such Loan pursuant to the terms hereof. The
making of a Revolving Credit Loan by an SPC hereunder shall utilize the
Commitment of the Granting Lender to the same extent, and as if, such Loan were
made by the Granting Lender. Each party hereto hereby agrees that no SPC shall
be liable for any payment under this Agreement for which a Lender would
otherwise be liable (all liability for which, if any, shall remain with the
Granting Lender). In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement) that,
prior to the date that is one year and one day after the later of (A) the
payment in full of all outstanding commercial paper or other senior indebtedness
of any SPC and (B) the Revolving Loan Maturity Date, it will not institute
against, or join any other person in instituting against, such SPC any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings
or similar proceedings under the laws of the United States or any state thereof.
In addition, notwithstanding anything to the contrary contained in this Section
10.04, any SPC may, with notice to, but without prior written consent of, the
Company, any Subsidiary Borrower or the Administrative Agent and without paying
any processing fee therefor, assign all or a portion of its interests in any
Loans to the Granting Lender or to any financial institutions providing
liquidity and/or credit support to or for the account of such SPC to fund the
Loans made by such SPC or to support the securities (if any) issued by such SPC
to fund such Loans and disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or liquidity or credit enhancement to such
SPC.
SECTION 10.05. Survival. All covenants, agreements, representations and
warranties made by any Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.13, 2.14, 2.15 and 10.03 shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitments or the termination of this Agreement or any provision hereof.
SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Borrower against any of and all the obligations of such Borrower now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against any Borrower or its properties in the courts of any
jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to
service of process to the General Counsel of the Company at Kerr-McGee
Corporation, 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma, 73102 (Telecopy
No. (405) 270-4211). Nothing in this Agreement will affect the right of any
party to this Agreement to serve process in any other manner permitted by law.
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. Confidentiality. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Company
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than a Borrower. For the purposes of this Section, "Information" means all
information received from any Borrower relating to such Borrower or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by such Borrower; provided that, in the case of information received
from such Borrower after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
SECTION 10.13. Currency Indemnity. (a) If any amount payable by any
Borrower under or in connection with any Loan or any other obligation under or
in connection herewith is received by any Lender in a currency (the "Payment
Currency") other than that agreed to be payable in this Agreement (the "Agreed
Currency"), whether as a result of any judgment or order or the enforcement of
the same, the liquidation of such Borrower or otherwise and the amount produced
by converting the Payment Currency so received into the Agreed Currency at
market rates prevailing at or about the time of receipt of the Payment Currency
is less than the amount of the Agreed Currency due with respect to such Loan,
then such Borrower and the Company shall and hereby does, as an independent and
additional obligation, indemnify each Lender for the deficiency and any loss
sustained as a result.
(b) The above indemnity shall constitute separate and
independent obligations of each Borrower from its other obligations under this
Agreement and shall apply irrespective of any indulgence granted by the
Administrative Agent or any Lender. The applicable Borrower shall pay reasonable
costs of making any conversion from the Payment Currency to the Agreed Currency.
(c) Each Borrower hereby waives any right it may have in any
jurisdiction to pay any amount due and owing hereunder in a currency other than
that which it is expressed to be payable under the terms and conditions of this
Agreement.
SECTION 10.14. Subsidiary Borrower Several Obligations. The obligations
of each Subsidiary Borrower under this Agreement are several and the failure of
any Subsidiary Borrower to perform its obligations under this Agreement shall
not affect the obligations of any Borrower towards any of the other parties to
this Agreement.
(b) No assurance, security or payment which may be avoided
under any laws relating to bankruptcy, insolvency or corporate reorganization
and no release, settlement or discharge of any of the Subsidiary Borrowers which
may have been given or made on the faith of any such assurance, security or
payment, shall prejudice or affect the right of the Administrative Agent or any
Lender to recover from any other Subsidiary Borrower to the full extent of its
obligations under this Agreement just as if such release, settlement or
discharge had not occurred.
(c) Each Subsidiary Borrower hereby waives any rights it may
have under applicable law which may at any time be inconsistent with any of the
provisions of this Agreement or which it may have of first requiring the
Administrative Agent or any Lender to proceed against or claim payment from
another Borrower or any other party or parties. It is further agreed that all or
any of the Administrative Agent and the Lenders, without notice to any of the
Subsidiary Borrowers and without affecting or impairing the obligations of such
Subsidiary Borrowers hereunder, may grant time, indulgences, concessions,
releases and discharges to, may take securities from and give the same, may
accept compositions from and may otherwise deal with each other Borrower and all
other parties as they may see fit and generally may otherwise do or omit to do
any act or thing which, but for this provision, might operate to affect or
impair the obligations of each of the Subsidiary Borrowers hereunder. The
obligations of the Subsidiary Borrowers hereunder shall not be affected or
impaired by any amendment or modification hereto.
SECTION 10.15. Joint and Several Obligations of the Company. (a) The
liability of the Company under this Agreement with respect to its own
obligations and the obligations of each Subsidiary Borrower is joint and several
and therefore, without prejudice to any other provision of this Agreement, the
Company hereby unconditionally and irrevocably undertakes, as principal obligor,
to the Administrative Agent and the Lenders the due and unconditional
performance and discharge by each of the other Borrowers of all the obligations
expressed to be binding upon such Borrowers hereunder as the same may be amended
from time to time (the "Relevant Obligations") and, without limitation, agrees
with the Administrative Agent and the Lenders that if and whenever at any time
and from time to time any of the other Borrowers shall fail to perform or
discharge or shall otherwise be in default in respect of any of the Relevant
Obligations it shall discharge and make good the default as if it instead of the
relevant other Borrower was expressed to be such Borrower hereunder.
(b) No assurance, security or payment which may be avoided
under any laws relating to bankruptcy, insolvency or corporate reorganization
and no release, settlement or discharge of any of the Subsidiary Borrowers which
may have been given or made on the faith of any such assurance, security or
payment, shall prejudice or affect the right of the Administrative Agent or any
Lender to recover from the Company to the full extent of the undertakings given
in this Section 10.15 just as if such release, settlement or discharge had not
occurred.
(c) The Company hereby waives any rights it may have under
applicable law which may at any time be inconsistent with any of the provisions
of this Agreement or which it may have of first requiring the Administrative
Agent or any Lender to proceed against or claim payment from another Borrower or
any other party or parties. It is further agreed that all or any of the
Administrative Agent and the Lenders, without notice to the Company and without
affecting or impairing the obligations of the Company hereunder, may grant time,
indulgences, concessions, releases and discharges to, may take securities from
and give the same, may accept compositions from and may otherwise deal with each
other Borrower and all other parties as they may see fit and generally may
otherwise do or omit to do any act or thing which, but for this provision, might
operate to affect or impair the obligations of the Company hereunder. The
obligations of the Company hereunder shall not be affected or impaired by any
amendment or modification hereto.
(d) The Company hereby waives notice of the acceptance of this
undertaking and of presentment, demand and protest and notices of non-payment
and dishonor and any other demands and notices required by applicable law.
SECTION 10.16. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 10.17. International Banking Facilities. Each Borrower
acknowledges by its execution and delivery hereof (or by its execution and
delivery of any applicable Joinder Agreement) that (a) it is the policy of the
Board that deposits received by international banking facilities may be used
only to support the non-U.S. operations of a depositor (or its foreign
affiliates) located outside the United States and that extensions of credit by
international banking facilities may be used only to finance the non-U.S.
operations of a Borrower (or its foreign affiliates) located outside the U.S.
and (b) funds deposited by any Borrower with an international banking facility
of any Lender will be used solely in support of such non-U.S. operations, or
that of such foreign affiliates, and that the proceeds of any Borrowings from
any such international banking facility will be used solely to finance such
non-U.S. operations, or that of such foreign affiliates. Any terms used in this
Section 10.17 that are not otherwise defined herein, shall have the meaning
assigned thereto in Regulation D of the Board (as amended from time to time).
[The remaining portion of this page is intentionally left blank.]
[Signature Page - 18]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
KERR-MCGEE CORPORATION, as the Company and
as guarantor
By:
John C. Linehan
Executive Vice President
By:
John M. Rauh
Vice President & Treasurer
KERR-MCGEE CREDIT LLC,
as a Subsidiary Borrower
By:
John M. Rauh
Vice President & Treasurer
KERR-MCGEE (G.B.) LIMITED,
as a Subsidiary Borrower
By:
John M. Rauh
Director
KERR-MCGEE RESOURCES (U.K.) LIMITED,
as a Subsidiary Borrower
By:
John M. Rauh
Director
KERR-MCGEE OIL (U.K.) PLC,
as a Subsidiary Borrower
By:
John C. Linehan
Director
KERR-MCGEE NORTH SEA (U.K.) LIMITED,
as a Subsidiary Borrower
By:
John M. Rauh
Director
KERR-MCGEE GMBH,
as a Subsidiary Borrower
By: KM Investment Corporation, its
sole stockholder
By:
Kenneth W. Crouch
President
KERR-MCGEE CHEMICAL GMBH,
as a Subsidiary Borrower
By:
John C. Linehan
Managing Director
ROYAL BANK OF CANADA, individually and
as Administrative Agent
By:
Linda M. Stephens
Senior Manager
KBC BANK N.V.
By
Name:
Title:
THE BANK OF NEW YORK
By
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK BRANCH
By
Name:
Title:
By
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
Name:
Title:
BANCFIRST, A STATE BANKING ASSOCIATION
By
Name:
Title:
UMB OKLAHOMA BANK
By
Name:
Title:
BANQUE NATIONALE DE PARIS
By
Name:
Title:
ABN AMRO BANK N.V.
By:
Name:
Title:
NATIONSBANK, N.A.
By:
Name:
Title:
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By:
Name:
Title:
CITIBANK, N.A.
By:
Name:
Title:
MELLON BANK, N.A.
By:
Name:
Title:
WACHOVIA BANK OF GEORGIA, N.A.
By:
Name:
Title:
BANK OF OKLAHOMA, N.A.
By:
Name:
Title:
BAYERISHE LANDESBANK
By:
Name:
Title:
[Schedule A - Page 1 of 1]
SCHEDULE A
COMMITMENTS
LENDER COMMITMENT TITLE
- -----------------------------------------------------------------------------
Royal Bank of Canada $73,333,333.34 Administrative Agent
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
NationsBank, N.A. $50,000,000.00 Syndication Agent
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ABN AMRO Bank N.V. $50,000,000.00 Documentation Agent
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
The Bank of New York $43,333,333.33 Co-Agent
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Chase Bank of Texas, National $43,333,333.33 Co-Agent
Association
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Citibank, N.A. $43,333,333.33 Co-Agent
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
The First National Bank of Chicago $43,333,333.33 Co-Agent
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Westdeutsche Landesbank Girozentrale, $43,333,333.33 Co-Agent
New York Branch
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Mellon Bank, N.A. $30,000,000.00 Manager
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Bank of Oklahoma, N.A. $16,666,666.67 Participant
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Banque Nationale de Paris $16,666,666.67 Participant
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
KBC Bank N.V. $16,666,666.67 Participant
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Wachovia Bank of Georgia, N.A. $16,666,666.67 Participant
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
UMB Oklahoma Bank $10,000,000.00 Participant
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
BancFirst, a State Banking Association $3,333,333.33 Participant
- -----------------------------------------------------------------------------
[Schedule B - Page 2 of 2]
SCHEDULE B
PRICING SCHEDULE
The Applicable Rate, for any day, with respect to any EURIBOR Loan or
LIBOR Loan, or with respect to the facility fees or utilization fees payable
hereunder, as the case may be, is the rate per annum set forth below based upon
the Ratings by Duff & Phelps, Moody's and S&P, respectively, applicable on such
date to the Rating Debt:
- ------------------------------------- -------------------------- -------------
Rating Facility Fee EURIBOR/LIBOR Loan Margin Utilization
Fee
greater than
or equal to
33% usage
- ------------------------------------- -------------------------- -------------
- ------------------------------------- -------------------------- -------------
Level One 0.08% 0.22% 0.05%
greater than or
equal to A/A2
- ------------------------------------- -------------------------- -------------
- ------------------------------------- -------------------------- -------------
Level Two 0.09% 0.26% 0.10%
greater than or
equal to A-/A3
- ------------------------------------- -------------------------- -------------
- ------------------------------------- -------------------------- -------------
Level Three 0.115% 0.36% 0.10%
greater than or
equal to BBB+/Baa1
- ------------------------------------- -------------------------- -------------
- ------------------------------------- -------------------------- -------------
Level Four 0.135% 0.465% 0.10%
greater than or
equal to BBB/Baa2
- ------------------------------------- -------------------------- -------------
- ------------------------------------- -------------------------- -------------
Level Five 0.175% 0.55% 0.15%
greater than or
equal to BBB-/Baa3
- ------------------------------------- -------------------------- -------------
- ------------------------------------- -------------------------- -------------
Level Six 0.25% 0.75% 0.25%
less than BBB-/Baa3
- ------------------------------------- -------------------------- -------------
For purposes of the foregoing, (a) if the Ratings established or deemed
to have been established by Moody's, Duff & Phelps, and S&P for the Rating Debt
shall fall within different Levels, the Applicable Rate shall be based on the
two highest Ratings; provided, that if such two highest Ratings also fall within
different Levels, (i) where the split represents one subgrade the Applicable
Rate will be determined based on the lower of such two Levels; and (ii) where
the split represents two or more subgrades, the Applicable Rate will be
determined by reference to the Level at the midpoint of such highest ratings;
provided, that if such midpoint falls between Levels, the Applicable Rate will
be determined by reference to the Level immediately below such midpoint; (b) if
the Ratings established or deemed to have been established by Moody's, Duff &
Phelps, and S&P for the Rating Debt shall be changed (other than as a result of
a change in the rating system of Moody's, Duff & Phelps, or S&P), such change
shall be effective as of the date on which it is first announced by the
applicable Rating Agency; (c) if Moody's, Duff & Phelps, or S&P shall not have
in effect a Rating for the Rating Debt (other than by reason of the
circumstances referred to in the last sentence of this paragraph), then such
Rating Agency shall be deemed to have established a Rating in Level 6. Each
change in the Applicable Rate shall apply during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of Moody's, Duff &
Phelps, or S&P shall change, or if any such Rating Agency shall cease to be in
the business of rating corporate debt obligations, the Company and the Lenders
shall negotiate in good faith to amend this definition to reflect such changed
rating system or the unavailability of Ratings from such Rating Agency and,
pending the effectiveness of any such amendment, the Applicable Rate shall be
determined by reference to the Rating most recently in effect prior to such
change or cessation. Notwithstanding the foregoing, if on the Effective Date, at
least two of the Rating Agencies have not announced a Rating expressly to be
effective after the Oryx Merger, Level Three pricing shall apply from the
Effective Date until at least two of the Rating Agencies shall have announced
such Ratings.
[Schedule C - Page 3 of 3]
SCHEDULE C
NOTICE SCHEDULE
KBC BANK N.V.
Lynda Resuma, Loan Administration
KBC Bank N.V.
New York Branch
125 West 55th Street
New York, NY 10019
Telephone: (212) 541-0657
Telecopier: (212) 956-5581
THE BANK OF NEW YORK
Terry Foran, Energy Industries Division
The Bank of New York
One Wall Street, 19th Floor
New York, New York 10286
Telephone: (212) 635-7921
Telecopier: (212) 635-7923
WESTDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH Philip Green Westdeutsche
Landesbank Girozentrale, New York Branch 1211 Avenue of the americas
New York, New York 10036
Telephone: (212) 852-6152
Telecopier: (212) 302-7946
THE FIRST NATIONAL BANK OF CHICAGO
Bill Laird
The First National Bank of Chicago
One First National Plaza
0634, 1FNP, 10
Chicago, Illinois 60670
Telephone: (312) 732-5635
Telecopier: (312) 732-4840
BANCFIRST, A STATE BANKING ASSOCIATION
Cathie Wythe
BancFirst
101 North Broadway
P.O. Box 26788
Oklahoma City, Oklahoma 73126-0788
Telephone: (405) 270-4711
Telecopier: (405) 270-4790
UMB OKLAHOMA BANK
Richard J. Lehrter
UMB Oklahoma Bank
204 N. Robinson
Oklahoma City, Oklahoma 73102
Telephone: (405) 239-5925
Telecopier: (405) 236-1971
BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
Donna Rose
Banque Nationale de Paris, Houston Agency
333 Clay Street, Suite 3400
Houston, Texas 77002
Telephone: (713) 951-1240
Telecopier: (713) 659-1414
ROYAL BANK OF CANADA, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT Elizabeth
Gonzales Royal Bank of Canada One Liberty Plaza
New York, New York 10006-1404
Telephone: (212) 428-6439
Telecopier: (212) 428-2310
ABN AMRO BANK N.V.
ABN AMRO Bank N.V.
Attention: Loan Administration
208 South LaSalle, Suite 1500
Chicago, Illinois 60604-1003
Telephone: (312) 992-5152
Telecopier: (312) 992-5157
NATIONSBANK, N.A.
Betty Canales
901 Main Street, 14th Floor
Dallas, Texas 75283-0104
Telephone: (214) 508-1225
Telecopier: (214) 508-1215
CHASE BANK OF TEXAS, NATIONAL ASSOCIATION
Richard Sink
Chase Bank of Texas, National Association
2200 Ross Avenue, 3rd Floor
Dallas, Texas 75201
Telephone: (214) 965-2379
Telecopier: (214) 965-2389
CITIBANK, N.A.
James E. Reilly
Citibank, N.A.
2100 Citicorp Center
1200 Smith Street, Suite 2000
Houston, Texas 77002
Telephone: (713) 654-2820
Telecopier: (713) 654-2849
MELLON BANK, N.A.
Cathy Capp
Three Mellon Bank Center
Suite 1203
Pittsburgh, Pennsylvania 15259-0003
Telephone: (412) 234-1870
Telecopier: (412) 209-6111
WACHOVIA BANK OF GEORGIA, N.A.
John Cunningham
Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telephone: (404) 332-1114
Telecopier: (404) 332-4320
BANK OF OKLAHOMA, N.A.
Laura Christofferson
Bank of Oklahoma, N.A.
201 Robert S. Kerr
P.O. Box 24128
Oklahoma City, Oklahoma 73124
Telephone: (405) 272-2327
Telecopier: (405) 272-2588
[Schedule 3.14 - 1]
SCHEDULE 3.14
MATERIAL SUBSIDIARIES
Kerr-McGee Oil and Gas Corporation
Kerr-McGee Chemical LLC
KM Investment Corporation
Sun Energy Partners, L.P.
[Exhibit A - Page 3 of 3]
EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the $500,000,000 3-Year Revolving Credit Agreement
dated as of ________, 1999 (as amended and in effect on the date hereof, the
"Credit Agreement"), among Kerr-McGee Corporation, a Delaware corporation, the
Subsidiary Borrowers parties thereto, the Lenders named therein, and Royal Bank
of Canada, as Administrative Agent. Terms defined in the Credit Agreement are
used herein with the same meanings.
The Assignor named on the reverse hereof hereby sells and assigns,
without recourse, to the Assignee named on the reverse hereof, and the Assignee
hereby purchases and assumes, without recourse, from the Assignor, effective as
of the Assignment Date set forth on the reverse hereof, the interests set forth
on the reverse hereof (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth on the reverse hereof in the Commitment of the Assignor on
the Assignment Date and Competitive Loans and Revolving Loans owing to the
Assignor which are outstanding on the Assignment Date, but excluding accrued
interest and fees to and excluding the Assignment Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Assignment Date (i) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent of the Assigned Interest, relinquish its rights and be
released from its obligations under the Credit Agreement.
This Assignment and Acceptance is being delivered to the Administrative
Agent together with (i) if the Assignee is a Foreign Lender, any documentation
required to be delivered by the Assignee pursuant to Section 2.15(e) of the
Credit Agreement, duly completed and executed by the Assignee, and (ii) if the
Assignee is not already a Lender under the Credit Agreement, an administrative
questionnaire in the form supplied by the Administrative Agent, duly completed
by the Assignee. The Assignee/Assignor shall pay the fee payable to the
Administrative Agent pursuant to Section 10.04(b) of the Credit Agreement.
This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignee's Address for Notices:
Effective Date of Assignment
("Assignment Date"):
<TABLE>
<CAPTION>
Percentage Assigned of
Facility/Commitment (set forth,
to at least eight decimals, as a
Principal Amount Assigned percentage of the Facility and
(and identifying information the aggregate Commitments of all
as to individual Competitive Lenders thereunder)
Loans)
<S> <C> <C>
Facility
- ---------------------- ------------------------------- ===================================
Commitment Assigned: $ %
- ---------------------- ------------------------------- ===================================
Revolving Loans:
- ---------------------- ------------------------------- ===================================
Competitive Loans:
- ---------------------- ------------------------------- ===================================
</TABLE>
The terms set forth above and on the reverse side hereof are hereby agreed to:
[Name of Assignor] , as Assignor
By:
Name:
Title:
[Name of Assignee] , as Assignee
By:
Name:
Title:
The undersigned hereby consent to the within assignment:
[Kerr-McGee Corporation] Royal Bank of Canada,
as Administrative Agent
By: By:
Name: Name:
Title: Title:
[Exhibit B-1 - Page 2 of 2]
EXHIBIT B-1
FORM OF
OPINION OF RUSSELL G. HORNER, JR.
February 26, 1999
To the Lenders and the Administrative
Agent Referred to Below
c/o Royal Bank of Canada, as
Administrative Agent
Dear Sirs:
I have acted as counsel for Kerr-McGee Corporation, a Delaware
corporation (the "Company") and each Subsidiary Borrower (as defined in the
following described Credit Agreement), in connection with the $500,000,000
3-Year Revolving Credit Agreement dated as of February 26, 1999 (the "Credit
Agreement"), among the Company, the Subsidiary Borrowers, the banks and other
financial institutions identified therein as Lenders, and Royal Bank of Canada,
as Administrative Agent. Terms defined in the Credit Agreement are used herein
with the same meanings.
I have examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as I have deemed necessary or advisable for
purposes of this opinion.
Upon the basis of the foregoing, I am of the opinion that:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. Each
Domestic Subsidiary Borrower organized under the laws of the United States of
America, any State thereof, or the District of Columbia, is a corporation duly
incorporated, validly existing and in good standing (or, if such Domestic
Subsidiary Borrower is a limited liability company, is a limited liability
company duly formed, validly existing and in good standing) under the laws of
its jurisdiction of incorporation, organization or formation. Each Foreign
Subsidiary Borrower organized under the laws of a jurisdiction other than United
States of America, any State thereof, or the District of Columbia, is a company
duly established and validly existing under the laws of its jurisdiction of
formation.
2. The Company and each Subsidiary Borrower (a) has all
requisite corporate or limited liability company power and authority to carry on
its business as now conducted, and (b) except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
3. The Transactions are within the Company's and each
Subsidiary Borrower's corporate or limited liability company powers and have
been duly authorized by all necessary corporate or limited liability company,
and, if required, stockholder action.
The Credit Agreement has been duly executed and delivered by each Borrower.
4. The Transactions (a) do not require any consent or approval
of, registration or filing with, or any other action by, any Governmental
Authority, except such as have been obtained or made and are in full force and
effect, (b) will not violate any applicable law or regulation or the charter,
by-laws or other organizational documents of each Borrower or any of its
Subsidiaries or any order of any Governmental Authority, (c) will not violate or
result in a default under any indenture, agreement or other instrument binding
upon each Borrower or any of its Subsidiaries or its assets, or give rise to a
right thereunder to require any payment to be made by a Borrower or any of its
Subsidiaries, and (d) will not result in the creation or imposition of any Lien
on any asset of the Company or any of its Subsidiaries.
5. There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to my knowledge,
threatened against or affecting the Company or any of its Subsidiaries (a) as to
which there is a reasonable possibility of an adverse determination and that, if
adversely determined, could reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or (b) that involve the Credit
Agreement or the Transactions.
6. Neither the Company nor any of its Subsidiaries is (a) an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 or (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
I am a member of the bar of the State of Oklahoma and the
foregoing opinion is limited to the laws of the State of Oklahoma, the General
Corporation Law of the State of Delaware and the Federal laws of the United
States of America. This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by any other Person (other than your successors and assigns as
Lenders and Persons that acquire participations in your Loans) without our prior
written consent.
Very truly yours,
Russell G. Horner, Jr.
Senior Vice President &
General Counsel
[Exhibit B-2 - Page 4 of 4]
EXHIBIT B-2
FORM OF
OPINION OF SIMPSON THACHER & BARTLETT
February 26, 1999
Royal Bank of Canada, as Administrative Agent under the Credit Agreement, as
hereinafter defined (the "Agent")
and
The Lenders listed on Schedule I hereto which are parties to the Credit
Agreement on the date hereof
Ladies and Gentlemen:
We have acted as counsel to Kerr-McGee Corporation (the "Company") and
the subsidiaries of the Company named on Schedule II attached hereto (each, a
"Subsidiary Borrower" and, collectively, the "Subsidiary Borrowers"; the Company
and the Subsidiary Borrowers being referred to herein collectively as the
"Credit Parties") in connection with the preparation, execution and delivery of
the $500,000,000 3-Year Revolving Credit Agreement dated as of February 26, 1999
(the "Credit Agreement") among the Company, the Subsidiary Borrowers, the
lending institutions identified in the Credit Agreement (the "Lenders") and the
Agent. Unless otherwise indicated, capitalized terms used but not defined herein
shall have the respective meanings set forth in the Credit Agreement. This
opinion is furnished to you pursuant to Section 4.01(c) of the Credit Agreement.
In connection with this opinion, we have examined the Credit Agreement,
signed by each Credit Party thereto and by the Agent and certain of the Lenders.
We also have examined the originals, or duplicates or certified or conformed
copies, of such records, agreements, instruments and other documents and have
made such other investigations as we have deemed relevant and necessary in
connection with the opinions expressed herein. As to questions of fact material
to this opinion, we have relied upon certificates of public officials and of
officers and representatives of the Credit Parties. In addition, we have
examined, and have relied as to matters of fact upon, the representations made
in the Credit Agreement.
In rendering the opinions set forth below, we have assumed the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as duplicates or certified
or conformed copies, and the authenticity of the originals of such latter
documents.
Based upon and subject to the foregoing, and subject to the
qualifications and limitations set forth herein, we are of the opinion that:
1. Assuming that proceeds of borrowings will be used in accordance with
the terms of the Credit Agreement, the execution and delivery by any Credit
Party of the Credit Agreement, its borrowings in accordance with the terms of
the Credit Agreement and performance of its payment obligations thereunder will
not result in any violation of any New York statute or any rule or regulation
issued pursuant to any New York statute.
2. No consent, approval, authorization, order, filing, registration or
qualification of or with any New York governmental agency is required for the
execution and delivery by any Credit Party of the Credit Agreement or the
borrowings by any Credit Party in accordance with the terms of the Credit
Agreement.
3. Assuming that the Credit Agreement is a valid and legally binding
obligation of each of the Lenders party thereto and assuming that (a) each of
the Credit Parties is validly existing and in good standing under the laws of
the jurisdiction in which it is organized and has duly authorized, executed and
delivered the Credit Agreement in accordance with its Certificate of
Incorporation and By-Laws, (b) execution, delivery and performance by each
Credit Party of the Credit Agreement do not violate the laws of the jurisdiction
in which it is organized or any other applicable laws (excepting the laws of the
State of New York), (c) execution, delivery and performance by each Credit Party
of the Credit Agreement do not constitute a breach or violation of any agreement
or instrument which is binding upon such Credit Party and (d) no Credit Party is
an "investment company" within the meaning of and subject to regulation under
the Investment Company Act of 1940, the Credit Agreement constitutes the valid
and legally binding obligation of each Credit Party, enforceable against such
Credit Party in accordance with its terms.
Our opinions in paragraph 3 above are subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, (ii)
general equitable principles (whether considered in a proceeding in equity or at
law), (iii) an implied covenant of good faith and fair dealing and (iv) the
effects of the possible judicial application of foreign laws or foreign
governmental or judicial action affecting creditors' rights.
We note that (A) a New York statute provides that with respect to a
foreign currency obligation a court of the State of New York shall render a
judgment or decree in such foreign currency and such judgment or decree shall be
converted into currency of the United States at the rate of exchange prevailing
on the date of entry of such judgment or decree and (B) with respect to a
foreign currency obligation a United States Federal court in New York may award
judgment in United States dollars, provided that we express no opinion as to the
rate of exchange such court would apply.
We express no opinion with respect to:
(A) the effect of any provision of the Credit Agreement which is
intended to permit modification thereof only by means of an agreement signed in
writing by the parties thereto;
(B) the effect of any provision of the Credit Agreement insofar as it
provides that any Person purchasing a participation from a Lender or other
Person may exercise set-off or similar rights with respect to such participation
or that any Lender or other Person may exercise set-off or similar rights other
than in accordance with applicable law;
(C) the effect of any provision of the Credit Agreement imposing
penalties or forfeitures;
(D) the enforceability of any provision of the Credit Agreement to the
extent that such provision constitutes a waiver of illegality as a defense to
performance of contract obligations; (E) the effect of any provision of the
Credit Agreement relating to indemnification or exculpation in connection with
violations of any securities laws or relating to indemnification, contribution
or exculpation in connection with willful, reckless or criminal acts or gross
negligence of the indemnified or exculpated Person or the Person receiving
contribution.; and
(F) the effect of any provision of the Credit Agreement whereby the
Credit Parties submit to the jurisdiction of the United States District Court
for the Southern District of New York or the Supreme Court of the State of New
York.
We are members of the Bar of the State of New York, and we do not
express any opinion herein concerning any law other than the law of the State of
New York.
This opinion letter is rendered to you in connection with the above
described transactions. This opinion letter may not be relied upon by you for
any other purpose, or relied upon by any other person, firm or corporation
without our prior written consent.
Very truly yours,
SIMPSON THACHER & BARTLETT
[Exhibit B-2 - Schedule I - Page 1 of 1]
SCHEDULE I
THE LENDERS
Royal Bank of Canada
NationsBank, N.A.
ABN AMRO Bank, N.V.
The Bank of New York
Chase Bank of Texas, National Association
Citibank, N.A.
The First National Bank of Chicago
Westdeutsche Landesbank Girozentrale,
New York Branch
Mellon Bank, N.A.
Bank of Oklahoma, N.A.
Banque Nationale de Paris
KBC Bank N.V.
Wachovia Bank of Georgia, N.A.
UMB Oklahoma Bank
BancFirst, a State Banking Association
[Exhibit B-2 - Schedule II - Page 1 of 1]
SCHEDULE II
SUBSIDIARY BORROWERS
Kerr-McGee Chemical GMBH
Kerr-McGee Credit LLC
Kerr-McGee (G.B.) Limited
Kerr-McGee GMBH
Kerr-McGee North Sea (U.K.) Limited
Kerr-McGee Oil (U.K.) PLC
Kerr-McGee Resources (U.K.) Limited
[Exhibit C - Page 2 of 2]
EXHIBIT C
FORM OF
JOINDER AGREEMENT
Reference is made to the $500,000,000 3-Year Revolving Credit
Agreement, dated as of February 26, 1999 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; terms defined therein being
used herein as therein defined), among Kerr-McGee Corporation, a Delaware
corporation, the Subsidiary Borrowers parties thereto, the Lenders named
therein, and Royal Bank of Canada, as Administrative Agent.
The undersigned hereby acknowledges that it has received and
reviewed a copy (in execution form) of the Credit Agreement, and agrees to:
(i) join the Credit Agreement as a Subsidiary Borrower
party thereto;
(ii) be bound by all covenants, agreements and
acknowledgments attributable to a Borrower in the
Credit Agreement and any Note to which it is a party;
and
(iii) perform all obligations required of it by the Credit
Agreement and any Note to which it is a party.
The undersigned hereby represents and warrants that the
representations and warranties with respect to it contained in, or made or
deemed made by it in, Article III of the Credit Agreement are true and correct
on the date hereof.
The undersigned hereby certifies that attached hereto are (i)
the true and correct organizational documents of the undersigned, as amended,
(ii) certificates of continued existence and good standing or their equivalent
with respect to the undersigned, (iii) true and correct copies of any corporate
resolution, or such other appropriate evidence of authority, providing for the
undersigned to execute and deliver this Joinder Agreement and to become a party
to the Credit Agreement and (iv) an officers' incumbency certificate for the
undersigned.
THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Joinder
Agreement to be duly executed and delivered in New York City, New York by its
proper and duly authorized officer as of this day of , [1999] [20__].
[SUBSIDIARY BORROWER]
By:
Title:
ACKNOWLEDGED AND AGREED TO:
KERR-MCGEE CORPORATION
By:
Title:
[Exhibit D - Page 4 of 4]
EXHIBIT D
FORM OF
CASH COLLATERAL ACCOUNT AGREEMENT
[Between][Among]
[KERR-McGEE CORPORATION,
[SUBSIDIARY BORROWER]],
and
ROYAL BANK OF CANADA,
as Administrative Agent
Dated as of [ ]
THIS CASH COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is made and
entered into as of the __ day of _______, ____, [between][among] [KERR-McGEE
CORPORATION, a Delaware corporation (the "Company"), [______________________, a
____________________ (" "),]] and ROYAL BANK OF CANADA ("RBC"), as
administrative agent (in such capacity, the "Administrative Agent") for itself
and the Lenders (as defined in the Credit Agreement referred to below).
RECITALS
A. On February 26, 1999, the Company, the Subsidiary Borrowers (as
defined in the Credit Agreement), the Administrative Agent and the Lenders
executed that certain Revolving Credit Agreement (as amended from time to time,
the "Credit Agreement") whereby, upon the terms and conditions stated therein,
the Lenders agreed to make Loans (as defined in the Credit Agreement) (a) to the
Company and the Domestic Subsidiary Borrowers (as defined in the Credit
Agreement) or any one or more of them, up to the Domestic Available Amount (as
defined in the Credit Agreement) and (b) to the Foreign Subsidiary Borrowers (as
defined in the Credit Agreement) or any one or more of them up to the Foreign
Available Amount (as defined in the Credit Agreement).
B. Section 2.09(c) of the Credit Agreement provides that in the event
that (i) the aggregate principal amount of all Loans made to the Company and the
Domestic Subsidiary Borrowers exceeds the Domestic Available Amount or (ii) the
aggregate amount of all Loans made to the Company and the Foreign Subsidiary
Borrowers exceeds the Foreign Available Amount, the Company may, and may cause
one of more of the Subsidiary Borrowers to, in lieu of prepaying such excess
described in clause (i) or (ii) above, provide cash collateral equal to the
amount of such excess plus any accrued and unpaid interest thereon, to the
Administrative Agent for the benefit of the Lenders pursuant to the terms and
conditions of this Agreement.
C. Therefore, in accordance with the terms of Section 2.09(c) of the
Credit Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, [the Company and [Subsidiary
Borrower]] hereby [agrees][agree] and with the Administrative Agent as follows:
AGREEMENT
Section (1) Pursuant to Section 2.09(c) of the Credit Agreement,
simultaneously with the execution of this Agreement, [the Company and
[Subsidiary Borrower]] will make [a deposit][deposits] in an amount equal to the
excess as determined in accordance with Section 2.09(c)[(ii)][(iii)] of the
Credit Agreement plus all accrued and unpaid interest thereon (the "Cash
Collateral") in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders styled "Kerr-McGee Cash
Collateral Account," which is an interest bearing collateral account and is
subject to the exclusive dominion and control, including the exclusive right of
withdrawal, of the Administrative Agent (the "Cash Collateral Account").
Section (2) [The Company and [Subsidiary Borrower]] hereby
[pledge][pledges] and [grant][grants] to the Administrative Agent for the
account of the Lenders a security interest in the Cash Collateral and the Cash
Collateral Account to secure the payment and performance of the obligations of
the Company and the Subsidiary Borrowers under the Credit Agreement.
Section (3)
(a) The Cash Collateral may be invested by the Administrative
Agent at the option and sole discretion of the Administrative Agent and
at the risk and expense of [the Company and [Subsidiary Borrower]].
Interest or profits, in any, on such investments shall accumulate in
the Cash Collateral Account. Other than interest earned on such
investments, the Cash Collateral shall not bear interest. Moneys in the
Cash Collateral Account shall be applied by the Administrative Agent to
satisfy the obligations of the Company and the Subsidiary Borrowers
under the Credit Agreement.
(b) Moneys in the Cash Collateral Account shall be returned to
[the Company and [Subsidiary Borrower]] within three Business Days
after the earlier to occur of (i) the first Business Day of a month
that the Administrative Agent determines that the Cash Collateral is no
longer required pursuant to Section 2.09(c)[(ii)][(iii)] of the Credit
Agreement and (ii) a prepayment of the Loans in an amount equal to the
Cash Collateral. In such event, the Administrative Agent will execute
and deliver to [the Company and [Subsidiary Borrower]] an appropriate
release of the pledge, liens, security interests and obligations
created hereby and will release to [the Company and [Subsidiary
Borrower]] all funds then remaining in the Cash Collateral Account.
Section (4) [THE COMPANY AND [SUBSIDIARY BORROWER]] [AGREES][AGREE] TO
REIMBURSE AND INDEMNIFY THE ADMINISTRATIVE AGENT FOR AND HOLD IT HARMLESS
AGAINST ANY LOSS, LIABILITY, CLAIM, DEMAND, CAUSE OF ACTION, DAMAGES OR
CONTROVERSY AT ANY TIME ARISING OUT OF OR IN CONNECTION WITH PERFORMANCE BY THE
ADMINISTRATIVE AGENT OF ANY OF ITS DUTIES AND OBLIGATIONS UNDER THIS AGREEMENT,
AS WELL AS ALL COSTS AND EXPENSES, INCLUDING BUT NOT LIMITED TO REASONABLE
ATTORNEYS' FEES, INCURRED IN THE ADMINISTRATION OR PREPARATION OF THIS AGREEMENT
OR IN DEFENDING AGAINST ANY CLAIM OR LIABILITY ARISING OUT OF OR RELATING TO
THIS AGREEMENT OTHER THAN ARISING OUT OF OR RELATING TO THE WILFUL MISCONDUCT OR
GROSS NEGLIGENCE OF THE ADMINISTRATIVE AGENT.
Section (5) [The Company and [Subsidiary Borrower]] will promptly at
[its][their] sole expense, upon reasonable request, execute and deliver all such
other documents in form and substance reasonably satisfactory to the
Administrative Agent and its legal counsel and take such other action as may be
reasonable and necessary to fully effectuate the terms and intent of this
Agreement.
Section 7. In the event that one or more of the provisions contained in
this Agreement shall, for any reason, be held invalid, illegal or unenforceable
in any respect (i) [the Company and [Subsidiary Borrower]] [agrees][agree] that
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, and (ii) [the Company,] [ Subsidiary Borrower] and
Administrative Agent (acting on behalf of and at the direction of the Lenders)
will negotiate in good faith to amend such provision so as to be legal, valid
and enforceable.
Section 8. This Agreement may be executed in counterparts, and it shall
not be necessary that the signatures of all parties hereto be contained on any
one counterpart hereof; each counterpart shall be deemed an original, but all of
which together shall constitute one and the same instrument.
WITNESS THE EXECUTION HEREOF, as of the date first above written.
[KERR-MCGEE CORPORATION
By:
Name:
Title: ]
[[SUBSIDIARY BORROWER]
By:_____________________________________
Name:
Title: ]
ROYAL BANK OF CANADA, as Administrative Agent
By:
Name:
Title:
[Exhibit E - Page 1 of 1]
EXHIBIT E
FORM OF
AUDITOR'S CERTIFICATE
To Kerr-McGee Corporation:
We have examined the consolidated balance sheet of Kerr-McGee
Corporation (a Delaware corporation) and subsidiary companies as of December 31,
____ and ____, and the related consolidated statements of income, retained
earnings and cash flows for each of the three years in the period ended December
31, ____ and have issued our report thereon dated February __, ____. Our
examination was made in accordance with generally accepted auditing standards
and, accordingly, included such tests of the accounting records and such other
auditing procedures as we considered necessary in the circumstances.
We have read the Credit Agreement dated as of February 26, 1999 among
Kerr-McGee Corporation (the "Company"), the lenders parties thereto and Royal
Bank of Canada, as Administrative Agent (as amended, modified, supplemented and
restated from time to time, the "Credit Agreement"), particularly Articles V, VI
and VII. These articles contain certain covenants of the Company and the
Subsidiary Borrowers relative to certain financial conditions and describe
Events of Default relative to such covenants. We have also read the accompanying
officer's certificate prepared by your chief accounting officer described in
Section 5.01(c) of the Credit Agreement.
In connection with our examination, nothing came to our attention that
caused us to believe that you were in default with any of the provisions of
Article VII of the Credit Agreement insofar as they pertain to accounting
matters. It should be noted that our examination was not directed primarily
toward obtaining knowledge of noncompliance.
Very truly yours,
EXHIBIT 12
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(1)
(Millions of dollars) 1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Income (loss) from
continuing operations $(227) $194 $220 $(24) $ 69
Add -
Provision (benefit) for
income taxes (148) 83 103 (45) 30
Interest expense 58 46 52 61 58
Rental expense representa-
tive of interest factor 6 5 5 4 4
----- ---- ---- ---- ----
Earnings $(311) $328 $380 $ (4) $161
===== ==== ==== ==== ====
Fixed Charges -
Interest expense $ 58 $ 46 $ 52 $ 61 $ 58
Rental expense representa-
tive of interest factor 6 5 5 4 4
Interest capitalized 12 8 9 11 10
----- ---- ---- ---- ----
Total fixed charges 76 $ 59 $ 66 $ 76 $ 72
===== ==== ==== ==== ====
Ratio of earnings to fixed
charges -(2) 5.6 5.8 -(2) 2.2
===== ==== ==== ==== ====
(1)The computation of the ratio of earnings to fixed charges has been restated
to conform with the current year's presentation.
(2)Earnings were inadequate to cover fixed charges by $387 million and $80
million in 1998 and 1995, respectively.
Management's Discussion and Analysis
Transactions in 1998
In January 1998, Kerr-McGee announced its intent to focus on two core
businesses, the exploration and production of oil and gas and the production and
marketing of titanium dioxide pigment. Several major transactions were part of
this strategic plan.
The company also announced its intent to exit the coal business in January.
The sales were completed in July for approximately $600 million cash and
resulted in an after-tax gain of $257 million. The company also disposed of its
ammonium perchlorate operation in the first half of 1998 in a $39 million cash
sale. The gain on the sale was immaterial.
Titanium dioxide pigment production capacity was significantly expanded
with the acquisition of an 80% interest in the Bayer AG (Bayer) European pigment
business. The company has the option to acquire the remaining 20% after March
31, 2001. The $97 million cash transaction was effective March 31, 1998. This
acquisition increased annual production capacity by approximately 55%.
Oil and gas production and exploratory prospects expanded with the purchase
of the North Sea assets of Gulf Canada Resources Limited (Gulf Canada) for $422
million. This transaction was effective March 31, 1998. The company's North Sea
production and reserves were increased by 80% and 47%, respectively, compared
with year-end 1997.
The merger with Oryx Energy Company (Oryx) was announced in October 1998.
As a result of the merger Kerr-McGee is, based on proven reserves, the
fourth-largest among the independent, non-integrated oil and gas exploration and
production companies base d in the United States.
Kerr-McGee/Oryx
On February 26, 1999, the merger between Kerr-McGee and Oryx was completed
(see Note 23). Oryx's operations have been merged into and will be reported with
the company's exploration and production segment.
Under the merger agreement, each outstanding share of Oryx common stock was
exchanged for 0.369 shares of newly issued Kerr-McGee common stock.
Approximately 39 million shares of Kerr-McGee stock were issued to the Oryx
shareholders, bringing total shares outstanding at February 26, 1999, to 86
million. The existing Oryx debt ($1.3 billion at December 31, 1998) has become
the company's obligation. The Oryx 7-1/2% convertible debentures due 2014 are
convertible into shares of Kerr-McGee common stock at a conversion rate adjusted
to reflect the exchange ratio.
The merger is being accounted for using the pooling of interests method of
accounting. Therefore, all prior period results of operations, financial
position and cash flows will be restated to reflect the combined company as
though it had always been in existence. These results will be presented in a
Form 8-K to be filed with the Securities and Exchange Commission in mid-1999.
The financial statements and related notes included in this Annual Report
to Stockholders and this Management's Discussion and Analysis pertain only to
the operations of Kerr-McGee Corporation as it existed at December 31, 1998, and
therefore do not reflect the results of operations, financial position or cash
flows of Oryx.
Operating Environment and Outlook
The merger with Oryx creates a much larger global oil and gas reserve and
production base. The company's management expects the benefits of the pretax
synergies of the two organizations to be $100 million annually.
Oil prices in early 1999 are at their lowest level since 1985. The Asian
and South American economic downturns have reduced demand, and prices have
remained low for approximately 18 months. These low oil prices have forced most
exploration and production companies to reduce capital budgets. Crude oil
inventories declined in early 1999, which indicates that world oil consumption
is higher than production. Management recognizes that supply restraint by OPEC
and a few larger non-OPEC producers remains a risk to commodity pricing, but
believes prices will rise because of the high levels of internal political and
economic risk in major producing nations, increasing demand and the likely
reduction of crude oil stocks.
In early 1999, gas markets in the United States have seen weakened pricing
due to a warm winter and high storage volumes. Management believes the severe
downturn in drilling on the shallow Gulf of Mexico shelf has already reduced gas
deliverability. This lack of investment, the long startup time required for
deepwater projects and increasing demand for natural gas in environmentally
friendly power generation should contribute to higher prices later in 1999 and
support them over the longer term.
The company expanded its titanium dioxide pigment capacity by approximately
55% in 1998. Pigment prices for 1998 increased due to economic growth, mainly in
North America and Europe, rising about 14% in the domestic market and slightly
higher in certai n international markets. Demand in early 1999 is about 90% of
industry capacity. Management believes that pigment consumption will remain flat
in 1999, which is likely to equate to a flat pricing structure. To maximize
profits, the company is focused on optimizing manufacturing processes to reduce
costs.
Results of Consolidated Operations
Net income and per-share amounts for each of the three years in the period
ended December 31, 1998, were as follows:
(Millions of dollars, except per-share amounts) 1998 1997 1996
- ------------------------------------------------------------------------------
Net income $ 50 $194 $220
Income from continuing operations
excluding special items 37 151 174
Net income per share -
Net income -
Basic 1.06 4.06 4.45
Diluted 1.06 4.04 4.43
Income from continuing operations
excluding special items -
Basic .77 3.17 3.52
Diluted .77 3.15 3.50
Net income was impacted by a number of special items in each of the years.
In 1998, special items related primarily to impairment write-downs reflecting
the current market value of certain of the company's oil and gas producing
fields and certain chemical facilities. Other 1998 special items were
principally nonoperating and reduced net income by an additional $14 million. In
1997, special items were also principally nonoperating and increased net income
by $10 million. The 1996 special items resulted in a charge to net income of $10
million and were both operating and nonoperating. These special items affect
comparability between the periods and are shown on an after-tax basis in the
following table, which reconciles income from continuing operations excluding
special items to net income.
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------
Income from continuing
operations excluding special items $ 37 $151 $174
---- ---- ----
Special items, net of income taxes -
Asset impairment (250) -- (16)
Equity affiliate's full-cost
ceiling writedown (27) -- --
Net provision for environmental
reclamation and remediation of
inactive sites (26) (13) (28)
Gains (losses) on the sale of nonstrategic
oil and gas properties (12) 4 8
Restructuring (4) (1) (7)
Pending/settled litigation -- (1) (21)
Settlement of prior years' income taxes 41 -- --
Settlements with insurance carriers 8 8 44
Effect of United Kingdom
tax-rate change 8 -- --
Gains on the sale of equity securities -- 12 15
Other, net (2) 1 (5)
---- ---- ----
Total (264) 10 (10)
---- ---- ----
Income from discontinued operations,
net of income taxes 277 33 56
---- ---- ----
Net income $ 50 $194 $220
==== ==== ====
The company sold its coal operations in 1998, resulting in an after-tax
gain of $257 million. All amounts related to coal are shown in the Consolidated
Statement of Income as discontinued operations.
Income from continuing operations excluding special items for 1998 declined
$114 million from 1997. This primarily resulted from a $165 million decline in
exploration and production operating profit excluding special items, which was
partially off set by a $31 million increase in chemical results. In 1997, income
from continuing operations excluding special items decreased $23 million from
the prior year, due primarily to declines of 25% and 7% in operating profit
excluding special items of exploration and production and chemical,
respectively. The merger of the company's North American onshore properties into
Devon Energy Corporation (Devon) was effective December 31, 1996, and affects
the comparability of 1997 and 1996 operating profit. The company's investment in
Devon is accounted for using the equity method, and the related results are not
included in operating profit in 1998 and 1997 (see Note 4). Operating profit
excluding special items was $128 million, $262 million and $326 million for
1998, 1997 and 1996, respectively.
Sales from continuing operations were $1.4 billion in both 1998 and 1997,
compared with $1.6 billion in 1996. Declines in 1998 average sales prices for
oil and natural gas of 36% and 15%, respectively, were offset by sales volume
increases in crude oil, natural gas and titanium dioxide pigment and sales price
increases for pigment. The volume increases in crude oil and natural gas sales
were primarily a result of the company's purchase of the North Sea assets of
Gulf Canada. Volume increases in titanium dioxide sales relate to the purchase
of an 80% interest in Bayer's European pigment operations and the expansion of
the pigment facility in Hamilton, Mississippi. Sales for 1997 were less than the
prior year due to lower crude oil prices and volumes, lower natural gas volumes
and lower average prices for titanium dioxide pigment. Oil and gas volumes
declined primarily due to the merger of the North American onshore properties
into Devon, divestitures of nonstrategic properties and significantly lower
sales of natural gas purchased from third parties. Partially offsetting these
declines were higher prices for natural gas and increased pigment volumes.
Costs and operating expenses were $818 million, $739 million and $804
million for 1998, 1997 and 1996, respectively. The 1998 amount was higher than
the prior year principally due to costs of the new European pigment operations
and higher per-unit costs at the domestic pigment and synthetic rutile
facilities. This was offset by the absence of costs of natural gas purchased for
resale. Costs and operating expenses for 1997 were lower than the prior year,
primarily due to the absence of North American onshore and divested oil and gas
properties and significantly lower volumes of natural gas purchased for resale,
partially offset by higher production costs for pigment.
Following are general and administrative expenses for 1998, 1997 and 1996:
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------
General and administrative expenses
excluding special items $135 $109 $106
---- ---- ----
Special items -
Net provision for environmental
reclamation and remediation of
inactive sites 41 20 43
Restructuring 3 2 10
Pending/settled litigation -- 2 29
Other, net (3) 3 9
---- ---- ----
Total 41 27 91
---- ---- ----
General and administrative expenses $176 $136 $197
==== ==== ====
The increase in 1998 vs. 1997 general and administrative expenses primarily
resulted from additional costs related to the company's European pigment
operations, which were acquired March 31, 1998. Net provisions for environmental
reclamation and remediation of inactive sites primarily represent additional
provisions established for the removal of low-level radioactive materials from
the company's inactive facility and offsite areas in West Chicago, Illinois.
Restructuring charges are for a 1998 work process review and organizational
restructuring of several groups, the 1996-1997 relocation of the exploration and
production unit to Houston, Texas, and severance associated with the divestiture
program and the Devon merger.
Asset impairment totaled $370 million in 1998 and $25 million in 1996 (see
Note 10). Of the 1998 amount, $313 million was for writedowns associated with
certain oil and gas fields located in the North Sea, China and the Gulf of
Mexico. Asset impairment of $57 million was also recognized for certain chemical
facilities in Idaho and Alabama. The impairments were recorded because these
assets were no longer expected to recover their net book values through future
cash flows. The 1996 asset impairment related principally to certain oil and gas
exploration and production properties in the Gulf of Mexico.
Exploration costs for 1998, 1997 and 1996 were $84 million, $65 million and
$74 million, respectively. The 1998 increase was the result of higher dry hole
costs in the Gulf of Mexico and Thailand, higher undeveloped leasehold
amortization in the Gulf of Mexico and higher district expense in China and the
North Sea, partially offset by lower dry hole costs in China and lower
geological expenses. Lower dry hole costs in the North Sea, offset in part by
higher costs in China, were the primary reason for the reduced 1997 costs. Also
contributing to the reduction was lower undeveloped lease amortization,
partially offset by higher geophysical cost.
Interest and debt expense totaled $58 million in 1998, $47 million in 1997
and $52 million in 1996. Borrowings increased in 1998 due to the acquisitions of
European chemical operations and North Sea oil and gas assets. Decreased debt
was the principal reason for the lower 1997 expense, compared with the prior
year.
Other income was as follows for each of the years in the three-year period
ended December 31, 1998:
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------
Other income excluding special items $37 $47 $ 29
--- --- ----
Special items -
Interest income from settlement
of prior years' income taxes 19 -- --
Settlements with insurance carriers 12 12 67
Equity affiliate's full-cost ceiling
writedown (27) -- --
Gains (losses) on the sale of nonstrategic
oil and gas properties (19) 6 13
Gains on sales of equity securities -- 18 23
Other, net -- 7 --
--- --- ----
Total (15) 43 103
--- --- ----
Other income $22 $90 $132
=== === ====
Lower equity earnings from unconsolidated affiliates were the primary
reason for the decline in 1998 other income excluding special items, compared
with the prior year. Equity earnings from the Devon investment were impacted by
lower oil and gas prices and decreased $14 million for 1998, compared with 1997.
In 1997, equity earnings from Devon were $23 million and contributed to higher
other income, as compared with 1996.
Segment Operations
Operating profit (loss) from each of the company's segments is summarized
in the following table:
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------
Operating profit excluding special items -
Exploration and production $ 13 $178 $236
Chemicals 115 84 90
----- ---- ----
Total 128 262 326
Special items (374) (6) (37)
----- ---- ----
Operating profit (loss) $(246) $256 $289
===== ==== ====
Exploration and Production
Exploration and production sales, operating profit (loss) and production
and sales statistics are shown in the following table:
(Millions of dollars, except per-unit amounts) 1998 1997 1996
- ------------------------------------------------------------------------------
Sales $ 463 $ 628 $ 874
====== ====== ======
Operating profit excluding special items $ 13 $ 178 $ 236
Special items (315) (3) (32)
------ ------ ------
Operating profit (loss) $ (302) $ 175 $ 204
====== ===== ======
Net proprietary crude oil and condensate
produced (thousands of barrels per day) 67 57 69
Average price of crude oil sold (per barrel) $11.88 $18.51 $19.16
Proprietary natural gas sold (MMCF per day) 198 184 281
Average price of natural gas sold (per MCF) $ 2.18 $ 2.56 $ 2.12
Asset impairment for certain oil and gas fields in the North Sea, China and
Gulf of Mexico totaled $313 million in 1998 and is reflected in special items.
Special items in 1997 consisted primarily of additional costs for the unit's
restructuring and relocation to Houston, Texas. The 1996 special items were $22
million for asset impairment and $10 million for restructuring, due to the
December 1996 merger of the North American onshore properties into Devon and the
announcement of the relocation of certain exploration and production personnel
to Houston, Texas.
Increases in 1998 production volumes of both oil and gas did not offset the
large price declines. As a result, operating profit excluding special items was
negatively impacted by approximately $100 million. The volume increase primarily
resulted from the acquisition of additional North Sea assets. In addition,
exploration expenses increased and contributed to the 1998 decline in operating
profit from 1997. The primary reasons for lower 1997 operating profit excluding
special items, compared with 1996, were equity accounting for the merged
properties and lower average sales prices for crude oil, partially offset by
increased sales prices for natural gas and lower exploration expenses.
Chemicals
Chemical sales and operating profit are shown in the following table:
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------
Sales $ 933 $ 760 $ 692
====== ====== ======
Operating profit excluding special items $ 115 $ 84 $ 90
Special items (59) (3) (5)
------ ------ ------
Operating profit $ 56 $ 81 $ 85
====== ====== ======
Asset impairment totaled $57 million for noncore chemical assets in Alabama
and Idaho in 1998 and is included in special items. In addition, $2 million of
severance charges were recorded as special items in 1998. Special items in 1997
were primarily for the write-off of obsolete equipment and in 1996 for
impairment and shutdown costs for a crosstie-treating facility and the
elimination of a product line at a specialty plant.
Titanium dioxide pigment prices increased throughout 1998. This improvement
in pricing, along with the company's acquisition of the 104,000 net
metric-ton-per-year European pigment operations from Bayer and a full year's
production from the 27,000 metric-ton-per-year expansion of the company's
Hamilton, Mississippi, plant, were the primary reasons for the $173 million
increase in chemical sales. These sales increases were partially offset by
higher per-unit costs for pigment, synthetic rutile and certain electrolytic
products, resulting in a $31 mill ion increase in operating profit excluding
special items. The increase in 1997 sales, compared with 1996, was due to
increased titanium dioxide pigment and ammonium perchlorate sales volumes.
Partially offsetting these increases were lower average pigment prices. Although
prices strengthened considerably in the last half of 1997, average prices
received over the year were less than those received in 1996. The higher 1997
pigment volumes resulted from the completion of the expansion at the Hamilton,
Mississippi, plant and a full year's production from the 1996 expansion in
Western Australia.
Financial Condition
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------
Current ratio 1.4 1.3 1.7
Working capital $ 215 $ 166 $ 320
Total debt 944 579 663
Total debt less cash 830 396 542
Stockholders' equity $1,333 $1,440 $1,367
Total debt to total capitalization 41% 29% 33%
Floating-rate debt to total debt 46 11 66
Cash Flow
Net cash provided by operating activities was $99 million in 1998, compared
with $569 million in 1997 and $645 million in 1996.
The decrease in 1998 resulted primarily from working capital and other
changes that used cash from operating activities and lower net operating income.
Net cash provided by operating activities was reduced by taxes paid of $115
million related to the sale of the discontinued coal operations.
The decrease in 1997 net cash provided by operating activities, compared
with 1996, resulted primarily from lower net income, lower noncash charges,
higher cash environmental expenditures and lower deferred income taxes,
partially offset by working capital and other changes that increased net cash
provided by operating activities. Cash flow provided by operating activities in
1997 was also adversely affected by the company's merger of its North American
onshore oil and gas properties into Devon, since undistributed earnings from
equity affiliates represent a noncash item. The net cash provided by operating
activities in 1996 was primarily attributable to the company's record net
income.
In 1998, approximately $600 million in cash was provided from proceeds from
the sales of the company's discontinued coal operations, $39 million from the
sale of the ammonium perchlorate operations and $21 million from other investing
activities. These sources of cash from investing activities and net proceeds
from debt issuances of $362 million were used for capital expenditures of $550
million and acquisitions of $518 million for the Gulf Canada North Sea assets
and the European titanium dioxide pig ment facilities.
In both 1997 and 1996, cash provided by operating activities was
supplemented by other sources of cash that were used primarily to reduce debt
and purchase the company's common stock (see Note 13). In 1997, cash available
increased $21 million from the sale of equity securities, $18 million from the
sale of nonstrategic and marginal exploration and production properties, $17
million from the sale of other assets and $21 million related to insurance
settlements. During 1996, the company received cash proceeds of $48 million from
the divestiture of nonstrategic, marginal and other exploration and production
properties; $43 million related to insurance settlements; $29 million from the
sale of equity securities; $13 million from the sale of the remaining refining
and marketing assets; and $11 million from the sale of other assets, including
the company's West Virginia coal mining operation.
The company's Board of Directors authorized a stock purchase program in
1998. A total of $25 million (580,000 shares) was purchased before the program
was cancelled because of the company's merger with Oryx. The 1995 stock purchase
program was completed in August 1997 with expenditures of $60 million in 1997,
$195 million in 1996 and $45 million in 1995. A total of 4,829,000 shares was
purchased through this program.
On January 14, 1997, the company's Board of Directors approved an increase
in the quarterly dividend payable April 1, 1997, to $.45 per share from $.41 per
share.
Liquidity
The company's balance sheet reflects a solid working capital position and
low debt to capitalization. The company's debt has been rated "A", "A3" or "A-"
by various rating agencies, resulting in low debt costs. In connection with the
merger with Oryx, the rating agencies have reviewed the company's debt ratings.
The company has been notified that the new ratings are "BBB+", "Baa1" and "BBB"
for its senior unsecured debt. This reflects the substantial increase in debt
leverage because of the assumption of Oryx debt obligations. At December 31,
1998, the company's net working capital position was $215 million, an increase
of $49 million from the prior year. The strengthening of the working capital
position was directly attributable to increases in receivables and inventory
generated by the company's European pigment operations since acquisition in
March 1998. The 1997 net working capital position was $166 million, a decline
from the 1996 year-end position. The merger of the company's North American
onshore exploration and production properties contributed to the lower working
capital position, since certain components of working capital were converted
into the Devon equity investment.
At year-end 1998, total debt outstanding was $944 million. The percentage
of total debt to total capitalization was 41% at December 31, 1998; 29% at
December 31, 1997; and 33% at year-end 1996. The higher percentage at year-end
1998 resulted from the increase in borrowings due to the acquisition of the
North Sea assets and European pigment operations and capital expenditures that
totaled more than the cash proceeds from the sales of the coal operations. The
improvement in the 1997 percentage was the direct result of repayment of debt,
which more than offset the effect of the stock purchase program on total
capitalization.
The company last issued publicly held debt in October 1997. The majority of
the then outstanding floating-rate debt was replaced with $300 million of
fixed-rate securities - $150 million of 7.125% debentures (effective rate 7.01%)
due October 15, 2027, and $150 million of 6.625% notes (effective rate 6.54%)
due October 15, 2007.
Additionally, the company and/or its subsidiaries have several revolving
credit agreements. At year-end 1998, $281 million was outstanding under the
agreements with interest payable at varying rates. At December 31, 1998, the
company had unused lines of credit and revolving credit facilities of $525
million. Of this amount, $345 million and $90 million could be used to support
the commercial paper borrowings of Kerr-McGee Credit LLC and Kerr-McGee Oil
(U.K.) PLC, respectively, both wholly owned subsidiaries.
In 1998, one of the company's wholly owned U.K. subsidiaries, Kerr-McGee
Resources Limited, entered into a $76 million revolving credit agreement, of
which $71 million was outstanding at year-end. This agreement permits borrowings
through May 15, 2003.
Another facility entered into during 1998 allows for the European
operations to borrow up to 500 million Belgian francs (approximately $14
million) and is renewable annually. At December 31, 1998, an amount equal to $8
million was outstanding under this arrangement. Subsequent to year-end 1998, the
company and Kerr-McGee Oil (U.K.) PLC notified the lead bank of the intent to
eliminate a $75 million credit facility. On February 26, 1999, the company
signed two new revolving credit agreements, a 3-year $500 million facility and a
364-day $250 million facility. Initially, one-third of the borrowings under each
of these agreements can be made in British pounds sterling, euros or other local
European Union currencies. Interest for each of the revolving credit agreements
is payable at varying rates.
At December 31, 1998, the company classified $400 million of its short-term
obligations as long-term debt. Final settlement of these obligations, consisting
of revolving credit borrowings and commercial paper, is not expected to occur in
1999. The company has the intent and the ability, as evidenced by committed
credit arrangements, to refinance this debt on a long-term basis. The company's
practice has been to continually refinance its commercial paper, while
maintaining levels believed to be appropriate.
The company finances capital expenditures through internally generated
funds and various borrowings. Cash capital expenditures were $550 million in
1998, $341 million in 1997 and $392 million in 1996, a total of $1.3 billion.
During this same period, $1.6 billion of net cash was provided by operating
activities (exclusive of working capital and other changes), which exceeded cash
capital expenditures and dividends paid during the period by approximately $20
million.
Management anticipates that 1999 cash capital requirements, currently
estimated at $545 million after the merger with Oryx, and the capital
expenditures programs for the next several years can continue to be provided
through internally generated funds and selective short-term and/or long-term
borrowings.
Market Risks
The company is exposed to a variety of market risks, including the effects
of movements in foreign currency exchange rates, interest rates and certain
commodity prices. The company addresses its risks through a controlled program
of risk management that includes the use of derivative financial instruments.
The company does not hold or issue derivative financial instruments for trading
purposes. See Notes 1 and 15 to the Consolidated Financial Statements for
additional discussion of the company's financial instruments and hedging
activities.
Foreign Currency Exchange
The U.S. dollar is the functional currency for the company's international
operations, except for its European chemical operations. It is the company's
intent to hedge a portion of its monetary assets and liabilities denominated in
foreign currencies. Periodically, the company purchases foreign currency forward
contracts to provide funds for operating and capital expenditure requirements
that will be denominated in foreign currencies, primarily Australian dollars and
British pounds sterling. These contracts generally have durations of less than
three years. The company also enters into forward contracts to hedge the sale of
various foreign currencies, principally generated from accounts receivable for
titanium dioxide pigment sales denominated in foreign currencies. These
contracts are principally for European currencies and generally have durations
of less than a year. Since these contracts qualify as hedges and correlate to
currency movements, any gains or losses resulting from exchange rate changes are
deferred and recognized as adjustments of the hedged transaction when it is
settled in cash.
At year-end 1998 and 1997, the company's derivative financial instruments
were comprised only of foreign currency forward contracts. Following are the
notional amounts at the contract exchange rates, weighted-average contractual
exchange rates and estimated fair value by contract maturity for open contracts
at year-end 1998 and 1997 to purchase (sell) foreign currencies. All amounts are
U.S. dollar equivalents.
<TABLE>
<CAPTION>
Notional Weighted-Average Estimated Fair
(Millions of dollars, except average contract rate) Amount Contract Rate Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Open contracts at December 31, 1998 -
Maturing in 1999 -
Australian dollar $56 .7117 $48
German mark (1) 1.6745 (1)
Maturing in 2000 -
Australian dollar 21 .6145 21
Open contracts at December 31, 1997 -
Maturing in 1998 -
Australian dollar 63 .7507 55
British pound sterling 12 1.5897 12
German mark (3) 1.7721 (3)
British pound sterling (1) .6137 (1)
Belgian franc (1) 36.0382 (1)
Maturing in 1999 -
Australian dollar 39 .7377 35
</TABLE>
Interest Rates
The company's exposure to changes in interest rates relates primarily to
long-term debt obligations. The company does not currently participate in
interest rate-related derivative financial instruments.
The table below presents principal amounts and related weighted-average
interest rates by maturity date for the company's long-term debt obligations
outstanding at year-end 1998. All borrowings are in U.S. dollars.
<TABLE>
<CAPTION>
There- Fair Value
(Millions of dollars) 1999 2000 2001 2002 2003 after Total 12/31/98
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed-rate debt -
Principal amount $7 $13 $ 12 $ 10 $ 6 $460 $508 $617
Weighted-average
interest rate 9.57% 8.99% 9.61% 9.61% 9.61% 6.98% 7.21%
Variable-rate debt -
Principal amount -- $65 $129 $135 $71 -- 400 $400
Weighted-average
interest rate -- 5.43% 6.32% 5.55% 5.58% -- 5.78%
</TABLE>
At December 31, 1997, long-term debt included fixed-rate debt of $517
million (fair value - $632 million) with a weighted-average interest rate of
7.25% and $37 million variable-rate debt, which approximated fair value, with a
weighted-average interest rate of 6.04%.
Commodity Prices
Although no such contracts were entered into during 1998 or 1997, the
company has periodically used commodity futures and option contracts to hedge a
portion of its crude oil and natural gas sales and natural gas purchased for
operations in order to minimize the price risks associated with the production
and marketing of crude oil and natural gas. Since the contracts qualified as
hedges and correlated to price movements of crude oil and natural gas, any gain
or loss from these contracts was explicitly deferred and recognized as part of
the hedged transaction.
Environmental Matters
The company's operations are subject to various environmental laws and
regulations. Under these laws, the company is subject to possible obligations to
remove or mitigate the effects on the environment of the disposal or release of
certain chemical, petroleum or low-level radioactive substances at various
sites, including sites that have been designated Superfund sites by the U.S.
Environmental Protection Agency (EPA) pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (CERCLA), as
amended. At December 31, 1998, the company had received notices that it has been
named a potentially responsible party (PRP) with respect to the remediation of
13 existing EPA Superfund sites and may share liability at certain of these
sites. In addition, the company and/or its subsidiaries have executed consent
orders, operate under a license or have reached agreements to perform or have
performed remediation or remedial investigations and feasibility studies on
sites not included as EPA Superfund sites.
The company does not consider the number of sites for which it has been
named a PRP to be a relevant measure of liability. The company is uncertain as
to its involvement in many of the sites because of continually changing
environmental laws and regulations; the nature of the company's businesses; the
large number of other PRPs; the present state of the law, which imposes joint
and several liability on all PRPs under CERCLA; and pending legal proceedings.
Therefore, the company is unable to reliably estimate the potential liability
and the timing of future expenditures that may arise from many of these
environmental si tes. Reserves have been established for the remediation and
reclamation of active and inactive sites where it is probable that future costs
will be incurred and the liability is estimable. In 1998, $88 million was added
to the reserve for active and inactive sites. At December 31, 1998, the
company's reserve for these sites totaled $226 million. In addition, at year-end
1998, the company had a reserve of $73 million for the future costs of the
abandonment and removal of offshore well and production facilities at the end of
their productive lives. In the Consolidated Balance Sheet, $216 million of the
total reserve is classified as a deferred credit, and the remaining $83 million
is included in current liabilities.
Expenditures for the environmental protection and cleanup of existing sites
for each of the last three years and for the three-year period ended December
31, 1998, are as follows:
(Millions of dollars) 1998 1997 1996 Total
- ---------------------------------------------------------------------
Charges to environmental reserves $105 $ 94 $ 56 $255
Capital expenditures 24 17 15 56
Recurring expenses 13 20 19 52
---- ---- ---- ----
Total $142 $131 $ 90 $363
==== ==== ==== ====
The company has not recorded in the financial statements potential
reimbursements from governmental agencies or other third parties (see Notes 9
and 12). The following table reflects the company's portion of the known
estimated costs of investigation and/or remediation that is probable and
estimable. The table includes all EPA Superfund sites where the company has been
notified it is a PRP under CERCLA and other sites for which the company believes
it had some ongoing financial involvement in investigation and/or remediation at
year-end 1998.
<TABLE>
<CAPTION>
Total Known Total
Estimated Expenditures Total Number
Costs Through 1998 of Identifiable
Location of Site Stage of Investigation/Remediation (Millions of dollars) PRPs
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EPA Superfund sites
Milwaukee, Wis. Executed consent decree to remediate the site of
a former wood-treating facility. Awaiting approval
of proposed remedy; installed and operating a free-
product recovery system. $ 15 $ 7 3
West Chicago, Ill., two sites Began cleanup of a portion of one site in 1995, and
outside the facility cleanup of the second site began in 1997 (see Note 9). 58 50 1
Chicago, Ill., and nine sites
individually not material Various stages of investigation/remediation. 32 28 138
---- ---- ---
105 85 142
---- ---- ===
Non-EPA Superfund sites under
consent order, license or
agreement
West Chicago, Ill., facility Reached agreement with the City of West Chicago.
Decommissioning is in progress under State of Illinois
supervision while awaiting state license amendment
(see Note 9). Began shipments to a permanent
disposal facility in 1994. 385 225
Cleveland/Cushing, Okla. Began cleanup in 1996. 63 47
---- ----
448 272
---- ----
Non-EPA Superfund sites
individually not material 213 183
---- ----
Total for all sites $766 $540
==== ====
</TABLE>
Management believes adequate reserves have been provided for environmental
and all other known contingencies. However, it is possible that additional
reserves could be required in the future due to the previously noted
uncertainties.
Year 2000 Readiness
In 1996, the company established a formal Year 2000 Program (Program) to
assess and correct Year 2000 problems in both information technology and
non-information technology systems. The Program is organized into two major
areas: business systems and facilities integrity. Business systems include
replacement and upgrade of computer hardware and software, including major
business applications such as purchasing, inventory, engineering, financial,
human resources, etc. Facilities integrity encompasses telecommunications, plant
process controls, instrumentation and embedded chip systems as well as an
assessment of third-party Year 2000 readiness. The Program is generally divided
into the following phases:
- Identification and evaluation of systems that need to be modified or
replaced.
- Remediation work to modify existing systems or install new systems.
- Testing and validation of systems and applications.
An integral part of the Program is communication with third parties to
assess the status of their Year 2000 efforts. Formal communications have been
initiated with critical suppliers to determine whether their operations and/or
the products and services provided to the company will be Year 2000 ready. In
addition, the company has contacted key customers requesting information
regarding their Year 2000 readiness. The company continues to evaluate responses
and make additional inquiries as needed.
The company is also developing contingency plans which include manual
systems and other procedures to accommodate significant disruptions that could
be caused by system failures. When possible, alternative providers are being
identified in the event that certain critical suppliers are unable to provide an
acceptable level of service to the company.
At December 31, 1998, approximately 99% of the planned work on the business
systems had been completed, with all phases completed in the first quarter of
1999. Most of these projects were system replacements to improve business
functionality and were not undertaken solely because of Year 2000 issues.
Approximately 70% of the planned work on facilities integrity was also
completed. These activities are expected to be completed by the third quarter of
1999. Ongoing work in the areas of contingency planning, third-party
communications and Year 2000 response team training is expected through the end
of 1999.
Inception-to-date Program expenditures totaled $42 million at year-end
1998, which includes $16 million spent during 1998. The total capital and
operating costs to achieve Year 2000 readiness are estimated to be $45 million
over the period of the Program, which is not material to the company's
consolidated results of operations, financial position or cash flows. Program
expenditures are provided through internally generated funds and selective
short-term and/or long-term borrowings.
The merger with Oryx was completed in the first quarter of 1999, and the
Year 2000 programs of the companies were combined. Approximately 75% of Oryx's
business systems will be replaced with Kerr-McGee's Year 200 0-compliant
systems. The remaining business systems will be modified to be Year 2000
compliant by the third quarter of 1999. The status of the facilities integrity
is being assessed and will be included in the company's Program. Therefore, the
cost and progress of the Kerr-McGee Program will be impacted and future
disclosures adjusted appropriately.
The failure to correct a material Year 2000 problem could result in
disruption to some aspects of the company's normal business activities or
operations. Such failures could have a material adverse effect on the company's
results of operations and cash flows in a particular quarter or annual period.
Management believes that the Program is comprehensive and reduces Year 2000
risks associated with internal systems to a manageable level. Regardless of
management's efforts to assess and verify readiness, there can be no assurance
that all entities with which the company does business will be Year 2000
compliant. Contingency plans are being developed to address these concerns.
However, failure by a third party to remediate Year 2000 issues in a timely
manner could have a material adverse effect on the company's results of
operations and cash flows in a particular quarter or annual period. This would
most likely result from failure of critical operating or safety components or
the failure of a key third-party supplier or customer.
New Accounting Standards
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) No. 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." Amounts capitalized
or expensed by the company for internal-use software projects are not expected
to differ materially as a result of the SOP, since the prescribed accounting
treatment is fairly consistent with the company's current accounting policy. The
effect of the SOP is to be recognized prospectively and is effective for 1999
financial statements.
SOP No. 98-5, "Reporting on the Costs of Start-Up Activities," was issued
in April 1998. It requires that costs related to start-up activities, including
organization costs, be expensed as incurred. The SOP will be adopted for the
first quarter of 1999, and the company will recognize approximately $6 million
($4 million after income taxes) as the cumulative effect of the change in
accounting principle. These costs were carried as deferred charges at year-end
1998.
In June 1998, the Financial Accounting Standards Board issued Statement No.
133, "Accounting for Derivative and Hedging Activities." The statement requires
recording all derivative instruments as assets or liabilities, measured at fair
value. The standard is effective for fiscal years beginning after June 15, 1999.
The company is currently evaluating the impact the standard will have on income
from continuing operations; however, management believes it will be immaterial
due to the limited amount of hedging activity in which the company engages.
Cautionary Statement Concerning Forward-Looking Statements
The company has made certain forward-looking statements in this report,
which are subject to risks and uncertainties. These statements are based on the
beliefs and assumptions of the company's management. Forward-looking statements
are not guarantees of performance.
Certain information in the Year 2000 Readiness section is forward looking.
The Year 2000 Program and the date on which the company believes it will be
completed are based on management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued availability of
certain resources, third-party modification plans and other factors. However,
there can be no assurance that there will not be a delay in, or increased costs
associated with, the im plementation of the Year 2000 Program.
Forward-looking statements include information concerning possible or
assumed future results and may be preceded by, followed by, or otherwise include
the words "believes", expects", "anticipates", "intends", "plans", "estimates",
or similar expressions. For those statements, the company claims the protection
of the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.
Responsibility for Financial Reporting
The company's management is responsible for the integrity and objectivity
of the financial data contained in the financial statements. These financial
statements have been prepared in conformity with generally accepted accounting
principles appropriate under the circumstances and, where necessary, reflect
informed judgments and estimates of the effects of certain events and
transactions based on currently available information at the date the financial
statements were prepared.
The company's management depends on the company's system of internal
accounting controls to assure itself of the reliability of the financial
statements. The internal control system is designed to provide reasonable
assurance, at appropriate cost, that assets are safeguarded and transactions are
executed in accordance with management's authorizations and are recorded
properly to permit the preparation of financial statements in accordance with
generally accepted accounting principles. Periodic reviews are made of internal
controls by the company's staff of inte rnal auditors, and corrective action is
taken if needed.
The Board of Directors reviews and monitors financial statements through
its audit committee, which is composed solely of directors who are not officers
or employees of the company. The audit committee meets regularly with the
independent public accountants, internal auditors and management to review
internal accounting controls, auditing and financial reporting matters.
The independent public accountants are engaged to provide an objective and
independent review of the company's financial statements and to express an
opinion thereon. Their audits are conducted in accordance with generally
accepted auditing standards, and their report is included below.
Report of Independent Public Accountants
To the Stockholders and Board of Directors of Kerr-McGee Corporation:
We have audited the accompanying consolidated balance sheet of Kerr-McGee
Corporation (a Delaware corporation) and subsidiary companies as of December 31,
1998 and 1997, and the related consolidated statements of income, comprehensive
income and stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1998. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Kerr-McGee Corporation and
subsidiary companies as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.
Oklahoma City, Oklahoma,
February 26, 1999
ARTHUR ANDERSEN LLP
<TABLE>
Consolidated Statement of Income
<CAPTION>
(Millions of dollars, except per-share amounts) 1998 1997 1996
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $1,396 $1,388 $1,566
------ ------ ------
Costs and Expenses
Costs and operating expenses 818 739 804
General and administrative expenses 176 136 197
Depreciation and depletion 269 239 267
Asset impairment 370 -- 25
Exploration, including dry holes and amortization of undeveloped leases 84 65 74
Taxes, other than income taxes 18 20 30
Interest and debt expense 58 47 52
------ ------ ------
Total Costs and Expenses 1,793 1,246 1,449
------ ------ ------
(397) 142 117
Other Income 22 90 132
------ ------ ------
Income (Loss) from Continuing Operations before Income Taxes (375) 232 249
Provision (Benefit) for Income Taxes (148) 71 85
------ ------ ------
Income (Loss) from Continuing Operations (227) 161 164
Income from Discontinued Operations, net of taxes of
$156 in 1998, $12 in 1997 and $18 in 1996 277 33 56
------ ------ ------
Net Income $ 50 $ 194 $ 220
====== ====== ======
Net Income (Loss) per Common Share
Basic -
Continuing operations $(4.78) $ 3.38 $ 3.32
Net income 1.06 4.06 4.45
Diluted -
Continuing operations (4.78) 3.36 3.30
Net income 1.06 4.04 4.43
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Consolidated Statement of Comprehensive Income and Stockholders' Equity
<CAPTION>
Accumulated
Capital in Other Deferred Total
Comprehensive Common Excess of Retained Comprehensive Treasury Compensation Stockholders'
(Millions of dollars) Income Stock Par Value Earnings Income (Loss) Stock and Other Equity
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance December 31, 1995 $54 $318 $1,209 $26 $(111) $(80) $1,416
Net income $220 -- -- 220 -- -- -- 220
Unrealized gains on securities,
net of $5 income tax 9 -- -- -- 9 -- -- 9
Realized gains on securities,
net of $8 income tax (15) -- -- -- (15) -- -- (15)
Appreciation of securities
donated, net of $5
income tax (8) -- -- -- (8) -- -- (8)
Shares issued -- -- 16 -- -- -- -- 16
Shares acquired -- -- -- -- -- (195) -- (195)
Dividends declared
($1.64 per share) -- -- -- (81) -- -- -- (81)
Other -- -- -- -- -- -- 5 5
---- --- ---- ------ --- ----- ---- ------
Total $206
====
Balance December 31, 1996 54 334 1,348 12 (306) (75) 1,367
Net income $194 -- -- 194 -- -- -- 194
Unrealized gains on securities,
net of $1 income tax 2 -- -- -- 2 -- -- 2
Realized gains on securities,
net of $6 income tax (12) -- -- -- (12) -- -- (12)
Appreciation of securities
donated, net of $1
income tax (2) -- -- -- (2) -- -- (2)
Shares issued -- -- 12 -- -- -- -- 12
Shares acquired -- -- -- -- -- (57) -- (57)
Dividends declared
($1.80 per share) -- -- -- (86) -- -- -- (86)
Other -- -- -- -- -- -- 22 22
---- --- ---- ------ --- ----- ---- ------
Total $182
====
Balance December 31, 1997 54 346 1,456 -- (363) (53) 1,440
Net income $ 50 -- -- 50 -- -- -- 50
Foreign currency
translation adjustment (5) -- -- -- (5) -- -- (5)
Minimum pension liability
adjustment (3) -- -- -- (3) -- -- (3)
Shares issued -- -- 3 -- -- -- -- 3
Shares acquired -- -- -- -- -- (25) -- (25)
Dividends declared
($1.80 per share) -- -- -- (86) -- -- -- (86)
Effect of equity
affiliate's merger -- -- -- (51) -- -- -- (51)
Other -- -- -- -- -- -- 10 10
---- --- ---- ------ --- ----- ---- ------
Total $ 42
====
Balance December 31, 1998 $54 $349 $1,369 $(8) $(388) $(43) $1,333
=== ==== ====== === ===== ==== ======
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Consolidated Balance Sheet
<CAPTION>
(Millions of dollars) 1998 1997
-----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets
Cash $ 114 $ 183
Accounts receivable, net of allowance for doubtful accounts
of $5 in both 1998 and 1997 305 274
Inventories 246 172
Deposits, prepaid expenses and other 86 60
------- -------
Total Current Assets 751 689
Investments
Equity affiates 170 273
Other assets 49 60
Property, Plant and Equipment - Net 2,288 1,998
Deferred Charges 83 76
------- -------
Total Assets $ 3,341 $ 3,096
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 291 $ 247
Short-term borrowings 36 25
Long-term debt due within one year 7 2
Taxes on income -- 36
Taxes, other than income taxes 7 17
Accrued liabilities 195 196
------- -------
Total Current Liabilities 536 523
------- -------
Long-Term Debt 901 552
------- -------
Deferred Credits and Reserves
Income taxes 189 159
Other 382 422
------- -------
Total Deferred Credits and Reserves 571 581
------- -------
Stockholders' Equity
Common stock, par value $1.00 - 150,000,000 shares authorized,
54,177,938 shares issued in 1998 and 54,120,747 shares issued in 1997 54 54
Capital in excess of par value 349 346
Preferred stock purchase rights 1 1
Retained earnings 1,369 1,456
Accumulated other comprehensive loss (8) --
Common stock in treasury, at cost - 7,010,790 shares in 1998 and
6,434,465 shares in 1997 (388) (363)
Deferred compensation (44) (54)
------- -------
Total Stockholders' Equity 1,333 1,440
------- -------
Total Liabilities and Stockholders' Equity $ 3,341 $ 3,096
======= =======
The "successful efforts" method of accounting for oil and gas exploration and
production activities has been followed in preparing this balance sheet.
The accompanying notes are an integral part of this balance sheet.
</TABLE>
<TABLE>
Consolidated Statement of Cash Flows
<CAPTION>
(Millions of dollars) 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flow from Operating Activities
Net income $ 50 $ 194 $ 220
Adjustments to reconcile to net cash provided by operating activities -
Deferred income taxes (61) 36 68
Depreciation, depletion and amortization 298 271 307
Asset impairment 370 -- 25
Provision for environmental reclamation and remediation of inactive sites 41 20 43
Gain on sale of coal operations, net of income taxes (257) -- --
Gain on sale of exploration and production properties -- (6) (21)
Realized gain on available-for-sale securities -- (18) (23)
Retirements and (gain) loss on sale of other assets 13 (4) (3)
Noncash items affecting net income (19) 1 18
Changes in current assets and liabilities and other, net of effects
of operations acquired and sold -
Decrease in accounts receivable 29 132 48
(Increase) decrease in inventories (56) 40 1
(Increase) decrease in deposits and prepaids (26) 13 59
Increase (decrease) in accounts payable and accrued liabilities 28 (16) (37)
Increase (decrease) in taxes payable (165) 31 (22)
Other (146) (125) (38)
---- ----- -----
Net cash provided by operating activities 99 569 645
---- ----- -----
Cash Flow from Investing Activities
Capital expenditures (550) (341) (392)
Acquisitions (518) -- --
Proceeds from sale of discontinued operations 599 -- 13
Proceeds from sale of chemical and exploration and production properties 39 18 48
Proceeds from sale of available-for-sale securities -- 21 29
Proceeds from sale of other assets 11 17 11
Proceeds from sale of long-term investments 10 13 17
Purchase of long-term investments (3) (14) (6)
---- ----- -----
Net cash used in investing activities (412) (286) (280)
---- ----- -----
Cash Flow from Financing Activities
Issuance of long-term debt 401 299 24
Issuance of common stock 3 12 16
Increase (decrease) in short-term borrowings 11 (12) (57)
Repayment of long-term debt (50) (375) (36)
Dividends paid (86) (85) (83)
Purchase of treasury stock (25) (60) (195)
---- ----- -----
Net cash provided by (used in) financing activities 254 (221) (331)
---- ----- -----
Effects of Exchange Rate Changes on Cash and Cash Equivalents (10) -- --
---- ----- -----
Net Increase (Decrease) in Cash and Cash Equivalents (69) 62 34
Cash and Cash Equivalents at Beginning of Year 183 121 87
---- ----- -----
Cash and Cash Equivalents at End of Year $114 $ 183 $ 121
==== ===== =====
The accompanying notes are an integral part of this statement.
</TABLE>
Notes to Financial Statements
1. Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of all
subsidiary companies that are more than 50% owned and the proportionate share of
joint ventures in which the company has an undivided interest. Investments in
affiliated companies that are 20% to 50% owned are carried as Investments -
Equity affiliates in the Consolidated Balance Sheet at cost, adjusted for equity
in undistributed earnings. Except for dividends and changes in ownership
interest, changes in equity for undistributed earnings are included in the
Consolidated Statement of Income. All material intercompany transactions have
been eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates as additional
information becomes known.
Foreign Currencies
The U.S. dollar is the functional currency for each of the company's
international operations, except for its European chemical operations. Foreign
currency transaction gains or losses are recognized in the period incurred. The
net foreign currency transaction losses in 1998 and 1997 were immaterial. The
company recorded net foreign currency transaction losses of $9 million in 1996.
The local currencies are the functional currencies for the European
chemical operations. Translation adjustments resulting from translating the
functional currency financial statements into U.S. dollar equivalents are
reported separately in accumulated other comprehensive income (loss).
Net Income (Loss) per Common Share
Basic net income per share includes no dilution and is computed by dividing
income available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted net income per share is computed by
dividing net income by the weighted-average number of common shares outstanding
for the period and common stock equivalents.
The weighted-average number of shares used to compute basic net income per
share was 47,504,409 in 1998; 47,807,916 in 1997 and 49,419,993 in 1996. After
adding the dilutive effect of the conversion of options to the weighted-average
number of shares outstanding, the shares used to compute diluted net income per
share were 48,000,082 in 1997 and 49,657,890 in 1996. There was no dilution for
1998 since the company incurred a loss from continuing operations.
Not included in the calculation of the denominator for diluted net income
per share were 157,000 and 153,000 employee stock options outstanding at
year-end 1997 and 1996, respectively. The inclusion of these options would have
been anti-dilutive since they were not "in the money" at the end of the
respective years.
Cash Equivalents
The company considers all investments purchased with a maturity of three
months or less to be cash equivalents. Cash equivalents totaling $57 million in
1998 and $132 million in 1997 were comprised of time deposits, certificates of
deposit and U.S. government securities.
Inventories
The costs of the company's product inventories are determined by the
first-in, first-out (FIFO) method. Inventory carrying values include material
costs, labor and the associated indirect manufacturing expenses. Materials and
supplies are valued at average cost.
Property, Plant and Equipment
Oil and Gas - Exploration expenses, including geological and geophysical
costs, rentals and exploratory dry holes, are charged against income as
incurred. Costs of successful wells and related production equipment and
developmental dry holes are capitalized and amortized by field using the
unit-of-production method as the oil and gas are produced.
Undeveloped acreage costs are capitalized and amortized at rates that
provide full amortization on abandonment of unproductive leases. Costs of
abandoned leases are charged to the accumulated amortization accounts, and costs
of productive leases are transferred to the developed property accounts.
Other - Property, plant and equipment is stated at cost less reserves for
depreciation, depletion and amortization. Maintenance and repairs are expensed
as incurred, except that costs of replacements or renewals that improve or
extend the lives of existing properties are capitalized. Costs of nonproducing
mineral acreage surrendered or otherwise disposed of are charged to expense at
the time of disposition.
Depreciation and Depletion - Property, plant and equipment is depreciated
or depleted over its estimated life by the unit-of-production or the
straight-line method. Capitalized exploratory drilling and development costs are
amortized using the unit-of-production method based on total estimated proved
developed oil and gas reserves. Amortization of producing leasehold, platform
costs and acquisition costs of proved properties is based on the
unit-of-production method using total estimated proved reserves. In arriving at
rates under the unit-of-production method, the quantities of recoverable oil,
gas and other minerals are based on estimates made by the company's geologists
and engineers.
Retirements and Sales - The costs and related depreciation, depletion and
amortization reserves are removed from the respective accounts upon retirement
or sale of property, plant and equipment. The resulting gain or loss is included
in other income.
Interest Capitalized - The company capitalizes interest costs on major
projects that require a considerable length of time to complete. Interest
capitalized in 1998, 1997 and 1996 was $12 million, $8 million and $9 million,
respectively.
Impairment of Long-Lived Assets
Proved oil and gas properties are reviewed for impairment on a
field-by-field basis when facts and circumstances indicate that their carrying
amounts may not be recoverable. In performing this review, future cash flows are
estimated by applying estimated future oil and gas prices to estimated future
production, less estimated future expenditures to develop and produce the
reserves. If the sum of these estimated future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the property, an
impairment loss is recognized for the excess of the carrying amount over the
estimated fair value of the property.
Other assets are reviewed for impairment by asset group for which the
lowest level of independent cash flows can be identified and impaired in the
same manner as proved oil and gas properties.
Revenue Recognition
Except for natural gas sales, revenue is recognized when title passes to
the customer. Natural gas revenues and gas-balancing arrangements with partners
in natural gas wells are recognized when the gas is produced using the
entitlements method of accounting and are based on the company's net working
interests. At December 31, 1998 and 1997, both the quantity and dollar amount of
gas balancing arrangements were immaterial.
Lease Commitments
The company utilizes various leased properties in its operations,
principally for office space. Net lease rental expense was $19 million in 1998,
$14 million in 1997 and $13 million in 1996.
The aggregate minimum annual rentals under noncancelable leases in effect
on December 31, 1998, totaled $72 million, of which $13 million is due in 1999,
$12 million in 2000, $27 million in the period 2001 through 2003 and $20 million
thereafter.
Income Taxes
Deferred income taxes are provided to reflect the future tax consequences
of differences between the tax bases of assets and liabilities and their
reported amounts in the financial statements.
Site Dismantlement, Reclamation and Remediation Costs
The company provides for the estimated cost at current prices of the
dismantlement and removal of oil and gas production and related facilities. Such
costs are accumulated over the estimated lives of the facilities by the use of
the unit-of-production method. As sites of environmental concern are identified,
the company assesses the existing conditions, claims and assertions, generally
related to former operations, and records an estimated undiscounted liability
when environmental assessments and/or remedial efforts are probable and the
associated costs can be reasonably estimated.
Employee Stock Option Plans
The company accounts for its employee stock option plans using the
intrinsic value method in accordance with Accounting Principles Board Opinion
(APB) No. 25, "Accounting for Stock Issued to Employees."
Futures, Forward and Option Contracts
The company hedges a portion of its monetary assets, liabilities and
commitments denominated in foreign currencies. Periodically, the company
purchases foreign currency forward contracts to provide funds for operating and
capital expenditure requireme nts that will be denominated in foreign currencies
and sells foreign currency forward contracts to convert receivables that will be
paid in foreign currencies to U.S. dollars. Since these contracts qualify as
hedges and correlate to currency movements, any gain or loss resulting from
market changes is offset by gains or losses on the hedged receivable, capital
item or operating cost.
In 1996, the company also entered into foreign currency forward contracts
to sell various foreign currencies in anticipation of titanium dioxide pigment
sales denominated in foreign currencies. These contracts were marked-to-market
with the resulting gain or loss reflected in income in the period in which the
change occurred. There were no open contracts at year-end 1997, and no contracts
were entered into in 1998. Open contracts at year-end 1996 matured throughout
1997. Net gains and losses on these contracts in both 1997 and 1996 were
immaterial.
2. Cash Flow Information
Net cash provided by operating activities reflects cash payments for income
taxes and interest as follows:
(Millions of dollars) 1998 1997 1996
- --------------------------------------------------------------------------------
Income taxes paid $149 $ 49 $ 37
Interest paid 64 47 60
Noncash transactions not reflected in the Consolidated Statement of Cash
Flows include capital expenditures for which payment will be made in the
subsequent year totaling $43 million, $19 million and $4 million at year-end
1998, 1997 and 1996, respectively; transactions during 1997 associated with the
assignments of interest in certain North Sea oil and gas properties; the
revaluation of certain investments to fair value and transactions affecting
deferred compensation associated with the Employee Stock Ownership Plan in each
of the three years. See Notes 15 and 19.
Effective December 31, 1996, the company merged its North American onshore
exploration and production properties into Devon Energy Corporation (Devon) in
exchange for 9,954,000 shares of Devon common stock (see Note 4). This
transaction was not reflected in the Consolidated Statement of Cash Flows due to
its noncash nature.
3. Inventories
Major categories of inventories at year-end 1998 and 1997 are:
(Millions of dollars) 1998 1997
- --------------------------------------------------------------------
Chemicals and other products $185 $119
Materials and supplies 53 48
Crude oil 8 5
---- ----
Total $246 $172
==== ====
4. Investments - Equity Affiliates
At December 31, 1998 and 1997, investments in equity affiliates are as
follows:
(Millions of dollars) 1998 1997
- --------------------------------------------------------------------------------
Devon Energy Corporation $108 $217
Javelina Company 30 32
National Titanium Dioxide Company Limited 18 12
Other 14 12
---- ----
Total $170 $273
==== ====
The company holds 9,954,000 shares of Devon common stock, a publicly traded
oil and gas exploration and production company, representing an ownership
interest in Devon of approximately 21% and 31% at December 31, 1998 and 1997,
respectively. The initial 31% investment in Devon was recorded at the carrying
value of the North American onshore properties merged into Devon at December 31,
1996. The change in ownership interest resulted from Devon's merger with a third
party, which was accounted for as a pooling of interests. In 1998, the carrying
amount of the investment in Devon stock was adjusted for the issuance of
additional common stock that resulted from the merger, and retained earnings
were charged $51 million for the decrease in the company's share of Devon's net
assets resulting from the merger. Devon also recorded a full cost writedown in
1998. The company's proportionate share of the writedown was $27 million. The
market value of the company's investment in Devon was $305 million at year-end
1998, based on the closing price of Devon's common stock as reported in The Wall
Street Journal.
Javelina Company and National Titanium Dioxide Company Limited represent
the company's investment of 40% and 25%, respectively, in non-exploration and
production joint ventures or partnerships.
Following are financial summaries of the company's equity affiliates. Due
to immateriality, investments shown as Other in the preceding table have been
excluded from the information below.
(Millions of dollars) 1998 1997 1996
- --------------------------------------------------------------------------------
Results of operations -
Net sales(1) $ 593 $ 570 $ 207
Net income (loss) (41) 105 22
Financial position -
Current assets 222 198
Property, plant and equipment - net 1,334 990
Total assets 1,582 1,215
Current liabilities 170 123
Total liabilities 844 470
Stockholders' equity 738 745
(1) Includes net sales to the company of $2 million, $26 million and $44 million
for 1998, 1997 and 1996, respectively.
5. Investments - Other Assets
Investments in other assets consist of the following at December 31, 1998
and 1997:
(Millions of dollars) 1998 1997
- ------------------------------------------------------------------------------
Net deferred tax asset $17 $22
U.S. government obligations 17 19
Patents 6 6
Long-term notes receivable, net of $9 allowance
for doubtful notes in both 1998 and 1997 3 5
Equity securities -- 2
Other 6 6
--- ---
Total $49 $60
=== ===
6. Property, Plant and Equipment
Fixed assets and related reserves by business segment at December 31, 1998
and 1997, are as follows:
<TABLE>
<CAPTION>
Reserves for
Depreciation and
Gross Property Depletion Net Property
(Millions of dollars) 1998 1997 1998 1997 1998 1997(1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Exploration and production $3,710 $2,888 $2,053 $1,677 $1,657 $1,211
Chemicals 1,162 1,020 588 506 574 514
Other 130 147 73 90 57 57
Discontinued operations -- 547 -- 331 -- 216
------ ------ ------ ------ ------ ------
Total $5,002 $4,602 $2,714 $2,604 $2,288 $1,998
====== ====== ====== ====== ====== ======
(1) Includes chemical assets held for sale of $11 million.
</TABLE>
7. Deferred Charges
Deferred charges are as follows at year-end 1998 and 1997:
(Millions of dollars) 1998 1997
- --------------------------------------------------------------
Pension plan prepayment $41 $42
Nonqualified pension plan deposit 10 7
Amounts pending recovery from third parties 8 --
Preoperating and startup costs 6 8
Intangible assets 3 6
Other 15 13
--- ---
Total $83 $76
=== ===
8. Debt
Lines of Credit and Short-Term Borrowings
At year-end 1998, the company had available unused bank lines of credit and
revolving credit facilities of $525 million. Of this amount, $345 million and
$90 million can be used to support commercial paper borrowing arrangements of
Kerr-McGee Credit LLC and Kerr-McGee Oil (U.K.) PLC, respectively.
The company has arrangements to maintain compensating balances with certain
banks that provide credit. At year-end 1998, the aggregate amount of such
compensating balances was immaterial, and the company was not legally restricted
from withdrawing all or a portion of such balances at any time during the year.
Short-term borrowings at year-end 1998 consisted of commercial paper
totaling $28 million (6.37% average effective interest rate) and notes payable
of $8 million (3.63% average interest rate). Outstanding at year-end 1997 was a
note payable of $25 million (5.98% interest rate).
Long-Term Debt
The company's policy is to classify certain borrowings under revolving
credit facilities and commercial paper as long-term debt since the company has
the ability under certain revolving credit agreements and the intent to maintain
these obligations for longer than one year. At year-end 1998 and 1997, debt
totaling $400 million and $37 million, respectively, was classified as long-term
consistent with this policy.
Long-term debt consisted of the following at year-end 1998 and 1997:
<TABLE>
<CAPTION>
(Millions of dollars) 1998 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Debentures -
7.125% Debentures due October 15, 2027 (7.01% effective rate) $150 $150
7% Debentures due November 1, 2011, net of unamortized debt discount of
$105 in 1998 and $108 in 1997 (14.25% effective rate) 145 142
8-1/2% Sinking fund debentures due June 1, 2006 11 22
Notes payable -
6.625% Notes due October 15, 2007 (6.54% effective rate) 150 150
Variable interest rate revolving credit agreements with banks
(5.54% average rate at December 31, 1998): $65 due March 6, 2000;
$10 due December 4, 2001; $135 due April 28, 2002; $71 due May 15, 2003 281 37
Commercial paper (6.37% average effective interest rate at December 31, 1998) 119 --
Guaranteed Debt of Employee Stock Ownership Plan 9.61% Notes due in installments
through January 2, 2005 49 51
Other 3 2
---- ----
908 554
Long-term debt due within one year (7) (2)
---- ----
Total $901 $552
==== ====
</TABLE>
Maturities of long-term debt due after December 31, 1998, are $7 million in
1999, $78 million in 2000, $141 million in 2001, $145 million in 2002, $77
million in 2003 and $460 million thereafter.
Additional information regarding the major changes in debt during the
periods and unused commitments for financing is included in the Financial
Condition discussion in Management's Discussion and Analysis.
9. Contingencies
West Chicago
In 1973, a wholly owned subsidiary, Kerr-McGee Chemical Corporation, closed
the facility at West Chicago, Illinois, that processed thorium ores. Kerr-McGee
Chemical Corporation now operates as Kerr-McGee Chemical LLC (Chemical).
Operations resulted in some low-level radioactive contamination at the site and,
in 1979, Chemical filed a plan with the Nuclear Regulatory Commission (NRC) to
decommission the facility. The NRC transferred jurisdiction of this site to the
State of Illinois (the State) in 1990. The following discusses the current
status of various matters associated with the West Chicago site.
Closed Facility - In 1994, Chemical, the City of West Chicago (the City)
and the State reached agreement on the initial phase of the decommissioning plan
for the closed West Chicago facility, and Chemical began shipping material from
the site to a licensed permanent disposal facility.
In February 1997, Chemical executed an agreement with the City as to the
terms and conditions for completing the final phase of decommissioning work. The
State indicated approval of this agreement and has issued license amendments
authorizing much of the work. Chemical expects the majority of the work to be
completed within five years.
In 1992, the State enacted legislation imposing an annual storage fee equal
to $2 per cubic foot of byproduct material located at the closed facility. The
storage fee cannot exceed $26 million per year, and any storage fee payments
must be reimbursed to Chemical as decommissioning costs are incurred. Chemical
has been fully reimbursed for all storage fees paid pursuant to this
legislation. In June 1997, the legislation was amended to provide that future
storage fee obligations are to be offset against decommissioning costs incurred
but not yet reimbursed.
Offsite Areas - The U.S. Environmental Protection Agency (EPA) has listed
four areas in the vicinity of the West Chicago facility on the National Priority
List that the EPA promulgates under authority of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA) and has designated
Chemical as a potentially responsible party in these four areas. The EPA issued
unilateral administrative orders for two of these areas (referred to as the
residential areas and Reed-Keppler Park), which require Chemical to conduct
removal actions to excavate contaminated soils and ship the soils elsewhere for
disposal. Without waiving any of its rights or defenses, Chemical has begun the
cleanup of these two sites.
Judicial Proceedings - In December 1996, a lawsuit was filed against the
company and Chemical in Illinois state court on behalf of a purported class of
present and former West Chicago residents. The lawsuit seeks damages for alleged
diminution in property values and the establishment of a medical monitoring fund
to benefit those allegedly exposed to thorium wastes originating from the former
facility. The case was removed to federal court and is being vigorously
defended.
Government Reimbursement - Pursuant to Title X of the Energy Policy Act of
1992 (Title X), the U.S. Department of Energy is obligated to reimburse Chemical
for certain decommissioning and cleanup costs in recognition of the fact that
much of the facility's production was dedicated to United States government
contracts. Title X was amended in 1998 to increase the amount authorized to $140
million plus inflation adjustments. Through January 31, 1999, Chemical has been
reimbursed approximately $54 million under Title X.
Other Matters
The company's current and former operations involve management of regulated
materials and are subject to various environmental laws and regulations. These
laws and regulations will obligate the company to clean up various sites at
which petroleum, chemicals, low-level radioactive substances or other regulated
materials have been disposed of or released. Some of these sites have been
designated Superfund sites by the EPA pursuant to CERCLA. The company is also a
party to legal proceedings involving environmental matters pending in various
courts and agencies. As of December 31, 1998, the company's estimate for the
cost to investigate and/or remediate all presently identified sites of former or
current operations, based on currently known facts and circumstances, totaled
$226 million, which includes $168 million for the former West Chicago facility,
the residential areas and Reed-Keppler Park. Reserves have been established
based on this estimate. Expenditures are reduced by the amounts recovered under
government programs. Expenditures from inception through December 31, 1998,
totaled $540 million for currently known sites.
In addition to the environmental issues previously discussed, the company
or its subsidiaries are also a party to a number of other legal proceedings
pending in various courts or agencies in which the company or a subsidiary
appears as plaintiff or defendant.
It is not possible for the company to reliably estimate the amount and
timing of all future expenditures related to environmental matters because of:
- the difficulty of estimating cleanup costs;
- the uncertainty in quantifying liability under environmental laws that
impose joint and several liability on all potentially responsible
parties; and
- the continually changing nature of environmental laws and regulations.
The company provides for costs related to contingencies when a loss is
probable and the amount is reasonably estimable. Although management believes,
after consultation with general counsel, that adequate reserves have been
provided for all known contingencies, the ultimate cost will depend on the
resolution of the above-noted uncertainties. Therefore, it is possible that
additional reserves could be required in the future.
10. Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
Assets to Be Held and Used
At year-end 1998, certain oil and gas fields in the North Sea, China and
the Gulf of Mexico and two domestic chemical plants were deemed to be impaired
because the assets were no longer expected to recover their net book values
through future cash flows. Expectations of future cash flows were lower than
those previously forecasted primarily as a result of continued weakness in crude
oil, natural gas and certain chemical product prices. Downward reserve revisions
were also deemed necessary for certain fields.
The oil and gas impairment test was based on estimates of future cash flows
for each field. Crude oil price estimates were $13 per barrel for 1999,
increasing $1 per barrel each year up to $20 per barrel. Natural gas price
estimates were $2.25 per MMBtu for 1999, increasing $.10 per MMBtu each year up
to $2.45 per MMBtu. These prices, consistent with forecasts by investment
bankers and industry consultants, were applied to production profiles developed
by the company's engineers using proved reserves at December 31, 1998. Probable
reserves and future development costs were taken into consideration when
justified by actual drilling and planned additional drilling.
The chemical impairment test was based on current prices for a variety of
different products, including vanadium compounds and fertilizers manufactured at
the Soda Springs, Idaho, plant and synthetic rutile manufactured at the Mobile,
Alabama, plant. These prices were escalated based on current market perceptions.
The impairment loss was determined based on the difference between the
carrying value of the assets and the present value of future cash flows
discounted at 10% or market value when appropriate. The resulting impairment
loss represents 16% and 9% of the carrying value of exploration and production
and chemical assets, respectively, before the impairment.
In addition, certain oil and gas fields in the Gulf of Mexico were impaired
in 1996. There was no impairment loss recognized in 1997.
Following is the impairment loss for assets held and used by segment for
each of the years ended December 31, 1998 and 1996.
(Millions of dollars) 1998 1996
- -------------------------------------------------------------------
Exploration and production $313 $ 22
Chemicals 57 --
---- ----
Total $370 $ 22
==== ====
Assets to Be Disposed Of
The company withdrew from the ammonium perchlorate business in 1998. The
carrying value of these assets was approximately $9 million. The gain on the
sale was immaterial.
During 1997, the company's exploration and production operating unit
completed the program to divest a number of crude oil and natural gas producing
properties considered to be nonstrategic. Most of these properties were located
onshore in the United States; however, some were located in the Gulf of Mexico,
Canada and the North Sea. Net gains recognized on the sales of properties
included in the divestiture program totaled $6 million in 1997 and $13 million
in 1996. The divestiture program properties did not constitute a material
portion of the company's oil and gas production or cash flows from operations
for 1997 or 1996 or year-end 1996 oil and gas reserves.
Certain chemical facilities were closed during 1996. A $3 million
impairment loss was recognized in 1996, which reduced the carrying value of the
assets to nil.
Following are the sales and pretax income included in the Consolidated
Statement of Income in each of the last three years for assets sold during the
three-year period ended December 31, 1998. Any impairment loss is included in
the pretax income amounts. The company had no material assets held for disposal
at year-end 1998.
(Millions of dollars) 1998 1997 1996
- -----------------------------------------------------------------------
Sales -
Exploration and production $-- $-- $42
Chemicals 11 30 29
--- --- ---
Total $11 $30 $71
=== === ===
Income (Loss) -
Exploration and production $-- $-- $ 9
Chemicals -- 3 (5)
--- --- ---
Total $-- $ 3 $ 4
=== === ===
11. Income Taxes
The taxation of a company that has operations in several countries involves
many complex variables, such as differing tax structures from country to country
and the effect on U.S. taxation of international earnings. These complexities do
not permit meaningful comparisons between the domestic and international
components of income before income taxes and the provision for income taxes, and
disclosures of these components do not provide reliable indicators of
relationships in future periods. Income (loss) from continuing operations before
income taxes is composed of the following:
(Millions of dollars) 1998 1997 1996
- ----------------------------------------------------------------------
Domestic $(161) $ 132 $ 142
International (214) 100 107
----- ----- -----
Total $(375) $ 232 $ 249
===== ===== =====
The corporate tax rate in the United Kingdom will decrease to 30% from 31%
effective April 1, 1999, and decreased to 31% from 33% effective April 1, 1997.
The deferred income tax liability balance was adjusted to reflect the revised
rates, which decrea sed the international deferred provision for income taxes by
$8 million in both 1998 and 1997. The 1998, 1997 and 1996 provision (benefit)
for income taxes is summarized below:
(Millions of dollars) 1998 1997 1996
- ----------------------------------------------------------------
U.S. Federal -
Current $(160) $ 5 $19
Deferred 72 34 25
----- ---- ---
(88) 39 44
----- ---- ---
International -
Current 11 32 5
Deferred (71) (1) 32
----- ---- ---
(60) 31 37
----- ---- ---
State -- 1 4
----- ---- ---
Total $(148) $ 71 $85
===== ==== ===
At December 31, 1998, the company had foreign operating loss carryforwards
totaling $110 million - $9 million that expire in 2001, $19 million that expire
in 2003 and $82 million that have no expiration date. Realization of these
operating loss carryforwards is dependent on generating sufficient taxable
income.
The net deferred tax asset, classified as Investments - Other assets in the
Consolidated Balance Sheet, represents the net deferred taxes in certain foreign
jurisdictions. Although realization is not assured, the company believes it is
more likely than not that all of the net deferred tax asset will be realized.
Deferred tax liabilities and assets at December 31, 1998 and 1997, are composed
of the following:
(Millions of dollars) 1998 1997
- --------------------------------------------------------------------------
Net deferred tax liability -
Accelerated depreciation $223 $240
Exploration and development 85 72
Undistributed earnings of foreign subsidiaries 28 28
Postretirement benefits (48) (47)
Foreign operating loss carryforward (28) (4)
Dismantlement, reclamation, remediation
and other reserves (9) (69)
Other (62) (61)
---- ----
189 159
---- ----
Net deferred tax asset -
Accelerated depreciation 5 13
Foreign operating loss carryforward (14) (29)
Other (8) (6)
---- ----
(17) (22)
---- ----
Total $172 $137
==== ====
In the following table, the U.S. Federal income tax rate is reconciled to
the company's effective tax rates for income from continuing operations as
reflected in the Consolidated Statement of Income.
1998 1997 1996
---- ---- ----
U.S. statutory rate (35.0)% 35.0% 35.0%
Increases (decreases) resulting from -
Taxation of foreign operations 6.1 2.5 1.1
Adjustment of prior years' accruals (.4) (1.9) .3
Refund of prior years' income taxes (7.7) -- --
Contribution of appreciated equity securities -- (.4) (1.8)
Adjustment of deferred tax balances due to tax
rate changes (2.1) (3.4) --
Other - net (.3) (1.1) (.3)
----- ---- ----
Total (39.4)% 30.7% 34.3%
===== ==== ====
The Internal Revenue Service has examined the company's Federal income tax
returns for all years through 1994, and the years have been closed through 1992.
The company believes that it has made adequate provision for income taxes that
may become payable with respect to open tax years.
12. Deferred Credits and Reserves - Other
Other deferred credits and reserves consist of the following at year-end
1998 and 1997:
(Millions of dollars) 1998 1997
- ------------------------------------------------------------------------
Reserves for site dismantlement,
reclamation and remediation $216 $251
Postretirement benefit obligations 113 120
Minority interest in subsidiary companies 20 --
Other 33 51
---- ----
Total $382 $422
==== ====
The company provided for environmental reclamation and remediation of
former plant sites, net of reimbursements received, during each of the years
1998, 1997 and 1996 as follows:
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------
Provision, net of reimbursements $44 $18 $43
Reimbursements received 14 12 10
The reimbursements, which pertain to the former facility in West Chicago,
Illinois, were received pursuant to the Energy Policy Act of 1992 (see Note 9).
13. Common Stock Outstanding
Changes in shares of common stock issued and treasury stock held for 1998,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
(Thousands of shares) Common Stock Treasury Stock
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Balance December 31, 1995 53,514 2,445
Exercise of stock options and stock appreciation rights 348 --
Issuance of shares for achievement awards -- (3)
Stock purchase program -- 3,127
------ -----
Balance December 31, 1996 53,862 5,569
Exercise of stock options and stock appreciation rights 259 --
Issuance of shares for achievement awards -- (2)
Stock purchase program -- 867
------ -----
Balance December 31, 1997 54,121 6,434
Exercise of stock options and stock appreciation rights 57 --
Issuance of shares for achievement awards -- (3)
Stock purchase program -- 580
------ -----
Balance December 31, 1998 54,178 7,011
====== =====
</TABLE>
The company has 40 million shares of preferred stock without par value
authorized, and none is issued.
In mid-1998, the Board of Directors authorized management to purchase up to
$300 million of company common stock over the next three years. A total of
580,000 shares was acquired at a cost of $25 million before this stock purchase
program was cancelled because of the merger with Oryx Energy Company. The 1995
stock purchase program was completed in 1997 with a total of 4,829,000 shares of
the company's stock acquired in open-market transactions at a cost of $300
million.
The company has had a stockholders-rights plan since 1986. The current
rights plan is dated July 6, 1996, and replaced the previous plan prior to its
expiration. Rights were distributed under the original plan as a dividend at the
rate of one right for each share of the company's common stock. Generally, the
rights become exercisable the earlier of 10 days after a public announcement
that a person or group has acquired, or a tender offer has been made for, 15% or
more of the company's then-outstanding stock. If either of these events occurs,
each right would entitle the holder (other than a holder owning more than 15% of
the outstanding stock) to buy the number of shares of the company's common stock
having a market value two times the exercise price. The exercise price is $215.
Generally, the rights may be redeemed at $.01 per right until a person or group
has acquired 15% or more of the company's stock. The rights expire in July
2006.
14. Other Income
Other income is as follows during each of the years in the three-year
period ended December 31, 1998:
(Millions of dollars) 1998 1997 1996
- ---------------------------------------------------------------------------
Interest $ 34 $12 $ 9
Settlements with insurance carriers 12 12 67
Gain (loss) on sale of assets (13) 10 24
Income (loss) from unconsolidated affiliates (12) 32 14
Gain on sale of available-for-sale securities -- 18 23
Other 1 6 (5)
---- --- ----
Total $ 22 $90 $132
==== === ====
15. Financial Instruments and Hedging Activities
Investments in Certain Debt and Equity Securities
The company has certain investments that are considered to be available for
sale. These financial instruments are carried in the Consolidated Balance Sheet
at fair value, which is based on quoted market prices, as Current Assets or as
Investments - Other assets, depending upon their maturity. At December 31, 1998
and 1997, the fair value of available-for-sale securities totaled $30 million
and $27 million, respectively, which approximated cost at the end of the
periods. The company held no securities classified as held to maturity or
trading at December 31, 1998 and 1997.
During 1997 and 1996, the company sold available-for-sale equity
securities. Proceeds from the sales totaled $21 million in 1997 and $29 million
in 1996. The average cost of the securities was used in the determination of the
realized gains, which totaled $18 million in 1997 and $23 million in 1996 before
income taxes. Also during 1997 and 1996, the company donated a portion of its
available-for-sale equity securities to Kerr-McGee Foundation Corporation, a
tax-exempt entity whose purpose is to contribute to not-for-profit
organizations. The fair value of these donated shares totaled $3 million in 1997
and $16 million in 1996, which included appreciation of $3 million and $13
million before income taxes, respectively.
Financial Instruments for Other than Trading Purposes
In addition to the investments previously discussed, the company holds or
issues financial instruments for other than trading purposes. At December 31,
1998 and 1997, the carrying amount and estimated fair value of such financial
instruments for which fair value can be determined are as follows:
1998 1997
Carrying Fair Carrying Fair
(Millions of dollars) Amount Value Amount Value
- ------------------------------------------------------------------------------
Cash and cash equivalents $114 $114 $183 $183
Long-term notes receivable 3 3 5 5
Contracts to sell foreign currencies -- 2 -- 8
Contracts to purchase foreign currencies -- 70 -- 102
Short-term borrowings 36 36 25 25
Total long-term debt 908 1,017 554 669
The carrying amount of cash and cash equivalents approximates fair value of
those instruments due to their short maturity. The fair value of notes
receivable is based on discounted cash flows or the fair value of the note's
collateral. The fair value of the company's short-term and long-term debt is
based on the quoted market prices for the same or similar debt issues or on the
current rates offered to the company for debt with the same remaining maturity.
The fair value of foreign currency forward contracts represents the aggregate
replacement cost based on financial institutions' quotes.
Hedging Activities
Most of the company's foreign currency contracts are hedges principally for
chemicals' accounts receivable generated from titanium dioxide pigment sales
denominated in foreign currencies ($30 million hedged in 1998 and $65 million
hedged in 1997) and the operating costs and capital expenditures of
international chemical operations ($53 million hedged in 1998 and $50 million
hedged in 1997). The purpose of these foreign currency hedging activities is to
protect the company from the risk that the functional currency amounts from
sales to foreign customers and purchases from foreign suppliers could be
adversely affected by changes in foreign currency exchange rates. The company
recognized net foreign currency hedging gains of $4 million in 1997 and $3
million in 1996. The net foreign currency hedging loss recognized in 1998 was
immaterial.
Net unrealized losses on foreign currency contracts totaled $7 million at
year-end 1998 and $13 million at year-end 1997. Net unrealized gains totaled $4
million at year-end 1996. The company's foreign currency contract positions at
year-end 1998 and 1997 were as follows:
December 31, 1998 -
- Contracts maturing January 1999 through December 2000 to purchase $113
million Australian for $77 million
- Contracts maturing January through March 1999 to sell various foreign
currencies (principally European)for $2 million
December 31, 1997 -
- Contracts maturing January 1998 through December 1999 to purchase $137
million Australian for $102 million and 8 million British pounds sterling
for $12 million
- Contracts maturing January through April 1998 to sell various foreign
currencies (principally European) for $8 million
The company has periodically used oil or natural gas futures or option
contracts to reduce the effect of the price volatility of crude oil and natural
gas. The futures contracts permitted settlement by delivery of commodities.
During 1996, the company sold forward 10 million barrels of crude oil and
37 billion cubic feet of natural gas representing approximately 40% and 36% of
its worldwide crude oil and natural gas production, respectively. Net hedging
losses recognized in 1996 totaled $37 million. The effect of the losses was to
reduce the company's 1996 average gross margin for crude oil and natural gas by
$1.04 per barrel and $.11 per MCF, respectively. There were no open crude oil or
natural gas contracts at year-end 1996, and no contracts were entered into
during 1998 or 1997.
Contract amounts do not quantify risk or represent assets or liabilities of
the company but are used in the calculation of cash settlements under the
contracts. These financial instruments limit the company's market risks, are
with major financial institutions, expose the company to credit risks and may at
times be concentrated with certain institutions or groups of institutions.
However, the credit worthiness of these institutions is subject to continuing
review, and full performance is anticipated. Additional information regarding
market risk is included in Management's Discussion and Analysis.
Year-end hedge positions and activities during a particular year are not
necessarily indicative of future activities and results.
16. Taxes, Other than Income Taxes
Taxes, other than income taxes, as shown in the Consolidated Statement of
Income for the years ended December 31, 1998, 1997 and 1996, are composed of the
following:
(Millions of dollars) 1998 1997 1996
- ----------------------------------------------------------------
Payroll $12 $11 $11
Property 3 4 8
Production/severance 1 3 9
Other 2 2 2
--- --- ---
Total $18 $20 $30
=== === ===
17. Employee Stock Option Plans
The 1998 Long Term Incentive Plan (1998 Plan) authorizes the issuance of
shares of the company's common stock any time prior to December 31, 2007, in the
form of stock options, restricted stock or long-term performance awards. The
options may be accompanied by stock appreciation rights. A total of 2,300,000
shares of the company's common stock is authorized to be issued under the 1998
Plan.
In January 1998, the Board of Directors approved a broad-based stock option
plan (BSOP) that provides for the granting of options to purchase the company's
common stock to all full-time employees, except officers. A total of 1,500,000
shares of common stock is authorized to be issued under the BSOP.
The 1987 Long Term Incentive Program (1987 Program) authorized the issuance
of shares of the company's stock over a 15-year period in the form of stock
options, restricted stock or long-term performance awards. The 1987 Program was
terminated when the stockholders approved the 1998 Plan. No options could be
granted under the 1987 Program after that time, although options and any
accompanying stock appreciation rights outstanding may be exercised prior to
their respective expiration dates.
The company's employee stock options are fixed-price options granted at the
fair market value of the underlying common stock on the date of the grant.
Generally, one-third of each grant vests and becomes exercisable over a
three-year period immediately following the grant date and expires 10 years
after the grant date.
Transactions during the past three years under these employee stock option
plans are summarized below:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------------- --------------------------- ----------------------------
Weighted-Average Weighted-Average Weighted-Average
Exercise Price Exercise Price Exercise Price
Options per Option Options per Option Options per Option
------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year 1,302,577 $56.48 1,246,466 $50.98 1,334,363 $46.46
Options granted 785,275 59.19 325,200 68.90 310,800 63.56
Options exercised (56,167) 47.56 (256,986) 45.93 (333,594) 46.40
Options surrendered upon exercise
of stock appreciation rights (4,000) 38.06 (5,000) 32.38 (58,634) 40.80
Options forfeited (24,928) 60.26 (6,703) 57.46 (6,469) 53.00
Options expired (139,839) 60.16 (400) 54.06 -- --
-------- --------- ---------
Outstanding, end of year 1,862,918 57.61 1,302,577 56.48 1,246,466 50.98
========= ========= =========
Exercisable, end of year 994,430 54.30 750,894 50.87 623,461 46.44
</TABLE>
The following table summarizes information about stock options issued under
the plans described above that are outstanding and exercisable at December 31,
1998:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
- ----------------------------------------------------------------------- -------------------------
Range of Weighted-Average Weighted-Average Weighted-Average
Exercise Prices Remaining Contractual Exercise Price Exercise Price
Options per Option Life (years) per Option Options per Option
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
29,400 $32.38-$39.56 1.8 $37.84 29,400 $37.84
386,914 40.81- 49.25 4.6 45.54 386,914 45.54
868,236 50.56- 59.66 8.4 57.76 244,886 54.38
428,368 61.00- 64.88 7.7 64.00 267,234 63.96
150,000 73.50- 73.50 8.0 73.50 65,996 73.50
- --------- -------
1,862,918 32.38- 73.50 7.3 57.61 994,430 54.30
</TABLE>
Financial Accounting Standards Board Statement (FAS) No. 123, "Accounting
for Stock-Based Compensation," prescribes a fair-value method of accounting for
employee stock options under which compensation expense is measured based on the
estimated fair value of stock options at the grant date and recognized over the
period that the options vest. The company, however, chooses to account for its
stock option plans under the optional intrinsic value method of APB No. 25,
"Accounting for Stock Issued to Employees," under which no compensation expense
is recognized for fixed-price stock options. Compensation cost for stock
appreciation rights, which is recognized under both accounting methods, was
immaterial for 1998, 1997 and 1996.
Had compensation expense been determined in accordance with FAS No. 123,
the estimated weighted-average fair value at the grant date would have been
$11.20, $14.37 and $13.17 per option for those options granted in 1998, 1997 and
1996, respectively, and the resulting compensation expense would have affected
net income and per-share amounts as shown in the following table. These amounts
may not be representative of future compensation expense using the fair-value
method of accounting for employee stock options as the number of options granted
in a particular year may not be indicative of the number of options granted in
future years, and the fair-value method of accounting has not been applied to
options granted prior to January 1, 1995.
(Millions of dollars, except per-share amounts) 1998 1997 1996
- -----------------------------------------------------------------------------
Net income -
As reported $ 50 $194 $220
Pro forma 46 191 218
Net income per share -
Basic -
As reported 1.06 4.06 4.45
Pro forma .98 4.00 4.42
Diluted -
As reported 1.06 4.04 4.43
Pro forma .98 3.99 4.40
The fair value of each option granted in 1998, 1997 and 1996 was estimated
as of the date of grant using the Black-Scholes option pricing model with the
following weighted-average assumptions.
1998 1997 1996
----------------------
Expected volatility 17.3% 17.5% 17.9%
Risk-free interest rate 5.4 6.3 6.1
Expected dividend yield 3.0% 3.1% 3.1%
Expected life (years) 5.8 5.8 5.8
18. Restructuring Charges
The company completed a work process review during 1998 that resulted in
the elimination of nonessential work processes, organizational restructuring and
employee reductions in both the operating and staff units. As a result, 75
employees were notified that their positions would be eliminated. Most were
terminated during 1998.
The restructuring of the exploration and production operating unit began in
1995 with the unit's reorganization of its administrative and operating
functions and continued throughout 1996 and 1997 with the unit's merger of its
North American onshore properties into Devon and the relocation of the unit to
Houston, Texas. This program was essentially completed at year-end 1997 and
resulted in approximately 300 employees terminating their employment.
During the three-year period ended December 31, 1998, the company accrued a
total of $19 million for the cost of termination benefits for retiring employees
to be paid from retirement plan assets, future compensation, relocation, lease
cancellation and outplacement. The $2 million reserve at December 31, 1998,
primarily represents remaining severance costs, which are expected to be paid
and charged to the reserve during 1999. The accruals, expenditures and reserve
balances are set forth below:
(Millions of dollars) 1998 1997
- ------------------------------------------------------------------------
Beginning balance $ 2 $ 10
Accruals 7 2
Retirement benefits to be paid from plan assets (3) --
Payments (4) (10)
--- ----
Ending balance $ 2 $ 2
=== ====
19. Employee Stock Ownership Plan
In 1989, the company's Board of Directors approved a leveraged Employee
Stock Ownership Plan (ESOP) into which is paid the company's matching
contribution for the employees' contributions to the Kerr-McGee Corporation
Savings Investment Plan (SIP). Most of the company's employees are eligible to
participate in both the ESOP and the SIP. Although the ESOP and the SIP are
separate plans, matching contributions to the ESOP are contingent upon
participants' contributions to the SIP.
In 1989, the ESOP trust borrowed $125 million from a group of lending
institutions and used the proceeds to purchase approximately 3 million shares of
the company's treasury stock. The company used the $125 million in proceeds from
the sale of the stock to acquire shares of its common stock in open-market and
privately negotiated transactions. In 1996, a portion of the third-party
borrowings was replaced with a note payable to the company (sponsor financing).
The third-party borrowings are guaranteed by the company and are reflected in
the Consolidated Balance Sheet as Long-Term Debt, while the sponsor financing
does not appear in the company's balance sheet.
The company stock acquired by the ESOP trust is held in a loan suspense
account. Deferred compensation representing these unallocated ESOP shares is
reflected as a reduction of stockholders' equity. The company's matching
contribution and dividends on the shares held by the ESOP trust are used to
repay the loan, and stock is released from the loan suspense account as the
principal and interest are paid. The expense is recognized and stock is then
allocated to participants' accounts at market value as the participants'
contributions are made to the SIP. Long-term debt is reduced as payments are
made on the third-party financing. Dividends paid on the common stock held in
participants' accounts are also used to repay the loans, and stock with a market
value equal to the amount of dividends is allocated to participants' accounts.
At December 31, 1998 and 1997, the ESOP trust held shares of stock
allocated to participants' accounts and in the loan suspense account as follows:
(Thousands of shares) 1998 1997
- ------------------------------------------------------------------
Participants' accounts 1,196 1,343
Loan suspense account 934 1,110
The shares allocated to participants at December 31, 1998, included
approximately 45,000 shares released in January 1999, and at December 31, 1997,
included approximately 15,000 shares released in January 1998.
All ESOP shares are considered outstanding for net income per-share
calculations. Dividends on ESOP shares are charged to retained earnings.
Compensation expense is recognized using the cost method and is reduced for
dividends paid on the unallocated ESOP shares. The company recognized
ESOP-related expense of $11 million, $10 million and $12 million in 1998, 1997
and 1996, respectively. These amounts include interest expense incurred on the
third-party ESOP debt of $5 million in both 1998 and 1997 and $6 million in
1996. The company contributed $2 million, $1 million and $9 million to the ESOP
in 1998, 1997 and 1996, respectively. The cash contributions are net of $4
million for the dividends paid on the company stock held by the ESOP trust in
each of the years 1998, 1997 and 1996.
20. Employee Benefit Plans
The company has both noncontributory defined-benefit retirement plans and
company-sponsored contributory postretirement plans for health care and life
insurance. Most employees are covered under the company's retirement plans, and
substantially all U.S. employees may become eligible for the postretirement
benefits if they reach retirement age while working for the company. Following
are the changes in the benefit obligations during the past two years:
<TABLE>
<CAPTION>
Postretirement Health
Retirement Plans and Life Plans
---------------- ---------------------
(Millions of dollars) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Benefit obligation, beginning of year $438 $400 $131 $121
Service cost 10 10 2 2
Interest cost 32 28 8 9
Plan amendments 26 -- -- --
Net actuarial loss 17 38 10 7
Acquisitions 6 -- -- --
Dispositions, curtailments, settlements 7 (12) (9) --
Benefits paid (30) (26) (8) (8)
---- ---- ---- ----
Benefit obligation, end of year $506 $438 $134 $131
==== ==== ==== ====
</TABLE>
The benefit amount that can be covered by the retirement plans that qualify
under the Employee Retirement Income Security Act of 1974 (ERISA) is limited by
both ERISA and the Internal Revenue code. Therefore, the company has unfunded
supplemental plans designed to maintain benefits for all employees at the plan
formula level and to provide senior executives with benefits equal to a
specified percentage of their final average compensation. The benefit obligation
for the unfunded retirement plans was $18 million and $14 million at December
31, 1998 and 1997, respectively. Although not considered plan assets, a grantor
trust was established from which payments for certain of these supplemental
plans are made. The trust had a balance of $10 million at year-end 1998 and $7
million at year-end 1997. The postretirement plans are also unfunded.
Following are the changes in the fair value of plan assets during the past
two years and the reconciliation of the plans' funded status to the amounts
recognized in the financial statements at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Postretirement Health
Retirement Plans and Life Plans
---------------- ---------------------
(Millions of dollars) 1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fair value of plan assets, beginning of year $ 639 $ 538 $ -- $ --
Actual return on plan assets 275 126 -- --
Employer contribution 1 13 -- --
Benefits paid (30) (26) -- --
Settlements -- (12) -- --
----- ----- ----- -----
Fair value of plan assets, end of year 885 639 -- --
Benefit obligation (506) (438) (134) (131)
----- ----- ----- -----
Funded status of plans - over (under) 379 201 (134) (131)
Amounts not recognized in the Consolidated Balance Sheet-
Transition asset (9) (13) -- --
Prior service costs 30 14 -- --
Net actuarial loss (gain) (372) (165) 13 3
----- ----- ----- -----
Prepaid expense (accrued liability) $ 28 $ 37 $(121) $(128)
===== ===== ===== =====
</TABLE>
Following is the classification of the amounts recognized in the
Consolidated Balance Sheet at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Postretirement Health
Retirement Plans and Life Plans
---------------- ---------------------
(Millions of dollars) 1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Prepaid benefits expense $ 42 $ 42 $ -- $ --
Accrued benefit liability (20) (11) (121) (128)
Additional minimum liability -
Intangible asset 3 6 -- --
Accumulated other comprehensive income 3 -- -- --
----- ---- ----- -----
Total $ 28 $ 37 $(121) $(128)
===== ==== ===== =====
</TABLE>
Total costs recognized for employee retirement and postretirement benefit
plans for each of the years ended December 31, 1998, 1997 and 1996 were as
follows:
<TABLE>
<CAPTION>
Retirement Plans Postretirement Health and Life Plans
---------------------- ------------------------------------
(Millions of dollars) 1998 1997 1996 1998 1997 1996
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net periodic cost -
Service cost $10 $10 $10 $ 2 $ 2 $ 2
Interest cost 32 29 28 8 9 9
Expected return on plan assets (49) (42) (39) -- -- --
Net amortization -
Transition asset (4) (4) (4) -- -- --
Prior service cost 3 2 2 -- -- --
Net actuarial gain (1) (1) -- -- -- --
--- --- --- --- --- ---
(9) (6) (3) 10 11 11
Dispositions, curtailments, settlements 14 6 2 (9) -- --
--- --- --- --- --- ---
Total $ 5 $-- $(1) $ 1 $11 $11
=== === === === === ===
</TABLE>
The following assumptions were used in estimating the actuarial present
value of the plans' benefit obligations and net periodic expense:
1998 1997 1996
---- ---- ----
Discount rate 6.75% 7.0% 7.5%
Expected return on plan assets 9.00 9.0 9.0
Rate of compensation increases 5.00 5.0 5.0
The health care cost trend rate used to determine the year-end 1998
postretirement benefit obligation was 7.5% in 1999, gradually declining to 5% in
the year 2009 and thereafter. A 1% increase in the assumed health care cost
trend rate for each future year would increase the postretirement benefit
obligation at December 31, 1998, by $13 million and increase the aggregate of
the service and interest cost components of net periodic postretirement expense
for 1998 by $1 million. A 1% decrease in the trend rate for each future year
would reduce the benefit obligation at year-end 1998 by $11 million. It was not
practical to calculate the effect on net periodic expense of the percent
decrease in the health care cost trend rate.
21. Reporting by Business Segments
The company is managed in two industry segments: oil and gas exploration
and production and manufacturing and marketing of titanium dioxide pigment. The
exploration and production unit explores for, develops and produces oil and gas
in the Gulf of Mexico, United Kingdom sector of the North Sea, Indonesia, China,
Yemen, Thailand and Gabon. The chemicals group manufactures and markets
primarily titanium dioxide pigment, as well as electrolytic chemicals and forest
products. The chemicals segment has operations in the United States, Australia,
Germany and Belgium.
Crude oil sales to an individually significant customer totaled $156
million and $202 million for 1997 and 1996, respectively. There were no
individually significant customers in 1998. Sales to subsidiary companies are
eliminated as described in Note 1.
<TABLE>
<CAPTION>
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales -
Exploration and production $ 463 $ 628 $ 874
Chemicals 933 760 692
------ ------ ------
Total $1,396 $1,388 $1,566
====== ====== ======
Operating profit (loss)(1) -
Exploration and production$ (302) $ 175 $ 204
Chemicals 56 81 85
------ ------ ------
Total $ (246) $ 256 $ 289
====== ====== ======
Net operating profit (loss)(1) -
Exploration and production$ (205) $ 107 $ 136
Chemicals 35 52 53
------ ------ ------
Total (170) 159 189
Net interest expense(1) (15) (24) (29)
Net nonoperating income (expense)(1) (42) 26 4
Income from discontinued operations, net of income taxes 277 33 56
------ ------ ------
Net income $ 50 $ 194 $ 220
====== ====== ======
Sales -
U.S. operations $ 805 $ 889 $1,026
------ ------ ------
International operations -
North Sea - exploration and production 195 215 289
Southeast Asia - exploration and production 46 60 25
Australia - chemicals 178 185 151
Europe - chemicals 163 -- --
Other 9 39 75
------ ------ ------
591 499 540
------ ------ ------
Total $1,396 $1,388 $1,566
====== ====== ======
Operating profit (loss)(1) -
U.S. operations $ (24) $ 159 $ 174
----- ------ ------
International operations -
Southeast Asia - exploration and production (132) 1 --
North Sea - exploration and production (131) 80 93
Europe - chemicals 23 -- --
Australia - chemicals 19 13 9
Other (1) 3 13
----- ------ ------
(222) 97 115
----- ------ ------
Total $(246) $ 256 $ 289
===== ====== ======
(1) Includes special items. Refer to Management's Discussion and Analysis.
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation, depletion and amortization expense -
Exploration and production$ 210 $186 $218
Chemicals 68 55 55
All other 6 5 4
Discontinued operations 14 25 30
------ ------ ------
Total $ 298 $ 271 $ 307
====== ====== ======
Cash capital expenditures -
Exploration and production$ 440 $213 $239
Chemicals 92 91 118
All other 8 10 6
Discontinued operations 10 27 29
------ ------ ------
Total 550 341 392
------ ------ ------
Exploration expenses -
Exploration and production -
Dry hole costs 37 25 37
Amortization of undeveloped leases 15 8 10
Other 31 30 25
------ ------ ------
Total 83 63 72
Minerals and other 1 2 2
------ ------ ------
Total exploration expenses 84 65 74
Less - Amortization of oil and gas and minerals leases
and other noncash expenses (17) (8) (14)
------ ------ ------
67 57 60
------ ------ ------
Total cash capital expenditures and cash
exploration expenses $ 617 $ 398 $ 452
====== ====== ======
Identifiable assets -
Exploration and production $1,973 $1,681 $1,667
Chemicals 1,098 875 886
------ ------ ------
Total 3,071 2,556 2,553
Corporate and other assets 270 270 295
Discontinued operations -- 270 276
------ ------ ------
Total $3,341 $3,096 $3,124
====== ====== ======
Identifiable assets -
U.S. operations $1,246 $1,362 $1,390
------ ------ ------
International operations -
North Sea - exploration and production 1,224 699 651
Southeast Asia - exploration and production 97 216 196
Australia - chemicals 245 243 268
Europe - chemicals 223 -- --
Other 36 36 48
------ ------ ------
1,825 1,194 1,163
------ ------ ------
Total $3,071 $2,556 $2,553
====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
(Millions of dollars) 1998 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net property, plant and equipment -
U.S. operations - $ 853 $1,096 $1,086
International operations -
North Sea - exploration and production 1,125 581 555
Southeast Asia - exploration and production 77 186 171
Australia - chemicals 129 133 135
Europe - chemicals 99 -- --
Other 5 2 1
------ ------ ------
Total $2,288 $1,998 $1,948
====== ====== ======
Net assets -
U.S. operations $ 270 $ 617 $ 582
------ ------- ------
International operations -
North Sea - exploration and production 654 475 413
Southeast Asia - exploration and production 22 167 126
Australia - chemicals 204 152 211
Europe - chemicals 142 -- --
Other 41 29 35
------ ------ ------
1,063 823 785
------ ------ ------
Total $1,333 $1,440 $1,367
====== ====== ======
</TABLE>
22. Discontinued Operations
The company exited from the coal business in 1998 with the sales of its
mining operations at Galatia, Illinois, and Kerr-McGee Coal Corporation, which
held Jacobs Ranch Mine in Wyoming. The cash sales resulted in proceeds of
approximately $600 million. Coal assets and liabilities at December 31, 1997,
are included as part of the appropriate line items in the Consolidated Balance
Sheet. Included at December 31, 1997, are current assets of $50 million;
property, plant and equipment of $216 million; other assets of $4 million;
current liabilities of $40 million and long-term liabilities of $73 million.
Summarized financial information for discontinued operations for the three years
ended December 31, 1998, is as follows:
<TABLE>
<CAPTION>
(Millions of dollars, except per-share amounts) 1998 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $174 $323 $ 365
==== ==== =====
Income from discontinued operations -
Gain on disposal, net of income taxes of $149 $257 $ -- $ --
Income from operations, net of income taxes of $7 in 1998,
$12 in 1997 and $18 in 1996 20 33 56
---- ---- -----
Total $277 $ 33 $ 56
==== ==== =====
Net income per share -
Basic -
Gain on sale $5.42 $ -- $ --
Income from operations .42 .68 1.13
----- ---- -----
Total $5.84 $.68 $1.13
===== ==== =====
Diluted -
Gain on sale $5.42 $ -- $ --
Income from operations .42 .68 1.13
----- ---- -----
Total $5.84 $.68 $1.13
===== ==== =====
</TABLE>
23. Merger with Oryx Energy Company (Unaudited)
On February 26, 1999, the company completed the merger with Oryx upon the
approval of the shareholders of each company. Under the terms of the merger
agreement, each outstanding share of Oryx common stock was exchanged for 0.369
shares of newly issued company stock. Approximately 39 million shares of the
company stock were issued to the Oryx shareholders, bringing the total shares
outstanding to approximately 86 million. The merger qualifies as a tax-free
exchange to Oryx shareholders and has been accounted for as a pooling of
interests. Presented below are combined condensed financial statements for the
year ended and at December 31, 1998, as though the merger had been completed at
year-end.
<TABLE>
Combined Condensed Statement of Income
<CAPTION>
Combined
(Millions of dollars, except per-share amounts) Kerr-McGee Oryx Reclassifications Adjustments(1) Company
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales $1,396 $ 820 $(16) $ -- $2,200
------ ----- ---- ---- ------
Costs and operating expenses 1,735 868 (13) 16 2,606
Interest and debt expense 58 99 -- -- 157
------ ----- ---- ---- ------
Total costs and expenses 1,793 967 (13) 16 2,763
------ ----- ---- ---- ------
(397) (147) (3) (16) (563)
Other income 22 -- 21 -- 43
Provision (benefit) for income taxes (148) (52) 18 7 (175)
------ ----- ---- ---- ------
Loss from continuing operations (227) (95) -- (23) (345)
Income from discontinued operations 277 -- -- -- 277
------ ----- ---- ---- ------
Net income (loss) $ 50 $ (95) $ -- $(23) $ (68)
====== ===== == ==== ======
Net loss per share -
Continuing operations $(3.98)
Total (.78)
</TABLE>
<TABLE>
Combined Condensed Balance Sheet
<CAPTION>
Combined
(Millions of dollars) Kerr-McGee Oryx Reclassifications Adjustments(1) Company
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets -
Current assets $ 751 $ 131 $ (5) $ -- $ 877
Property, plant and equipment - net 2,288 1,765 123 (23) 4,153
Other noncurrent assets 302 88 (1) -- 389
------ ------ ---- ---- ------
Total $3,341 $1,984 $117 $(23) $5,419
====== ====== ==== ==== ======
Liabilities and stockholders' equity -
Current liabilities $ 536 $ 505 $ 9 $ -- $1,050
Long-term debt 901 1,077 -- -- 1,978
Deferred credits and reserves 571 329 108 9 1,017
Stockholders' equity 1,333 73 -- (32) 1,374
------ ------ ---- ---- ------
Total $3,341 $1,984 $117 $(23) $5,419
====== ====== ==== ==== ======
(1) These amounts reflect adjustments to conform accounting methods between
Kerr-McGee and Oryx and apply the pooling of interests method of accounting for
business combinations.
</TABLE>
24. Results of Operations from Crude Oil and Natural Gas Activities
The results of operations from crude oil and natural gas activities for the
three years ended December 31, 1998, consist of the following:
<TABLE>
<CAPTION>
Proportional
Interest
Results of in Equity
Production Other Depreciation Income Tax Operations, Affiliate's
Gross (Lifting) Related Exploration and Depletion Asset Expense Producing Results of
(Millions of dollars) Revenues Costs Costs(1) Expenses Expenses Impairment (Benefit) Activities Operations(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 -
Domestic $222 $ 48 $31 $44 $ 91 $ 38 $(11) $ (19) $(11)
North Sea 179 63 3 13 85 160 (43) (102) --
Other international 46 14 9 26 19 115 (44) (93) 7
---- ---- --- --- --- ---- ---- ----- ----
Total crude oil and
natural gas activities 447 125 43 83 195 313 (98) (214) (4)
Other(3) 16 5 1 -- -- -- 1 9 --
-- ---- ---- --- --- ---- ---- ---- ----- ----
Total $463 $130 $44 $83 $195 $313 $(97) $(205) $ (4)
==== ==== === === ==== ==== ==== ===== ====
1997 -
Domestic $309 $ 50 $25 $25 $105 $ -- $ 39 $ 65 $ 25
North Sea 190 49 7 13 53 -- 27 41 --
Other international 59 12 12 25 20 -- (4) (6) 3
---- ---- --- --- ---- ---- ---- ----- ----
Total crude oil and
natural gas activities 558 111 44 63 178 -- 62 100 28
Other(3) 70 55 2 -- -- -- 6 7 --
-- ---- ---- --- --- ---- ---- --- ----- ----
Total $628 $166 $46 $63 $178 $ -- $68 $ 107 $ 28
==== ==== === === ==== ==== === ===== ====
1996 -
Domestic $397 $ 83 $31 $26 $127 $ 22 $35 $ 73 $ --
North Sea 240 57 8 36 57 -- 30 52 --
Other international 57 18 11 10 23 -- (1) (4) --
---- ---- --- --- ---- ---- ---- ----- ----
Total crude oil and
natural gas activities 694 158 50 72 207 22 64 121 --
Other(3) 180 159 1 -- 1 -- 4 15 --
-- ---- ---- --- --- ---- ---- --- ------ ----
Total $874 $317 $51 $72 $208 $ 22 $68 $ 136 $ --
==== ==== === === ==== ==== === ====== ====
(1) Includes restructuring charges of $2 million in both 1998 and 1997 and $10
million in 1996 (see Note 18).
(2) The equity affiliate follows the "full cost" method of accounting for oil
and gas exploration and production activities.
(3) Includes gas marketing, gas processing plants, pipelines and other items
that do not fit the definition of crude oil and natural gas activities but have
been included above to reconcile to the segment presentations.
</TABLE>
The table below presents the company's average per-unit sales price of
proprietary crude oil and natural gas and production costs per barrel of oil
equivalent for each of the past three years. Natural gas production has been
converted to a barrel of o il equivalent based on approximate relative heating
value (6 MCF equals 1 barrel).
1998 1997 1996
------ ------ ------
Average sales price -
Crude oil (per barrel)
Domestic $11.70 $18.53 $19.36
North Sea 11.97 18.77 19.08
Other international 11.96 17.75 18.63
Average 11.88 18.51 19.16
Natural gas (per MCF)
Domestic 2.12 2.57 2.16
North Sea 2.49 2.52 2.64
Other international -- -- 1.14
Average 2.18 2.56 2.12
Production costs -
(Per barrel of oil equivalent)
Domestic 2.62 2.75 3.32
North Sea 4.25 4.70 4.33
Other international 3.92 3.56 4.23
Average 3.41 3.48 3.72
25. Capitalized Costs of Crude Oil and Natural Gas Activities
Capitalized costs of crude oil and natural gas activities and the related
reserves for depreciation, depletion and amortization at the end of 1998 and
1997 are set forth in the table below. Not included in the amounts shown is $221
million that represents the company's proportional interest in an equity
affiliate's net capitalized costs at both December 31, 1998 and 1997 (see Note
4). The equity affiliate follows the "full cost" method of accounting for oil
and gas exploration and production activities.
(Millions of dollars) 1998 1997
- ------------------------------------------------------------------------------
Capitalized costs -
Proved properties $3,260 $2,709
Unproved properties 399 134
Other 51 45
------ ------
Total 3,710 2,888
------ ------
Reserves for depreciation, depletion and amortization -
Proved properties 1,986 1,623
Unproved properties 41 30
Other 26 24
------ ------
Total 2,053 1,677
------ ------
Net capitalized costs $1,657 $1,211
====== ======
26. Standardized Measure of and Reconciliation of Changes in Discounted Future
Net Cash Flows (Unaudited)
The standardized measure of future net cash flows presented in the
following table was computed using year-end prices and costs and a 10% discount
factor. The future income tax expense was computed by applying the appropriate
year-end statutory rates, with consideration of future tax rates already
legislated, to the future pre-tax net cash flows less the tax basis of the
properties involved. However, the company cautions that actual future net cash
flows may vary considerably from these estimates. Although the company's
estimates of total reserves, development costs and production rates were based
on the best information available, the development and production of the oil and
gas reserves may not occur in the periods assumed. Actual prices realized and
costs incurred may vary significantly from those used. Therefore, such estimated
future net cash flow computations should not be considered to represent the
company's estimate of the expected revenues or the current value of existing
proved reserves.
<TABLE>
<CAPTION>
Standardized Proportional
Future Measure of Interest in Equity
Development 10% Discounted Affiliate's
Future and Production Future Future Net Annual Future Net Standardized
(Millions of dollars) Cash Inflows Costs Income Taxes Cash Flows Discount Cash Flows Measure
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 -
Domestic $ 889 $ 352 $ 139 $ 398 $ 97 $ 301 $102
North Sea 1,759 1,069 135 555 175 380 --
Other international 546 327 84 135 83 52 90
------ ------ ----- ------ ---- ------ ----
Total $3,194 $1,748 $ 358 $1,088 $355 $ 733 $192
====== ====== ===== ====== ==== ====== ====
1997 -
Domestic $1,407 $ 403 $ 290 $ 714 $242 $ 472 $205
North Sea 1,807 813 266 728 266 462 --
Other international 705 324 97 284 87 197 19
------ ------ ------ ------ ---- ------ ----
Total $3,919 $1,540 $ 653 $1,726 $595 $1,131 $224
====== ====== ====== ====== ==== ====== ====
1996 -
Domestic $2,217 $ 435 $ 552 $1,230 $411 $ 819 $336
North Sea 2,610 841 638 1,131 382 749 --
Other international 904 395 133 376 117 259 28
------ ------ ------ ------ ---- ------ ----
Total $5,731 $1,671 $1,323 $2,737 $910 $1,827(1) $364
====== ====== ====== ====== ==== ====== ====
(1) Includes $(8) million for properties held for sale.
</TABLE>
The changes in the standardized measure of future net cash flows are
presented below for each of the past three years:
<TABLE>
<CAPTION>
(Millions of dollars) 1998 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net change in sales, transfer prices and production costs $ (831) $(1,121) $ 847
Changes in estimated future development costs (168) (64) 45
Sales and transfers less production costs (322) (446) (516)
Purchases of reserves in place 156 -- 1
Changes due to extensions, discoveries, etc 46 108 474
Changes due to revisions in quantity estimates 17 37 116
Changes due to sales of reserves in place (11) (8) (139)
Changes due to reserves merged into equity affiliate -- -- (511)
Current period development costs 342 152 155
Accretion of discount 153 261 199
Changes in income taxes 181 384 (289)
Timing and other 39 1 (52)
------ ------- ------
Net change (398) (696) 330
Total at beginning of year 1,131 1,827 1,497
------ ------- ------
Total at end of year $ 733 $ 1,131 $1,827
====== ======= ======
</TABLE>
27. Crude Oil, Condensate and Natural Gas Net Reserves (Unaudited)
The estimates of proved reserves have been prepared by the company's
geologists and engineers in accordance with the Securities and Exchange
Commission definitions. Such estimates include reserves on certain properties
that are partially undeveloped and reserves that may be obtained in the future
by improved recovery operations now in operation or for which successful testing
has been demonstrated. The company has no proved reserves attributable to
long-term supply agreements with governments or consolidated subsidiaries in
which there are significant minority interests. At December 31, 1996, the
company merged its North American onshore properties into an equity affiliate
(see Note 4).
The following table summarizes the changes in the estimated quantities of
the company's crude oil and condensate and natural gas reserves for the three
years ended December 31, 1998.
<TABLE>
<CAPTION>
Crude Oil and Condensate Natural Gas
(Millions of barrels) (Billions of cubic feet)
--------------------------------- --------------------------------
Other Other
North Interna- North Interna-
Domestic Sea tional Total Domestic Sea tional Total
-------- ----- -------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Proved developed and undeveloped reserves -
Balance December 31, 1995(1) 66 62 42 170 519 191 69 779
Revisions of previous estimates 12 (1) (1) 10 (1) (10) (1) (12)
Purchases of reserves in place -- -- -- -- 1 -- -- 1
Sales of reserves in place (10) -- (1) (11) (28) -- (18) (46)
Reserves merged into equity affiliate (16) -- (9) (25) (122) -- (41) (163)
Extensions, discoveries and other additions 3 39 7 49 27 2 39 68
Production (11) (11) (3) (25) (84) (11) (9) (104)
--- --- -- --- --- --- -- ----
Balance December 31, 1996(1) 44 89 35 168 312 172 39 523
Revisions of previous estimates 5 1 1 7 (1) 29 3 31
Sales of reserves in place -- (1) -- (1) (27) -- -- (27)
Extensions, discoveries and other additions 7 -- 4 11 37 -- 4 41
Production (9) (8) (4) (21) (56) (12) -- (68)
--- --- -- --- --- --- -- ---
Balance December 31, 1997 47 81 36 164 265 189 46 500
Revisions of previous estimates 3 2 (15) (10) 2 7 13 22
Purchases of reserves in place -- 45 -- 45 -- 46 -- 46
Sales of reserves in place (1) -- -- (1) (8) -- -- (8)
Extensions, discoveries and other additions 1 1 5 7 23 1 103 127
Production (8) (12) (4) (24) (60) (13) -- (73)
--- --- -- --- --- --- --- ---
Balance December 31, 1998 42 117 22 181 222 230 162 614
== === == === === === === ===
Proportional interest in equity affiliate's reserves(2) -
December 31, 1996 22 -- 3 25 172 -- 13 185
December 31, 1997 22 -- 3 25 175 -- 15 190
December 31, 1998 11 -- 9 20 122 -- 124 246
Proved developed reserves -
December 31, 1996(1) 26 45 20 91 183 161 -- 344
December 31, 1997 28 33 36 97 166 147 -- 313
December 31, 1998 26 62 16 104 176 151 -- 327
Proportional interest in equity affiliate's reserves(2) -
December 31, 1996 20 -- 3 23 164 -- 13 177
December 31, 1997 20 -- 2 22 142 -- 14 156
December 31, 1998 10 -- 8 18 96 -- 120 216
(1) Includes 1 million barrels of oil and 3 billion cubic feet of natural gas
held for sale at December 31, 1996, and 12 million barrels of oil and 57 billion
cubic feet of natural gas held for sale at December 31, 1995 (see Note 10).
(2) During 1998, the equity affiliate merged with a third party, which reduced
the company's ownership interest in the affiliate. The company's proportionate
interest reflects its ownership interest at the respective year-end (see Note
4).
</TABLE>
The following presents the company's barrel of oil equivalent proved
developed and undeveloped reserves based on approximate relative heating value
(6 MCF equals 1 barrel).
<TABLE>
<CAPTION>
North Other
(Millions of equivalent barrels) Domestic Sea International Total
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1996(1) 96 118 42 256
December 31, 1997 91 112 44 247
December 31, 1998 79 155 49 283
Proportional interest in equity affiliate's reserves(2) -
December 31, 1996 51 -- 5 56
December 31, 1997 52 -- 5 57
December 31, 1998 31 -- 30 61
(1) Includes 2 million barrels of oil equivalent held for sale at December 31,
1996 (see Note 10).
(2) During 1998, the equity affiliate merged with a third party, which reduced
the company's ownership interest in the affiliate. The company's proportionate
interest reflects its ownership interest at the respective year-end (see Note
4).
</TABLE>
28. Costs Incurred in Crude Oil and Natural Gas Activities
<TABLE>
<CAPTION>
Total expenditures, both capitalized and expensed, for crude oil and
natural gas property acquisition, exploration and development activities for the
three years ended December 31, 1998, are reflected in the following table:
Property
Acquisition Exploration Development
(Millions of dollars) Costs(1) Costs(2) Costs(3)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1998 -
Proprietary costs -
Domestic $ 52 $ 55 $ 90
North Sea 423 37 237
Other international 5 34 15
---- ---- ----
Total $480 $126 $342
==== ==== ====
Proportional interest in equity affiliate's costs(4) -
Domestic $ 11 $ 7 $ 16
Other international 30 10 15
---- --- ----
Total $ 41 $17 $ 31
==== === ====
1997 -
Proprietary costs -
Domestic $ 29 $31 $ 45
North Sea -- 15 86
Other international 2 39 21
---- ---- ----
Total $ 31 $ 85 $152
==== ==== ====
Proportional interest in equity affiliate's costs(4) -
Domestic $ 6 $ 6 $ 25
Other international -- -- 2
---- ---- ----
Total $ 6 $ 6 $ 27
==== ==== ====
1996 -
Proprietary costs -
Domestic $ 6 $ 53 $ 99
North Sea -- 49 21
Other international 1 15 35
---- ---- ----
Total $ 7 $117 $155
==== ==== ====
(1) Includes $278 million applicable to purchases of reserves in place in 1998.
(2) Exploration costs include delay rentals, exploratory dry holes, dry hole and
bottom hole contributions, geological and geophysical costs, costs of carrying
and retain- ing properties, and capital expenditures such as costs of drilling
and equipping successful exploratory wells.
(3) Development costs include costs incurred to obtain access to proved reserves
(surveying, clearing ground, building roads), to drill and equip development
wells and to acquire, construct and install production facilities and improved
recovery systems. Development costs also include costs of developmental dry
holes.
(4) During 1998, the equity affiliate merged with a third party, which reduced
the company's ownership interest in the affiliate. The company's proportionate
interest reflects its ownership interest at the respective year-end (see Note
4).
</TABLE>
29. Quarterly Financial Information (Unaudited)
A summary of quarterly consolidated results for 1998 and 1997 is presented
below. In periods in which there was a loss from continuing operations, the
conversion of stock options was not assumed since the loss per-share amount
would have been lower. Therefore, the quarterly per-share amounts may not add to
the annual amounts. Refer to Management's Discussion and Analysis for
information about special items.
<TABLE>
<CAPTION>
Diluted Income (Loss)
Income per Common Share
(Loss) from Net
Operating Continuing Income Continuing Net
(Millions of dollars, except per-share amounts) Sales Profit (Loss) Operations (Loss) Operations Income
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1998 Quarter Ended -
March 31 $ 291 $ 34 $ 16 $ 24 $ .33 $ .50
June 30 395 43 26 77 .55 1.62
September 30 360 31 (23) 195 (.48) 4.09
December 31 350 (354) (246) (246) (5.18) (5.17)
-- ------ ----- ----- ----- ------ ------
Total $1,396 $(246) $(227) $ 50 $(4.78) $ 1.06
====== ===== ===== ===== ====== ======
1997 Quarter Ended -
March 31 $ 384 $ 83 $ 58 $ 70 $ 1.21 $ 1.45
June 30 335 54 37 42 .76 .87
September 30 324 57 31 37 .65 .77
December 31 345 62 35 45 .74 .95
-- ------ ----- ----- ----- ------ ------
Total $1,388 $ 256 $ 161 $ 194 $ 3.36 $ 4.04
====== ===== ===== ===== ====== ======
</TABLE>
The company's common stock is listed for trading on the New York Stock
Exchange and was held by approximately 10,900 stockholders of record at year-end
1998. The ranges of market prices and dividends declared during the last two
years are as follows:
<TABLE>
<CAPTION>
Market Prices
------------------------------------------
Dividends
1998 1997 per Share
------------------ ------------------ -------------
High Low High Low 1998 1997
------- ------- -------- -------- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Quarter Ended -
March 31 73 3/16 55 7/8 75 61 7/8 $.45 $.45
June 30 70 1/4 56 5/8 67 1/4 55 1/2 .45 .45
September 30 60 1/2 38 69 15/16 59 13/16 .45 .45
December 31 47 9/16 36 3/16 71 1/2 60 1/8 .45 .45
</TABLE>
<TABLE>
Five-Year Financial Summary
<CAPTION>
(Millions of dollars, except per-share amounts) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Summary of Net Income (Loss)
Sales $ 1,396 $ 1,388 $ 1,566 $ 1,401 $ 1,272
------- ------- ------- ------- -------
Costs and operating expenses 1,735 1,199 1,397 1,480 1,187
Interest and debt expense 58 47 52 60 59
------- ------- ------- ------- -------
Total costs and expenses 1,793 1,246 1,449 1,540 1,246
------- ------- ------- ------- -------
(397) 142 117 (139) 26
Other income 22 90 132 29 27
Provision (benefit) for income taxes (148) 71 85 (52) 18
------- ------- ------- ------- -------
Income (loss) from continuing operations (227) 161 164 (58) 35
Income from discontinued operations 277 33 56 27 55
------- ------- ------- ------- -------
Net income (loss) $ 50 $ 194 $ 220 $ (31) $ 90
======= ======= ======= ======= =======
Common Stock Information, per Share
Diluted net income (loss) -
Continuing operations $ (4.78) $ 3.36 $ 3.30 $ (1.12) $ .67
Discontinued operations 5.84 .68 1.13 .52 1.07
------- ------- ------- --- ----
Total $ 1.06 $ 4.04 $ 4.43 $ (.60) $ 1.74
======= ======= ======= ======= =======
Dividends declared $ 1.80 $ 1.80 $ 1.64 $ 1.55 $ 1.52
Stockholders' equity 28.26 30.09 28.10 27.52 29.82
Market high for the year 73.19 75.00 74.13 64.00 51.00
Market low for the year 36.19 55.50 55.75 44.00 40.00
Market price at year-end $ 38.25 $ 63.31 $ 72.00 $ 63.50 $ 46.25
Shares outstanding at year-end (thousands) 47,167 47,686 48,294 51,069 51,694
Balance Sheet Information
Working capital $ 215 $ 166 $ 320 $ 189 $ 52
Property, plant and equipment - net 2,288 1,998 1,948 2,210 2,489
Total assets 3,341 3,096 3,124 3,213 3,696
Long-term debt 901 552 626 632 673
Total debt 944 579 663 735 993
Stockholders' equity 1,333 1,440 1,367 1,416 1,543
Cash Flow Information
Net cash provided by operating activities 99 569 645 369 356
Cash capital expenditures 550 341 392 484 410
Dividends paid 86 85 83 79 78
Purchase of treasury stock $ 25 $ 60 $ 195 $ 45 $ --
Ratios and Percentage
Current ratio 1.4 1.3 1.7 1.3 1.1
Average price/earnings ratio 51.6 16.2 14.7 NM 26.1
Total debt to total capitalization 41% 29% 33% 34% 39%
Employees
Total wages and benefits $ 283 $ 285 $ 289 $ 314 $ 319
Number of employees at year-end 3,367 3,746 3,851 3,976 5,524
</TABLE>
<TABLE>
Five-Year Operating Summary
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Exploration and Production
Net proprietary production of crude oil and condensate -
(thousands of barrels per day)
Domestic 22.2 24.2 30.6 28.9 25.5
North Sea 34.4 23.4 30.9 36.7 34.3
Other international 10.2 9.3 7.1 4.8 7.5
---- ---- ---- ---- ----
Total 66.8 56.9 68.6 70.4 67.3
==== ==== ==== ==== ====
Average price of crude oil sold (per barrel) -
Domestic $11.70 $18.53 $19.36 $15.69 $14.64
North Sea 11.97 18.77 19.08 16.31 15.15
Other international 11.96 17.75 18.63 15.21 13.79
Average $11.88 $18.51 $19.16 $15.99 $14.81
Proprietary natural gas sales (MMCF per day) 198 184 281 291 271
Average price of natural gas sold (per MCF) $ 2.18 $ 2.56 $ 2.12 $ 1.52 $ 1.76
Net exploratory wells drilled -
Productive 1.40 2.65 4.91 3.71 9.61
Dry 7.42 4.42 3.52 9.16 8.47
---- ---- ---- ----- -----
Total 8.82 7.07 8.43 12.87 18.08
==== ==== ==== ===== =====
Net development wells drilled -
Productive 11.30 9.78 21.33 40.86 22.27
Dry 1.00 -- 1.04 2.95 4.63
----- ---- ----- ----- -----
Total 12.30 9.78 22.37 43.81 26.90
===== ==== ===== ===== =====
Undeveloped net acreage (thousands) -
Domestic 465 319 265 472 499
North Sea 715 391 428 358 363
Other international 9,225 12,308 1,852 1,765 1,745
------ ------ ----- ----- -----
Total 10,405 13,018 2,545 2,595 2,607
====== ====== ===== ===== =====
Developed net acreage (thousands) -
Domestic 159 155 209 537 542
North Sea 69 24 33 22 21
Other international 537 123 123 178 184
--- --- --- --- ---
Total 765 302 365 737 747
=== === === === ===
Estimated proved reserves (millions of equivalent barrels) 283 247 256 300 332
Chemicals
Industrial and specialty chemical sales (thousands of metric tons) 481 443 405 404 346
</TABLE>
EXHIBIT 21
KERR-McGEE CORPORATION AND SUBSIDIARY COMPANIES
SUBSIDIARIES
State or Country Percent
Name of Subsidiary of Incorporation Owned
Kerr-McGee Oil & Gas Corporation Delaware 100%
Kerr-McGee (G.B.) Limited England 100%
Kerr-McGee Chemical LLC Delaware 100%
Kerr-McGee Investment Corporation Nevada 100%
A number of additional subsidiaries are omitted since, considered in
the aggregate as a single subsidiary, they would not constitute a significant
subsidiary as of December 31, 1998.
EXHIBIT 23
Consent of Independent Public Accountant
As independent public accountants, we hereby consent to the incorporation of our
reports dated February 26, 1999, included in the company's 1998 Annual Report to
Stockholders and incorporated by reference in this Form 10-K and on page 27 of
this Form 10-K, into the company's previously filed Registration Statements on
Form S-8 File Nos. 33-24274, 33-50949 and 333-28235, and the company's
previously filed Registration Statements on Form S-3 File Nos. 33-5473 and
33-66112.
(ARTHUR ANDERSEN LLP)
ARTHUR ANDERSEN LLP
Oklahoma City, Oklahoma,
March 30, 1999
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(William E. Bradford)
--------------------------------
William E. Bradford, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director or
Officer or both, as the case may be, of the Company, does hereby appoint Tom J.
McDaniel and John C. Linehan, and each of them severally, his true and lawful
attorneys or attorney-in-fact and agents or agent with power to act with or
without the other and with full power of substitution and resubstitution, to
execute for him and in his name, place and stead, in his capacity as a Director
or Officer or both, as the case may be, of the Company, the Form 10-K and any
and all amendments thereto, as said attorneys or each of them shall deem
necessary or appropriate, together with all instruments necessary or incidental
in connection therewith, and to file the same or cause the same to be filed with
the Commission. Each of said attorneys shall have full power and authority to do
and perform in the name and on behalf of the undersigned, in any and all
capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Luke R. Corbett)
--------------------------------
Luke R. Corbett
Chief Executive Officer and Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in her capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, her true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for her and
in her name, place and stead, in her capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Sylvia A. Earle)
---------------------------
Sylvia A. Earle, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(David C. Genever-Watling)
--------------------------------
David C. Genever-Watling, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Martin C. Jischke)
--------------------------------
Martin C. Jischke, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director or
Officer or both, as the case may be, of the Company, does hereby appoint Luke R.
Corbett, Tom J. McDaniel and John C. Linehan, and each of them severally, his
true and lawful attorneys or attorney-in-fact and agents or agent with power to
act with or without the other and with full power of substitution and
resubstitution, to execute for him and in his name, place and stead, in his
capacity as a Director or Officer or both, as the case may be, of the Company,
the Form 10-K and any and all amendments thereto, as said attorneys or each of
them shall deem necessary or appropriate, together with all instruments
necessary or incidental in connection therewith, and to file the same or cause
the same to be filed with the Commission. Each of said attorneys shall have full
power and authority to do and perform in the name and on behalf of the
undersigned, in any and all capacities, each act whatsoever necessary or
desirable to be done in the premises, as fully and to all intents and purposes
as the undersigned might or could do in person, the undersigned hereby ratifying
and approving the acts of said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Robert L. Keiser)
--------------------------------
Robert L. Keiser
Chairman of the Board and Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director or
Officer or both, as the case may be, of the Company, does hereby appoint Luke R.
Corbett and John C. Linehan his true and lawful attorney-in-fact and agent with
power to act and with full power of substitution and resubstitution, to execute
for him and in his name, place and stead, in his capacity as a Director or
Officer or both, as the case may be, of the Company, the Form 10-K and any and
all amendments thereto, as said attorneys or each of them shall deem necessary
or appropriate, together with all instruments necessary or incidental in
connection therewith, and to file the same or cause the same to be filed with
the Commission. Said attorneys shall have full power and authority to do and
perform in the name and on behalf of the undersigned, in any and all capacities,
each act whatsoever necessary or desirable to be done in the premises, as fully
and to all intents and purposes as the undersigned might or could do in person,
the undersigned hereby ratifying and approving the acts of said attorney.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Tom J. McDaniel)
--------------------------------
Tom J. McDaniel
Vice Chairman of the Board and
Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(William C. Morris)
--------------------------------
William C. Morris, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(John J. Murphy)
--------------------------------
John J. Murphy, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Leroy C. Richie)
--------------------------------
Leroy C. Richie, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Richard M. Romopala)
--------------------------------
Richard M. Rompala, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Matthew R. Simmons)
--------------------------------
Matthew R. Simmons, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in her capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, her true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for her and
in her name, place and stead, in her capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Farah M. Walters)
-------------------------------------
Farah M. Walters, Director
KERR-McGEE CORPORATION
POWER OF ATTORNEY
WHEREAS, Kerr-McGee Corporation, a Delaware corporation ("Company"),
intends to file with the Securities and Exchange Commission ("Commission") under
the Securities Exchange Act of 1934, as amended ("ACT"), an Annual Report on
Form 10-K for the year ended December 31, 1998 ("Form 10-K") with such amendment
or amendments thereto as may be necessary or appropriate from time to time,
together with any and all exhibits and other relevant or associated documents.
NOW, THEREFORE, the undersigned in his capacity as a Director of the
Company, does hereby appoint Luke R. Corbett, Tom J. McDaniel and John C.
Linehan, and each of them severally, his true and lawful attorneys or
attorney-in-fact and agents or agent with power to act with or without the other
and with full power of substitution and resubstitution, to execute for him and
in his name, place and stead, in his capacity as a Director of the Company, the
Form 10-K and any and all amendments thereto, as said attorneys or each of them
shall deem necessary or appropriate, together with all instruments necessary or
incidental in connection therewith, and to file the same or cause the same to be
filed with the Commission. Each of said attorneys shall have full power and
authority to do and perform in the name and on behalf of the undersigned, in any
and all capacities, each act whatsoever necessary or desirable to be done in the
premises, as fully and to all intents and purposes as the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts of
said attorney or attorneys.
IN WITNESS WHEREOF, the undersigned has executed this instrument
effective March 15, 1999.
(Ian L. White-Thomson)
--------------------------------
Ian L. White-Thomson, Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at December 31, 1998, 1997, and 1996, and the
Consolidated Statement of Income for the years then ended and is qualified in
its entirety by reference to such Form 10-K.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<PERIOD-END> DEC-31-1998 DEC-31-1997 DEC-31-1996
<CASH> 114 183 121
<SECURITIES> 0 0 0
<RECEIVABLES> 310 279 380
<ALLOWANCES> 5 5 5
<INVENTORY> 246 172 218
<CURRENT-ASSETS> 751 689 805
<PP&E> 5002 4602 4837
<DEPRECIATION> 2714 2604 2889
<TOTAL-ASSETS> 3341 3096 3124
<CURRENT-LIABILITIES> 536 523 485
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 54 54 54
<OTHER-SE> 1279 1386 1313
<TOTAL-LIABILITY-AND-EQUITY> 3341 3096 3124
<SALES> 1396 1388 1566
<TOTAL-REVENUES> 1396 1388 1566
<CGS> 818 739 804
<TOTAL-COSTS> 1793 1246 1449
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 58 47 52
<INCOME-PRETAX> (375) 232 249
<INCOME-TAX> (148) 71 85
<INCOME-CONTINUING> (227) 161 164
<DISCONTINUED> 277 33 56
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 50 194 220
<EPS-PRIMARY> 1.06 4.06 3.30
<EPS-DILUTED> 1.06 4.04 4.43
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