<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO __________
COMMISSION FILE NUMBER 1-9019
UNION TEXAS PETROLEUM HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0040040
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1330 POST OAK BLVD.
HOUSTON, TEXAS 77056
(Address of principal
executive offices
and zip code)
(713) 623-6544
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
As of July 21, 1995, there were 87,756,733 shares of Union Texas Petroleum
Holdings, Inc. $.05 par value Common Stock issued and outstanding.
<PAGE> 2
FORM 10-Q
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
---------- ------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,687 $ 8,389
Accounts and notes receivable, less allowance for doubtful accounts . . . . . 73,262 54,773
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,252 43,228
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . 45,437 30,675
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 173,638 137,065
Equity investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111,846 114,505
Property, plant and equipment, at cost, less accumulated
depreciation, depletion and amortization* . . . . . . . . . . . . . . . . . . 1,282,175 1,286,278
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,894 6,786
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,577,553 $1,544,634
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . $ 2,292 $ 2,292
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71,603 106,032
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89,582 89,281
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,779 48,069
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 34,012 41,862
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 252,268 287,536
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430,362 430,085
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,032 365,777
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,451 111,737
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,161,113 1,195,135
---------- ----------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,391 4,391
Paid in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,408 19,889
Cumulative foreign exchange translation adjustment and other . . . . . . . . (59,108) (65,476)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452,817 394,806
Common stock held in treasury, at cost:
57,550 shares at June 30, 1995 and 221,565 shares at
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,068) (4,111)
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 416,440 349,499
---------- ----------
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . $1,577,553 $1,544,634
========== ==========
</TABLE>
* The Company follows the successful efforts method of accounting for oil and
gas activities.
The accompanying notes are an integral part of this financial statement.
2
<PAGE> 3
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, JUNE 30,
-------- --------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Sales and operating revenues . . . . . . . . . . . . . $ 200,425 $ 145,608 $ 439,982 $ 339,705
Interest income and other revenues . . . . . . . . . . (377) 30 330 123
Net earnings of equity investee . . . . . . . . . . . 5,533 3,392 10,941 10,179
--------- ---------- --------- ----------
205,581 149,030 451,253 350,007
Costs and other deductions:
Product costs and operating expenses . . . . . . . . . 74,386 69,892 153,563 133,945
Exploration expenses . . . . . . . . . . . . . . . . . 22,099 11,443 37,649 24,327
Depreciation, depletion and amortization . . . . . . . 38,102 28,213 84,647 75,042
Selling, general and administrative expenses . . . . . 6,111 6,260 12,281 11,904
Interest expense . . . . . . . . . . . . . . . . . . . 5,242 3,355 10,510 4,538
--------- ---------- --------- ----------
Income before income taxes . . . . . . . . . . . . . . . . 59,641 29,867 152,603 100,251
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 39,539 21,571 85,825 65,340
--------- ---------- --------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 20,102 $ 8,296 $ 66,778 $ 34,911
========= ========== ========= ==========
Earnings per share of common stock . . . . . . . . . . . . $ .23 $ .09 $ .76 $ .40
========= ========== ========= ==========
Dividends per share of common stock . . . . . . . . . . . . $ .05 $ .05 $ .10 $ .10
========= ========== ========= ==========
Weighted average number of shares outstanding (000s) . . . 87,735 87,711 87,687 87,696
========= ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE> 4
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 66,778 $ 34,911
Adjustment to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization . . . . . . . . . . . . . . . . 84,647 75,042
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . (3,192) 685
Net income of equity investee . . . . . . . . . . . . . . . . . . . . . . (10,941) (10,179)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,566 2,260
----------- ---------
Net cash provided by operating activities before changes in other
assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . 138,858 102,719
Increase in accounts and notes receivable . . . . . . . . . . . . . . . . (18,431) (14,129)
(Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . 3,226 (4,100)
Increase in prepaid expenses and other assets . . . . . . . . . . . . . . (16,281) (2,250)
Increase (decrease) in accounts payable and other liabilities . . . . . . (8,711) 7,616
Increase (decrease) in income taxes payable . . . . . . . . . . . . . . . 2,202 (30,007)
----------- ---------
Net cash provided by operating activities . . . . . . . . . . . . . . 100,863 59,849
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment . . . . . . . . . . . . . . . . . (60,788) (63,790)
Cash provided (required) by equity investee . . . . . . . . . . . . . . . . 13,600 (6,950)
Net cash required by sale of businesses . . . . . . . . . . . . . . . . . . (772) (1,091)
----------- ---------
Net cash required by investing activities . . . . . . . . . . . . . . . . (47,960) (71,831)
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of long-term notes . . . . . . . . . . . . . . . 197,713
Payments to settle long-term debt . . . . . . . . . . . . . . . . . . . . . (36,146)
Net payments under credit facilities . . . . . . . . . . . . . . . . . . . . (201,353) (20,000)
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,767) (8,770)
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . 311
Proceeds from issuance of treasury stock . . . . . . . . . . . . . . . . . . 1,407
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . (2,779)
Net (payments) proceeds from short-term borrowings . . . . . . . . . . . . . (35,605) 70,434
----------- ---------
Net cash (required) provided by financing activities . . . . . . . . . . (46,605) 3,050
----------- ---------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . 6,298 (8,932)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . 8,389 18,143
----------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . $ 14,687 $ 9,211
=========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . . . . . . . . . . $ 11,906 $ 5,645
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,197 87,738
</TABLE>
The accompanying notes are an integral part of this financial statement.
4
<PAGE> 5
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NOTE 1 - BASIS OF PRESENTATION - These consolidated financial statements should
be read in the context of the consolidated financial statements and notes
thereto filed with the Commission in the Company's 1994 annual report on Form
10-K. In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, consisting only of normal
adjustments, necessary to present fairly the financial position of Union Texas
Petroleum Holdings, Inc. and its consolidated subsidiaries at June 30, 1995,
and the results of operations and cash flows for the three and six months ended
June 30, 1995 and 1994. The results of operations for the six months ended
June 30, 1995, should not necessarily be taken as indicative of the results of
operations that may be expected for the entire year 1995. Certain prior period
amounts have been reclassified for comparative purposes.
NOTE 2 - ALBA ACQUISITION - On July 18, 1995, the Company, through its
subsidiary, Union Texas Petroleum Limited ("UTPL"), acquired from Oryx UK
Energy Company ("Oryx") their 15.5% working interest in Block 16/26 in the
central United Kingdom North Sea, which includes the Alba field. UTPL paid
Oryx approximately $270 million for the interest. The effective date of the
transaction was July 1, 1995.
NOTE 3 - SECONDARY PUBLIC OFFERING - In May 1995, pursuant to a secondary
public offering registered by the Company under the Securities Act of 1933 as
amended, 11.5 million shares of the 33.3 million shares of the Company's common
stock owned by partnerships affiliated with Kohlberg Kravis Roberts & Co.
("KKR") were sold in the open market. The Company did not receive any proceeds
from the offering.
NOTE 4 - CREDIT FACILITIES - The Company currently has three unsecured bank
credit facilities (the "Credit Facilities"). One of the Credit Facilities is a
$100 million revolver that provides for conversion of amounts outstanding on
April 15, 1996 to a one-year term loan maturing April 15, 1997. Another Credit
Facility is a $450 million revolver that reduces quarterly by $35 million
beginning July 31, 1998, with a final maturity of April 30, 1999. In June
1995, the Company entered into a $100 million revolver that provides for
conversion of amounts outstanding on June 15, 1996 to a one-year term loan
maturing June 15, 1997. In addition to such Credit Facilities, the Company has
the ability to obtain short-term borrowings on uncommitted and unsecured lines
of credit established with several banks.
In May 1995, the Company's indirect subsidiary, Union Texas Britannia Limited,
which is a wholly owned subsidiary of Union Texas Petroleum Limited, entered
into a 150 million pounds sterling secured financing. The financing will be
used to fund the Company's share of the cost of developing the Britannia field
to production.
NOTE 5 - DEBT OFFERINGS - In March 1995, the Company publicly issued $125
million principal amount of 8-3/8% Senior Notes due 2005 (the "8-3/8% Senior
Notes") at an initial public offering price of 99.431%. In April 1995, the
Company publicly issued $75 million principal amount of 8-1/2% Senior Notes due
2007 (the "8-1/2% Senior Notes") at an initial public offering price of
99.658%. The net proceeds from the sale of the 8-3/8% Senior Notes and the
8-1/2% Senior Notes were approximately $123.5 million and $74.2 million,
respectively (after deducting underwriting discount, commissions and offering
expenses). The Company used such proceeds to reduce debt under its existing
credit facility and its uncommitted and unsecured lines of credit.
NOTE 6 - ACCOUNTING PRONOUNCEMENTS RECENTLY ISSUED - In March 1995, the
Financial Accounting Standards Board ("FASB") released Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of," which set forth the
criteria for impairment of plant, property and equipment and other long-lived
assets. Adoption of the Statement is required for years beginning after
December 15, 1995. The Company is still reviewing the Statement; however, the
Company believes its current policy on oil and gas asset impairment is
consistent with this pronouncement and that the pronouncement will have no
material impact on the Company.
5
<PAGE> 6
NOTE 7 - CONTINGENCIES - The Company and its subsidiaries and related companies
are named defendants in a number of lawsuits and named parties in numerous
government proceedings arising in the ordinary course of business. While the
outcome of contingencies, lawsuits or other proceedings against the Company
cannot be predicted with certainty, management expects that any liability, to
the extent not provided for through insurance or otherwise, will not have a
material adverse effect on the financial statements of the Company.
6
<PAGE> 7
UNION TEXAS PETROLEUM HOLDINGS, INC.
With respect to the unaudited consolidated financial information of Union Texas
Petroleum Holdings, Inc. for the three and six month periods ended June 30,
1995 and 1994, Price Waterhouse LLP reported that they have applied limited
procedures in accordance with professional standards for a review of such
information. However, their separate report dated July 25, 1995 appearing
below, states that they did not audit and they do not express an opinion on
that unaudited consolidated financial information. Price Waterhouse LLP has
not carried out any significant or additional audit tests beyond those which
would have been necessary if their report had not been included. Accordingly,
the degree of reliance on their report on such information should be restricted
in light of the limited nature of the review procedures applied. Price
Waterhouse LLP is not subject to the liability provisions of section 11 of the
Securities Act of 1933 for their report on the unaudited consolidated financial
information because that report is not a "report" prepared or certified by
Price Waterhouse LLP within the meaning of sections 7 and 11 of the Act.
REPORT ON REVIEW BY INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Union Texas Petroleum Holdings, Inc.
We have reviewed the accompanying consolidated balance sheet of Union Texas
Petroleum Holdings, Inc. and consolidated subsidiaries as of June 30, 1995 and
the related consolidated statements of operations for the three and six month
periods ended June 30, 1995 and 1994 and of cash flows for the six month
periods ended June 30, 1995 and 1994. This financial information is the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial information for it to be in conformity
with generally accepted accounting principles.
We previously audited in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 31, 1994, and the related
consolidated statements of operations, of cash flows, and of stockholders'
equity for the year then ended (not presented herein), and in our report dated
January 25, 1995 we expressed an unqualified opinion on those consolidated
financial statements. In our opinion, the information set forth in the
accompanying consolidated balance sheet information as of December 31, 1994, is
fairly stated in all material respects in relation to the consolidated balance
sheet from which it has been derived.
PRICE WATERHOUSE LLP
Houston, Texas
July 25, 1995
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements, notes, and management's discussion contained in the registrant's
1994 annual report on Form 10-K, and condensed financial statements and notes
contained in this report.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1995 COMPARED WITH THREE MONTHS ENDED JUNE 30, 1994
Net income for the three months ended June 30, 1995, was $20 million, or $.23
per share as compared to net income of $8 million, or $.09 per share reported
for the same period in 1994. The current quarter was favorably impacted by
higher U.S. ethylene margins and sales volumes, higher oil and gas prices,
higher volumes in the U.K. and higher Indonesian LNG volumes, partially offset
by higher exploration expenses.
Sales and operating revenues for the three months ended June 30, 1995, were
$200 million, up from $146 million for the second quarter of 1994.
International revenues totaled $145 million as compared to $109 million for the
second quarter of 1994. In the U.K., sales and operating revenues increased by
$15 million due to higher prices and increased sales volumes. In Indonesia,
sales increased $19 million due to higher LNG volumes and sales prices for LNG
and crude oil. In Pakistan, sales were $3 million above 1994 primarily due to
higher prices and higher crude oil volumes.
Average prices received and volumes sold by the Company's major operations
during the second quarter of 1995 and 1994, respectively, were as follows:
<TABLE>
<CAPTION>
PRICES VOLUMES
(000S PER DAY)
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Crude oil (barrels):
U.K. $17.79 $14.74 29 26
Pakistan 14.90 13.41 6 5
Indonesia 17.85 15.33 6 6
Indonesian LNG (Mcf) 3.19 2.68 202 170
Pakistan natural gas (Mcf) 1.30 1.10 45 47
U.K. natural gas (Mcf) 2.85 1.65 24 7
U.S. ethylene (pounds) .28 .17 1,298 1,247
</TABLE>
Petrochemical revenues totaled $55 million as compared to $36 million in the
second quarter of 1994, while operating profit was $19 million as compared to
$3 million in the prior period. The increase was primarily due to higher
ethylene sales prices, which resulted in an increase in ethylene margins to 16
cents per pound in 1995 vs. 3 cents per pound in 1994. Higher ethylene sales
volumes also contributed to the increased operating profit.
Exploration expenses increased by $11 million primarily due to drilling
expenditures in Argentina and Ireland. Interest expense increased by $2
million during the period due to higher levels of debt and higher interest
rates. The effective tax rate decreased from the prior year due primarily to
the increase in U.S. petrochemical income, which is taxed at lower rates,
partially offset by higher new venture exploration expenses, most of which
generate no tax benefits.
8
<PAGE> 9
SIX MONTHS ENDED JUNE 30, 1995 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1994
Net income for the six months ended June 30, 1995, was $67 million, or $.76 per
share as compared to net income of $35 million, or $.40 per share reported for
the same period in 1994. The current period was favorably impacted by higher
U.S. ethylene margins and sales volumes and higher oil and gas prices,
partially offset by higher exploration expenses and lower Indonesian volumes.
Sales and operating revenues for the six months ended June 30, 1995, were $440
million, up from $340 million in the prior year. International revenues
totaled $329 million as compared to $272 million for the first six months of
1994. In the U.K., sales and operating revenues increased by $34 million due
to higher prices and increased sales volumes. In Indonesia, sales increased
$18 million as compared to 1994 due to higher crude oil and LNG prices, which
were partially offset by lower volumes. Lower LNG volumes are attributable to
a lower average participation interest in cargoes delivered for the period and
it is anticipated that LNG sales volumes for the remainder of 1995 will
continue to be lower as compared to 1994. In Pakistan, sales were $5 million
above 1994 primarily due to higher prices and higher crude oil volumes.
Average prices received and volumes sold by the Company's major operations
during the first six months of 1995 and 1994, respectively, were as follows:
<TABLE>
<CAPTION>
PRICES VOLUMES
(000S PER DAY)
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Crude oil (barrels):
U.K. $16.98 $13.83 33 30
Pakistan 14.77 13.10 6 4
Indonesia 17.56 15.01 6 7
Indonesian LNG (Mcf) 3.13 2.70 222 225
Pakistan natural gas (Mcf) 1.30 1.10 44 46
U.K. natural gas (Mcf) 2.96 2.71 34 23
U.S. ethylene (pounds) .28 .16 1,318 1,077
</TABLE>
Petrochemical revenues totaled $110 million as compared to $68 million in the
first half of 1994, while operating profit was $38 million as compared to $3
million in the prior period. The increase was primarily due to higher ethylene
sales prices, which resulted in an increase in ethylene margins to 16 cents per
pound in 1995 vs. 2 cents per pound in 1994, and due to higher volumes.
Exploration expenses increased by $13 million primarily due to drilling
expenditures in Argentina and Ireland. Interest expense increased by $6
million during the period due to higher levels of debt and to higher interest
rates. The effective tax rate decreased from the prior year due primarily to
the increase in U.S. petrochemical income, which is taxed at lower rates,
partially offset by higher new venture exploration expenses, most of which
generate no tax benefits.
9
<PAGE> 10
FINANCIAL CONDITION
Cash flow from operations: Net cash provided by operating activities was $101
million in the first six months of 1995, an increase of $41 million from the
same period in the prior year. The increase was primarily the result of
improved ethylene margins and sales volumes and higher international oil and
gas prices, partially offset by lower Indonesian volumes.
Ethylene margins have averaged approximately 16 cents per pound in the first
half of 1995. The Company cannot predict the duration of the favorable trends
in the ethylene business. The ethylene business is cyclical and there can be
no assurances that margins will remain at their current levels over the near
term. The prices the Company receives for its ethylene are sensitive to many
factors beyond the control of the Company, such as worldwide and U.S. demand
for petrochemicals, inventory levels, feedstock costs and availability, plant
utilization rates, plant operations and costs and competitive capacity
expansion.
Capital resources: Capital expenditures for the first half of 1995 were $90
million including capitalized interest of $11 million. Capital expenditures for
the first half of 1994 were $64 million including capitalized interest of $9
million. The increase is principally due to development costs for the
Britannia field and increased exploration spending.
On July 18, 1995, the Company, through its subsidiary, Union Texas Petroleum
Limited ("UTPL"), acquired from Oryx UK Energy Company ("Oryx") their 15.5%
working interest in Block 16/26 in the central United Kingdom North Sea, which
includes the Alba field. UTPL paid Oryx approximately $270 million for the
interest. The effective date of the transaction was July 1, 1995. The Company
funded the acquisition under its bank credit facilities and its uncommitted and
unsecured lines of credit. As a result of the acquisition, the Company expects
to record approximately 45 million barrels of oil as proved reserves. The Alba
field commenced production in January 1994. The Company expects to spend about
$25 million to $30 million net over the next five years for future development
expenditures. The Alba field is operated by Chevron U.K. Ltd.
The Company's plans in the near term are to focus on integrating the interests
in Alba as well as the undeveloped Britannia field acquired in late 1994 into
its existing North Sea program while utilizing any excess cash flow for the
reduction of debt. The Company will also continue to emphasize developing its
core holdings and conducting an active exploration program as well as
controlling costs.
Financing activities: The Company has three unsecured credit facilities (the
"Credit Facilities"). One of the Credit Facilities is a $100 million unsecured
credit agreement with NationsBank of Texas, N.A. ("NationsBank"), as agent,
Bank of America National Trust and Savings Association ("Bank of America") and
Union Bank of Switzerland, Houston Agency ("UBS"), as co-agents, and certain
other banks, that provides for conversion of amounts outstanding on April 15,
1996 to a one-year term loan maturing April 15, 1997. This Credit Facility
replaced a prior $200 million revolver. Another Credit Facility is with
NationsBank, as agent, Bank of America and UBS, as co-agents, and certain other
banks. Initially this Credit Facility was a $350 million revolver that in
April 1995 was amended to increase the amount of the facility to $450 million
and to provide that the amount of the facility would reduce quarterly by $35
million beginning July 31, 1998, with a final maturity of April 30, 1999. The
$450 million revolver allows the Company to obtain up to $300 million of
availability thereunder in U.S. dollar loans that bear interest at a rate
determined in a competitive bid process. Loans under the $450 million revolver
may be made in both pounds sterling and U.S. dollars at the option of the
Company. In June 1995, the Company executed an amendment to eliminate the
total indebtedness restriction under such two Credit Facilities, which was a
$775 million limitation. In June 1995, the Company entered into an additional
$100 million unsecured credit agreement with NationsBank, as agent, and Bank of
America and UBS, as co-agents. This Credit Facility is a revolver that
provides for conversion of amounts outstanding on June 15, 1996 to a one-year
term loan maturing June 15, 1997. Loans under the Credit Facilities bear
interest at floating market rates based on, at the Company's option, the agent
bank's base rate or LIBOR, plus applicable margins, subject to increase in
certain events. Borrowings under the Credit Facilities are guaranteed by
certain subsidiaries of the Company that also guarantee the Company's senior
notes. The Credit Facilities contain restrictive covenants, including
maintenance of certain coverage ratios related to the incurrence of additional
indebtedness and limitations on asset sales and mergers or consolidations. The
covenants also require maintenance of a certain level of stockholders' equity.
Under the terms of the Credit Facilities, the Company may pay dividends and
make stock repurchases, provided that such level of minimum stockholders'
equity is maintained and the Company complies with the other covenants
10
<PAGE> 11
in the Credit Facilities. Based on current conditions, the Company expects to
pay dividends without restriction under the Credit Facilities. At June 30,
1995, $116 million was outstanding under the Credit Facilities bearing interest
at a weighted average rate of 6.8% per annum.
At June 30, 1995, $72 million was outstanding under the Company's uncommitted
and unsecured lines of credit. These amounts outstanding bear interest at a
weighted average rate of 7.2% per annum and do not reduce amounts available
under the Company's Credit Facilities.
In May 1995, the Company's indirect subsidiary, Union Texas Britannia Limited
("UTBL"), which is a wholly owned subsidiary of UTPL, entered into a 150
million pounds sterling secured financing from Chemical Bank, NationsBank N.A.
(Carolinas), National Westminster Bank plc and certain other banks. The
financing will be used to fund the Company's share of the cost of developing
the Britannia field to production (including interest and other financing costs
incurred prior to completion and potential cost overruns), and any remaining
availability after completion may, subject to certain coverage ratios being
met, be used for UTBL's general corporate purposes. Except for certain support
by UTPL related to any potential cost overruns in excess of the facility amount
(limited to 30 million pounds sterling), insurance, tax benefits and
administrative services, the lenders' recourse will be limited to the Britannia
field project assets and is nonrecourse to the Company. The financing has a
final maturity in September 2005. At June 30, 1995, 7 million pounds sterling
($11 million) was outstanding under UTBL's financing.
In May 1995, pursuant to a secondary public offering registered by the Company
under the Securities Act of 1933 as amended, 11.5 million shares of the 33.3
million shares of the Company's common stock owned by partnerships affiliated
with Kohlberg Kravis Roberts & Co. ("KKR") were sold in the open market. The
Company did not receive any proceeds from the offering.
In March 1995, the Company publicly issued $125 million principal amount of
8-3/8% Senior Notes due 2005 (the "8-3/8% Senior Notes") at an initial public
offering price of 99.431%. In April 1995, the Company publicly issued $75
million principal amount of 8-1/2% Senior Notes due 2007 (the "8-1/2% Senior
Notes") at an initial public offering price of 99.658%. The net proceeds from
the sale of the 8-3/8% Senior Notes and the 8-1/2% Senior Notes were
approximately $123.5 million and $74.2 million, respectively (after deducting
underwriting discount, commissions and offering expenses). The Company used
such proceeds to reduce debt under its existing credit facility and its
uncommitted and unsecured lines of credit. The Company's $100 million principal
amount of 8.25% Senior Notes due 1999 ("the 8.25% Senior Notes) together with
the 8-1/2% Senior Notes and the 8-3/8% Senior Notes are referred to herein as
the "Senior Notes." The Senior Notes represent general unsecured obligations of
the Company and rank pari passu in right of payment with the Company's
obligations under its Credit Facilities, and senior in right of payment to
subordinated indebtedness, if any, of the Company. The Senior Notes are
guaranteed by the subsidiaries of the Company that are also guarantors under
the Company's Credit Facilities and the two recent issuances contain
restrictive covenants similar to the Company's 8.25% Senior Notes. The Senior
Notes are redeemable at any time, at the option of the Company, in whole or in
part, at a price equal to 100% of their principal amount plus accrued interest
plus a make whole premium relating to the then-prevailing Treasury Yield and
the remaining life of the Senior Notes.
In addition, at the 1995 Annual Meeting of Stockholders held May 10, 1995, the
Company's stockholders approved the authorization of a new class of 15 million
shares of preferred stock. The new preferred stock provides the Company
additional financing flexibility to issue from time to time this form of equity
based on current market conditions.
On April 27, 1994, the Company's Board of Directors authorized the repurchase
of up to 2,000,000 shares of the Company's common stock and pursuant thereto,
the Company had repurchased 307,500 shares as of December 31, 1994. The
repurchased stock will be used for general corporate purposes, including
fulfilling employee benefit program obligations. No repurchases were made by
the Company during the first half of 1995. As of June 30, 1995, 57,550 shares
of common stock were held, at cost, as treasury shares.
11
<PAGE> 12
Financial condition: In the second quarter of 1995, the Company declared and
paid a dividend of approximately $4.4 million on its common stock. On July 19,
1995, the Company announced a dividend on its common stock of $.05 per share to
stockholders of record as of July 31, 1995, payable on August 15, 1995.
In March 1995, the Financial Accounting Standards Board ("FASB") released
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which set forth the criteria for impairment of plant, property and equipment
and other long-lived assets. Adoption of the Statement is required for years
beginning after December 15, 1995. The Company is still reviewing the
Statement; however, the Company believes its current policy on oil and gas
asset impairment is consistent with this pronouncement and that the
pronouncement will have no material impact on the Company.
12
<PAGE> 13
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company and its subsidiaries and related companies are named defendants in
numerous lawsuits and named parties in numerous governmental proceedings
arising in the ordinary course of business. While the outcome of lawsuits or
other proceedings against the Company cannot be predicted with certainty,
management does not expect these matters to have a material adverse effect on
the financial position of the Company. (See Item 3 in the Company's 1994
annual report on Form 10-K.)
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 10, 1995, the 1995 Annual Meeting of Stockholders of the Company was
held. The following persons were elected as proposed in the proxy solicitation
issued pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended, to serve as directors until the next Annual Meeting of Stockholders or
until their successors are elected and qualified: A. Clark Johnson, Stanley P.
Porter, Henry R. Kravis, George R. Roberts, Michael W. Michelson, Saul A. Fox,
Sellers Stough, Richard R. Shinn, James H. Greene, Jr., Edward A. Gilhuly and
Glenn A. Cox. Stockholders ratified the appointment of Price Waterhouse LLP as
the Company's independent accountants for the fiscal year ending December 31,
1995. The stockholders also approved the amendment to the Company's Restated
Certificate of Incorporation to provide for a new class of preferred stock, the
1994 Incentive Plan and the amendment to the 1992 Stock Option Plan.
There were 79,914,814 shares voted for the election of directors with 332,872
withholding votes and no abstentions or broker non-votes. Results by nominated
director were:
<TABLE>
<CAPTION>
VOTED AUTHORITY
FOR WITHHELD
<S> <C> <C>
A. Clark Johnson 79,150,234 1,097,452
Stanley P. Porter 79,860,163 387,523
Henry R. Kravis 76,718,269 3,529,417
George R. Roberts 76,723,688 3,523,998
Michael W. Michelson 79,127,436 1,120,250
Saul A. Fox 77,069,033 3,178,653
Sellers Stough 79,864,090 383,596
Richard R. Shinn 79,855,690 391,996
James H. Greene, Jr. 79,129,826 1,117,860
Edward A. Gilhuly 79,126,826 1,120,860
Glenn A. Cox 79,893,331 354,355
</TABLE>
There were 80,087,552 shares voted for the ratification of the appointment of
Price Waterhouse LLP as the Company's independent public accountants, with
28,355 shares voted against, 131,779 abstentions and no broker non-votes.
There were 71,869,719 shares voted for the approval of the proposed amendment
to the Restated Certificate of Incorporation of the Company relating to
preferred stock, with 4,786,269 shares voted against, 359,807 abstentions and
3,231,891 broker non-votes.
There were 74,189,858 shares voted for the approval of the 1994 Incentive Plan,
with 5,669,005 shares voted against, 388,823 abstentions and no broker
non-votes.
There were 75,254,028 shares voted for the approval of the proposed amendment
to the 1992 Stock Option Plan, with 4,600,586 shares voted against, 393,072
abstentions and no broker non-votes.
13
<PAGE> 14
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
10.1 Third Amendment Agreement dated as of April
24, 1995, to the Amended and Restated
Credit Agreement dated as of May 13, 1994,
as amended, among Union Texas Petroleum
Holdings, Inc., the Banks and Co-Agents
listed therein and NationsBank of Texas,
N.A., as Agent.
10.2 Second Amendment to Amended and Restated
Subsidiary Guaranty Agreement dated as of
April 24, 1995, among Union Texas Petroleum
Energy Corporation, Union Texas Products
Corporation, Union Texas East Kalimantan
Limited, Union Texas International
Corporation and Unistar, Inc., and
NationsBank of Texas, N.A., as Agent.
10.3 $100,000,000 Credit Agreement dated as of
April 24, 1995, among Union Texas Petroleum
Holdings, Inc., the Banks and Co-Agents
listed therein and NationsBank of Texas,
N.A., as Agent.
10.4 Subsidiary Guaranty Agreement dated as of
April 24, 1995, among Union Texas Petroleum
Energy Corporation, Union Texas Products
Corporation, Union Texas East Kalimantan
Limited, Union Texas International
Corporation and Unistar, Inc., and
NationsBank of Texas, N.A., as Agent.
10.5 Fourth Amendment Agreement dated as of June
16, 1995, to the Amended and Restated
Credit Agreement dated as of May 13, 1994,
as amended, among Union Texas Petroleum
Holdings, Inc., the Banks and Co-Agents
listed therein and NationsBank of Texas,
N.A., as Agent.
10.6 First Amendment Agreement dated as of June
16, 1995, to the Credit Agreement dated as
of April 24, 1995, as amended, among Union
Texas Petroleum Holdings, Inc., the Banks
and Co-Agents listed therein and
NationsBank of Texas, N.A., as Agent.
10.7 $100,000,000 Credit Agreement dated as of
June 30, 1995, among Union Texas Petroleum
Holdings, Inc., the Co-Agents listed
therein and NationsBank of Texas, N.A., as
Agent.
10.8 Subsidiary Guaranty Agreement dated as of
June 30, 1995, among Union Texas Petroleum
Energy Corporation, Union Texas Products
Corporation, Union Texas East Kalimantan
Limited, Union Texas International
Corporation and Unistar, Inc., and
NationsBank of Texas, N.A., as Agent.
10.9 Facility Agreement, dated May 26, 1995,
among Union Texas Britannia Limited
("UTBL"), Chemical Bank, as Arranger,
NationsBank, N.A. Carolinas
("NationsBank"), as Facility Agent,
National Westminster Bank plc, as Funding
Agent, and the Co-Arrangers, Technical
Agents, Account Bank and Banks named
therein.
14
<PAGE> 15
10.10 Sponsor Direct Agreement, dated May 26,
1995, among Union Texas Petroleum Limited
("UTPL"), UTBL and NationsBank, as Facility
Agent.
10.11 Sponsor Support Agreement, dated May 26,
1995, between UTPL and UTBL.
10.12 Union Texas Petroleum Holdings, Inc. 1994
Incentive Plan.
10.13 First Amendment to Union Texas Petroleum
Holdings, Inc. 1992 Stock Option Plan.
10.14 Sale and Purchase Agreement dated May 31,
1995, between Union Texas Petroleum Limited
and Oryx U.K. Energy Company.
15 Independent Accountants' Awareness Letter.
27.1 Financial Data Schedule for the six-month
period ended June 30, 1995.
(b) Reports on Form 8-K
The Company filed a Form 8-K dated April 10, 1995 to attach a
schedule showing the calculation of the proforma ratio of earnings
to fixed charges with respect to the issuance of $75 million of
8-1/2% Senior Notes due 2007 (the "8-1/2% Notes") and a press
release announcing the pricing of the Company's offering of the
8-1/2% Notes.
The Company filed a Form 8-K dated April 28, 1995 to disclose
certain amendments to its Credit Facilities, to include an
Independent Accountants' Awareness Letter and to attach press
releases announcing the Company's filing of a secondary offering of
certain shares of the Company's stock held by KKR, the Company's
first quarter earnings and an update of the offshore Argentina
drilling program.
The Company filed a Form 8-K dated May 4, 1995 to disclose an
update of the Company's drilling program in the Colville Delta area
of Alaska.
The Company filed a Form 8-K dated May 18, 1995 to attach a form of
U.S. and international underwriting agreements, to attach a
Restated Certificate of Incorporation of the Company, as amended
through May 10, 1995 and to attach a press release reporting the
results of the Company's Annual Stockholders Meeting.
The Company filed a Form 8-K dated June 28, 1995 to disclose the
Company's agreement to acquire Block 16/26 in the North Sea, to
disclose an update on the Company's financing activities and to
attach press releases announcing the pricing and closing of the
secondary offering of 11.5 million shares of the Company's common
stock held by KKR and a conference update of operations activities.
The Company filed a Form 8-K dated July 14, 1995 to disclose
completion of financing on Train G in Indonesia and an update of
the offshore Ireland drilling activities.
The Company filed a Form 8-K dated July 25, 1995 to attach a press
release announcing the Company's second quarter earnings.
15
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION TEXAS PETROLEUM HOLDINGS, INC.
Date: July 27, 1995 By: /s/ DONALD M. MCMULLAN
----------------------
Donald M. McMullan
Vice President and Controller
(Chief Accounting Officer
and officer duly authorized to
sign on behalf of the registrant)
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
10.1 Third Amendment Agreement dated as of April 24, 1995, to the
Amended and Restated Credit Agreement dated as of May 13,
1994, as amended, among Union Texas Petroleum Holdings,
Inc., the Banks and Co-Agents listed therein and
NationsBank of Texas, N.A., as Agent.
10.2 Second Amendment to Amended and Restated Subsidiary Guaranty
Agreement dated as of April 24, 1995, among Union Texas
Petroleum Energy Corporation, Union Texas Products
Corporation, Union Texas East Kalimantan Limited, Union
Texas International Corporation and Unistar, Inc., and
NationsBank of Texas, N.A., as Agent.
10.3 $100,000,000 Credit Agreement dated as of April 24, 1995,
among Union Texas Petroleum Holdings, Inc., the Banks and
Co-Agents listed therein and NationsBank of Texas, N.A., as
Agent.
10.4 Subsidiary Guaranty Agreement dated as of April 24, 1995,
among Union Texas Petroleum Energy Corporation, Union Texas
Products Corporation, Union Texas East Kalimantan Limited,
Union Texas International Corporation and Unistar, Inc., and
NationsBank of Texas, N.A., as Agent.
10.5 Fourth Amendment Agreement dated as of June 16, 1995, to the
Amended and Restated Credit Agreement dated as of May 13,
1994, as amended, among Union Texas Petroleum Holdings,
Inc., the Banks and Co-Agents listed therein and
NationsBank of Texas, N.A., as Agent.
10.6 First Amendment Agreement dated as of June 16, 1995, to the
Credit Agreement dated as of April 24, 1995, as amended,
among Union Texas Petroleum Holdings, Inc., the Banks and
Co-Agents listed therein and NationsBank of Texas, N.A., as
Agent.
10.7 $100,000,000 Credit Agreement dated as of June 30, 1995,
among Union Texas Petroleum Holdings, Inc., the Co-Agents
listed therein and NationsBank of Texas, N.A., as Agent.
10.8 Subsidiary Guaranty Agreement dated as of June 30, 1995,
among Union Texas Petroleum Energy Corporation, Union Texas
Products Corporation, Union Texas East Kalimantan Limited,
Union Texas International Corporation and Unistar, Inc., and
NationsBank of Texas, N.A., as Agent.
10.9 Facility Agreement, dated May 26, 1995, among Union Texas
Britannia Limited ("UTBL"), Chemical Bank, as Arranger,
NationsBank, N.A. Carolinas ("NationsBank"), as Facility
Agent, National Westminster Bank plc, as Funding Agent, and
the Co-Arrangers, Technical Agents, Account Bank and Banks
named therein.
10.10 Sponsor Direct Agreement, dated May 26, 1995, among Union
Texas Petroleum Limited ("UTPL"), UTBL and NationsBank, as
Facility Agent.
10.11 Sponsor Support Agreement, dated May 26, 1995, between UTPL
and UTBL.
</TABLE>
<PAGE> 18
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
10.12 Union Texas Petroleum Holdings, Inc. 1994 Incentive Plan.
10.13 First Amendment to Union Texas Petroleum Holdings, Inc. 1992
Stock Option Plan.
10.14 Sale and Purchase Agreement dated May 31, 1995, between
Union Texas Petroleum Limited and Oryx U.K. Energy Company.
15 Independent Accountants' Awareness Letter.
27.1 Financial Data Schedule for the six-month period ended June
30, 1995.
</TABLE>
<PAGE> 1
Exhibit 10.1
THIRD AMENDMENT AGREEMENT
This Third Amendment Agreement, effective as of April 24, 1995
("Amendment"), is by and among Union Texas Petroleum Holdings, Inc., a Delaware
corporation ("Company"), the Banks and Co-Agents party to the Agreement
(defined below) and NationsBank of Texas, N.A., as Agent ("Agent"). In
consideration of the mutual covenants contained herein, the Company, the Banks,
the Co-Agents and the Agent agree as set forth herein.
1. Amendments to Credit Agreement. The Amended and Restated
Credit Agreement dated as of May 13, 1994, as amended by the First Amendment
Agreement dated as of November 21, 1994 and the Second Amendment Agreement
dated as of January 31, 1995 (as so amended, the "Agreement") among the
Company, the Banks, the Co-Agents and the Agent, is hereby amended as follows:
1.1. Section 1.01. The following respective definitions set
forth in Section 1.01 of the Agreement are hereby amended to read as follows:
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages of the
Third Amendment (or, if such Bank is an Assignee and its name is not
set forth on the signature pages of the Third Amendment, the amount of
its Commitment as set forth in the Assignment pursuant to which it
became a Bank), as such amount may be reduced from time to time
pursuant to Sections 2.09 and 2.10 or reduced or increased from time
to time pursuant to any Assignment to which it is a party.
"Current Exchange Rate" means the arithmetic average of the
respective spot exchange rates determined by each of the Reference
Banks (i) for converting Sterling into Dollars (in an amount
substantially equal to the aggregate outstanding principal amount of
the Sterling Loans of such Reference Bank or pound sterling 1,000,000
if no such amount is outstanding) or (ii) in the case of a Conversion
of a Base Rate Loan or a Euro-Dollar Loan into a Sterling Loan, for
converting Dollars into Sterling (in an amount substantially equal to
the aggregate outstanding principal amount of the Base Rate Loans and
Euro-Dollar Loans of such Reference Bank or $1,000,000 if no such
amount is outstanding), in each case in the interbank eurocurrency
market where the foreign currency and exchange operations of such
Reference Bank's Sterling Lending Office are customarily conducted
with respect to Sterling, at 10:00 A.M. (London time) or as near
thereto as practicable on the date that is two Sterling Business Days
prior to the date of determination, as determined by the Agent in
accordance with Section 2.19(a), which determination shall be
conclusive in the absence of manifest error. The Current Exchange
Rate shall be determined for, and shall take effect on, each
Adjustment Date and shall remain in effect until any
<PAGE> 2
subsequent determination of the Current Exchange Rate. Any Conversion
of a Base Rate Loan or a Euro-Dollar Loan into a Sterling Loan or of a
Sterling Loan into a Base Rate Loan or a Euro-Dollar Loan shall be
made at the Current Exchange Rate in effect on the date of such
Conversion.
"Short-Term Credit Agreement" means the Credit Agreement dated
as of April 24, 1995 among the Company, NationsBank of Texas, N.A., as
agent, and the co-Agents and the banks parties thereto, providing a
$100,000,000 credit facility to the Company, as may be amended from
time to time.
Section 1.01 of the Agreement is hereby further amended by (i)
changing the date "April 30, 1999" set forth in the definitions of
"Excluded Subordinated Debt" and "Restricted Preferred Stock" to
"April 30, 2000", and (ii) changing the date "April 30, 1998" set
forth in the definition of "Termination Date" to "April 30, 1999".
Section 1.01 of the Agreement is hereby further amended by
adding the following new definition in the appropriate alphabetical
order:
"Third Amendment" means the Third Amendment Agreement
effective as of April 24, 1995 executed by the Company, the Agent, the
Co-Agents and various Banks.
1.2. Section 2.03. Section 2.03(b) of the Agreement is
hereby amended by changing the amount "$200,000,000" set forth therein to
"$300,000,000".
1.3. Section 5.05. Section 5.05(a) of the Agreement is
hereby amended by changing the amount "$750,000,000" set forth therein to
"$775,000,000".
1.4. Section 5.19. Section 5.19 of the Agreement is
hereby amended by adding the following sentence at the end thereof:
The Company will cause Union Texas East Kalimantan Limited, as
promptly as reasonably practicable following execution from
time to time of amendments hereto or to the Subsidiary
Guaranty Agreement, (i) to report the execution and delivery
of such amendments to the Team and (ii) to deliver copies of
such amendments to the Team and to Bank Indonesia.
1.5. Section 9.06. The last sentence of Section 9.06(c)
of the Agreement is hereby amended by changing the date "May 1, 1996" therein
to "April 16, 1997".
1.6. Schedule I. Schedule I to the Agreement is hereby
replaced with Schedule I hereto.
-2-
<PAGE> 3
2. Effectiveness. The effectiveness of this Amendment is subject
to the receipt by the Agent of:
2.1. counterparts of this Amendment signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
2.2. the Second Amendment to Amended and Restated
Subsidiary Guaranty Agreement dated as of the date hereof (the
"Guaranty Amendment"), duly executed by each of the Required
Guarantors, substantially in the form of Exhibit A hereto;
2.3. an opinion of Newton W. Wilson, III, General Counsel
of the Company, substantially in the form of Exhibit B hereto;
2.4. an opinion of Andrews & Kurth L.L.P., special counsel
for the Obligors, substantially in the form of Exhibit C hereto;
2.5. opinions of local counsel, substantially in the forms
of Exhibits D-1 and D-2 hereto;
2.6. an opinion of Bracewell & Patterson, L.L.P., special
counsel for the Agent, substantially in the form of Exhibit E hereto;
and
2.7. all documents which the Agent may reasonably request
relating to the existence of the Obligors, the corporate authority for
and the validity of this Amendment and the Guaranty Amendment and any
other matters relevant thereto, all in form and substance satisfactory
to the Agent.
3. Miscellaneous.
3.1. Bank Consent. Each of the undersigned Banks hereby
consents to the amendment of the Subsidiary Guaranty Agreement pursuant to the
terms and provisions of the Guaranty Amendment.
3.2. Amendments, Etc. No amendment or waiver of any
provision of this Amendment, nor consent to any departure by the Company
therefrom, shall in any event be effective unless effected in accordance with
Section 9.05 of the Agreement.
3.3. Governing Law. This Amendment and the Agreement as
amended hereby shall be construed in accordance with and governed by the laws
of the State of Texas.
-3-
<PAGE> 4
3.4. Preservation. Except as specifically modified by the
terms of this Amendment or the Guaranty Amendment, all of the terms,
provisions, covenants, warranties and agreements contained in the Agreement
(including, without limitation, exhibits thereto) or any other Financing
Document remain in full force and effect. Undefined capitalized terms used
herein are used herein as defined in the Agreement as amended hereby.
3.5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
3.6. Representations and Warranties. The Company hereby
represents and warrants to the Banks, the Co-Agent and the Agent that (i) the
representations and warranties contained in Article IV of the Agreement (other
than the representations and warranties contained in Sections 4.04(a) and
4.04(c) thereof) are correct on and as of the date hereof as though made on and
as of the date hereof, with this Amendment, the Agreement as amended hereby,
the Guaranty Amendment and the Subsidiary Guaranty Agreement as amended by the
Guaranty Amendment constituting "Financing Documents" for purposes thereof, and
(ii) no event has occurred and is continuing which constitutes a Default or an
Event of Default.
3.7. Default. Without limiting any other event which may
constitute an Event of Default, in the event that any representation or
warranty set forth herein shall be incorrect or misleading in any material
respect when made, such event shall constitute an "Event of Default" under the
Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: /s/ M.N. MARKOWITZ
---------------------------------
M.N. Markowitz
Vice President and Treasurer
1330 Post Oak Blvd.
Houston, Texas 77056
Telex number: 762255
-4-
<PAGE> 5
Commitments
- -----------
$36,818,181.81 NATIONSBANK OF TEXAS, N.A.
By: /s/ PAUL A. SQUIRES
----------------------------------
Paul A. Squires
Senior Vice President
$28,636,363.63 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ LAURA B. SHEPARD
----------------------------------
Authorized Officer
$28,636,363.63 UNION BANK OF SWITZERLAND, HOUSTON
AGENCY
By: /s/ EVANS SWANN
----------------------------------
Evans Swann
Managing Director
By: /s/ JAN BUETTGEN
----------------------------------
Jann Buettgen
Vice President
Corporate Banking
$24,545,454.55 THE BANK OF NOVA SCOTIA
By: /s/ A.S. NORSWORTHY
----------------------------------
A.S. Norsworthy
Assistant Agent
$24,545,454.55 CHEMICAL BANK
By: /s/ [Illegible]
----------------------------------
Authorized Officer
-5-
<PAGE> 6
Commitments
- -----------
$24,545,454.55 CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ XAVIER RATOUIS
----------------------------------
Authorized Officer
$24,545,454.55 THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ [Illegible]
----------------------------------
Authorized Officer
$24,545,454.55 MELLON BANK, N.A.
By: /s/ A. GARY CHACE
----------------------------------
A. Gary Chace
Senior Vice President
$24,545,454.55 MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ PHILIP W. MCNEAL
----------------------------------
Philip W. McNeal
Vice President
$20,454,545.45 BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By: /s/ [Illegible]
----------------------------------
Authorized Officer
-6-
<PAGE> 7
Commitments
- -----------
$20,454,545.45 LTCB TRUST COMPANY
By: /s/ [Illegible]
-------------------------------
Authorized Officer
$20,454,545.45 SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ [Illegible]
-------------------------------
Authorized Officer
$14,318,181.82 THE BANK OF TOKYO, LTD., DALLAS
AGENCY
By: /s/ JOHN M. MCINTYRE
-------------------------------
Authorized Officer
$14,318,181.82 BANQUE PARIBAS, HOUSTON AGENCY
By: /s/ [Illegible]
-------------------------------
Authorized Officer
By: /s/ BART SCHOUEST
-------------------------------
Authorized Officer
-7-
<PAGE> 8
Commitments
- -----------
$14,318,181.82 CHRISTIANIA BANK
By: /s/ JAHN O. ROISING
----------------------------------
Authorized Officer
By: /s/ [Illegible]
----------------------------------
Authorized Officer
$14,318,181.82 CITIBANK, N.A.
By: /s/ BARBARA A. COHEN
----------------------------------
Barbara A. Cohen
Vice President
$14,318,181.82 DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By: /s/ B. C. ERICKSON
----------------------------------
Authorized Officer
By: /s/ [Illegible]
----------------------------------
Authorized Officer
$14,318,181.82 THE MITSUBISHI TRUST & BANKING
CORPORATION
By: /s/ [Illegible]
----------------------------------
Authorized Officer
-8-
<PAGE> 9
Commitments
- -----------
$14,318,181.82 NATIONAL WESTMINSTER BANK PLC (NEW
YORK BRANCH)
By: /s/ DAVID L. SMITH
----------------------------------
David L. Smith
Vice President
NATIONAL WESTMINSTER BANK PLC
(NASSAU BRANCH)
By: /s/ DAVID L. SMITH
----------------------------------
David L. Smith
Vice President
$14,318,181.82 THE YASUDA TRUST AND BANKING
COMPANY, LIMITED, NEW YORK BRANCH
By: /s/ NEIL T. CHAU
----------------------------------
Neil T. Chau
First Vice President
$8,181,818.18 BANK OF TAIWAN
By: /s/ [Illegible]
----------------------------------
Authorized Officer
$8,181,818.18 BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/ IAIN A. WHYTE
----------------------------------
Authorized Officer
By: /s/ [Illegible]
----------------------------------
Authorized Officer
-9-
<PAGE> 10
Commitments
- -----------
$8,181,818.18 DEN NORSKE BANK AS
By: /s/ [Illegible]
----------------------------------
Authorized Officer
By: /s/ FRAN MEYERS
----------------------------------
Fran Meyers
Vice President
$8,181,818.18 FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ COLLIE C. MICHAELS
----------------------------------
Authorized Officer
Total Commitments: $450,000,000
------------
-10-
<PAGE> 11
NATIONSBANK OF TEXAS, N.A., as Agent
By: /s/ PAUL A. SQUIRES
----------------------------------------
Paul A. Squires
Senior Vice President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Co-Agent
By: /s/ LAURA B. SHEPARD
----------------------------------------
Authorized Officer
UNION BANK OF SWITZERLAND, HOUSTON AGENCY,
as Co-Agent
By: /s/ EVANS SWANN
----------------------------------------
Evans Swann
Managing Director
By: /s/ JAN BUETTGEN
----------------------------------------
Jan Beuttgen
Vice President
Corporate Banking
-11-
<PAGE> 12
SCHEDULE I
COMMITMENT REDUCTION SCHEDULE
Date Maximum Aggregate Commitments
---- -----------------------------
July 31, 1998 $415,000,000
October 31, 1998 380,000,000
January 31, 1999 345,000,000
April 30, 1999 -0-
<PAGE> 13
EXHIBIT A
SECOND AMENDMENT TO AMENDED AND RESTATED
SUBSIDIARY GUARANTY AGREEMENT
This Second Amendment to Amended and Restated Subsidiary Guaranty
dated as of April 24, 1995 (this "Guaranty Amendment") is among each of the
Subsidiary Guarantors listed on the signature pages hereof under the caption
"Subsidiary Guarantors" and NationsBank of Texas, N.A. (the "Agent"), as agent
for the banks under the Amended and Restated Credit Agreement dated as of May
13, 1994 as amended by the First Amendment Agreement dated as of November 21,
1994 and the Second Amendment Agreement dated as of January 31, 1995 (as the
same may be further amended or modified from time to time, the "Credit
Agreement") among Union Texas Petroleum Holdings, Inc. (the "Company"), the
Co-Agents and lenders parties thereto ("Banks") and the Agent.
In consideration of the mutual covenants contained herein, the parties
hereto agree as follows:
1. Amendment to the Guaranty Agreement. The fourth recital to
the Amended and Restated Subsidiary Guaranty Agreement dated as of May 13, 1994
as amended by the First Amendment to Amended and Restated Subsidiary Guaranty
dated as of November 21, 1994 (as so amended, the "Guaranty Agreement")
executed by the Subsidiary Guarantors and the Agent is hereby amended by
deleting the dollar amount "$350,000,000" therein and inserting in lieu thereof
the dollar amount "$450,000,000".
2. Acknowledgement and Consent. To induce the Agent and the
Banks to execute the Third Amendment Agreement dated of even date herewith
among the Company, the Banks and Co-Agents parties thereto, and the Agent (the
"Credit Agreement Amendment") and other Financing Documents, each of the
undersigned Subsidiary Guarantors hereby (a) consents to and agrees to the
terms of the Credit Agreement Amendment and the Credit Agreement as amended
thereby and the other Financing Documents, (b) agrees that (i) none of such
Subsidiary Guarantor's obligations under or in connection with the Financing
Documents and none of the Banks' or the Agent's rights and remedies with
respect to any Subsidiary Guarantor is released, impaired or affected thereby
or by the foregoing, (ii) neither the Guaranty Agreement as amended hereby nor
any other Financing Document provided by any Subsidiary Guarantor is released,
impaired or affected thereby or by any of the foregoing, and (iii) this
acknowledgement shall not be construed as requiring the consent or agreement of
any Subsidiary Guarantor in any circumstance, (c) ratifies and confirms all
provisions of all Financing Documents executed by such Subsidiary Guarantor and
all documents pertaining thereto or referred to therein, and (d) agrees that
none of such Subsidiary Guarantor's obligations, none of the Banks' or the
Agent's rights and remedies and neither the Guaranty Agreement as amended
hereby, nor any
<PAGE> 14
other Financing Document, would be released, impaired or affected if such
Subsidiary Guarantor had not acknowledged the Credit Agreement Amendment and
other Financing Documents.
3. Miscellaneous.
3.1. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty Amendment, and no consent to any departure by any
Subsidiary Guarantor, any Bank or the Agent herefrom, shall in any event be
effective unless effected in accordance with Section 3.03 of the Guaranty
Agreement. This Guaranty Amendment shall become effective upon the execution
of this Guaranty Amendment by the Subsidiary Guarantors and the Agent.
3.2. Texas Law. This Guaranty Amendment, and the Guaranty
Agreement as amended hereby, shall be construed in accordance with and governed
by the laws of the State of Texas.
3.3. Preservation. Except as specifically modified by the
terms of this Amendment, all of the terms, provisions, covenants, warranties
and agreements contained in the Guaranty Agreement remain in full force and
effect. Each of the undersigned Subsidiary Guarantors hereby ratifies and
confirms the Guaranty Agreement as amended hereby. Terms used herein which are
not defined herein and are defined in the Credit Agreement, as amended by the
Credit Agreement Amendment, are used herein as defined in the Credit Agreement,
as amended by the Credit Agreement Amendment. References in the Guaranty
Agreement as amended hereby to "the Agreement", "the Guaranty Agreement", "this
Guaranty Agreement" or to "this Agreement" or to words of similar effect (such
as "herein") shall mean the Guaranty Agreement as amended hereby.
3.4. Execution in Counterparts. This Guaranty Amendment may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
3.5. Authority, etc. Each of the undersigned Subsidiary
Guarantors hereby represents and warrants to the Agent and each of the Banks
that (a) the execution and delivery by such Subsidiary Guarantor of the
Guaranty Agreement and this Guaranty Amendment, and the performance of the
Guaranty Agreement as amended hereby and this Guaranty Amendment, (i) are
within such Subsidiary Guarantor's corporate powers, (ii) have been duly
authorized by all necessary corporate action of such Subsidiary Guarantor,
(iii) do not contravene or constitute a default under any provision of
applicable law or regulation and (iv) require no authorization, consent or
approval of any governmental body, agency or official other than those
authorizations, consents and approvals that have been obtained and are in full
force and effect, and (b) the Guaranty Agreement and this Guaranty Amendment
have been duly executed
-2-
<PAGE> 15
and delivered by such Subsidiary Guarantor and this Guaranty Amendment and the
Guaranty Agreement as amended hereby constitute legal, valid and binding
obligations of such Subsidiary Guarantor.
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized, as of the date first above written.
SUBSIDIARY GUARANTORS:
UNION TEXAS PETROLEUM ENERGY
CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
UNION TEXAS PRODUCTS
CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
UNION TEXAS EAST KALIMANTAN
LIMITED
By: ____________________________________
Name: __________________________________
Title: _________________________________
UNION TEXAS INTERNATIONAL
CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
-3-
<PAGE> 16
UNISTAR, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
AGENT:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: ____________________________________
Name: __________________________________
Title: _________________________________
-4-
<PAGE> 17
EXHIBIT B
OPINION OF GENERAL COUNSEL
April 24, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
I am General Counsel, Vice President-Administration, and
Secretary of Union Texas Petroleum Holdings, Inc., a Delaware corporation (the
"Company"), and have acted as counsel (i) for the Company in connection with
the Third Amendment Agreement dated as of April 24, 1995 (the "Credit
Amendment") among the Company, the Banks and Co-Agents party to the Credit
Agreement (as defined below) and the Agent (as defined below), which Credit
Amendment amends the Amended and Restated Credit Agreement dated as of May 13,
1994, as amended by the First Amendment Agreement dated as of November 21, 1994
and the Second Amendment Agreement dated as of January 31, 1995 (as so amended,
the "Credit Agreement"; and as further amended by the Credit Amendment, the
Amended Credit Agreement"), among the Company, the Banks and Co-Agents listed
on the signature pages thereof and NationsBank of Texas, N.A., as Agent (the
"Agent"), and (ii) for Union Texas Petroleum Energy Corporation, a Delaware
corporation, Union Texas International Corporation, a Delaware corporation,
Unistar, Inc., a Delaware corporation, Union Texas East Kalimantan Limited, a
Bahamian corporation, and Union Texas Products Corporation, a Delaware
corporation (collectively, the "Subsidiary Guarantors" and together with the
Company, the "Obligors"), in connection with the Second Amendment to Amended
and Restated Subsidiary Guaranty Agreement dated as of April 24, 1995 (the
"Guaranty Amendment") among the Subsidiary Guarantors and the Agent, which
Guaranty Amendment amends the Amended and Restated Subsidiary Guaranty
Agreement dated as of May 13, 1994 as amended by the First Amendment to Amended
and Restated Subsidiary Guaranty Agreement dated as of November 21, 1994 (as so
amended and as amended by the Guaranty Amendment, the "Amended Guaranty
Agreement"), among the Subsidiary Guarantors and the Agent. Terms defined in
the Amended Credit Agreement and not otherwise defined herein are used herein
as therein defined.
In connection with the opinions expressed below, I have
examined or caused to be examined executed counterparts of the following
(collectively, the "Financing Documents"):
<PAGE> 18
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 2
(a) the Amended Credit Agreement and the Credit Amendment,
(b) the Amended Guaranty Agreement and the Guaranty
Amendment, and
(c) twenty four (24) promissory notes, each substantially
in the form of Exhibit A to the Amended Credit Agreement, one payable
to each Bank.
I have also examined or caused to be examined originals or
copies, certified or otherwise identified to my satisfaction, of such other
instruments, documents and records as I deemed necessary to express the
opinions hereinafter set forth. To the extent relevant to my opinion, I have
assumed, without independent verification, (i) the due execution and delivery
of each Financing Document by each party thereto (other than the Obligors),
(ii) the genuineness of all signatures on all documents submitted to me, (iii)
that each party (other than the Obligors) to each of the Financing Documents is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has full power and authority to enter into
and to carry out its obligations under such Financing Documents, (iv) that the
execution and delivery of each of the Financing Documents by each party thereto
(other than the Obligors) and the performance of its obligations under such
Financing Documents have been duly authorized by all necessary proceedings and
actions, (v) that each of the Financing Documents is the legal, valid and
binding obligation of each party thereto (other than the Obligors), enforceable
against such party in accordance with the terms of such Financing Documents,
subject to limitations of the types described in the opinion of Andrews & Kurth
L.L.P. delivered to you pursuant to the Financing Documents, and (vi) the
authenticity of all documents submitted to me as originals and the conformity
to authentic original documents of all documents submitted to me as certified,
conformed or photostatic copies. I have relied, to the extent that I deem such
reliance proper, upon certificates of officers of one or more of the Obligors
and of governmental officials as to matters of fact not independently
established by me.
For purposes of the opinion set forth in paragraph 2 below, I
have (i) relied on the opinion of Andrews & Kurth L.L.P. with respect to the
agreements and instruments identified on Schedule I thereto, and (ii) examined
or caused to be examined each other agreement or other instrument binding upon
any Obligor, a breach of or default under which would, in my judgment, have a
material adverse effect upon the Company and its Subsidiaries taken as a whole.
As to other agreements and instruments, I have not undertaken such a review for
purposes of this opinion, given the volume of such documents and given the fact
that by virtue of the character of such
<PAGE> 19
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 3
documents and the historical practices of the Company with respect thereto, I
have no reason to believe that a breach of or default under any such document
would arise by virtue of the execution, delivery and performance of the
Financing Documents.
Based on the foregoing and subject to the qualifications and
limitations set forth below, I am of the opinion that:
1. Each of the Obligors has all material governmental
licenses, authorizations, consents and approvals required to own its assets and
to carry on its business as now conducted.
2. To the best of my knowledge, the execution, delivery
and performance by each Obligor of each Financing Document to which it is a
party do not constitute a breach of or default under, or result in the creation
or imposition of any Lien on any material asset of the Company or any
Subsidiary under, any provision of any instrument or agreement evidencing or
governing Debt binding upon such Obligor or any other material agreement,
judgment, injunction, order, decree or other instrument binding upon such
Obligor. However, please be advised that the Company currently has an
aggregate $300 million principal amount of its senior notes outstanding
(individually referred to as the $100 million 8.25% Senior Notes due 1999, the
$125 million 8 3/8% Senior Notes due 2005 and the $75 million 8 1/2% Senior
Notes due 2007, and collectively referred to as the "Senior Notes"), and that
the sum of the Senior Notes, the Commitments and the commitments under the
Short-Term Credit Agreement equals $850 million, while the total amount of debt
permitted under Section 5.05(a) of the Amended Credit Agreement and the
Short-Term Credit Agreement may not exceed $775 million.
3. To the best of my knowledge, there is no action, suit
or proceeding pending against, threatened against or affecting the Company or
any of its Subsidiaries or any of their respective properties or interests, at
law or in admiralty or equity, before any court or arbitrator or any
governmental body, agency or official, foreign or domestic, in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, financial position or results of operations of the Company
and its Subsidiaries, taken as a whole, or which in any manner draws into
question the validity of any Financing Document.
My opinions in paragraph 1 are rendered only with respect to
the constitutions, laws, rules and regulations which are currently in effect
and applicable court rulings and orders which have been published and are
generally available. In
<PAGE> 20
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 4
addition, the foregoing opinions are rendered only as of the date hereof, and I
disclaim any obligation to advise you of changes thereafter.
I am a member of the bar of the State of Texas only, and this
opinion is limited in all respects to the laws of the State of Texas, the
General Corporation Law of Delaware and federal law of the United States of
America, and, to the limited extent described below, the laws of The
Commonwealth of The Bahamas and The Republic of Indonesia. In rendering
certain of the opinions expressed above, I have relied, with your approval,
upon an opinion, dated the date hereof, of Andrews & Kurth L.L.P., a copy of
which has been furnished to you. My opinion in paragraph 1 addresses, with
respect to Union Texas East Kalimantan Limited, the laws of The Commonwealth of
The Bahamas and The Republic of Indonesia and such opinion with respect to such
laws is, with your permission and without independent investigation, given
solely in reliance upon and limited in scope to the opinions of Graham,
Thompson & Co. and Mochtar, Karuwin & Komar, respectively, copies of which have
been furnished to you, and my opinion incorporates by reference all
qualifications, exceptions and limitations set forth therein.
This opinion is for the benefit of and may be relied upon by
the Banks, the Agent, the Co-Agents, their respective successors and assigns,
their respective counsel and participants in connection with the transactions
contemplated by the Credit Amendment and the Amended Credit Agreement.
Otherwise, this opinion may not be used, published, circulated or relied upon
by any other Person for any purpose without my prior written consent.
Very truly yours,
Newton W. Wilson, III
<PAGE> 21
EXHIBIT C
OPINION OF ANDREWS & KURTH L.L.P.
April 24, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
We have acted as special counsel (i) to Union Texas Petroleum
Holdings, Inc., a Delaware corporation (the "Company"), in connection with the
Third Amendment Agreement dated as of April 24, 1995 (the "Credit Amendment")
among the Company, the Banks and Co-Agents party to the Credit Agreement (as
defined below) and the Agent (as defined below), which Credit Amendment amends
the Amended and Restated Credit Agreement dated as of May 13, 1994, as amended
by the First Amendment Agreement dated as of November 21, 1994 and the Second
Amendment Agreement dated as of January 31, 1995 (as so amended, the "Credit
Agreement"; and as further amended by the Credit Amendment, the "Amended Credit
Agreement"), among the Company, the Banks and Co-Agents listed on the signature
pages thereof and NationsBank of Texas, N.A., as Agent (the "Agent"), and (ii)
for Union Texas Petroleum Energy Corporation, a Delaware corporation, Union
Texas International Corporation, a Delaware corporation, Unistar, Inc., a
Delaware corporation, Union Texas East Kalimantan Limited, a Bahamian
corporation, and Union Texas Products Corporation, a Delaware corporation
(collectively, the "Subsidiary Guarantors" and together with the Company, the
"Obligors"), in connection with the Second Amendment to Amended and Restated
Subsidiary Guaranty Agreement dated as of April 24, 1995 (the "Guaranty
Amendment") among the Subsidiary Guarantors and the Agent, which Guaranty
Amendment amends the Amended and Restated Subsidiary Guaranty Agreement dated
as of May 13, 1994, as amended by the First Amendment to Amended and Restated
Subsidiary Guaranty Agreement dated as of November 21, 1994 (as so amended and
as amended by the Guaranty Amendment, the "Amended Guaranty Agreement"), among
the Subsidiary Guarantors and the Agent. Terms defined in the Amended Credit
Agreement and not otherwise defined herein are used herein as therein defined.
In connection with the opinions expressed below, we have
examined executed counterparts of the following (collectively, the "Financing
Documents"):
(a) the Amended Credit Agreement and the Credit Amendment,
<PAGE> 22
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 2
(b) the Amended Guaranty Agreement and the Guaranty
Amendment, and
(c) twenty four (24) promissory notes, each substantially
in the form of Exhibit A to the Amended Credit Agreement, one payable
to each Bank (collectively, the "Notes").
We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such other instruments, documents
and records as we deemed necessary to express the opinions hereinafter set
forth. To the extent relevant to our opinion, we have assumed, without
independent verification, (i) the due execution and delivery of each Financing
Document by each party thereto (other than the Obligors), (ii) the genuineness
of all signatures on all documents submitted to us, (iii) that each party
(other than the Obligors) to each of the Financing Documents is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and to carry out
its obligations under such Financing Documents, (iv) that the execution and
delivery of each of the Financing Documents by each party thereto (other than
the Obligors) and the performance of its obligations under such Financing
Documents have been duly authorized by all necessary proceedings and actions,
(v) that each of the Financing Documents is the legal, valid and binding
obligation of each party thereto (other than the Obligors) enforceable against
such party in accordance with the terms of such Financing Documents, subject to
limitations of the types described herein, and (vi) the authenticity of all
documents submitted to us as originals and the conformity to authentic original
documents of all documents submitted to us as certified, conformed or
photostatic copies. We have relied, to the extent that we deem such reliance
proper, upon certificates of officers of one or more of the Obligors and of
governmental officials as to matters of fact not independently established by
us. We have also examined the representations and warranties of the Company
contained in the Credit Amendment, the Amended Credit Agreement, the Guaranty
Amendment and the Amended Guaranty Agreement and have relied, to the extent we
deem such reliance proper, upon the relevant facts stated therein.
Based on the foregoing and subject to the qualifications and
limitations set forth below, we are of the opinion that:
1. (a) Each of the Obligors is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation,
<PAGE> 23
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 3
and has all corporate power and authority required to own its assets and to
carry on its business as now conducted.
(b) The execution, delivery and performance by each
Obligor of each Financing Document to which it is a party will not violate the
Public Utility Holding Company Act of 1935, the Investment Company Act of 1940
or the Interstate Commerce Act.
2. The execution, delivery and performance by each
Obligor of each Financing Document to which it is a party are within such
Obligor's corporate powers, have been duly authorized by all necessary
corporate action, and do not constitute a breach or default under, any
provision of applicable law or regulation known to us after reasonable inquiry
or the certificate of incorporation or bylaws of such Obligor.
3. To the best of our knowledge, the execution, delivery
and performance by each Obligor of each Financing Document to which it is a
party do not constitute a breach of or default under, or result in the creation
or imposition of any Lien on any material asset of the Company or any
Subsidiary under, any provision of the instruments and agreements identified in
Schedule I hereto. However, please be advised that the Company currently has
an aggregate $300 million principal amount of its senior notes outstanding
(individually referred to as the $100 million 8.25% Senior Notes due 1999, the
$125 million 8 3/8% Senior Notes due 2005 and the $75 million 8 1/2% Senior
Notes due 2007, and collectively referred to as the "Senior Notes"), and that
the sum of the Senior Notes, the Commitments and the commitments under the
Short-Term Credit Agreement equals $850 million, while the total amount of debt
permitted under Section 5.05(a) of the Amended Credit Agreement and the
Short-Term Credit Agreement may not exceed $775 million.
4. No authorization, consent or approval of any
governmental body, agency or official is required in connection with the
execution, delivery or performance by any Obligor of any of the Financing
Documents to which it is a party.
5. (a) The Credit Amendment and the Notes have been
duly executed and delivered by the Company, and the Credit Amendment, the Notes
and the Amended Credit Agreement constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms.
(b) The Guaranty Amendment has been duly executed and
delivered by each of the Subsidiary Guarantors, and the Guaranty Amendment and
the Amended
<PAGE> 24
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 4
Guaranty Agreement constitute legal, valid and binding obligations of each of
the Subsidiary Guarantors, enforceable against each of the Subsidiary
Guarantors in accordance with their respective terms.
6. If all material facts (as we understand them) and
issues of law were presented and properly argued, a Texas court or a federal
court sitting in the State of Texas and applying the laws of the State of Texas
should hold that the consent by the Company in Section 9.09 of the Amended
Credit Agreement, and by each Subsidiary Guarantor in Section 3.05 of the
Amended Guaranty Agreement, to the non-exclusive personal jurisdiction of the
courts of the State of Texas and of any federal court located in the State of
Texas is valid. In this regard we call to your attention that such consents to
non-exclusive jurisdiction are not effective to (1) confer subject matter
jurisdiction that does not otherwise exist in such court or (2) establish
diversity jurisdiction that does not otherwise exist in an action brought in
federal court.
7. Neither the execution, delivery and performance by
any Obligor of the Financing Documents to which it is a party, nor the use of
the proceeds of the Loans in accordance with Section 5.09 of the Amended Credit
Agreement, will violate the provisions of Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System.
The opinions set forth above are subject to the following
additional assumptions, limitations and qualifications:
(a) Our opinions with respect to the enforceability of
the Financing Documents are subject to the qualification that such
enforceability may be (i) limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws affecting the
rights of creditors generally, (ii) subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity), including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, and (iii) limited by the power of
a court to award damages in lieu of equitable remedies (including specific
performance or injunctive relief) or otherwise to refuse to grant a particular
remedy sought by the parties to the Financing Documents.
(b) We express no opinion herein as to (1) the right of
any Bank to set-off against funds held in any special account maintained by the
Company with such Bank or which are otherwise subject to special agreement
between the Company and such Bank; (2) whether the provisions of the Amended
Credit Agreement which permit
<PAGE> 25
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 5
the Agent, the Co-Agents or any Bank to take action or make determinations may
be subject to a requirement that such action be taken or such determination be
made in good faith; (3) whether the holder of a Note may, under certain
circumstances, be called upon to prove the outstanding principal amount of the
loans evidenced thereby; (4) the effect of the law of any jurisdiction (other
than Texas) wherein any Bank may be located which limits rates of interest
which may be charged or collected by such Bank; and (5) the enforceability of
any provision in the Financing Documents that purports to (i) require
indemnification for the negligence or wilful misconduct of the indemnitee or to
otherwise require any Obligor to provide indemnification to the extent the same
may be in conflict with public policy, (ii) limit the effect of any delay or
omission of enforcement of rights or remedies or any course of performance or
course of dealing between the parties, (iii) create an agreement to agree, (iv)
fix evidentiary standards or venue of any proceeding, (v) waive rights to a
trial by jury, or (vi) waive rights to notices, legal defenses or other
benefits that cannot, as a matter of law, be effectively waived.
(c) Whenever this opinion states the existence or absence
of any fact to the best of our knowledge, such statement is intended to convey
that, during the course of our representation of the Obligors with respect to
matters addressed herein, no information has come to our attention which has
given us actual knowledge of facts contrary to the statements so expressed
herein.
(d) In rendering our opinions in paragraph 1 we have
relied upon the description of the properties, assets and businesses of the
Obligors set forth in the Report on Form 10-K for the year ended December 31,
1994 filed by the Company with the Securities and Exchange Commission.
(e) In rendering the opinions in paragraphs 2 and 5, we
have assumed that (i) there are no fees, points, premiums or other sums
contracted for, charged to or paid or to be paid by the Company to the Banks on
account of the transactions described in the Amended Credit Agreement other
than those described in the Amended Credit Agreement and those described in the
letters dated May 13, 1994 from the Agent to us and (ii) the parties to the
Financing Documents will comply strictly with the precise terms of the
Financing Documents, including, without limitation, the usury savings clauses
set forth therein with respect to any consideration contemplated by Financing
Documents that will constitute interest under Texas law.
<PAGE> 26
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 6
(f) In rendering our opinions in paragraph 7 we have
assumed that the representations of the Company and the Banks set forth in
Sections 4.12 and 9.07, respectively, of the Amended Credit Agreement will be
true and correct at all times.
(g) The foregoing opinions are rendered only with respect
to the constitutions, laws, rules and regulations which are currently in effect
and applicable court rulings and orders which have been published and are
generally available. In addition, the foregoing opinions are rendered only as
of the date hereof, and we disclaim any obligation to advise you of changes
thereafter.
This opinion is limited in all respects to the laws of the
State of Texas, the General Corporation Law of Delaware and federal law of the
United States of America, and, to the limited extent described below, the laws
of The Commonwealth of The Bahamas and The Republic of Indonesia. Insofar as
our opinion relates to the laws of The Commonwealth of The Bahamas and The
Republic of Indonesia it is, with your permission and without independent
investigation, given solely in reliance upon and limited in scope to the
opinions of Graham, Thompson & Co. and Mochtar, Karuwin & Komar, respectively,
copies of which have been furnished to you, and our opinion incorporates by
reference all qualifications, exceptions and limitations set forth therein.
This opinion is for the benefit of and may be relied upon by
the Banks, the Agent, the Co-Agents, their respective successors and assigns,
their respective counsel and Participants in connection with the transactions
contemplated by the Credit Amendment and the Amended Credit Agreement and may
be relied upon by Newton W. Wilson, III, General Counsel of the Company, in
rendering his opinion to the Banks and the Agent in connection with such
transactions. Otherwise, this opinion may not be used, published, circulated
or relied upon by any other Person for any purpose without our prior written
consent.
Very truly yours,
ANDREWS & KURTH L.L.P.
<PAGE> 27
SCHEDULE I
I. UNION TEXAS PETROLEUM HOLDINGS, INC. ("UTPH")
A. Indenture dated as of November 15, 1992 between UTPH, the
guarantors named therein, and State Street Bank and Trust Company, as trustee,
relating to the $100,000,000 8.25% Senior Notes due November 15, 1999 issued by
UTPH.
B. Indenture dated as of March 15, 1995 between UTPH, the guarantors
named therein, and The First National Bank of Chicago, as trustee, relating to
the $125,000,000 8 3/8% Senior Notes due 2005 issued by UTPH and the
$75,000,000 8 1/2% Senior Notes due 2007 issued by UTPH.
C. $450,000,000 Amended and Restated Credit Agreement dated as of
May 13, 1994 among UTPH, the Banks and Co-Agents listed on the signature pages
thereof and NationsBank of Texas, N.A., as Agent, as amended by the First
Amendment Agreement dated as of November 21, 1994, the Second Amendment
Agreement dated as of January 31, 1995 and the Third Amendment Agreement dated
as of April 24, 1995.
D. $100,000,000 Credit Agreement dated as of April 24, 1995 among
UTPH, the Banks and Co-Agents listed on the signature pages thereof and
NationsBank of Texas, N.A., as Agent.
II. UNION TEXAS PAKISTAN, INC. ("UT PAKISTAN")
A. Finance Agreement dated as of December 20, 1988 between UT
Pakistan and Overseas Private Investment Corporation ("OPIC").
B. Issuing and Paying Agency Agreement dated as of December 20, 1988
among First Trust New York National Association (as successor to Morgan
Guaranty Trust Company of New York), as issuing and paying agent, OPIC, and UT
Pakistan, relating to the Promissory Note dated December 20, 1988 issued by UT
Pakistan to Liberty U.S. Government Money Market Trust in the original
principal amount of US$21,250,000.
C. Guaranty Agreement dated as of December 20, 1988 between UTPH
and OPIC.
D. Deed of Floating Charge dated December 20, 1988 by UT Pakistan in
favor of OPIC.
III. UNISTAR, INC. ("UNISTAR") AND UNIMAR COMPANY ("UNIMAR")
A. Amended and Restated Agreement of General Partnership of Unimar
entered into as of September 11, 1990.
B. Indenture dated as of September 25, 1984 between Unimar and
Irving Trust Company, as trustee, relating to 14,077,747 Indonesian
Participating Units, as supplemented by the First Supplemental Indenture dated
as of October 31, 1986 between such parties.
<PAGE> 28
C. Shareholders Agreement dated as of September 11, 1990 among UTPH,
Unistar, Ultramar America Limited, Ultramar Indonesia Limited and Ultrastar,
Inc.
D. Second Shareholders Agreement dated as of August 26, 1993 among
UTPH, Unistar, LASMO America Limited, LASMO Sanga Sanga Limited and LASMO
(USTAR) Inc. (formerly Ultrastar, Inc.)
IV. UNION TEXAS EAST KALIMANTAN LIMITED ("UTEK")
A. Production Sharing Contract and related Agreements.
1. Amended and Restated Production Sharing Contract dated April 23,
1990, but effective as of August 8, 1968 among Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara ("Pertamina"), and Roy M. Huffington, Inc., Virginia
Indonesia Company, Virginia International Company, Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas & Oil Company, Inc. and
Huffington Corporation (all such parties and their predecessors and successors
in interest are herein collectively referred to as the "IJV Contractors"), and
Production Sharing Contract dated April 23, 1990, but effective as of August 8,
1998 among Pertamina and the IJV Contractors.
2. Joint Venture Agreement effective as of August 8, 1968 by and
between Roy M. Huffington, Inc., Virginia International Company, Austral
Petroleum Gas Corporation, Golden Eagle Indonesia Limited and Union Texas Far
East Corporation, as amended by a Settlement Agreement dated as of January 16,
1976 among these parties and Universe Tankships, Inc., an Agreement dated as of
October 1, 1979 among Roy M. Huffington, Inc., Virginia International Company,
Austral Petroleum Gas Corporation, Golden Eagle Indonesia Limited, Universe
Tankships, Inc. and Union Texas Far East Corporation and a Letter dated October
1, 1979 from Roy M. Huffington, Inc. to Virginia International Company, Austral
Petroleum Gas Corporation, Golden Eagle Indonesia Limited, Universe Tankships,
Inc. and Union Texas Far East Corporation.
3. Operating Agreement dated as of August 8, 1968 between Roy M.
Huffington, Inc., as operator, and Union Texas Far East Corporation, Golden
Eagle Indonesia Limited, Virginia International Company and Austral Petroleum
Gas Corporation, as non-operators, as amended by a letter agreement effective
September 15, 1973 among these parties and an Amendment to Operating Agreement
dated as of April 1, 1990 among Roy M. Huffington, Inc., Ultramar Indonesia
Limited, Virginia Indonesia Company, Virginia International Company, Union
Texas East Kalimantan Limited, and Universe Gas & Oil Company, Inc. and a
Letter dated February 8, 1990 from the IJV Contractors to Pertamina.
4. Amended and Restated Bontang Processing Agreement dated as of
February 9, 1988 among Pertamina, the IJV Contractors, Total Indonesie,
Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd., and P. T. Badak.
B. Supply Agreements.
1. Amended and Restated Supply Agreement (In support of the Amended
and Restated 1973 LNG Sales Contract) dated September 22, 1993, but effective
as of December 3, 1973, between Pertamina and the IJV Contractors.
<PAGE> 29
2. Supply Agreement for Badak LNG Expansion Project dated as of
April 14, 1981 among Pertamina and the IJV Contractors, as supplemented by the
Memorandum of Understanding dated as of April 14, 1981 among Pertamina, the IJV
Contractors, Total Indonesie, and Union Oil Company of Indonesia, and the
Supplemental Memorandum dated August 24, 1983 among Pertamina and the IJV
Contractors and as amended by the Memorandum dated December 1, 1988 among
Pertamina and the IJV Contractors.
3. Badak III LNG Sales Contract Supply Agreement executed October
19, 1987, but effective as of March 19, 1987 among Pertamina and the IJV
Contractors, as supplemented by the Supplemental Memorandum dated as of January
1, 1990 among Pertamina and the IJV Contractors.
4. Amended and Restated Second Supply Agreement for Excess Sales
(Quantities In Kind and LNG Amounts Under Amended and Restated Invoice
Settlement Agreements) dated as of January 19, 1990, but effective December 1,
1988, among Pertamina and the IJV Contractors, as supplemented by the
Supplemental Memorandum dated as of January 1, 1990 among Pertamina and the IJV
Contractors.
5. Badak IV LNG Sales Contract Supply Agreement dated as of August
12, 1991, but effective as of October 23, 1990, among Pertamina and the IJV
Contractors, as supplemented by the Memorandum of Understanding Re: Supply
Agreements and Package IV Sales dated as of August 12, 1991, but effective as
of July 1, 1990, and the Supplemental Memorandum of Understanding dated as of
January 31, 1994, but effective as of July 1, 1990, each among Pertamina, the
IJV Contractors, Total Indonesie, Unocal Indonesia, Ltd., and Indonesia
Petroleum, Ltd., and the Addendum to Badak IV LNG Sales Contract Supply
Agreement dated as of January 31, 1994, but effective as of October 23, 1990
among Pertamina and the IJV Contractors.
C. Miscellaneous Agreements.
1. Amended and Restated Bontang II Trustee and Paying Agent
Agreement dated as of July 15, 1991 among the IJV Contractors, Pertamina, Total
Indonesie, Unocal Indonesia, Ltd., and Indonesia Petroleum Ltd., and
Continental Bank International ("CBI"), as trustee.
2. Amended and Restated Debt Service Allocation Agreement dated as
of February 9, 1988 among Pertamina, the IJV Contractors, Total Indonesie,
Indonesia Petroleum, Ltd. and Unocal Indonesia, Ltd.
3. Amended and Restated Badak Trustee and Paying Agent Agreement
dated as of February 9, 1988 among Pertamina, the IJV Contractors, Total
Indonesie, Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd., and CBI, as
trustee ("Bontang I Trustee").
D. Bontang Capital Project Financing Tier III-2.
1. Producers Agreement No. 2 dated as of June 9, 1987 among the IJV
Contractors, the lenders named therein, and The Industrial Bank of Japan Trust
Company ("IBJ Trust"), as agent for such lenders, as amended by the Amendment
No. 1 to Producers Agreement No. 2 dated as of February 9, 1988 and Amendment
No. 2 to Producers Agreement No. 2 dated as of May 31, 1988, each among the IJV
Contractors, the lenders named therein, and IBJ Trust, as agent for such
lenders.
<PAGE> 30
2. Bontang Capital Projects Loan Agreement No. 2 dated as of June 9,
1987 among the Bontang I Trustee, the lenders named therein, and IBJ Trust, as
agent for such lenders, as amended by the Amendment No. 1 to Bontang Capital
Projects Loan Agreement No. 2 dated as of February 9, 1988 among the Bontang I
Trustee, the lenders named therein, and IBJ Trust, as agent for such lenders.
E. Train E Financing.
1. Bontang III Producers Agreement dated as of February 9, 1988
among Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum,
Ltd., and Unocal Indonesia, Ltd. in favor of Train-E Finance Co., Ltd., as
Tranche A Lender, the banks named therein as Tranche B Lenders and IBJ Trust as
Agent for such Tranche B Lenders, as amended by Amendment No. 1 dated as of May
31, 1988 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia
Petroleum, Ltd., and Unocal Indonesia, Ltd. in favor of Train-E Finance Co.,
Ltd., as Tranche A Lender, the banks named therein as Tranche B Lenders and IBJ
Trust as Agent for such Tranche B Lenders.
2. Bontang III Trustee and Paying Agent Agreement dated as of
February 9, 1988 among Pertamina, the IJV Contractors, Total Indonesie,
Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd. and CBI, as trustee (the
"Bontang III Trustee"), as amended by Amendment No.1 dated as of December 11,
1992 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia
Petroleum, Ltd., Unocal Indonesia, Ltd. and the Bontang III Trustee.
3. Amended and Restated Bontang Excess Sales Trustee and Paying
Agent Agreement dated as of February 9, 1988 among Pertamina, the IJV
Contractors, Total Indonesie, Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd.
and CBI, as trustee.
4. Bontang III Loan Agreement dated as of February 9, 1988 among the
Bontang III Trustee, Train-E Finance Co., Ltd., as Tranche A Lender, the banks
named therein as Lead Managers and Tranche B Lenders and IBJ Trust as Agent for
such Tranche B Lenders.
F. LPG Financing.
1. Amended and Restated Bontang LPG Trustee and Paying Agent
Agreement dated as of December 31, 1991 among Pertamina, the IJV Contractors,
Total Indonesie, Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd. and CBI, as
trustee.
2. Advance Payment Agreement dated as of February 18, 1987 between
Pertamina and Arun Bontang Project Finance Co., Ltd.
G. Train F Financing.
1. Bontang IV Producers Agreement dated as of August 26, 1991 among
Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum, Ltd., and
Unocal Indonesia, Ltd. in favor of the lenders named therein and The Chase
Manhattan Bank, N.A. as agent for such lenders.
<PAGE> 31
2. Bontang IV Trustee and Paying Agent Agreement dated as of August
26, 1991 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia
Petroleum, Ltd., Unocal Indonesia, Ltd. and CBI, as trustee (the "Bontang IV
Trustee").
3. Bontang IV Loan Agreement dated as of August 26, 1991 among the
Bontang IV Trustee, the lenders named therein and The Chase Manhattan Bank,
N.A. as agent for such lenders.
<PAGE> 32
EXHIBIT D-1
OPINION OF SPECIAL INDONESIAN COUNSEL
April 24, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
We have acted as special Indonesian counsel to Union Texas
Petroleum Holdings, Inc., a Delaware corporation (the "Company"), in connection
with the Third Amendment Agreement dated as of April 24, 1995 (the "Credit
Amendment") among the Company, the Banks and Co-Agents party to the Credit
Agreement (as defined below) and the Agent (as defined below), which Credit
Amendment amends the Amended and Restated Credit Agreement dated as of May 13,
1994, as amended by the First Amendment Agreement dated as of November 21, 1994
and the Second Amendment Agreement dated as of January 31, 1995 (as so amended,
the "Credit Agreement"), among the Company, the Banks and Co-Agents listed on
the signature pages thereof and NationsBank of Texas, N.A., as Agent (the
"Agent"), and to Union Texas East Kalimantan Limited, a Bahamian corporation
(the "Guarantor"), in connection with the Second Amendment to Amended and
Restated Subsidiary Guaranty dated as of April 24, 1995 (the "Guaranty
Amendment") among the Guarantor, the Other Guarantors (defined below) and the
Agent, which Guaranty Amendment amends the Amended and Restated Subsidiary
Guaranty Agreement dated as of May 13, 1994, as amended by the First Amendment
to Amended and Restated Subsidiary Guaranty dated as of November 21, 1994 (as
so amended, the "Subsidiary Guaranty Agreement"), among Union Texas Petroleum
Energy Corporation, a Delaware corporation, Union Texas Products Corporation, a
Delaware corporation, Union Texas International Corporation, a Delaware
corporation, Unistar, Inc., a Delaware corporation (collectively, the "Other
Guarantors"), the Guarantor and the Agent. Terms defined in the Credit
Agreement as amended by the Credit Amendment (the "Amended Credit Agreement")
and not otherwise defined herein are used herein as therein defined.
In connection with the opinions expressed below, we have
examined the Credit Agreement, the April 3, 1995 draft of the Credit Amendment,
the Subsidiary Guaranty Agreement and the April 3, 1995 draft of the Guaranty
Amendment. We have also examined copies, certified or otherwise identified to
our satisfaction, of the Production Sharing Contracts described in Exhibit "A"
attached hereto and such other instruments, documents and records as we have
deemed necessary to express the opinions hereinafter set forth. We have
relied, to the extent that we deem such reliance
<PAGE> 33
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 2
proper, upon certificates of officers of the Guarantor as to matters of fact
not independently established by us.
For purposes of this opinion, we have assumed the genuineness
of all signatures appearing on the documents examined by us, the authenticity
of all documents submitted to us as originals, the conformity with the original
documents of all documents submitted to us, or otherwise in our possession, as
copies, and the due authorization, execution and delivery of all such
documents. Wherever the phrase "to the best of our knowledge" appears in this
opinion, its use reflects that we have no actual knowledge to the contrary,
that we have made due inquiry of the Guarantor, but that we have not made any
independent investigation into any of the matters to which we refer.
Based on the foregoing, and subject to the qualifications and
limitations set forth below, we are of the opinion so far as the laws of the
Republic of Indonesia are concerned that:
1. The Guarantor is duly qualified as a foreign
corporation under the laws of the Republic of Indonesia, to the extent required
by Indonesian law and to the extent necessary to carry out its obligations
under the Production Sharing Contracts, and has all material governmental
licenses, authorizations, consents and approvals required to own property and
assets situated in Indonesia and to carry on business in the Republic of
Indonesia in accordance with the terms of the Production Sharing Contracts.
2. The execution, delivery and performance by the
Guarantor of the Guaranty Amendment and the performance by the Guarantor of the
Subsidiary Guaranty Agreement as amended by the Guaranty Amendment (the
"Amended Guaranty Agreement") do not constitute a breach of or default under
any provision of applicable law or regulation of the Republic of Indonesia.
3. To the best of our knowledge, the execution, delivery
and performance by the Guarantor of the Guaranty Amendment and the performance
by the Guarantor of the Amended Guaranty Agreement do not constitute a breach
of or default under, or result in the creation or imposition of any Lien on any
material asset of the Guarantor under, any judgment, injunction, order or
decree of any court or governmental instrumentality of the Republic of
Indonesia binding upon the Guarantor.
4. No authorization, consent or approval of any
Indonesian governmental body, agency or official is required in connection with
the execution,
<PAGE> 34
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 3
delivery or performance by the Guarantor of the Guaranty Amendment and the
performance by the Guarantor of the Amended Guaranty Agreement. [The Guarantor
is obligated to report the execution and delivery of the Guaranty Amendment to
the Foreign Commercial Loan Team (the "Team") established pursuant to
Presidential Decree No. 39 of 1991 and to deliver to the Team and to Bank
Indonesia copies of the Credit Amendment and the Guaranty Amendment.]
5. To the best of our knowledge, there is no action,
suit or proceeding pending against, threatened against or affecting the
Guarantor or any of its properties or interests, at law or in admiralty or
equity, before any court, arbitrator, governmental body, agency or official of
the Republic of Indonesia.
6. The choice of Texas law as the proper law of the
Guaranty Amendment and the Amended Guaranty Agreement would be upheld as a
valid choice of law by the courts of the Republic of Indonesia, and the
submission by the Guarantor to the nonexclusive jurisdiction of the courts
referred to in Section 3.05 of the Amended Guaranty Agreement with respect to
proceedings in connection with the Amended Guaranty Agreement would be treated
by the courts of the Republic of Indonesia as legal, valid, binding and
enforceable in accordance with the terms of such Section 3.05. We note,
however, that judgments of foreign courts are not enforceable in Indonesia.
7. All amounts payable by the Guarantor under the
Guaranty Amendment and the Amended Guaranty Agreement may be made free and
clear of and without deduction for or on account of any taxes, imposts,
withholdings or other deductions imposed, assessed or levied by the Republic of
Indonesia or any department, agency, political subdivision, instrumentality or
authority thereof or therein, irrespective of the fact that the Agent or any of
the Banks may have a representative office or subsidiary in Indonesia, except
that to the extent any payments of interest and other payments in the nature of
interest made by the Guarantor under the Guaranty Amendment and the Amended
Guaranty Agreement are recognized as being effectively connected with the
carrying on of the Guarantor's business in the Republic of Indonesia,
Indonesian withholding tax is payable at a rate of 20% thereof, except where a
recipient qualifies for a lower rate under a bilateral tax treaty and an
approval pursuant to the Circular Letter of the Director General of Taxation
No. SE-22/PJ.35/1993 dated August 31, 1993, has been obtained from the
Indonesian tax authorities acknowledging that the recipient is entitled to the
benefits of the treaty.
<PAGE> 35
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 4
8. No stamp or registration duty or similar taxes or
charges are payable in the Republic of Indonesia in respect of the Guaranty
Amendment and the Amended Guaranty Agreement, except nominal stamp taxes.
9. Under the laws of the Republic of Indonesia, neither
the Agent nor any Bank will be deemed to be resident, domiciled or carrying on
any commercial activity in the Republic of Indonesia or, except as provided in
subparagraph 7 above, subject to any Indonesian taxes, imposts or duties as a
result only of the entry into and performance of the Guaranty Amendment and the
Amended Guaranty Agreement or the transactions contemplated thereby.
This opinion is limited in all respects to the laws of the
Republic of Indonesia. This opinion is for the benefit of and may be relied
upon by the Company, the Guarantor, the Banks, the Agent, the Co-Agents, their
respective successors and assigns, their respective counsel and Participants in
connection with the transactions contemplated by the Amended Credit Agreement
and may be relied upon by Newton W. Wilson, III, General Counsel of the
Company, and Andrews & Kurth L.L.P., special counsel to the Company, in
rendering their respective opinions to the Banks and the Agent in connection
with such transactions. Otherwise, this opinion may not be used, published,
circulated or relied upon by any other person for any purpose without our prior
written consent.
Very truly yours,
MOCHTAR, KARUWIN & KOMAR
<PAGE> 36
EXHIBIT A
PRODUCTION SHARING CONTRACTS
1. Amended and Restated Production Sharing Contract
dated April 23, 1990, but effective as of August 8, 1968 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, and Roy M. Huffington, Inc., Virginia
Indonesia Company, Virginia International Company, Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas & Oil Company, Inc. and
Huffington Corporation.
2. Production Sharing Contract dated April 23, 1990, but
effective as of August 8, 1998 among Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara, and Roy M. Huffington, Inc., Virginia Indonesia Company, Virginia
International Company, Ultramar Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc. and Huffington Corporation.
<PAGE> 37
EXHIBIT D-2
OPINION OF SPECIAL BAHAMIAN COUNSEL
April 24, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
We have acted as special Bahamian counsel to Union Texas
Petroleum Holdings, Inc., a Delaware corporation (the "Company"), in connection
with the Third Amendment Agreement dated as of April 24, 1995 (the "Credit
Amendment") among the Company, the Banks and Co-Agents party to the Credit
Agreement (as defined below) and the Agent (as defined below), which Credit
Amendment amends the Amended and Restated Credit Agreement dated as of May 13,
1994, as amended by the First Amendment Agreement dated as of November 21, 1994
and the Second Amendment Agreement dated as of January 31, 1995 (as so amended,
the "Credit Agreement"), among the Company, the Banks and Co-Agents listed on
the signature pages thereof and NationsBank of Texas, N.A., as Agent (the
"Agent"), and to Union Texas East Kalimantan Limited, a Bahamian corporation
(the "Guarantor") in connection with the Second Amendment to Amended and
Restated Subsidiary Guaranty Agreement dated as of April 24, 1995 (the
"Guaranty Amendment") among the Guarantor, the Other Guarantors (defined below)
and the Agent, which Guaranty Amendment amends the Amended and Restated
Subsidiary Guaranty Agreement dated as of May 13, 1994, as amended by the First
Amendment to Amended and Restated Subsidiary Guaranty Agreement dated as of
November 21, 1994 (as so amended, the "Subsidiary Guaranty Agreement"), among
Union Texas Petroleum Energy Corporation, a Delaware corporation, Union Texas
Products Corporation, a Delaware corporation, Union Texas International
Corporation, a Delaware corporation, Unistar, Inc., a Delaware corporation
(collectively, the "Other Guarantors"), the Guarantor and the Agent. Terms
defined in the Credit Agreement as amended by the Credit Amendment (the
"Amended Credit Agreement") and not otherwise defined herein are used herein as
therein defined.
In connection with the opinions expressed below, we have
examined the Credit Agreement, the April 3, 1995 draft of the Credit Amendment,
the Subsidiary Guaranty Agreement and the April 3, 1995 draft of the Guaranty
Amendment. We have also examined copies, certified or otherwise identified to
our satisfaction, of such other instruments, documents and records as we have
deemed necessary to express the opinions hereinafter set forth. We have
relied, to the extent that we deem such reliance
<PAGE> 38
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 2
proper, upon certificates of officers of the Guarantor as to matters of fact
not independently established by us.
For purposes of this opinion, we have assumed the genuineness
of all signatures appearing on the documents examined by us, the authenticity
of all documents submitted to us as originals, the conformity with the original
documents of all documents submitted to us, or otherwise in our possession, as
copies, and the due authorization, execution and delivery of all such documents
(other than the Subsidiary Guaranty Agreement and the Guaranty Amendment
insofar as such documents relate to the Guarantor). Wherever the phrase "to
the best of our knowledge" appears in this opinion, its use reflects that we
have no actual knowledge to the contrary, that we have made due inquiry of the
Guarantor, but that we have not made any independent investigation into any of
the matters to which we refer.
Based on the foregoing and subject to the qualifications and
limitations set forth below, we are of the opinion that:
1. The Guarantor is a corporation duly organized,
validly existing and in good standing, and has all corporate power and
authority and all material governmental licenses, authorizations, consents and
approvals required to own its assets and to carry on its business as now
conducted.
2. The execution, delivery and performance by the
Guarantor of the Guaranty Amendment and the performance by the Guarantor of the
Subsidiary Guaranty Agreement as amended by the Guaranty Amendment (the
"Amended Guaranty Agreement") are within the Guarantor's corporate powers, have
been duly authorized by all necessary corporate action, and do not constitute a
breach of or default under any provision of applicable law or regulation of The
Bahamas or the Memorandum of Association or the Articles of Association of the
Guarantor.
3. To the best of our knowledge, the execution, delivery
and performance by the Guarantor of the Guaranty Amendment and the performance
by the Guarantor of the Amended Guaranty Agreement do not constitute a breach
of or default under, or result in the creation or imposition of any Lien on any
material asset of the Company or the Guarantor under, any judgment, injunction,
order or decree of any court or governmental instrumentality of The Bahamas
binding upon the Guarantor.
4. No authorization, consent or approval of any Bahamian
governmental body, agency or official is required in connection with the
execution,
<PAGE> 39
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 3
delivery or performance by the Guarantor of the Guaranty Amendment and the
performance by the Guarantor of the Amended Guaranty Agreement.
5. To the best of our knowledge, there is no pending or
threatened action, suit or proceeding before any court or any governmental
agency or body or any arbitrator in The Bahamas involving the Guarantor.
6. The choice of Texas law as the proper law of the
Guaranty Amendment and the Amended Guaranty Agreement would be upheld as a
valid choice of law by the courts of The Bahamas, and the submission by the
Guarantor to the nonexclusive jurisdiction of the courts referred to in Section
3.05 of the Amended Guaranty Agreement with respect to proceedings in
connection with the Amended Guaranty Agreement is legal, valid, binding and
enforceable in accordance with the terms of such Section 3.05.
7. (a) Any of William M. Krips, President, Larry D.
Kalmbach, Vice President, Johnnie J. Cox, Vice President, James E. Knight, Vice
President, Newton W. Wilson, III, Secretary, Michael N. Markowitz, Treasurer,
Robert V. Deere, Controller, Alan R. Crain, Assistant Secretary, and Luis H.
Derrota, Assistant Secretary (collectively, the "Authorized Officers") of the
Guarantor has been duly authorized to sign the Guaranty Amendment and any other
required documents on behalf of the Guarantor and will bind the Guarantor by
their actions.
(b) Upon execution and delivery of the Guaranty Amendment
by any Authorized Officer, the Guaranty Amendment and the Amended Guaranty
Agreement will constitute legal, valid and binding obligations of the Guarantor
enforceable against the Guarantor in accordance with their respective terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
similar laws affecting creditors' rights generally and to general principles of
equity, and the Guaranty Amendment and the Amended Guaranty Agreement are in
proper form for their enforcement in the courts of The Bahamas.
8. All amounts payable by the Guarantor under the
Guaranty Amendment and the Amended Guaranty Agreement may be made free and
clear of and without deduction for or on account of any taxes, imposts,
withholdings or deductions of any kind imposed, assessed or levied by The
Bahamas or any authority thereof or therein, irrespective of the fact that the
Agent or any of the Banks may have a representative office or subsidiary in The
Bahamas.
<PAGE> 40
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 4
9. A stamp duty of Ten dollars Bahamian currency
(B$10.00) is payable in The Bahamas in respect of the Guaranty Amendment. No
other duty, tax or charge is payable in The Bahamas in respect of the Guaranty
Amendment. The required stamp duty has been paid in The Bahamas in respect of
the Subsidiary Guaranty Agreement. No other duty, tax or charge is payable in
respect of the Subsidiary Guaranty Agreement.
10. Under the laws of The Bahamas, neither the Agent nor
any Bank will be deemed to be resident, domiciled or carrying on any commercial
activity in The Bahamas or subject to any Bahamian taxes, imposts or duties as
a result only of the entry into and performance of the Guaranty Amendment and
the Amended Guaranty Agreement or the transactions contemplated thereby.
This opinion is limited in all respects to the laws of The
Bahamas. This opinion is for the benefit of and may be relied upon by the
Company, the Guarantor, the Banks, the Agent, the Co-Agents, their respective
successors and assigns, their respective counsel and Participants in connection
with the transactions contemplated by the Amended Credit Agreement and may be
relied upon by Newton W. Wilson, III, General Counsel of the Company, and
Andrews & Kurth L.L.P., special counsel to the Company, in rendering their
respective opinions to the Banks and the Agent in connection with such
transactions. Otherwise, this opinion may not be used, published, circulated
or relied upon by any other person for any purpose without our prior written
consent.
Yours faithfully,
GRAHAM, THOMPSON & CO.
<PAGE> 41
EXHIBIT E
OPINION OF SPECIAL COUNSEL TO THE AGENT
April 24, 1995
To NationsBank of Texas, N.A., as Agent,
and to each of the Banks referred to below
Ladies and Gentlemen:
We have acted as special counsel to NationsBank of Texas, N.A., acting for
itself and as Agent ("Agent"), in connection with the preparation, execution
and delivery of the Third Amendment Agreement dated as of April 24, 1995 (the
"Credit Amendment") among Union Texas Petroleum Holdings, Inc., a Delaware
corporation (the "Company"), the Banks and Co-Agents party to the Credit
Agreement (defined below) and the Agent, which Credit Amendment amends the
Amended and Restated Credit Agreement dated as of May 13, 1994 as amended by
the First Amendment Agreement dated November 21, 1994 and the Second Amendment
Agreement dated as of January 31, 1995 (as so amended, the "Credit Agreement")
among the Company, the banks listed on the signature pages thereof (the
"Banks"), the Agent and the Co-Agents. Capitalized terms defined in the Credit
Agreement as amended by the Credit Amendment (the "Amended Credit Agreement")
and not defined herein are used herein as therein defined.
In that connection, we have examined counterparts of the Credit Amendment
executed by the Agent and the Company respectively and the following documents:
(1) The Notes delivered to the Agent on the date hereof.
(2) The Second Amendment to Amended and Restated Subsidiary
Guaranty Agreement delivered to the Agent on the date hereof
(the "Guaranty Amendment").
(3) The legal opinions delivered to the Agent pursuant to Sections
2.3, 2.4 and 2.5 of the Credit Amendment.
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the
genuineness of all signatures and the conformity to the originals of all such
documents submitted to us as copies. We have also assumed the accuracy of all
matters set forth in the certificates delivered to the Agent in connection with
the Credit Amendment or the Credit Agreement and assumed that each of Company,
the Banks, the Agent and the Co-Agents has duly executed and delivered, with
all necessary power and authority
<PAGE> 42
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
April 24, 1995
Page 2
(corporate and otherwise), the Credit Amendment and the Credit Agreement, that
the Company has duly executed and delivered, with all necessary power and
authority (corporate and otherwise), the respective Notes, and that each of the
Required Guarantors and the Agent has duly executed and delivered, with all
necessary power and authority (corporate and otherwise), the Subsidiary
Guaranty Agreement and the Guaranty Amendment. We have also assumed that no
Bank has requested multiple Notes pursuant to Section 2.05(b) of the Amended
Credit Agreement.
Based upon the foregoing examination of documents and assumptions and upon such
other investigation as we have deemed necessary, we are of the opinion that the
documents referred to in items (1), (2) and (3) above are substantially
responsive to the requirements of the Credit Amendment.
This opinion is delivered to you only in connection with the transactions
contemplated by the Credit Amendment, the Amended Credit Agreement, the
Guaranty Amendment and the Subsidiary Guaranty Agreement and may not be quoted,
circulated or published, in whole or in part, or furnished to any Person, other
than your respective successors and assigns and Participants, without our
written consent.
Very truly yours,
Bracewell & Patterson, L.L.P.
<PAGE> 1
Exhibit 10.2
SECOND AMENDMENT TO AMENDED AND RESTATED
SUBSIDIARY GUARANTY AGREEMENT
This Second Amendment to Amended and Restated Subsidiary Guaranty
dated as of April 24, 1995 (this "Guaranty Amendment") is among each of the
Subsidiary Guarantors listed on the signature pages hereof under the caption
"Subsidiary Guarantors" and NationsBank of Texas, N.A. (the "Agent"), as agent
for the banks under the Amended and Restated Credit Agreement dated as of May
13, 1994 as amended by the First Amendment Agreement dated as of November 21,
1994 and the Second Amendment Agreement dated as of January 31, 1995 (as the
same may be further amended or modified from time to time, the "Credit
Agreement") among Union Texas Petroleum Holdings, Inc. (the "Company"), the
Co-Agents and lenders parties thereto ("Banks") and the Agent.
In consideration of the mutual covenants contained herein, the parties
hereto agree as follows:
1. Amendment to the Guaranty Agreement. The fourth recital to
the Amended and Restated Subsidiary Guaranty Agreement dated as of May 13, 1994
as amended by the First Amendment to Amended and Restated Subsidiary Guaranty
dated as of November 21, 1994 (as so amended, the "Guaranty Agreement")
executed by the Subsidiary Guarantors and the Agent is hereby amended by
deleting the dollar amount "$350,000,000" therein and inserting in lieu thereof
the dollar amount "$450,000,000".
2. Acknowledgement and Consent. To induce the Agent and the
Banks to execute the Third Amendment Agreement dated of even date herewith
among the Company, the Banks and Co-Agents parties thereto, and the Agent (the
"Credit Agreement Amendment") and other Financing Documents, each of the
undersigned Subsidiary Guarantors hereby (a) consents to and agrees to the
terms of the Credit Agreement Amendment and the Credit Agreement as amended
thereby and the other Financing Documents, (b) agrees that (i) none of such
Subsidiary Guarantor's obligations under or in connection with the Financing
Documents and none of the Banks' or the Agent's rights and remedies with
respect to any Subsidiary Guarantor is released, impaired or affected thereby
or by the foregoing, (ii) neither the Guaranty Agreement as amended hereby nor
any other Financing Document provided by any Subsidiary Guarantor is released,
impaired or affected thereby or by any of the foregoing, and (iii) this
acknowledgement shall not be construed as requiring the consent or agreement of
any Subsidiary Guarantor in any circumstance, (c) ratifies and confirms all
provisions of all Financing Documents executed by such Subsidiary Guarantor and
all documents pertaining thereto or referred to therein, and (d) agrees that
none of such Subsidiary Guarantor's obligations, none of the Banks' or the
Agent's rights and remedies and neither the Guaranty Agreement as amended
hereby, nor any
<PAGE> 2
other Financing Document, would be released, impaired or affected if such
Subsidiary Guarantor had not acknowledged the Credit Agreement Amendment and
other Financing Documents.
3. Miscellaneous.
3.1. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty Amendment, and no consent to any departure by any
Subsidiary Guarantor, any Bank or the Agent herefrom, shall in any event be
effective unless effected in accordance with Section 3.03 of the Guaranty
Agreement. This Guaranty Amendment shall become effective upon the execution
of this Guaranty Amendment by the Subsidiary Guarantors and the Agent.
3.2. Texas Law. This Guaranty Amendment, and the Guaranty
Agreement as amended hereby, shall be construed in accordance with and governed
by the laws of the State of Texas.
3.3. Preservation. Except as specifically modified by the
terms of this Amendment, all of the terms, provisions, covenants, warranties
and agreements contained in the Guaranty Agreement remain in full force and
effect. Each of the undersigned Subsidiary Guarantors hereby ratifies and
confirms the Guaranty Agreement as amended hereby. Terms used herein which are
not defined herein and are defined in the Credit Agreement, as amended by the
Credit Agreement Amendment, are used herein as defined in the Credit Agreement,
as amended by the Credit Agreement Amendment. References in the Guaranty
Agreement as amended hereby to "the Agreement", "the Guaranty Agreement", "this
Guaranty Agreement" or to "this Agreement" or to words of similar effect (such
as "herein") shall mean the Guaranty Agreement as amended hereby.
3.4. Execution in Counterparts. This Guaranty Amendment may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
3.5. Authority, etc. Each of the undersigned Subsidiary
Guarantors hereby represents and warrants to the Agent and each of the Banks
that (a) the execution and delivery by such Subsidiary Guarantor of the
Guaranty Agreement and this Guaranty Amendment, and the performance of the
Guaranty Agreement as amended hereby and this Guaranty Amendment, (i) are
within such Subsidiary Guarantor's corporate powers, (ii) have been duly
authorized by all necessary corporate action of such Subsidiary Guarantor,
(iii) do not contravene or constitute a default under any provision of
applicable law or regulation and (iv) require no authorization, consent or
approval of any governmental body, agency or official other than those
authorizations, consents and approvals that have been obtained and are in full
force and effect, and (b) the Guaranty Agreement and this Guaranty Amendment
have been duly executed
-2-
<PAGE> 3
and delivered by such Subsidiary Guarantor and this Guaranty Amendment and the
Guaranty Agreement as amended hereby constitute legal, valid and binding
obligations of such Subsidiary Guarantor.
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized, as of the date first above written.
SUBSIDIARY GUARANTORS:
UNION TEXAS PETROLEUM ENERGY CORPORATION
By: /s/ M.N. MARKOWITZ
-----------------------------------
M.N. Markowitz
Treasurer
UNION TEXAS PRODUCTS CORPORATION
By: /s/ M.N. MARKOWITZ
-----------------------------------
M.N. Markowitz
Treasurer
UNION TEXAS EAST KALIMANTAN LIMITED
By: /s/ M.N. MARKOWITZ
-----------------------------------
M.N. Markowitz
Treasurer
UNION TEXAS INTERNATIONAL CORPORATION
By: /s/ M.N. MARKOWITZ
-----------------------------------
M.N. Markowitz
Treasurer
-3-
<PAGE> 4
UNISTAR, INC.
By: /s/ M.N. MARKOWITZ
----------------------------------
M.N. Markowitz
Vice President
AGENT:
NATIONSBANK OF TEXAS, N.A., as Agent
By: /s/ PAUL A. SQUIRES
----------------------------------
Paul A. Squires
Senior Vice President
-4-
<PAGE> 1
Exhibit 10.3
$100,000,000
CREDIT AGREEMENT
dated as of
April 24, 1995
among
UNION TEXAS PETROLEUM HOLDINGS, INC.
The BANKS Listed Herein
and
NATIONSBANK OF TEXAS, N.A.
as Agent
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
UNION BANK OF SWITZERLAND, HOUSTON AGENCY
as Co-Agents
THE INDEMNIFICATION PROVISIONS OF SECTIONS 7.06 AND 9.03(B) OF THIS
AGREEMENT INCLUDE INDEMNIFICATION FROM THE CONSEQUENCES OF THE
NEGLIGENCE OF THE PERSONS INDEMNIFIED THEREBY TO THE EXTENT SET FORTH
THEREIN
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.03. Types of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.04. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.05. Unimar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 1.06. Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.01. Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.02. Notice of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.03. Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.04. Notice to Banks; Funding of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.06. Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.07. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.08. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.09. Optional Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.10. Mandatory Termination or Reduction of
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.11. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.12. General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.13. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.14. Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.15. Chapter 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.16. Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE III
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.01. Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.02. All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.02. Corporate and Governmental Authorization;
Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.04. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.05. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.06. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.07. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.08. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.09. Ownership of Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.10. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.11. Taxes and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.12. Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.13. Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.14. United Kingdom Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.02. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.03. Primary Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.05. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.06. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.07. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.08. Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.09. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.10. Parties to Subsidiary Guaranty Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.11. Restrictions on Dividends, Intercompany Loans,
or Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.12. Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.13. Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.14. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.15. Adjusted Equity and Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.16. Excluded Subordinated Debt and Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.17. Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.18. Restrictions on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.19. UTEK Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.20. Conversion to Unrestricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VI
DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.01. Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.02. Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.03. Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.05. Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.08. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.09. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VIII
CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 8.04. Base Rate Loans Substituted for Affected
Euro-Dollar Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.05. Substitution of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.03. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.04. Sharing of Set-Offs, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.05. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.06. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.07. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.08. Texas Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.09. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 9.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 9.11. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.12. COMPLETE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.13. Liability of Co-Agents and Arranger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 9.14. Termination of 1994 Short-Term Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
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<PAGE> 6
Schedule I - [Not used]
Schedule II - Existing Subsidiaries
Schedule III - Existing Liens
Schedule IV - Existing Restrictions
Schedule V - Joint Venture Debt Agreements
Schedule VI - Outstanding Options
Exhibit A - Note
Exhibit B - Subsidiary Guaranty Agreement
Exhibit C - Opinion of General Counsel of the Company
Exhibit D - Opinion of Special Counsel for the Company
Exhibit E - Opinion of Special Counsel for the Agent
Exhibit F - Assignment and Assumption Agreement
Exhibits G-1 and G-2 - Forms of Local Counsel Opinions
-v-
<PAGE> 7
CREDIT AGREEMENT
Credit Agreement dated as of April 24, 1995 among Union Texas
Petroleum Holdings, Inc., the Banks party hereto, NationsBank of Texas, N.A.,
as Agent, and Bank of America National Trust and Savings Association and Union
Bank of Switzerland, Houston Agency, as Co-Agents.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Acceptable Engineer" means DeGolyer & MacNaughton or such
other independent engineering firm that is mutually acceptable to the Agent and
the Company.
"Additional Margin Increase Condition" exists at all times
during which any senior unsecured long-term debt of the Company is rated below
BBB- by S&P.
"Adjusted Equity" means the consolidated stockholders equity
of the Company and its Consolidated Subsidiaries, as determined on a
consolidated basis in accordance with generally accepted accounting principles,
adjusted to exclude (i) any cumulative foreign exchange translation
adjustments, (ii) any non-cash write-up or writedown of any assets of the
Company and its Consolidated Subsidiaries made after March 31, 1992 in
accordance with generally accepted accounting principles, and (iii) the
non-cash effect of the adoption of any change after March 31, 1992 required by
generally accepted accounting principles.
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form requested by the Agent
submitted to the Agent (with a copy to the Company) duly completed by such
Bank.
"Affiliate" means (i) any Person holding 5% or more of any
class of capital stock of the Company, and (ii) any Person (other than the
Company, a Subsidiary or a Partnership) directly or indirectly controlling,
controlled by or under common control with any Person described in clause (i).
As used in this definition of "Affiliate", the term "control" means the
possession, directly or indirectly, of the power
<PAGE> 8
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
"Agent" means NationsBank in its capacity as agent for the
Banks hereunder and any successor in such capacity.
"Agreement" means this Credit Agreement dated as of April 24,
1995 among the Company, the Banks, the Agent and the Co-Agents, as amended from
time to time in accordance with the terms hereof.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Base Rate Loans, its Domestic Lending Office, and (ii)
in the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Arranger" means NationsBanc Capital Markets, Inc.
"Asset Sale" means any sale, lease, transfer or other
disposition of any Restricted Asset by the Company or any Restricted
Subsidiary, whether such sale, lease, transfer or other disposition is direct
or indirect (such as by selling capital stock of the Subsidiary that owns such
Restricted Asset, but excluding sales of capital stock of the Company), other
than (i) farm-outs in the ordinary course of business of properties containing
substantially no proved reserves at the time of the farm-out, (ii) sales in the
ordinary course of business of Hydrocarbons after severance, (iii) sales,
transfers, leases or other dispositions of inventory and obsolete or surplus
equipment in the ordinary course of business, and (iv) sales, transfers, leases
or other dispositions to the Company or any Restricted Subsidiary if no Default
then exists or would result therefrom.
"Assignee" has the meaning set forth in Section 9.06(c).
"Assignment" means an Assignment and Assumption Agreement in
substantially the form of Exhibit F hereto.
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 9.06(c), and their
respective successors.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Corporate Base Rate for such day and (ii) the sum of 1/2 of
1% plus the Federal Funds Rate for such day.
"Base Rate Loan" means a Loan which bears interest as provided
in Section 2.07(a).
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<PAGE> 9
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrowing" has the meaning set forth in Section 1.03.
"Cash Interest Expense" means, for any period, the sum of (i)
the aggregate amount accrued during such period by the Company and its
Consolidated Subsidiaries for interest determined on a consolidated basis, but
excluding interest on Non-Recourse Debt and interest on Debt of Unrestricted
Subsidiaries to the extent such Debt does not constitute Debt of the Company or
any Restricted Subsidiary plus (ii) the aggregate amount paid during such
period by the Company and its Consolidated Subsidiaries for dividends on
Restricted Preferred Stock, determined on a consolidated basis.
"Co-Agents" means Bank of America National Trust and Savings
Association and Union Bank of Switzerland, Houston Agency in their capacities
as Co-Agents hereunder.
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof (or, if such
Bank is an Assignee and its name is not set forth on the signature pages
hereof, the amount of its Commitment as set forth in the Assignment pursuant to
which it became a Bank), as such amount may be reduced from time to time
pursuant to Sections 2.09 and 2.10 or reduced or increased from time to time
pursuant to any Assignment to which it is a party.
"Company" means Union Texas Petroleum Holdings, Inc., a
Delaware corporation.
"Company's 1993 Form 10-K" means the Company's annual report
on Form 10-K for 1993, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Company's 1994 Form 10-K" means the Company's annual report
on Form 10-K for 1994, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Consolidated Debt" means, at any date, an amount equal to (a)
the sum (without duplication) of (i) the aggregate amount of Debt (other than
Defeased Debt, Excluded Subordinated Debt not exceeding $100,000,000 and Debt
that would not constitute Debt of the Company or any of its Consolidated
Subsidiaries if clause (viii)
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<PAGE> 10
were not included in the definition herein of Debt) of the Company and its
Consolidated Subsidiaries, determined on a consolidated basis as of such date,
plus (ii) the Unimar Percentage at such date of the aggregate Debt (other than
Defeased Debt and Debt that would not constitute Debt of Unimar or any of the
Unimar Restricted Subsidiaries if clause (viii) were not included in the
definition herein of Debt) of Unimar and the Unimar Restricted Subsidiaries,
determined on a consolidated basis as of such date, plus (iii) the Excess
Letter of Credit/Guarantee Amount at such date, minus (b) the sum (without
duplication and only to the extent that any of the following are included in
the foregoing clause (a)) at such date of (1) Debt of Unrestricted Subsidiaries
to the extent such Debt does not constitute Debt of the Company or any
Restricted Subsidiary plus (2) Non-Restricted Asset Non-Recourse Debt plus (3)
Existing Pakistan Non-Recourse Debt.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Company in its consolidated financial statements as of such date.
"Convert", "Conversion" and "Converted" each refers to (i) the
change of Loans of one Type into Loans of the other Type pursuant to Section
2.03 or Article VIII, (ii) the continuation of all Euro-Dollar Loans comprising
the same Borrowing as such for an additional Interest Period pursuant to
Section 2.03, and (iii) an election to change, pursuant to Section 2.03, the
Interest Period applicable to all Euro-Dollar Loans comprising the same
Borrowing prior to the end of the Interest Period then applicable thereto.
"Corporate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time equal to the rate of interest
publicly announced by NationsBank as its base rate, whether or not the Company
has notice thereof. Such rate is set by NationsBank as a general reference
rate of interest, taking into account such factors as NationsBank may deem
appropriate, it being understood that many of NationsBank's commercial or other
loans are priced in relation to such rate, that it is not necessarily the
lowest or best rate actually charged to any customer and that NationsBank may
make various commercial or other loans at rates of interest having no
relationship to such rate.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except accrued expenses, trade accounts payable and taxes
payable arising in the ordinary course of business, (iv) the present value,
determined in accordance with generally accepted accounting principles, of the
obligations of such Person to make payments under capital leases, (v) all
obligations of such Person which shall have been
-4-
<PAGE> 11
outstanding for more than five days owed to a bank or other Person in respect
of amounts theretofore paid under a letter of credit or similar instrument,
(vi) all Debt of others secured by a Lien on any asset owned by such Person
whether or not such Debt is assumed by such Person (except that Joint Venture
Debt shall for purposes of this Agreement be deemed to be Debt of Pertamina and
not of the Company or a Subsidiary), (vii) all Restricted Preferred Stock
issued by such Person or as to which such Person is otherwise liable, (viii)
all Debt of others Guaranteed by such Person, to the extent of such Guarantee,
and (ix) all obligations of such Person which have been outstanding for more
than five days to pay any margin call (or similar requirement) on any
Derivative Transaction (excluding, in the case of the Company and its
Subsidiaries, such obligations not exceeding $5,000,000 in the aggregate);
provided that, neither Debt nor Guarantee includes (a) obligations under leases
other than capital leases and under bona fide Derivative Transactions (except
as provided in clause (ix) above) and obligations with respect to take-or-pay
payments theretofore received which remain subject to cash settlement or
make-up; (b) Debt of the Company or a Subsidiary owing to the Company or a
Subsidiary, except for Debt not eliminated in consolidation pursuant to the
proviso in Section 1.02; (c) obligations under the Indonesian Participating
Units; (d) any preferred stock that does not constitute Restricted Preferred
Stock; and (e) the existing agreements relating to Joint Venture Debt set forth
in the contracts described on Schedule V of the parties thereto as to
allocation of responsibility for damages caused by reason of an act or failure
to act by, or otherwise related to, any such party, or any similar agreement
hereafter entered into providing for a similar allocation of liability in
respect of similar actions or failures to act. The amount of Debt attributable
to any Restricted Preferred Stock shall be the maximum consideration required
to be paid upon the purchase, retirement, redemption, exchange, or conversion
of the portion thereof constituting Debt (such consideration, if other than
cash, to be valued at the fair market value thereof); provided that, in
computing such consideration there shall be excluded (A) any consideration
payable solely in common stock of the Company, (B) dividends to the extent such
dividends do not materially exceed the generally prevailing market rate (at the
time of issuance of such Restricted Preferred Stock) on preferred stock of
comparable risk and maturity; and (C) any premium payable upon any such
purchase, retirement, redemption, exchange or conversion only as a result of
the exercise by the issuer of a call provision exercisable only at the option
of the issuer, if failure to exercise such option would not have an adverse
effect on the Company or any Subsidiary pursuant to the terms of any such
Restricted Preferred Stock or any documents related thereto.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Defeased Debt" means any Debt of the Company or any
Subsidiary (i) which has been defeased in accordance with the terms of the
applicable Debt
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<PAGE> 12
instruments, (ii) which is deemed to be extinguished under generally accepted
accounting principles applicable to the Company or such Subsidiary, and (iii)
with respect to which the Agent has received a certificate of an officer of the
Company or such Subsidiary to the effect that the requirements of clauses (i)
and (ii) of this definition have been met as to such Debt and such evidence, if
any, in support of such certificate as the Agent may reasonably request.
"Derivative Transactions" means foreign exchange transactions
and commodity, currency and interest rate swaps, floors, caps, collars, forward
sales, options, other similar transactions and combinations of the foregoing.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City, San Francisco
or Houston are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address set forth in its Administrative Questionnaire (or
identified in its Administrative Questionnaire as its Domestic Lending Office)
or such other office as such Bank may hereafter designate as its Domestic
Lending Office by notice to the Company and the Agent.
"EBITDA" means, for any period, the sum of (i) the
consolidated net income of the Company and its Consolidated Subsidiaries for
such period before non-cash non-recurring items, gains or losses on
dispositions of assets and the cumulative effect of changes in accounting
principles plus (ii) to the extent included in the determination of such
income, the consolidated charges for such period for interest, depreciation,
depletion and amortization plus (or, if there is a benefit from income taxes,
minus) (iii) to the extent included in the determination of such income, the
amount of the provision for or benefit from income taxes; provided that in
determining such consolidated net income, such consolidated charges and such
provision for or benefit from income taxes, there shall be excluded therefrom
(to the extent otherwise included therein) (a) the net income (or loss) of,
charges for interest, depreciation, depletion and amortization of, and such
provision for or benefit from income taxes of, any Person acquired by the
Company or a Subsidiary in a pooling-of-interest transaction for any period
prior to the date of such transaction, and (b) the net income (but not loss)
of, charges for interest, depreciation, depletion and amortization of, and such
provision for (but not benefit from) income taxes of, any Person which is
subject to any contractual restriction which prevents the payment of dividends
or the making of distributions on the capital stock or other ownership
interests of such Person to the extent of such contractual restrictions.
"Effective Date" means the date of this Agreement, which is
April 24, 1995.
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<PAGE> 13
"Engineering Report" means a report of an Acceptable Engineer
providing an estimate of the proved reserves of Hydrocarbons attributable to
the properties of the Company and the Restricted Subsidiaries.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Resource
Conservation and Recovery Act, the Oil Pollution Act, and their state analogs,
in each case as they have been or may be amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the Obligors and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with any Obligor, are
treated as a single employer under Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro- Dollar Lending Office) or such other office, branch or affiliate
of such Bank as it may hereafter designate as its Euro-Dollar Lending Office
by notice to the Company and the Agent.
"Euro-Dollar Loan" means a Loan which bears interest as
provided in Section 2.07(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Excess Letter of Credit/Guarantee Amount" means, at any date,
the excess of (a) the sum of (i) the aggregate undrawn amount, at such date, of
all letters
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<PAGE> 14
of credit as to which the Company or any Restricted Subsidiary (other than
Unimar and the Unimar Restricted Subsidiaries) is the account party or in
respect of which the Company or any Restricted Subsidiary (other than Unimar
and the Unimar Restricted Subsidiaries) has Guaranteed payment plus the unpaid
drawn portions, at such date, of all such letters of credit to the extent such
drawn portions do not constitute Debt of the Company or a Restricted Subsidiary
(other than Unimar and the Unimar Restricted Subsidiaries), plus (ii) the
Unimar Percentage of the aggregate undrawn amount, at such date, of all letters
of credit as to which Unimar or any of the Unimar Restricted Subsidiaries is
the account party or in respect of which Unimar or any of the Unimar Restricted
Subsidiaries has Guaranteed payment plus the unpaid drawn portions, at such
date, of such letters of credit to the extent such drawn portions do not
constitute Debt of Unimar or any of the Unimar Restricted Subsidiaries, plus
(iii) Debt that constitutes Debt of the Company or any Restricted Subsidiary
(other than Unimar or any Unimar Restricted Subsidiary) pursuant to clause
(viii) of the definition herein of Debt, plus (iv) the Unimar Percentage at
such date of Debt that constitutes Debt of Unimar or any of the Unimar
Restricted Subsidiaries pursuant to clause (viii) of the definition herein of
Debt, over (b) $50,000,000.
"Excess Net Sales Proceeds" means
(i) with respect to any Asset Sale involving, directly or
indirectly, a UK Asset (a "UK Asset Sale"),
(a) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all UK Asset Sales
since December 31, 1993 would be less than or equal
to $50,000,000 and the aggregate Net Sales Proceeds
from all Asset Sales since such date would be less
than or equal to $100,000,000, zero; or
(b) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all UK Asset Sales
since December 31, 1993 ("UK Aggregate Amount") would
be greater than $50,000,000 or the aggregate Net
Sales Proceeds from all Asset Sales since such date
("Total Aggregate Amount") would be greater than
$100,000,000, the lesser of (1) the greater of the
amount by which the UK Aggregate Amount exceeds
$50,000,000 or the amount by which the Total
Aggregate Amount exceeds $100,000,000 or (2) the Net
Sales Proceeds from such Asset Sale; and
(ii) with respect to any Asset Sale not involving, directly or
indirectly, a UK Asset,
-8-
<PAGE> 15
(a) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all Asset Sales
since December 31, 1993 would be less than or equal
to $100,000,000, zero; or
(b) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all Asset Sales
since December 31, 1993 would be greater than
$100,000,000, the lesser of (1) the amount by which
such aggregate Net Sales Proceeds exceeds
$100,000,000 or (2) the Net Sales Proceeds from such
Asset Sale.
"Excluded Subordinated Debt" means Debt that (i) is
subordinate and junior, on terms reasonably satisfactory to the Agent, to the
Loans in all respects and (ii) has no requirement, absent a default under such
Debt, that any principal thereof be paid, purchased, redeemed, defeased,
acquired, exchanged or converted (other than exchange for or conversion to
common stock of the Company) prior to April 30, 2000.
"Existing Pakistan Non-Recourse Debt" means the Debt, not
exceeding the principal amount of $9,500,000, evidenced by that certain
promissory note dated December 20, 1988, issued by UT Pakistan in the original
principal amount of $21,250,000, the related Finance Agreement between UT
Pakistan and the Overseas Private Investment Corporation ("OPIC") and the
related Issuing and Paying Agency Agreement among First Trust New York National
Association (as successor to Morgan Guaranty Trust Company of New York) as
issuing and paying agent, OPIC and UT Pakistan.
"Fair Market Value" means with respect to any asset of the
Company or any Subsidiary at any date the open market cash purchase price that
an informed and willing purchaser would pay for such asset in an arm's length
transaction to a willing and informed owner under no compulsion to sell, all as
reasonably determined in good faith by the Company.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day; provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate
on such transactions on the next preceding Domestic Business Day, as so
published on the next succeeding Domestic Business Day, and (ii) if no such
rate is so published on such next succeeding Domestic Business Day, the Federal
Funds Rate for such day shall be the average rate quoted to NationsBank on such
day on such transactions as determined by the Agent.
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<PAGE> 16
"Financing Documents" means this Agreement, the Notes and the
Subsidiary Guaranty Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise (including, without limitation, any obligation to repay to a payor or
creditor of a payor amounts previously paid to such Person by such payor), of
such Person directly or indirectly guaranteeing any Debt of any other Person or
otherwise incurred for the purpose of assuring the holder of payment of any
such Debt; provided that (i) the obligations of any Person in respect of Debt
of any Partnership in which such Person is a general partner shall not
constitute a Guarantee of such Debt so long as substantially all assets of such
Person are comprised of its Investment in such Partnership, (ii) the obligation
of a Person to transfer or restore cash to the account of a Partnership,
Subsidiary or Affiliate pursuant to periodic settlements or adjustments under
cash management practices of such Persons shall not constitute a Guarantee,
(iii) the contractual obligation of a Person to assure that a Subsidiary,
Partnership or Affiliate conducts its operations as a prudent operator shall
not constitute a Guarantee of indebtedness of the Subsidiary, Partnership or
Affiliate, (iv) the obligation of a Person to cause net amounts of cash owned
by a Subsidiary, Partnership or Affiliate to be applied to payment of
indebtedness of such Subsidiary, Partnership or Affiliate shall not constitute
a Guarantee of such indebtedness and (v) the reaffirmation to or for the
benefit of a lender of contractual obligations (as, for example, those set
forth in the Production Sharing Contracts) previously entered into in good
faith and not in contemplation of the incurrence of Debt shall not constitute a
Guarantee so long as the other arrangements entered into in connection with
such reaffirmation do not increase the likelihood that additional funds will be
required to meet such obligations (as would be the case, for example, if
revenues otherwise available to meet such obligations were dedicated to such
lender).
"HPG Plant" means the five-twelfths interest in the Geismar,
Louisiana olefins plant owned by UTPC and its subsidiaries, the supply and
distribution assets related to such plant and all other operating assets of
UTPC and its subsidiaries as of December 31, 1993.
"Hydrocarbons" means crude oil, including all kinds of
hydrocarbons and bitumens in solid or liquid form, and natural gas, including
all gaseous hydrocarbons produced from wells, and liquefied natural gas and
liquefied petroleum gases.
"Indonesian Participating Units" means the Indonesian
Participating Units issued by Unimar pursuant to the Indenture dated as of
September 24, 1984 between Unimar and Irving Trust Company, Trustee, as amended
and in effect on the date hereof, and as hereafter amended to the extent such
subsequent amendments do not change the term thereof, provide additional
security therefor, or increase the payments to be made to holders thereof.
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<PAGE> 17
"Interest Period" means, with respect to each Euro-Dollar Loan
comprising part of the same Borrowing, the period commencing on the date of
such Loan or the date of the Conversion of any Base Rate Loan into such
Euro-Dollar Loan and ending on the last day of the period selected by the
Company pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
(or on any other date selected by the Company pursuant to Section 2.03) and
ending on the last day of the period selected by the Company pursuant to the
provisions below and Section 2.03. The duration of each such Interest Period
shall be 1, 2, 3 or 6 months or (subject to Section 2.02(b)) 9 or 12 months, in
each case as the Company may, upon notice received by the Agent not later than
10:00 a.m. (Houston time) on the third Euro-Dollar Business Day prior to the
first day of such Interest Period, select; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Euro-Dollar
Business Day of a calendar month;
(c) the Company may not select an Interest Period for any
Loan if the last day of such Interest Period would be after April 15,
1997; and
(d) Interest Periods for all Loans comprising the same
Borrowing shall commence on the same date and shall be of the same
duration.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment" means any investment in any Person, whether by
means of share purchase, capital contribution, loan, advance, Guarantee or
otherwise. It is understood that a joint operating agreement or similar
arrangement with respect to Hydrocarbon properties or the HPG Plant does not
constitute a Person and hence that payments in respect of the acquisition or
maintenance of an interest in such Hydrocarbon properties or the HPG Plant do
not constitute an Investment.
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<PAGE> 18
"Joint Venture Debt" means obligations secured by a Lien on
the interests of the Company or a Subsidiary, as the case may be, arising under
either of the Production Sharing Contracts or any related supply contracts, if
such Lien covers ratably the interests of Pertamina and all production sharing
contractors thereunder.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset (including, without limitation, any production payment, advance payment
or similar arrangement with respect to minerals in place), whether or not
filed, recorded or otherwise perfected under applicable law. For the purposes
of this Agreement, the Company or any Subsidiary shall be deemed to own subject
to a Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset. The right of set-off,
whether by operation of law or by contract, does not constitute a Lien unless
there is a related obligation to maintain a deposit of cash or other assets in
respect of which such right of set-off may be exercised.
"Loan" means a loan made by a Bank to the Company pursuant to
section 2.01 and refers to a Base Rate Loan or a Euro-Dollar Loan (each of
which shall be a "Type" of Loan), and "Loans" means Base Rate Loans or
Euro-Dollar Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(b).
"Margin Increase Condition" exists at all times during any
Margin Period if the aggregate outstanding amount of Consolidated Debt on the
last day of the calendar quarter immediately preceding the first day of such
Margin Period exceeded 300% of Operating Cash Flow for the four calendar
quarter period ending on the last day of such calendar quarter.
"Margin Period" means each period commencing on and including
the 61st day of each calendar quarter and ending on and including the 60th day
of the next calendar quarter, with the first such period commencing on May 31,
1995.
"material" means, with respect to any matter so characterized
herein, that such matter would reasonably be expected to be significant to a
Bank in determining whether to enter into this Agreement or to extend credit
hereunder.
"Material Debt" means Debt of the Company and/or any one or
more Restricted Subsidiaries (other than Non-Recourse Debt) in an aggregate
principal amount equal to or greater than $15,000,000, whether incurred under
one or more related or unrelated documents or instruments.
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"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $15,000,000.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the
ERISA Group during such five year period.
"NationsBank" means NationsBank of Texas, N.A., a national
banking association.
"Net Sales Proceeds" means, with respect to any Asset Sale,
the Fair Market Value of the Restricted Asset that is sold, leased, transferred
or otherwise disposed of in such Asset Sale, minus the sum of (i) all
reasonable fees, commissions and expenses incurred by the Company or any
Subsidiary as a result of or in connection with such Asset Sale and (ii) all
taxes required to be paid by the Company or any Subsidiary as a result of such
Asset Sale.
"Non-Recourse Debt" means, at any date, (a) the aggregate
amount at such date of Debt of the Company or a Subsidiary (other than Unimar
and each Unimar Subsidiary) and (b) the Unimar Percentage of the aggregate
amount at such date of all Debt of each of Unimar and each Unimar Subsidiary,
in respect of which in the case of either (a) or (b) (i) the recourse of the
holder of such Debt, whether direct or indirect and whether contingent or
otherwise, shall be effectively limited to Non-Restricted Assets (or, in the
case of the Existing Pakistan Non-Recourse Debt, the assets described in
Schedule III) and (ii) in the case of any such Debt incurred after the date of
this Agreement, the Company shall have, at or prior to the time of incurrence
thereof, notified the Agent of such incurrence and delivered to the Agent a
certificate of an officer of the Company certifying that such Debt constitutes
Non-Recourse Debt (or that such Debt will be converted into Non-Recourse Debt
at some specified time or upon the occurrence of some specified event);
provided that, if any such Debt is secured by any interest in a license,
concession, production sharing contract or other right and any of the
Restricted Assets consists of an interest in such license, concession,
production sharing contract or other right, then the agreements evidencing such
Debt must provide that default under such Debt will not impair or affect such
license, concession, production sharing contract or other right. In the case
of any Non-Recourse Debt incurred after the date of this Agreement, such
limitation on recourse (i) must be set forth in the instrument evidencing such
Debt, and (ii) must be on terms acceptable to the Agent as evidenced by the
written approval thereof by the Agent (which approval will not be unreasonably
withheld, and in deciding whether to approve such terms the Agent will, if
requested by the Company, take into account what terms are usual and
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<PAGE> 20
customary in non-recourse financings) and in any event must provide that the
holder of such Debt waives, to the extent such holder may effectively do so,
such holder's right to elect recourse treatment under 11 U.S.C. Section
1111(b) unless such holder obtains the prior written consent of the Required
Banks. For avoidance of doubt, (a) if any such Debt is Guaranteed by the
Company or a Restricted Subsidiary in a limited amount, the excess over such
amount (but only the excess) constitutes Non-Recourse Debt, and (b) Debt shall
not be determined to not be Non-Recourse Debt solely as a result of the
existence of either of the following: (i) an agreement by a direct or indirect
parent corporation to repay to a subsidiary amounts received by such parent
corporation from such subsidiary in the event such subsidiary has a need for
such amounts in future periods or (ii) an agreement by a direct or indirect
parent corporation to cause a subsidiary to comply with such subsidiary's
contractual obligations so long as the parent corporation is not obligated to
contribute funds to the subsidiary to enable it to comply with such contractual
obligations and has not otherwise Guaranteed such obligations.
"Non-Restricted Asset Non-Recourse Debt" means, at any date,
the aggregate amount at such date of Non- Recourse Debt as to which the
recourse of the holder is limited exclusively to Non-Restricted Assets as
contemplated by clause (i) of the first sentence of the definition of
Non-Recourse Debt.
"Non-Restricted Assets" means all assets of the Company and
its Subsidiaries other than Restricted Assets.
"Non-UK Asset" means any Restricted Asset other than a UK
Asset.
"Notes" means promissory notes of the Company, substantially
in the form of Exhibit A hereto, evidencing the obligation of the Company to
repay the Loans made to it, and "Note" means any one of such promissory notes
issued hereunder.
"Notice of Borrowing" has the meaning specified in Section
2.02.
"Obligors" means the Company and the Required Guarantors, and
"Obligor" means any one of them.
"Operating Cash Flow" means, with respect to any period, an
amount equal to
(i) the "net cash (required) provided by operating activities
before changes in other assets and liabilities" of the Company
and its Consolidated Subsidiaries for such period, that should
be reflected in the consolidated statement of cash flows of
the Company and its Consolidated Subsidiaries for such period
prepared in accordance with generally accepted accounting
principles on substantially the same basis
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as the consolidated statement of cash flows of the Company and
its Consolidated Subsidiaries for the year ended December 31,
1993 as set forth in the Company's 1993 Form 10-K; provided
that in determining such "net cash (required) provided by
operating activities before changes in other assets and
liabilities" there shall be excluded therefrom (to the extent
otherwise included therein) (a) the portion of such net cash
provided by assets securing any Non-Recourse Debt other than
the Existing Pakistan Non-Recourse Debt, (b) the net cash
provided or required by operating activities before changes in
other assets and liabilities of any Person acquired by the
Company or a Subsidiary in a pooling-of-interest transaction
for any period prior to the date of such transaction, and (c)
the net cash provided by operating activities before changes
in other assets and liabilities of any Person which is subject
to any contractual restriction which prevents the payment of
dividends or the making of distributions on the capital stock
or other ownership interests of such Person to the extent of
such contractual restrictions,
plus (ii) to the extent included in the determination of the
"net cash (required) provided by operating activities before
changes in other assets and liabilities" for such period in
accordance with the foregoing clause (i), exploration expenses
incurred by the Company or any Consolidated Subsidiary during
such period other than (a) exploration expenses incurred in
connection with assets securing any Non-Recourse Debt other
than the Existing Pakistan Non-Recourse Debt, (b) the
exploration expenses of any Person acquired by the Company or
a Subsidiary in a pooling-of-interest transaction for any
period prior to the date of such transaction, and (c) the
exploration expenses of any Person which is subject to any
contractual restriction which prevents the payment of
dividends or the making of distributions on the capital stock
or other ownership interests of such Person to the extent of
such contractual restrictions,
plus (or, if cash is required by equity investee, minus) (iii)
the amount of the "cash (required) provided by equity
investee" of the Company and its Consolidated Subsidiaries for
such period, that should be reflected in the consolidated
statement of cash flows of the Company and its Consolidated
Subsidiaries for such period prepared in accordance with
generally accepted accounting principles on substantially the
same basis as the consolidated statement of cash flows of the
Company and its Consolidated Subsidiaries for the year ended
December 31, 1993 as set forth in the Company's 1993 Form
10-K, excluding the effect of any cash required by such equity
investee for the payment of the principal of
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its Debt and any cash provided by such equity investee from
incurrence of its Debt,
minus (iv) dividends on preferred stock paid during such
period by the Company or any Consolidated Subsidiary,
determined on a consolidated basis.
"Other Credit Agreement" means the Amended and Restated Credit
Agreement dated as of May 13, 1994 among the Company, NationsBank, as agent,
and the co-agents and the banks parties thereto, as amended from time to time,
providing a $450,000,000 credit facility to the Company.
"Other Credit Agreement Commitments" means the "Commitments"
as defined in the Other Credit Agreement.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"Partnership" means any general or limited partnership which
is accounted for on the equity method in the Company's consolidated financial
statements and in which the Company or a Subsidiary is a general partner.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
It is understood that a joint operating agreement or similar arrangement with
respect to Hydrocarbon properties or the HPG Plant does not constitute a
Person.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
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<PAGE> 23
"Production Sharing Contracts" means the production sharing
contracts pertaining to certain operations in Indonesia filed as Exhibits
10.102 and 10.103 to the Company's quarterly report on Form 10-Q for the
quarter ending June 30, 1990, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
"Reference Banks" means the principal London offices of
NationsBank, Bank of America National Trust and Savings Association and Union
Bank of Switzerland and such substitute Bank or Banks as may be mutually agreed
to by the Company and the Agent, and "Reference Bank" means any one of such
Reference Banks.
"Regulation G" means Regulation G of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 51%
of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 51% of the aggregate unpaid
principal amount of the Loans.
"Required Guarantors" means (a) each of Union Texas Petroleum
Energy Corporation, UTPC, Union Texas East Kalimantan Limited, Union Texas
International Corporation and Unistar, Inc. and (b) any Subsidiary that
acquires a Restricted Asset (other than any Restricted Asset in Pakistan or, if
such Subsidiary's entering into the Subsidiary Guaranty Agreement would have a
material adverse tax consequence on the Company, in the United Kingdom
(including the United Kingdom Sector of the North Sea)) after December 31, 1993
or the capital stock of any Required Guarantor after December 31, 1993. Each
Required Guarantor shall continue to be a Required Guarantor unless released
from its obligations under the Subsidiary Guaranty Agreement in accordance with
the terms of the Financing Documents.
"Restricted Assets" means (1) all proved reserves of the
Company and the Subsidiaries as of December 31, 1993 in Indonesia, the United
Kingdom (including the United Kingdom Sector of the North Sea) and Pakistan,
(2) all licenses, concessions, production sharing contracts and other rights
pertaining to any such proved reserves (excluding the portion thereof that does
not pertain to any of such proved reserves, if such portion can be severed
without material adverse consequences on the portion pertaining to such proved
reserves), (3) equipment used in the production of any such proved reserves or
in the transportation of production from any such proved reserves if such
equipment is a fixture or otherwise attached to realty, constitutes all or a
part
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<PAGE> 24
of any pipeline or related equipment, is all or part of a production platform
or related equipment or is equipment similar to any of the foregoing or used
for a similar purpose, and (4) the HPG Plant.
"Restricted Payment" means (i) any dividend or other
distribution on any shares of the Company's capital stock (except dividends
payable solely in shares of its common stock), or (ii) any payment on account
of the purchase, redemption, retirement or acquisition of (a) any shares of the
Company's capital stock or (b) any option, warrant or other right to acquire
shares of the Company's capital stock (except any such payment made solely in
shares of its common stock); provided that payments of stock-related and other
employee benefits (including purchases by the Company of its common stock in
connection with the payment of such benefits) in the ordinary course of
business to employees of the Company or a Subsidiary shall not be deemed
Restricted Payments.
"Restricted Preferred Stock" means (i) all preferred stock
which (a) is subject to purchase, retirement, redemption, exchange or
conversion (other than exchange for or conversion to common stock of the
Company), in whole or in part under any circumstance whatsoever (other than
purchase, retirement, redemption, exchange or conversion by the issuer thereof,
at the sole option of such issuer, if failure to exercise such option would not
have an adverse effect on the Company or any Subsidiary pursuant to the terms
of any such preferred stock or any documents related thereto) and (b) provides
for dividends materially in excess of the generally prevailing market dividend
rate (at the time of issuance of such preferred stock) for preferred stock of
comparable risk and maturity, and (ii) the portion of all other preferred stock
which is subject to purchase, retirement, redemption, exchange or conversion
(other than exchange for or conversion to common stock of the Company) at any
date or dates on or prior to April 30, 2000 under any circumstance whatsoever
(other than purchase, retirement, redemption, exchange or conversion by the
issuer thereof, at the sole option of such issuer, if failure to exercise such
option would not have an adverse effect on the Company or any Subsidiary
pursuant to the terms of any such preferred stock or any documents related
thereto). For avoidance of doubt, to the extent that any shares of Restricted
Preferred Stock are exchanged for or converted to common stock of the Company
and as a consequence such shares of Restricted Preferred Stock are cancelled,
such shares shall no longer constitute Restricted Preferred Stock.
"Restricted Subsidiaries Recourse Debt" means, at any date,
the sum of (a) the aggregate amount of all Debt (other than (i) Non-Recourse
Debt, (ii) any Guarantee of Debt of the Company (including the Loans) and (iii)
the amount, if any, by which the Guarantees of the Restricted Subsidiaries
(other than Unimar and the Unimar Restricted Subsidiaries) included in the
determination of Excess Letter of Credit/Guarantee Amount exceeds the Excess
Letter of Credit/Guarantee Amount) of each Restricted Subsidiary (other than
Unimar and the Unimar Restricted Subsidiaries),
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determined on a consolidated basis as of such date, and (b) the Unimar
Percentage of the aggregate amount of all Debt (other than (i) Non-Recourse
Debt, (ii) any Guarantee of Debt of the Company and (iii) the amount, if any,
by which the Unimar Percentage of the Guarantees of Unimar and the Unimar
Restricted Subsidiaries included in the determination of Excess Letter of
Credit/Guarantee Amount exceeds the Excess Letter of Credit/Guarantee Amount)
of Unimar and the Unimar Restricted Subsidiaries, determined on a consolidated
basis as of such date.
"Restricted Subsidiary" means each Person listed in Part B of
Schedule II hereto and each Subsidiary that owns directly or indirectly any
interest in any Restricted Assets or any Restricted Subsidiary; provided that a
Restricted Subsidiary shall cease to be such at such time as it is converted to
an Unrestricted Subsidiary pursuant to Section 5.20 or ceases to be a
Subsidiary as a result of a transaction permitted by Section 5.14.
"Restricted Transfer" means (i) any Investment in an
Affiliate, any Unrestricted Subsidiary or any subsidiary of an Unrestricted
Subsidiary, but excluding to the extent otherwise included in the foregoing,
Investments in Unimar and the Unimar Subsidiaries, or (ii) any payment by the
Company or any Subsidiary, directly or indirectly, in respect of Non-Recourse
Debt to the extent such Person is not legally obligated to make such payment by
the terms of such Debt, or solely in the case of Unimar, Unistar, Inc. or any
of the Unimar Subsidiaries, to the extent such Person is not legally obligated
to fund such payment under the terms of the Unimar Partnership Agreement.
"Revolving Credit Period" means the period from and including
the Effective Date to but not including the Termination Date.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. on the date hereof.
"Subsidiary" means (a) Unimar and the Unimar Subsidiaries
(except at such times as the Company does not own, directly or indirectly, any
of the ownership interest in Unimar) and (b) any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, it being
understood that the power to elect exactly 50% of the board of directors or
such other persons does not constitute a "majority" as used herein.
"Subsidiary Guarantors" means the Subsidiaries from time to
time parties to the Subsidiary Guaranty Agreement, and their respective
successors.
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<PAGE> 26
"Subsidiary Guaranty Agreement" means the Subsidiary Guaranty
Agreement dated as of April 24, 1995 among the Subsidiary Guarantors and
NationsBank, as Agent, substantially in the form of Exhibit B hereto, as the
same may be amended from time to time in accordance with the terms thereof.
"Termination Date" means April 15, 1996, or, if such day is
not a Euro-Dollar Business Day, the Termination Date shall be the next
preceding Euro-Dollar Business Day.
"Type" has the meaning specified in the definition of Loan.
"UK Assets" means all Restricted Assets of UTPL as of December
31, 1993.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the present value of all benefits under
such Plan as determined by such Plan's actuary exceeds (ii) the fair market
value of all Plan assets allocable to such benefits (excluding any accrued but
unpaid contributions), all determined as of the then most recent valuation date
for such Plan, but only to the extent that such excess represents a potential
liability of a member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA if such Plan terminated as of such date.
"Unimar" means Unimar Company, a partnership organized and
existing under the laws of Texas.
"Unimar Partnership Agreement" means the Amended and Restated
Agreement of General Partnership of Unimar dated as of September 11, 1990
between Unistar, Inc. and Ultrastar, Inc., as amended from time to time.
"Unimar Percentage" means, at any date, the aggregate
percentage ownership interest in Unimar owned at such date by the Company and
the Subsidiaries.
"Unimar Restricted Subsidiary" means any Unimar Subsidiary
that is also a Restricted Subsidiary at the relevant date.
"Unimar Subsidiary" means any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by Unimar, it being
understood that the power to elect exactly 50% of the board of directors or
such other persons does not constitute a majority as used herein.
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"Unrestricted Subsidiary" means any Subsidiary which is not a
Restricted Subsidiary.
"UT Pakistan" means Union Texas Pakistan, Inc., a Delaware
corporation.
"UTPC" means Union Texas Products Corporation, a Delaware
corporation.
"UTPL" means Union Texas Petroleum Limited, an English company.
SECTION 1.02. Accounting Terms and Determinations. 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 generally accepted accounting principles as in effect from time
to time, applied on a basis consistent with the most recent audited
consolidated financial statements of the Company and its Consolidated
Subsidiaries delivered to the Banks (except for changes concurred in by the
Company's independent public accountants); provided that in any determination
of Consolidated Debt if (i) the Company or any Restricted Subsidiary owes any
Debt to an Unrestricted Subsidiary which would otherwise be eliminated in such
determination of Consolidated Debt (the "intercompany Debt") (other than Debt
in an amount not exceeding $10,000,000 in the aggregate at any time and
representing advances by the Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary made in the ordinary course of the cash management
practices of the Company and its Subsidiaries) and (ii) such Unrestricted
Subsidiary owes, at the date of determination, any Debt for borrowed money to a
Person other than the Company or a Subsidiary (the "third party Debt") (other
than any such Debt that also constitutes Debt of the Company or a Restricted
Subsidiary), then an amount equal to the lesser of (1) such intercompany Debt
and (2) such third party Debt, shall not be eliminated in such determination of
Consolidated Debt.
SECTION 1.03. Types of Borrowings. The term "Borrowing"
denotes the aggregate of Loans made by Banks to the Company pursuant to Article
II on a single date, of a single Type and, if such Loans are Euro-Dollar Loans,
for a single Interest Period. Borrowings are classified for purposes of this
Agreement by reference to the pricing of Loans comprising such Borrowing (e.g.,
a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans).
SECTION 1.04. Miscellaneous. 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 and Exhibit references are to
Articles and Sections of and Schedules and Exhibits to this Agreement, unless
otherwise specified. The term
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"including" as used herein means "including without limitation". Definitions
of terms defined herein shall be applicable to both the singular and plural
forms of the terms defined as appropriate. References to "directly or
indirectly" in respect of ownership of any interest in any assets shall
include, without limitation, direct ownership, indirect ownership through
capital stock or other ownership interest (whether through one or more levels
of subsidiaries, affiliates or other Persons) and any other direct or indirect
ownership arrangement.
SECTION 1.05. Unimar. To the extent this Agreement or any
other Financing Document obligates the Company or a Subsidiary to cause Unimar
and the Unimar Subsidiaries to take any action, such obligation shall be
satisfied if (a) the Company votes (or causes a Subsidiary to vote) the Unimar
Percentage in a manner consistent with the obligations of the Company and the
Subsidiaries under the Financing Documents and (b) any representative of the
Company sitting on any management board or board of directors of Unimar or any
of the Unimar Subsidiaries votes, as a member of such management board or board
of directors, in a manner consistent with the obligations of the Company and
the Subsidiaries under the Financing Documents.
SECTION 1.06. Ratings. A rating, whether public or private,
by S&P shall be deemed to be in effect on the date of announcement or
publication by S&P, as the case may be, of such rating or, in the absence of
such announcement or publication, on the effective date of such rating and will
remain in effect until the effective date of any change in such rating. In the
event the standards for any rating by S&P are revised, or such rating is
designated differently (such as by changing letter designations to numerical
designations), then the references herein to such rating shall be changed to
the revised or redesignated rating for which the standards are closest to, but
not lower than, the standards at the date hereof for the rating which has been
revised or redesignated, all as determined by the Agent in good faith.
Long-term debt supported by a letter of credit, guaranty (other than guaranties
of Subsidiaries) or other similar credit enhancement mechanism shall not be
considered as senior unsecured long-term debt.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the Revolving
Credit Period each Bank severally agrees, on the terms and conditions set forth
in this Agreement, to make loans to the Company pursuant to this Section from
time to time in amounts such that the aggregate principal amount of Loans by
such Bank at any one time outstanding to the Company shall not exceed the
amount of such Bank's Commitment at such time. Each Borrowing under this
Section shall be in an aggregate
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principal amount of $10,000,000 or any larger multiple of $1,000,000 (except
that any such Borrowing may be, subject to the other terms hereof, in the
aggregate amount of the remaining unused Commitments) and shall be made from
the several Banks ratably in proportion to their respective Commitments.
Within the foregoing limits, the Company may borrow under this Section, repay
(whether pursuant to Section 2.10 or otherwise), or to the extent permitted by
Section 2.11, prepay Loans and reborrow at any time during the Revolving Credit
Period under this Section.
SECTION 2.02. Notice of Borrowings. (a) The Company shall
give the Agent notice (a "Notice of Borrowing") not later than 10:00 A.M.
(Houston time) on (x) the date of each Base Rate Borrowing, and (y) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Base Rate Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be
Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the duration
of the initial Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period.
Notwithstanding the foregoing, not more than ten Euro-Dollar Borrowings shall
be outstanding at any one time, and any Borrowing which would exceed such
limitation shall be made as a Base Rate Borrowing.
(b) If requested to do so by the Company through the
Agent at least ten Euro-Dollar Business Days before the first day of a proposed
Interest Period for Euro-Dollar Loans, each Bank will advise the Agent before
10:00 A.M. (Houston time) on the sixth Euro-Dollar Business Day preceding the
date of such proposed Interest Period as to whether, if the Company selects a
specified duration of nine or twelve months for such Interest Period, such Bank
expects that deposits in dollars with a corresponding term will be available to
it in the relevant market on the first day of such Interest Period in the
amount required to fund its Loan to which such Interest Period would apply.
Unless a Bank responds by such time to the effect that it expects such deposits
will not be available to it, the Company shall be entitled to select such
proposed duration for such Interest Period.
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SECTION 2.03. Conversions. (a) The Company may on any
Euro-Dollar Business Day, upon notice given to the Agent no later than 10:00
a.m. (Houston time) on the third Euro-Dollar Business Day prior to the date of
the proposed Conversion and subject to the provisions of Section 2.02 and
Article VIII and the other provisions hereof, Convert all Loans comprising one
or more Borrowings; provided that (i) Loans comprising a Borrowing may not be
Converted if after giving effect to such Conversion, such Borrowing would be a
Euro-Dollar Borrowing and the outstanding principal amount of such Borrowing
would be less than $10,000,000 and (ii) no Conversion (other than changing
Euro-Dollar Loans into Base Rate Loans) may be made if any Event of Default is
then existing. Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Loans to be
Converted, (iii) if after giving effect to such Conversion, such Borrowing
would be a Euro-Dollar Borrowing, the commencement date and duration of the
proposed Interest Period for each Loan comprising such Borrowing, and (iv) the
nature of such Conversion (i.e., whether such Conversion is a change of Loans
of one Type into another Type, a continuation of Euro-Dollar Loans as such for
an additional Interest Period or an election to change an Interest Period).
Each such notice shall be irrevocable.
(b) If the aggregate unpaid principal amount of
Euro-Dollar Loans comprising any Borrowing shall be reduced by payment or
prepayment or otherwise, to less than $10,000,000, such Loans shall
automatically, on the last day of the then existing Interest Period therefor,
Convert into Base Rate Loans.
(c) If the Company shall fail to select the duration of
any Interest Period for any Euro-Dollar Loans in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, or if there
shall be any Event of Default, such Loans will automatically on the last day of
the then existing Interest Period therefor, Convert into Base Rate Loans.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent
shall promptly, (by no later than 10:30 A.M. (Houston time) by telephone or
facsimile transmission) notify each Bank of the contents thereof and of such
Bank's share of such Borrowing and such Notice of Borrowing shall not
thereafter be revocable by the Company.
(b) Not later than 12:00 Noon (Houston time) on the date
of each Borrowing, each Bank shall (except as provided in subsection (c) of
this Section) make available its share of such Borrowing, in Federal or other
funds immediately available in Houston, to the Agent at its address specified
in or pursuant to Section 9.01. Unless the Agent determines that any
applicable condition specified in Article III has not been
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satisfied, the Agent will make the funds so received from the Banks available
to the Company at the Agent's aforesaid address.
(c) If any Bank makes a new Loan hereunder to the Company
on a day on which the Company is to repay all or any part of an outstanding
Loan from such Bank, such Bank shall apply the proceeds of its new Loan to make
such repayment and only an amount equal to the difference (if any) between the
amount being borrowed by the Company and the amount being repaid shall be made
available by such Bank to the Agent as provided in subsection (b), or remitted
by the Company to the Agent as provided in Section 2.12, as the case may be.
(d) Unless the Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not make available
to the Agent such Bank's share of such Borrowing, the Agent may assume that
such Bank has made such share available to the Agent on the date of such
Borrowing in accordance with subsections (b) and (c) of this Section 2.04 and
the Agent may, in reliance upon such assumption, make available to the Company
on such date a corresponding amount. If and to the extent that such Bank shall
not have so made such share available to the Agent, such Bank and the Company
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount
is made available to the Company until the date such amount is repaid to the
Agent, at (i) in the case of the Company, a rate per annum equal to the higher
of the Federal Funds Rate and the interest rate applicable thereto pursuant to
Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If
such Bank shall repay to the Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Loan included in such Borrowing for
purposes of this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank to the
Company shall be evidenced by a single Note of the Company payable to the order
of such Bank for the account of its Applicable Lending Office in an amount
equal to the aggregate unpaid principal amount of such Bank's Loans to the
Company.
(b) Each Bank may, by notice to the Company and the
Agent, request that its Loans of a particular Type payable to such Bank (or
such lending office, agency or branch of such Bank as such Bank may specify in
such request) be evidenced by a separate Note of the Company in an amount equal
to the aggregate unpaid principal amount of such Loans. Each such Note shall
be in substantially the form of Exhibit A hereto with appropriate modifications
to reflect the fact that it evidences solely Loans of the relevant Type. Any
Bank that receives multiple Notes pursuant to this Section 2.05(b) agrees that:
(1) the aggregate principal amount payable by the Company under such Notes
shall never exceed the aggregate principal amount of the Loans owed to such
Bank (including, if applicable, the separate lending offices, agencies or
branches
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of such Bank) and (2) the payees of the Notes issued at the request of such
Bank shall enjoy no greater rights (voting or otherwise) than such Bank would
enjoy in the absence of such request and such payees (including, if applicable,
the separate lending offices, agencies or branches of such Bank) shall be
considered a single Bank for purposes of this Agreement. Each reference in
this Agreement to the "Note" of such Bank shall be deemed to refer to and
include any or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section
3.01(b), the Agent shall mail or send by private delivery service such Note to
such Bank. Each Bank shall record the date, amount and Type of each Loan made
by it to the Company and the date and amount of each payment of principal made
with respect thereto, and prior to any transfer of its Note shall endorse on
the schedule forming a part thereof appropriate notations to evidence the
foregoing information with respect to each such Loan then outstanding; provided
that the failure of any Bank to make any such recordation or endorsement shall
not affect the obligations of any Obligor under any of the Financing Documents.
Each Bank is hereby irrevocably authorized by the Company so to endorse any
Note and to attach to and make a part of any Note a continuation of any such
schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan shall mature, and
the principal amount thereof shall be due and payable, on April 15, 1997.
SECTION 2.07. Interest Rates. The Company shall pay interest
on the unpaid principal amount of each Loan from the date of such Loan until
such principal amount shall be paid in full, at the following rates per annum:
(a) If such Loan is a Base Rate Loan, for each day that such
Loan is a Base Rate Loan, at a rate per annum equal to the sum of (i) the Base
Rate for such day plus (ii) at such times as the Margin Increase Condition
exists and the Additional Margin Increase Condition does not exist, 1/8% plus
(iii) at such times as the Additional Margin Increase Condition exists, 1/4%
plus (iv) at such times as any Event of Default exists, 1%. Such interest shall
be payable quarterly on each March 31, June 30, September 30 and December 31
and on the date such Base Rate Loan is Converted or paid in full. Any overdue
interest on any Base Rate Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 1% plus the otherwise
applicable rate for such day.
(b) If such Loan is a Euro-Dollar Loan, at a rate per
annum equal at all times during any Interest Period for such Loan to the sum of
(i) 0.6875% plus (ii) the applicable London Interbank Offered Rate plus (iii)
at such times as the Margin Increase Condition exists and the Additional Margin
Increase Condition does not exist, 1/8% plus (iv) at such times as the
Additional Margin Increase Condition exists, 1/4% plus (v) at such times as any
Event of Default exists, 1%; provided that any overdue
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principal of or interest on any Euro-Dollar Loan shall bear interest, payable
on demand, for each day from and including the date payment thereof was due to
but excluding the date of actual payment, at a rate per annum equal to the sum
of 1% plus the higher of (i) the sum of 0.6875% plus the London Interbank
Offered Rate applicable to such Loan plus at such times as the Margin Increase
Condition exists and the Additional Margin Increase Condition does not exist,
1/8% plus at such times as the Additional Margin Increase Condition exists,
1/4% and (ii) the sum of (1) 0.6875% plus (2) the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the respective rates per annum at
which one day (or, if such amount due remains unpaid more than three
Euro-Dollar Business Days, then for such other period of time not longer than
three months as the Agent may select) deposits in dollars in an amount
approximately equal to such overdue payment due to each of the Reference Banks
are offered to such Reference Bank in the London interbank market for the
applicable period determined as provided above plus (3) at such times as the
Margin Increase Condition exists and the Additional Margin Increase Condition
does not exist, 1/8% plus (4) at such times as the Additional Margin Increase
Condition exists, 1/4% (or, if the circumstances described in clause (a) or (b)
of Section 8.01 shall exist, at a rate per annum equal to the sum of 1% plus
the rate applicable to Base Rate Loans for such day). Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three months, at intervals of three months after the
first day thereof.
The "London Interbank Offered Rate" applicable to any Interest
Period means the arithmetic average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of the respective rates per annum at which deposits in
dollars are offered to each of the Reference Banks in the London interbank
market at approximately 11:00 A.M. (London time) two Euro-Dollar Business Days
before the first day of such Interest Period in an amount approximately equal
to the principal amount of the Euro-Dollar Loan of such Reference Bank to which
such Interest Period is to apply and for a period of time comparable to such
Interest Period.
(c) The Agent shall determine each interest rate
applicable to the Loans hereunder. The Agent shall give prompt notice to the
Company and the participating Banks of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence of manifest error.
Upon request of the Company, the Agent shall furnish to it such information as
to its determinations hereunder as the Company may reasonably request.
(d) Each Reference Bank agrees to use its best efforts to
furnish quotations to the Agent as contemplated by this Section. If any
Reference Bank does not furnish a timely quotation, the Agent shall determine
the relevant interest rate on the basis of the quotation or quotations
furnished by the remaining Reference Bank or
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Banks or, if none of such quotations is available on a timely basis, the
provisions of Section 8.01 shall apply.
(e) This Section 2.07 and each other provision in any of
the Financing Documents or in any other agreement executed in connection
herewith are specifically made subject to Section 2.16.
SECTION 2.08. Fees. (a) During the Revolving Credit Period,
the Company shall pay to the Agent for the account of the Banks ratably in
proportion to their Commitments a commitment fee at a rate per annum equal to
0.1875% on the daily average amount by which the aggregate amount of the
Commitments exceed the aggregate outstanding principal amount of the Loans.
Such commitment fee shall accrue from and including the Effective Date to but
excluding the Termination Date. Additionally, the Company shall pay to the
Agent for the account of the Banks ratably a facility fee at a rate per annum
equal to 0.1875% on the daily average aggregate outstanding principal amount of
the Loans. Such facility fee shall accrue from and including the Effective
Date to but excluding the date the Loans shall be repaid in their entirety.
(b) Payments. Accrued fees under this Section 2.08 shall
be payable quarterly on each March 31, June 30, September 30 and December 31
and upon the date of termination of the Commitments in their entirety (and, if
later, the date the Loans shall be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction of
Commitments. The Company may, upon at least three Domestic Business Days'
notice to the Agent, (i) terminate the Commitments at any time, if no Loans are
outstanding at such time, or (ii) ratably reduce from time to time by an
aggregate amount of $10,000,000 or any larger multiple of $5,000,000 the
aggregate amount of the Commitments in excess of the aggregate outstanding
principal amount of the Loans.
SECTION 2.10. Mandatory Termination or Reduction of
Commitments. (a) The Commitments shall terminate on the Termination Date.
(b) On the fifth Domestic Business Day following any
Asset Sale that results in positive Excess Net Sales Proceeds, (i) the Company
will deliver to each of the Banks a certificate of the chief financial officer,
the chief accounting officer or the treasurer of the Company certifying the
amount of such Excess Net Sales Proceeds from such Asset Sale, (ii) the
Commitments shall be automatically reduced ratably by an amount equal to (a)
100% of the amount of such Excess Net Sales Proceeds minus (b) the amount, if
any, by which the Other Credit Agreement Commitments are reduced pursuant to
Section 2.10(d)(ii) of the Other Credit Agreement as a result of such Excess
Net Sales Proceeds from such Asset Sale, and (iii) the Company shall be
obligated to
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repay such principal amount (together with accrued interest thereon) of each
Bank's outstanding Loans, if any, as may be necessary so that after such
repayment the aggregate outstanding principal amount of such Bank's Loans does
not exceed the amount of such Bank's Commitment as then reduced.
SECTION 2.11. Optional Prepayments. (a) The Company may,
upon at least one Domestic Business Day's notice to the Agent, prepay any
Borrowing in whole at any time, or from time to time in part in amounts
aggregating $10,000,000 or any larger multiple of $1,000,000, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment; provided that no partial prepayment of a Euro-Dollar
Borrowing shall be made if after giving effect thereto the principal amount of
such Borrowing would be less than $10,000,000. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several Banks included in
such Borrowing.
(b) Upon receipt of a notice of prepayment pursuant to
this Section, the Agent shall promptly notify each Bank of the contents thereof
and of such Bank's ratable share (if any) of such prepayment and such notice
shall not thereafter be revocable by the Company.
SECTION 2.12. General Provisions as to Payments. (a) The
Company shall make each payment of principal of, and interest on, the Loans and
of fees hereunder, not later than 12:00 Noon (Houston time) on the date when
due, in Federal or other funds immediately available in Houston, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable share of each such payment received by the Agent for
the account of the Banks. Whenever any payment of principal of, or interest
on, the Base Rate Loans or of fees shall be due on a day which is not a
Domestic Business Day, the date for payment thereof shall be extended to the
next succeeding Domestic Business Day. Whenever any payment of principal of,
or interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the
Company prior to the date on which any payment is due from the Company to the
Banks hereunder that the Company will not make such payment in full, the Agent
may assume that the Company has made such payment in full to the Agent on such
date and the Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then
due such Bank. If and to the extent
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that the Company shall not have so made such payment, each Bank shall repay to
the Agent forthwith on demand such amount distributed to such Bank together
with interest thereon, for each day from the date such amount is distributed to
such Bank until the date such Bank repays such amount to the Agent, at the
Federal Funds Rate.
SECTION 2.13. Funding Losses. If any Obligor makes any
payment of principal with respect to any Euro-Dollar Loan (pursuant to Article
II, VI or VIII or otherwise) on any day other than the last day of an Interest
Period applicable thereto, or the end of an applicable period fixed pursuant to
the proviso to Section 2.07(b), or if the Company fails to borrow any
Euro-Dollar Loan after notice has been given to any Bank in accordance with
Section 2.04(a), or if any Conversion of any Euro-Dollar Loan occurs on any day
other than the last day of an Interest Period applicable thereto, the Company
shall reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin from the period after any such payment or failure to borrow; provided
that such Bank shall have delivered to the Company a certificate as to the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest
based on the Base Rate hereunder shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and fees shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding
the last day).
SECTION 2.15. Chapter 15. In no event shall the provisions
of Article 5069, Chapter 15 of the Revised Civil Statutes of Texas (which
regulates certain revolving credit loan accounts and revolving tri-party
accounts) apply to any Loan made hereunder.
SECTION 2.16. Maximum Interest Rate. (a) Nothing contained
in this Agreement or the Notes shall require the Company to pay interest at a
rate exceeding the maximum rate permitted without penalty by applicable law.
Each provision in the Financing Documents and any other agreement executed in
connection herewith is expressly limited so that in no event whatsoever shall
the amount paid thereunder, or otherwise paid, by the Company for the use,
forbearance or detention of the money to be loaned under this Agreement, exceed
that amount of money which would cause the effective rate of interest thereon
to exceed the maximum rate of interest permitted without penalty under
applicable law, and all amounts payable under the Financing Documents or any
other agreement executed in connection herewith, or otherwise payable in
connection therewith, shall be subject to reduction so that such amounts paid
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or payable for the use, forbearance or detention of money to be loaned under
this Agreement shall not exceed that amount of money which would cause the
effective rate of interest thereon to exceed the maximum rate of interest
permitted without penalty under applicable law.
(b) If the amount of interest payable for the account of
any Bank on any interest payment date in respect of the immediately preceding
interest computation period, computed pursuant to Section 2.07, would exceed
the maximum amount permitted without penalty by applicable law to be charged by
such Bank, the amount of interest payable for its account on such interest
payment date shall be automatically reduced to such maximum permissible amount.
(c) If the amount of interest payable for the account of
any Bank in respect of any interest computation period is reduced pursuant to
clause (b) of this Section and the amount of interest payable for its account
in respect of any subsequent interest computation period, computed pursuant to
Section 2.07, would be less than the maximum amount permitted without penalty
by applicable law to be charged by such Bank, then the amount of interest
payable for its account in respect of such subsequent interest computation
period shall be automatically increased to such maximum permissible amount;
provided that at no time shall the aggregate amount by which interest paid for
the account of any Bank has been increased pursuant to this clause (c) exceed
the aggregate amount by which interest paid for its account has theretofore
been reduced pursuant to clause (b) of this Section.
(d) In the event that maturity of the Loans is
accelerated for any reason, or in the event of any required or permitted
prepayment of the Loans, then such consideration that constitutes interest
payable for the account of any Bank shall never include more than the maximum
amount allowed without penalty by applicable law to be charged by such Bank and
excess interest, if any, payable for the account of such Bank pursuant to its
Note, this Agreement or otherwise shall be cancelled automatically as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited on the Loans of such Bank (or, to the extent in excess of such Loans,
refunded by such Bank to the Company).
(e) It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for, charged or
received for the account of any Bank under the Note held by it, under this
Agreement, under any other agreement executed in connection herewith or
otherwise in connection with the Loans or the Commitment of such Bank for the
purpose of determining whether such rate exceeds the maximum nonusurious
interest rate applicable to such Bank, shall be made, to the extent permitted
by usury laws applicable to such Bank (now or hereafter enacted), by
amortizing, prorating and spreading in equal parts during the period of the
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full stated terms of the Loans evidenced by such Note all interest at any time
contracted for, charged or received by such Bank in connection therewith.
(f) To the extent that any Bank may be subject to Texas
law limiting the amount of interest payable for its account, such Bank shall
utilize the indicated (weekly) rate ceiling from time to time in effect as
provided in Article 5069-1.04 of the Revised Civil Statutes of Texas, as
amended.
SECTION 2.17. Taxes. (a) Any and all payments by the Company
hereunder or under the Notes shall be made, in accordance with Section 2.12,
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges and withholdings, and all
liabilities with respect thereto, excluding (i) in the case of the Agent, each
Co-Agent and each Bank, United States federal income taxes and, without
duplication, any taxes imposed on its income, and franchise taxes imposed on
it, by the jurisdiction under the laws of which the Agent, such Co-Agent or
such Bank, as the case may be, is organized or any political subdivision
thereof and (ii) in the case of each Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Company shall be required by law
to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note to any Bank, any Co-Agent or the Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.17) such Bank, such Co-Agent or the Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been
made, (ii) the Company shall make such deductions and (iii) the Company shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Company agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, assessments,
charges or similar levies which arise from any payment made hereunder or under
the Notes or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement, any of the Notes or the Subsidiary Guaranty
Agreement (hereinafter referred to as "Other Taxes").
(c) The Company will indemnify each Bank, each Co-Agent and the
Agent for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.17) paid by such Bank, such Co-Agent or the Agent
(as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted.
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Payments under any indemnification provided for in this Section 2.17(c) shall
be made within 30 days from the date such Bank, such Co-Agent or the Agent (as
the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Company will furnish to the Agent, at its address referred to in Section 9.01,
the original or a certified copy of a receipt evidencing payment thereof.
Should any Bank, any Co-Agent or the Agent ever receive any refund, credit or
deduction from any taxing authority to which such Bank, such Co-Agent or the
Agent, as the case may be, would not be entitled but for the payment by the
Company of Taxes as required by this Section 2.17 (it being understood that the
decision as to whether or not to claim, and if claimed, as to the amount of any
such refund, credit or deduction shall be made by such Bank, such Co-Agent or
the Agent, as the case may be, in its sole discretion), such Bank, such
Co-Agent or the Agent, as the case may be, thereupon shall repay to the Company
an amount with respect to such refund, credit or deduction equal to any net
reduction in taxes actually obtained by such Bank, such Co-Agent or the Agent,
as the case may be, and reasonably determined by such Bank, such Co-Agent or
the Agent, as the case may be, to be attributable to such refund, credit or
deduction.
(e) Each Bank represents that it is either (i) a corporation,
association or other entity organized under the laws of the United States or
any state thereof or (ii) 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 the Notes. Each Bank that is not
organized under the laws of the United States or any state thereof (a "Foreign
Bank") agrees to provide to the Company and the Agent, on or prior to the date
of this Agreement in the case of each Foreign Bank signatory hereto, and on the
date of the Assignment pursuant to which it became a Bank in the case of each
other Foreign Bank, two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that such Foreign Bank is
entitled to receive payments from the Company under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Foreign Bank which so delivers a Form 1001 or 4224 further
undertakes to deliver to each of the Company and the Agent two additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Company
or the Agent, in each case certifying that such Foreign Bank is entitled to
receive payments from the Company under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Foreign Bank from duly completing and delivering any such form with respect to
it and
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such Foreign Bank advises the Company and the Agent that it is not capable of
receiving such payments without any deduction or withholding of United States
federal income tax. Each Bank agrees to indemnify and hold the Company and the
Agent harmless from any United States taxes, penalties, interest and other
expenses, costs and losses incurred or payable by them as a result of either
(a) such Bank's failure to submit any form that it is required to provide
pursuant to this Section 2.17(e) or (b) the Agent's and the Company's reliance
on any such form which such Bank has provided to them, or on the representation
of such Bank made to them pursuant to this Section 2.17(e).
(f) If any Taxes are paid by the Company pursuant to this Section
2.17 in respect of the Applicable Lending Office of any Bank, such Bank will,
if requested to do so by the Company, designate a different Applicable Lending
Office if such designation will avoid the need to pay, or reduce the amount of,
such Taxes and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank.
ARTICLE III
CONDITIONS
SECTION 3.01. Initial Borrowing. The obligation of any Bank
to make a Loan on the occasion of the initial Borrowing is subject to the
satisfaction (or waiver in accordance with Section 9.05) of each of the
following conditions:
(a) receipt by the Agent of counterparts hereof signed by
each of the parties hereto (or, in the case of any party as to which
an executed counterpart shall not have been received, receipt by the
Agent in form satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a counterpart
hereof by such party);
(b) receipt by the Agent for the account of each Bank of
a duly executed Note of the Company dated on the date of this
Agreement complying with the provisions of Section 2.05;
(c) receipt by the Agent of the Subsidiary Guaranty
Agreement, duly executed by each of the Required Guarantors;
(d) receipt by the Agent of an opinion of Newton W.
Wilson, III, General Counsel of the Company, substantially in the form
of Exhibit C hereto;
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(e) receipt by the Agent of an opinion of Andrews & Kurth
L.L.P., special counsel for the Obligors, substantially in the form of
Exhibit D hereto;
(f) receipt by the Agent of an opinion of Bracewell &
Patterson, L.L.P., special counsel for the Agent, substantially in the
form of Exhibit E hereto;
(g) receipt by the Agent of opinions of local counsel,
substantially in the forms of Exhibits G-1 and G-2 hereto;
(h) receipt by the Agent of all documents it may
reasonably request relating to the existence of the Obligors, the
corporate authority for and the validity of each of the Financing
Documents, and any other matters relevant thereto, all in form and
substance satisfactory to the Agent;
(i) receipt by the Agent of a certificate of an officer
of the Company stating the rating by S&P of all senior unsecured
long-term debt of the Company as in effect on the date of this
Agreement; and
(j) receipt by the Agent of a certificate of the chief
financial officer, the chief accounting officer or the treasurer of
the Company certifying, as of the Effective Date, that no Default
exists and certifying the aggregate outstanding amount of Consolidated
Debt as of December 31, 1994 and the Operating Cash Flow for the four
calendar quarter period ending on December 31, 1994.
SECTION 3.02. All Borrowings. The obligation of any Bank to
make a Loan on the occasion of any Borrowing is subject to the satisfaction of
the following conditions (in addition to the conditions set forth in Section
3.01):
(a) receipt by the Agent of a Notice of Borrowing as
required by Section 2.02;
(b) the fact that immediately prior to and immediately
after such Borrowing, no Default shall have occurred and be
continuing; and
(c) the fact that the representations and warranties of
the Company contained in this Agreement (except, in the case of any
Borrowing subsequent to the first Borrowing, the representations and
warranties set forth in Section 4.04(a) or (c)) shall be true and
correct in all material respects on and as of the date of such
Borrowing.
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Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Company on the date of such Borrowing as to the facts specified in this
Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
SECTION 4.01. Corporate Existence and Power. Each of the
Obligors is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to own its assets and to carry on its business
as now conducted and is duly qualified as a foreign corporation in good
standing in each jurisdiction where the nature of its business or the ownership
or leasing of its properties requires such qualification and where the failure
so to qualify could have a material adverse effect on the business, financial
position, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole. Neither the Company nor any Subsidiary or
Affiliate is subject to regulation under the Public Utility Holding Company Act
of 1935, the Investment Company Act of 1940, the Interstate Commerce Act or any
other law or regulation which limits the incurrence by the Company or any
Subsidiary of Debt, including, but not limited to, laws relating to common or
contract carriers or the sale of electricity, gas, steam, water or other public
utility services.
SECTION 4.02. Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by each Obligor of each
Financing Document to which it is shown as being a party are within such
Obligor's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene, or constitute a default under, any
provision of applicable law or regulation (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System) or the certificate of incorporation, by-laws or other charter documents
of such Obligor or of any instrument or agreement evidencing or governing Debt
or any other material agreement, judgment, injunction, order, decree or other
instrument binding upon such Obligor or result in the creation or imposition of
any material Lien on any asset of the Company or any Subsidiary. All
authorizations, consents and approvals of governmental bodies, agencies or
officials required in connection with the execution, delivery and performance
by each Obligor of the Financing Documents to which it is shown as being a
party have been obtained and are in full force and effect.
SECTION 4.03. Binding Effect. This Agreement and each of the
Notes have been duly executed and delivered by the Company and constitute
legal, valid and
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binding agreements of the Company, and the Subsidiary Guaranty Agreement has
been duly executed and delivered by each Required Guarantor and constitutes a
legal, valid and binding obligation of each Required Guarantor.
SECTION 4.04. Information.
(a) The consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of December 31, 1994 and the related consolidated
statements of operations, cash flows and common stock and other shareholders'
equity for the fiscal year then ended, reported on by Price Waterhouse and set
forth in the Company's 1994 Form 10-K, a copy of which has been delivered to
each of the Banks, fairly present, in conformity with generally accepted
accounting principles, 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 fiscal year.
(b) To the best knowledge of the Company, there are no
statements or conclusions in any Engineering Report delivered pursuant hereto
which are based upon or include misleading information or fail to take into
account material information regarding the matters reported therein, it being
understood that such statements and conclusions are necessarily based upon
professional opinions, estimates and forecasts, and the Company does not
warrant that such opinions, estimates and forecasts will ultimately prove to
have been accurate.
(c) The Company's 1994 Form 10-K does not contain any
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements contained therein not misleading. Except for
matters of general public knowledge with respect to the oil and gas industry,
the Company has disclosed to the Banks in writing any and all facts which
materially and adversely affect or may be reasonably expected so to affect (to
the extent the Company can now reasonably foresee), the business, assets,
operations, prospects or condition, financial or otherwise, of the Company and
its Subsidiaries or the ability of any Obligor to perform its obligations under
the Financing Documents.
(d) Since December 31, 1994 there has been no material
adverse change in the business, financial position, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole.
(e) No Default exists.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending against, or to the knowledge of the Company threatened
against or affecting, the Company or any of its Subsidiaries or any of their
respective properties or interests
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at law or in admiralty or equity, before any court or arbitrator or any
governmental body, agency or official, foreign or domestic, in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, financial position or results of operations of the Company
and its Subsidiaries, taken as a whole, or which in any manner draws into
question the validity of any Financing Document.
SECTION 4.06. Compliance with ERISA. Each member of the
ERISA Group has fulfilled its obligations under the minimum funding standards
of ERISA and the Internal Revenue Code with respect to each Plan and is in
compliance in all material respects with the presently applicable provisions of
ERISA and the Internal Revenue Code with respect to each Plan. No member of
the ERISA Group has (i) sought a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code in respect of any Plan, (ii) failed to
make any contribution or payment to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement, or made any amendment to any Plan or
Benefit Arrangement, which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course
of its business, the Company conducts an ongoing review of the effect of
existing Environmental Laws on the business, operations and properties of the
Company and the Subsidiaries, in the course of which it attempts to identify
and evaluate associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or closure of
properties presently or previously owned, any capital or operating expenditures
required to achieve or maintain compliance with environmental protection
standards imposed by law or as a condition of any license, permit or contract,
any related constraints on operating activities, including any periodic or
permanent shutdown of any facility or reduction in the level of or change in
the nature of operations conducted thereat and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Company has reasonably concluded
that existing Environmental Laws are unlikely to have a material adverse effect
on the business, financial condition, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole.
SECTION 4.08. Subsidiaries. All Restricted Assets are owned
as of the date of this Agreement by the Company and the Persons listed in Part
B of Schedule II hereto or, in the case of Restricted Assets sold since
December 31, 1993, by Persons other than Unrestricted Subsidiaries. The list
of entities under the caption "Subsidiary Guarantors" on the signature pages of
the Subsidiary Guaranty Agreement constitutes a true, complete and accurate
list of all Required Guarantors as of the date of this Agreement. Part A of
Schedule II hereto contains a true, complete and accurate list of
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all Unrestricted Subsidiaries, and Part B of Schedule II hereto contains a
true, complete and accurate list of all Restricted Subsidiaries as of the date
of this Agreement.
SECTION 4.09. Ownership of Restricted Subsidiaries. The
Company or a Restricted Subsidiary is the record and beneficial owner, free and
clear of all Liens (other than those permitted by Section 5.07), of (i) all of
the issued and outstanding capital stock (other than directors' qualifying
shares and shares beneficially owned by the Company or a Restricted Subsidiary
and held by nominees of the Company or a Restricted Subsidiary solely to
satisfy requirements of local law) and other ownership interests of each
Restricted Subsidiary (except Unimar and the Unimar Restricted Subsidiaries and
any other Restricted Subsidiary the capital stock of which is sold pursuant to
a sale permitted by Section 5.14) and (ii) except during any period during
which Unimar is an Unrestricted Subsidiary or ceases to be a Subsidiary, at
least 50% of the ownership interest in Unimar and the Unimar Restricted
Subsidiaries. Except as disclosed on Schedule VI, there are no outstanding
options, warrants or other rights to acquire any capital stock or other
ownership interest of any Restricted Subsidiary.
SECTION 4.10. Title to Properties. The Company and each of
the Subsidiaries have good title, free and clear of all Liens, claims, burdens
and title defects, to all of the material assets reflected in the Company's or
such Subsidiary's books and records as being owned by them except Liens
permitted by this Agreement and claims, burdens and title defects not
materially adverse in the aggregate.
SECTION 4.11. Taxes and Other Obligations. Consolidated
United States Federal income tax returns of the Company and the Subsidiaries
have been examined by the Internal Revenue Service, or the statutory period for
such examination has expired, for all years up to and including the year ended
December 31, 1989, and all assessed deficiencies resulting from such
examination have been discharged or reserved against as required by generally
accepted accounting principles. The Company and the Subsidiaries have filed
all United States Federal, state and local income tax returns and all other
material domestic tax returns which are required to be filed by them and have
paid, or provided for the payment before the same became delinquent of, all
taxes due pursuant to such returns or pursuant to any assessment received by
the Company or any Subsidiary, other than those taxes being diligently
contested in good faith by appropriate proceedings. The charges, accruals and
reserves on the books of the Company and the Subsidiaries in respect of taxes
are, in the opinion of the Company, adequate. The Company and the Subsidiaries
have set up such reserves as are required by generally accepted accounting
principles for the payment of additional taxes for years which have not been
audited by the respective tax authorities. The Company and the Subsidiaries
have paid all other material obligations when due other than those being
contested in good faith by appropriate proceedings.
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SECTION 4.12. Regulation U. Neither the Company nor any
Subsidiary is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation G) or
margin stock (within the meaning of Regulation U). Following the application
of the proceeds of each Loan, not more than 25% of the value of the assets of
the Company, or of the Company and its Subsidiaries, which are subject to any
arrangement with the Agent or any Bank (herein or otherwise) whereby the
Company's or any Subsidiary's right or ability to sell, pledge or otherwise
dispose of assets is in any way restricted will be any such margin stock.
SECTION 4.13. Certain Obligations. Neither the Company nor
any Subsidiary has any obligation to make payments on the Joint Venture Debt
other than those permitted by Section 5.17. The only Non-Recourse Debt
existing on the date of this Agreement is the Existing Pakistan Non-Recourse
Debt.
SECTION 4.14. United Kingdom Assets. Substantially all of
the Restricted Assets located in the United Kingdom (including the United
Kingdom Sector of the North Sea) are directly owned by UTPL as of the date of
this Agreement.
ARTICLE V
COVENANTS
The Company agrees that, so long as any Bank has any
Commitment hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Company will deliver to each
of the Banks:
(a) as soon as available and in any event within 100 days
after the end of each fiscal year of the Company, 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
operations, cash flows and common stock and other shareholders' equity
for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all reported on in a manner
acceptable to the Securities and Exchange Commission by Price
Waterhouse or other independent public accountants of nationally
recognized standing;
(b) 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 consolidated balance sheet of the Company and its
Consolidated Subsidiaries as
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of the end of such quarter and the related consolidated statements of
operations and cash flows for such quarter and 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
preparation in accordance with generally accepted accounting
principles and consistency by the chief financial officer, the chief
accounting officer or the treasurer of the Company;
(c) simultaneously with the delivery of each set of
financial statements referred to in clauses (a) and (b) above, a
certificate of the chief financial officer, the chief accounting
officer or the treasurer of the Company (i) setting forth in
reasonable detail the calculations required to establish whether the
Company was in compliance with the requirements of Sections 5.05 and
5.15 on the date of such financial statements and (ii) stating whether
any Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the action which
the Company and its Subsidiaries are taking or propose to take with
respect thereto;
(d) as soon as available and in any event within 60 days
after the end of each fiscal quarter of the Company, a certificate of
the chief financial officer, the chief accounting officer or the
treasurer of the Company certifying (i) whether the Margin Increase
Condition will exist during the Margin Period commencing 61 days
following the end of such fiscal quarter and (whether or not any will
exist) setting forth the computation of each amount referred to in the
definition thereof as of the relevant dates or for the relevant
periods, (ii) whether the Additional Margin Increase Condition exists
as of the date of such certificate, (iii) the Unimar Percentage as of
the end of such quarter and the amounts as of the end of such quarter
of Consolidated Debt, Defeased Debt, Excluded Subordinated Debt, Debt
of the Company and its Consolidated Subsidiaries determined on a
consolidated basis, Debt of the Company and the Restricted
Subsidiaries determined on a consolidated basis, Debt of Unimar, Debt
of Unrestricted Subsidiaries, Excess Letter of Credit/Guarantee
Amount, Non-Restricted Asset Non-Recourse Debt, Non-Recourse Debt of
the Company and the Restricted Subsidiaries, and Restricted
Subsidiaries Recourse Debt, and (iv) each Asset Sale that has been
consummated during such quarter, the Fair Market Value of the
Restricted Assets subject thereto, the amount of fees, commissions,
expenses and taxes related thereto, the Net Sales Proceeds therefrom
and the cumulative amount of the Excess Net Sales Proceeds from all
Assets Sales since December 31, 1993;
(e) within five days after the chief financial officer,
the chief accounting officer or treasurer of the Company obtains
knowledge of any
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Default, if such Default is then continuing, a certificate of the
chief financial officer, the chief accounting officer or the treasurer
of the Company setting forth the details thereof and the action which
the Company and its Subsidiaries are taking or propose to take with
respect thereto;
(f) immediately upon the filing of, or any material
development in, any litigation or the occurrence of any other event or
contingency, if such development, litigation, event or contingency
could reasonably be expected to have a material adverse effect on the
business, assets, operations, prospects or condition, financial or
otherwise, of the Company and its Subsidiaries, taken as a whole, a
certificate of the chief financial officer, the chief accounting
officer or the treasurer of the Company setting forth the details of
such development, litigation, event or contingency and the action
which the Company and its Subsidiaries are taking or propose to take
with respect thereto;
(g) as soon as available and in any event within 100 days
after the end of each fiscal year of each Restricted Subsidiary (other
than the Unimar Restricted Subsidiaries), a consolidated balance sheet
of such Restricted Subsidiary and its consolidated subsidiaries as of
the end of such fiscal year and the related consolidated statements of
operations, cash flows and common stock and other shareholders' equity
for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, all certified as to
preparation in accordance with generally accepted accounting
principles and consistency by the chief financial officer, the chief
accounting officer or the treasurer of such Restricted Subsidiary;
(h) as soon as available and in any event within 60 days
after the end of the first three quarters of each fiscal year of each
Restricted Subsidiary (other than the Unimar Restricted Subsidiaries,
Union Texas Petroleum Energy Corporation and Union Texas International
Corporation), a consolidated balance sheet of such Restricted
Subsidiary and its consolidated subsidiaries as of the end of such
quarter and the related consolidated statements of operations and cash
flows for such quarter and for the portion of such Restricted
Subsidiary'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 Restricted
Subsidiary's previous fiscal year, all certified (subject to normal
year-end adjustments) as to preparation in accordance with generally
accepted accounting principles and consistency by the chief financial
officer, the chief accounting officer or the treasurer of such
Restricted Subsidiary;
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(i) promptly upon the mailing thereof to the shareholders
of the Company generally, copies of all financial statements, reports
and proxy statements so mailed;
(j) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or its equivalent) and reports on
Forms 10-K, 10-Q and 8-K (or their equivalents) which the Company
shall have filed with the Securities and Exchange Commission;
(k) at least 45 days prior to the closing of each Asset
Sale that will result in aggregate Net Sales Proceeds (for such sale
or, if such sale is one of a series of related sales, for all sales
and contemplated sales in such series) of $50,000,000 or more, notice
of such sale describing the assets to be sold and the estimated Net
Sales Proceeds thereof;
(l) if and when any member of the ERISA Group (i) gives
or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) (other than a "reportable event"
not subject to the provisions for 30-day notice to the PBGC under the
regulations issued under 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; (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;
(iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application;
(v) gives notice of intent to terminate any Plan under Section 4041(c)
of ERISA, a copy of such notice and other information filed with the
PBGC; (vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or (vii) fails to make
any payment or contribution to any Plan or Multiemployer Plan or in
respect of any Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other
security, a certificate of the chief financial officer, the chief
accounting officer or the treasurer of the Company setting forth
details as to such occurrence and action, if any, which the Company or
applicable member of the ERISA Group is required or proposes to take;
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(m) within 5 days after the chief financial officer, the
Vice President-Finance, the treasurer or the controller of the Company
has knowledge of any filing under Rule 13d of the Securities and
Exchange Commission, promulgated under the Securities Exchange Act of
1934, as amended, a copy thereof;
(n) within 5 days after receipt by the Company of any
written agreement of the type referred to in Section 6.01(k)(iii)(c),
(A) a copy thereof except that (i) if such written agreement has not
been filed with the Securities and Exchange Commission and is not
otherwise public information, each Bank as a condition to receiving a
copy of such written agreement may be required to sign, prior to
receipt thereof, a confidentiality agreement pursuant to which it
agrees that it will treat such written agreement in a confidential
manner until such written agreement otherwise becomes public, except
for disclosure (a) to counsel for and other advisors, accountants and
auditors of such Bank, (b) as may be required by statute, decision,
order, rule, regulation or other law, (c) to regulatory authorities,
(d) in connection with any litigation involving such written
agreement, such confidentiality agreement or any of the Financing
Documents, and (e) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective
participation or other transfer or prospective transfer of any of such
Bank's interests hereunder; provided that any such assignee,
prospective assignee, purchaser, prospective purchaser, participant,
prospective participant, transferee, or prospective transferee shall
have entered into a confidentiality agreement for the benefit of the
Company substantially upon the terms of this Section 5.01(n), and (ii)
if the Company is contractually prohibited from delivering a copy of
such written agreement to the Banks, the Company shall not be required
to deliver such written agreement unless such prohibition has been
waived, but the Company shall use reasonable efforts to obtain such
waiver or if it is a party to such written agreement to prevent any
such prohibition from being included therein, and (B) if the Company
is a party to such written agreement, but is excused pursuant to
clause (A)(ii) of this Section 5.01(n) from delivering a copy thereof
to the Banks, the Company shall notify the Banks of the existence of
such written agreement (but not the content thereof or other parties
thereto), but as a condition to receiving such notice the Banks may be
required to sign, prior to receipt of such notice, a confidentiality
agreement conforming to clause (A)(i) of this Section 5.01(n);
(o) by May 1 of each year, an Engineering Report as of
the last day of the immediately preceding year;
(p) promptly upon the closing of the sale or other
disposition of any capital stock of UTPC or any option, warrant or
other right to acquire any such capital stock, notice thereof;
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(q) promptly after any change in or termination of the
rating of any senior unsecured long-term debt of the Company by S&P,
notice thereof.
(r) from time to time such additional information
regarding the financial position or business of the Company or any
Subsidiary as the Agent, at the request of any Bank, may reasonably
request.
SECTION 5.02. Affirmative Covenants. The Company will
maintain its existence and cause each Restricted Subsidiary to maintain its
existence except in the case of (i) a merger of a Restricted Subsidiary into
the Company in a merger permitted by Section 5.08 hereof, (ii) the merger of a
Restricted Subsidiary into another Restricted Subsidiary, if immediately after
such merger (and giving effect thereto), no Default shall have occurred and be
continuing, and (iii) any Asset Sale in the form of the merger of a Restricted
Subsidiary into another Person, if immediately after such merger (and giving
effect thereto), no Event of Default shall have occurred and be continuing.
The Company and each Subsidiary shall:
(a) Conduct of Business; Property. Cause all material
property useful and necessary in its business to be maintained in good
working order and condition and to be operated prudently in accordance
with good industry practice; and to the extent consistent with prudent
business practices, defend its right, title and interest in its
material properties against all adverse claims.
(b) Compliance with Laws. Comply with all applicable
laws, ordinances, rules, regulations and reporting, filing and other
requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and regulations
thereunder), except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings or where the
failure to so comply would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole.
(c) Inspection of Property, Books and Records. Keep
proper books of record and account in accordance with sound accounting
practices; and permit representatives of any Bank, at such Bank's sole
risk and expense, to visit and inspect any of its properties (subject
to obtaining any required consent of third-party operators), to
examine and make abstracts and copies from any of its books and
records and to discuss its affairs, finances and accounts with its
officers and employees, and use its best efforts to make its
independent public accountants available to discuss the affairs,
finances and accounts of the Company
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and any of its Subsidiaries, all at such reasonable times and as often
as may reasonably be desired.
SECTION 5.03. Primary Business. The exploration for, and
production and marketing of, Hydrocarbons will continue to be the primary
business of the Company and its Subsidiaries taken as whole.
SECTION 5.04. Insurance. The Company will maintain, and will
cause each Subsidiary to maintain (either in the name of the Company or in such
Subsidiary's own name) with financially sound and reputable insurance
companies, insurance on their property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business; and
will furnish to the Banks, upon written request from the Agent, full
information as to the insurance carried.
SECTION 5.05. Debt. (a) Consolidated Debt will at no time
exceed $775,000,000 minus the aggregate of all Excess Net Sales Proceeds with
respect to all Asset Sales made at or prior to such time.
(b) At no time will Restricted Subsidiaries Recourse Debt exceed
$75,000,000.
(c) Consolidated Debt will not, on the last day of any calendar
quarter, exceed 3.75 times Operating Cash Flow for the four calendar quarters
ending on such day.
(d) Neither the Company nor any Restricted Subsidiary will create,
assume or otherwise incur any Debt if at the time of creation, assumption or
incurrence of such Debt or after giving effect to the creation, assumption or
incurrence of such Debt, any Event of Default would exist; provided that the
Company or any Restricted Subsidiary may renew or extend (but not increase) its
own Debt.
SECTION 5.06. Restricted Payments. Neither the Company nor
any Subsidiary shall declare or make any Restricted Payment unless, immediately
prior thereto and immediately thereafter, no Event of Default shall have
occurred and be continuing. Neither the Company nor any Subsidiary shall make
any Restricted Transfer unless, immediately prior thereto and immediately
thereafter, no Event of Default shall have occurred and be continuing; provided
that the Company or any Subsidiary can make Restricted Transfers in the form of
Investments in an Affiliate, Unrestricted Subsidiary or subsidiary of an
Unrestricted Subsidiary if (i) such Affiliate, Unrestricted Subsidiary or
subsidiary, as the case may be, has no outstanding Debt at the time of such
Investment and does not thereafter create, assume or otherwise incur any Debt
while any Event of Default is continuing and (ii) the Company notifies the
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Banks of any such Investment in excess of $5,000,000 at least ten days prior to
such Investment. Nothing in this Section shall prohibit the payment of any
dividend or distribution within 45 days after the declaration thereof if
payment of such dividend or distribution was not prohibited by this Agreement
at the time such declaration was made.
SECTION 5.07. Negative Pledge. Neither the Company nor any
Restricted Subsidiary will create, assume or suffer to exist (i) any Lien on
any capital stock or other ownership interest of any Restricted Subsidiary now
owned or hereafter acquired by it or any Lien on any option, warrant or other
right to acquire any capital stock or other ownership interest of any
Restricted Subsidiary now owned or hereafter acquired by it, other than those
described in Part A of Schedule III or (ii) any Lien on any other asset now
owned or hereafter acquired by it, except for the following Liens on assets not
referred to in the foregoing clause (i) of this Section:
(a) Liens existing on the date of this Agreement,
securing Debt outstanding and other obligations (including contractual
obligations) existing on the date of this Agreement and, except in the
case of inchoate operator's Liens, described in Part B of Schedule III
hereto;
(b) any Lien (i) on any Non-Restricted Asset securing
only Non-Restricted Asset Non-Recourse Debt of the Company or any
Restricted Subsidiary or (ii) on any asset of Virginia Indonesia
Company, Virginia International Company or Union Texas East Kalimantan
Limited securing Joint Venture Debt;
(c) mechanics', materialmen's, carriers' and other
statutory Liens, but only if arising, and only so long as continuing,
in the ordinary course of business; or deposits or pledges to obtain
the release of any such Lien; or easements, encroachments or other
title defects which do not materially detract from the value of its
assets or materially impair the use thereof in the operation of its
business;
(d) Liens arising in the ordinary course of its business
which (i) do not secure Debt, (ii) do not secure any obligation in an
amount exceeding $15,000,000 and (iii) do not in the aggregate
materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(e) Liens on any interest in a Partnership arising under
any agreement creating or governing such Partnership (including
Unimar) and securing only obligations of the members of such
Partnership to make Investments in such Partnership;
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(f) Liens arising under any customary provision of any
joint operating agreement or similar agreement relating to the
exploration, production, development or transportation of oil and gas;
(g) Liens not otherwise permitted by the foregoing
clauses of this Section on assets (other than any of the Restricted
Assets) securing Debt in an aggregate principal amount at any time
outstanding not to exceed $20,000,000; and
(h) any Lien securing the refinancing, extension, renewal
or refunding of any Debt secured by any Lien permitted by the
foregoing subsection (a) of this Section; provided that such Debt is
not increased from the lesser of the amount of such Debt set forth on
Schedule III hereto or the amount of such Debt outstanding immediately
prior to such refinancing, extension, renewal or refunding, and such
Lien does not cover any property that is not described on Schedule III
hereto as securing such Debt.
SECTION 5.08. Consolidations and Mergers. The Company will
not consolidate or merge with or into any Person; provided that the Company may
merge with another Person if the Company is the surviving corporation and,
immediately after such merger (and giving effect thereto), no Default shall
have occurred and be continuing.
SECTION 5.09. Use of Proceeds. The proceeds of the Loans
made under this Agreement will be used by the Company for general corporate
purposes; provided that none of such proceeds will be used in any manner or for
any purpose that results in any violation of any applicable law or regulation
(including, without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System).
SECTION 5.10. Parties to Subsidiary Guaranty Agreement. The
Company shall cause each Person that shall at any time after the date of this
Agreement become a Required Guarantor to enter into the Subsidiary Guaranty
Agreement and deliver, not later than 30 days after the date on which such
Person shall have become a Required Guarantor, to the Agent, in addition to a
duly executed counterpart of the Subsidiary Guaranty Agreement, duly executed
documents, in form and substance satisfactory to the Agent, of the type
referred to in Section 3.01(c), (d), (e), (g) and (h) pertaining to such
Required Guarantor and the Subsidiary Guaranty Agreement executed by it. Upon
any sale or other disposition of all of the capital stock of a Required
Guarantor in an Asset Sale permitted by Section 5.14, so long as no Default
exists, such Required Guarantor shall be released from its obligations under
the Subsidiary Guaranty Agreement, and the Agent shall execute such releases
and other documents as such Subsidiary or the Company may reasonably request to
further evidence such release.
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SECTION 5.11. Restrictions on Dividends, Intercompany Loans,
or Investments. The Company will not create or otherwise cause or permit to
exist or become effective, or permit any Subsidiary to create or otherwise
cause or permit to exist or become effective, any consensual encumbrance or
restriction (other than the Financing Documents) on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its capital stock or other ownership interests or pay any Debt or other
obligation owed to the Company or any Restricted Subsidiary, or (ii) make any
loans or advances to or other Investments in the Company or any Restricted
Subsidiary, except any encumbrance or restriction in effect on the date of this
Agreement and described on Schedule IV hereto.
SECTION 5.12. Loans and Advances. The Company will not make
or permit to remain outstanding any cash loan or advance to any Person, or
permit any Restricted Subsidiary to make or permit to remain outstanding any
cash loan or advance to any Person, except (i) loans and advances to
Subsidiaries or joint ventures, partnerships or other business ventures in
which the Company or any Subsidiary has or is contemporaneously acquiring an
interest or participation; and (ii) other loans and advances not exceeding
$10,000,000 at any time outstanding.
SECTION 5.13. Cross-Default. The Company will not create,
assume, otherwise incur or suffer to exist, or permit any Restricted Subsidiary
to create, assume, otherwise incur or suffer to exist, any Debt if the maturity
of such Debt is or may be accelerated (assuming the giving of notice or lapse
of time or both), in whole or in part, as a result of any default under, or
acceleration of (i) any Non-Recourse Debt of the Company or any Restricted
Subsidiary or (ii) any Debt of any Unrestricted Subsidiary, unless the Required
Banks shall have given their prior written consent to such Debt of the Company
or Restricted Subsidiary to be so created, assumed or otherwise incurred, which
consent will not be unreasonably withheld; provided that this Section 5.13
shall not prohibit a provision in a Guarantee of the Company or a Restricted
Subsidiary Guaranteeing Debt of an Unrestricted Subsidiary that provides that
the payment obligation under such Guarantee may be accelerated upon default
under or acceleration of such Debt.
SECTION 5.14. Subsidiaries. The Company will at all times
own, either directly or through one or more Restricted Subsidiaries, free and
clear of all Liens (other than those permitted by Section 5.07), 100% of all
issued and outstanding capital stock (other than directors' qualifying shares
and shares beneficially owned by the Company or a Restricted Subsidiary and
held by nominees of the Company or a Restricted Subsidiary solely to satisfy
requirements of local law) and other ownership interests of each Restricted
Subsidiary and all options, warrants and other rights to acquire any such
capital stock or any such ownership interest, except for (i) Unimar and the
Unimar Restricted Subsidiaries, (ii) any Restricted Subsidiary sold or
otherwise disposed of pursuant to an Asset Sale, if after giving effect to such
Asset Sale, the
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Company does not own, directly or indirectly, any interest in such Restricted
Subsidiary, and (iii) those options described on Schedule VI. The Company will
at all times own, either directly or through one or more Restricted
Subsidiaries, free and clear of all Liens (other than those permitted by
Section 5.07), 50% or more of the ownership interest in Unimar and the Unimar
Restricted Subsidiaries and all options, warrants and other rights to acquire
any such ownership interest (other than those described on Schedule VI);
provided that the Company and the Restricted Subsidiaries may sell all of their
ownership interest in Unimar and the Unimar Restricted Subsidiaries and such
options, warrants and other rights if, after giving effect to such sale, the
Company does not own, directly or indirectly, any interest in Unimar, the
Unimar Restricted Subsidiaries or any such option, warrant or other right. The
Company will not at any time permit any Restricted Subsidiary that is not a
Unimar Restricted Subsidiary to become a Unimar Restricted Subsidiary. The
Company will not permit any Restricted Asset to be sold, leased, transferred or
otherwise disposed of to any Person that was an Unrestricted Subsidiary
immediately prior thereto if any Default then exists or would result. The
Company will not permit any Restricted Subsidiary to issue any preferred stock
unless such preferred stock at all times is owned only by the Company. The
Company will not permit any Restricted Subsidiary to own, directly, both (a)
any UK Asset and (b) any Non-UK Asset.
SECTION 5.15. Adjusted Equity and Interest Coverage. The
Company will at all times maintain Adjusted Equity of $300,000,000 or more.
The Company will cause EBITDA for each period of four consecutive calendar
quarters to exceed 4.00 times Cash Interest Expense for such period.
SECTION 5.16. Excluded Subordinated Debt and Preferred Stock.
Neither the Company nor any Subsidiary will pay, prepay, purchase, redeem,
defease, acquire, exchange or convert any preferred stock (other than
Restricted Preferred Stock) or any Excluded Subordinated Debt, except (a)
exchanges for or conversions to common stock of the Company, (b) payments of
interest when due required by the terms of any such Excluded Subordinated Debt
as such terms are in effect on the date such Excluded Subordinated Debt is
incurred and (c) if no Event of Default exists, payments of ordinary periodic
dividends (excluding liquidating dividends) on such preferred stock in
accordance with the terms thereof as such terms are in effect on the date such
preferred stock is issued.
SECTION 5.17. Certain Obligations. Neither the Company nor
any Subsidiary will create, incur, assume or suffer to exist any obligation on
its part to make any payment on the Joint Venture Debt other than (a) the
obligations set forth in the agreements listed on Schedule V hereto with
respect to Joint Venture Debt in existence on the date of this Agreement and
(b) obligations substantially similar to those referred to in clause (a) with
respect to Joint Venture Debt created, incurred, assumed or arising after the
date of this Agreement.
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SECTION 5.18. Restrictions on Asset Sales. (a) The Company
will not and will not permit any of its Restricted Subsidiaries to enter into
any Asset Sale if after giving effect thereto any Event of Default would exist.
(b) The Company will not permit to occur any Asset Sale involving,
directly or indirectly, any UK Assets if the aggregate Net Sales Proceeds of
all Asset Sales involving, directly or indirectly, UK Assets since December 31,
1993 would exceed $250,000,000.
SECTION 5.19. UTEK Guaranty. The Company will cause Union
Texas East Kalimantan Limited to report, as promptly as reasonably practicable,
the execution and delivery of the Subsidiary Guaranty Agreement to the
Indonesian Foreign Commercial Loan Team ("Team") established pursuant to
Indonesian Presidential Decree No. 39 of 1991 and to deliver, as promptly as
reasonably practicable, to the Team and to Bank Indonesia copies of this
Agreement and the Subsidiary Guaranty Agreement. The Company will cause Union
Texas East Kalimantan Limited, as promptly as reasonably practical following
execution from time to time of amendments hereto or to the Subsidiary Guaranty
Agreement, (i) to report and (ii) to deliver copies of such amendments both to
the Team and to Bank Indonesia.
SECTION 5.20. Conversion to Unrestricted Subsidiary. The
Company may convert a Restricted Subsidiary into an Unrestricted Subsidiary by
giving the Agent notice of such conversion at least 5 Domestic Business Days
prior to such conversion; provided that (i) no Restricted Subsidiary shall be
so converted so long as it owns directly or indirectly any interest in any
Restricted Asset and (ii) no such conversion shall be made if at the time of
such notice or after giving effect to such conversion, any Default would exist.
Upon any such conversion of a Required Guarantor to an Unrestricted Subsidiary
such Subsidiary shall be released from its obligations under the Subsidiary
Guaranty Agreement, and the Agent shall execute such releases and other
documents as such Subsidiary or the Company may reasonably request to further
evidence such release.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Company shall fail to pay when due any principal
of any Loan, or shall fail to pay within five days of the due date
thereof any interest on any Loan, any fees or any other amount payable
hereunder;
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(b) the Company or any Subsidiary shall fail to observe
or perform any covenant contained in Sections 5.05 to 5.18, inclusive;
(c) the Company or any Subsidiary shall fail to observe
or perform any covenant or agreement contained in this Agreement
(other than those covered by clause (a) or (b) above) or in the
Subsidiary Guaranty Agreement for 30 days after written notice thereof
has been given to the Company by the Agent at the request of any Bank;
(d) any representation, warranty, certification or
statement made by the Company or any Subsidiary in this Agreement or
in the Subsidiary Guaranty Agreement or made in any certificate,
financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect
when made (or deemed made);
(e) the Company or any Restricted Subsidiary shall fail
to make any payment in respect of any Material Debt (other than the
Notes) when due or within any applicable grace period;
(f) any event or condition shall occur which results in
the acceleration of the maturity of any Material Debt of the Company
or any Restricted Subsidiary (other than the Notes) or enables (or,
with the giving of notice or lapse of time or both, would enable) the
holder of such Material Debt or any Person acting on such holder's
behalf to accelerate the maturity thereof;
(g) the Company or any Restricted 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, insolvency or other similar law now or hereafter
in effect or seeking 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 any such relief
or to the appointment of or taking possession by any such official in
an 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;
(h) an involuntary case or other proceeding shall be
commenced against the Company or any Restricted Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect 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
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an order for relief shall be entered against the Company or any
Restricted Subsidiary under the federal bankruptcy laws as now or
hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when
due an amount or amounts aggregating in excess of $5,000,000 which it
shall have become liable to pay under Title IV of ERISA; or notice of
intent to terminate a Material Plan shall be filed under Title IV of
ERISA by any member of the ERISA Group, 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 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; 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 could cause one
or more members of the ERISA Group to incur a current payment
obligation in excess of $5,000,000;
(j) a judgment or order for the payment of money in
excess of $15,000,000 (net of applicable insurance coverage which is
acknowledged by the insurer) shall be rendered against the Company or
any Restricted Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days;
(k) any Person or two or more Persons acting in concert,
together with any affiliates thereof, (i) shall have acquired
beneficial ownership, directly or indirectly, (a) within any 12 month
period, of (1) more than 25% of the Company's common stock or (2)
securities representing more than 25% of the combined voting power of
all securities of the Company entitled to vote in the election of
directors (other than securities having such power only by reason of
the happening of a contingency) ("Voting Securities"), or (b) within
any 24 month period, of (1) more than 40% of the Company's common
stock or (2) more than 40% of the Company's Voting Securities, (ii)
owns a higher percentage of the Company's common stock or Voting
Securities than the percentage owned by Kohlberg Kravis Roberts & Co.
and/or non-operating investment entities it controls, and (iii) either
(a) owns 50% or more of the Company's common stock or Voting
Securities, (b) directly or indirectly elects or causes the election
of Persons constituting in the aggregate a majority of the Board of
Directors of the Company or any Restricted Subsidiary, or (c)
exercises, directly or indirectly, by written agreement, control over
the Company or any Restricted Subsidiary; provided that no Default or
Event of Default shall occur under this subsection (k) until the
Agent, following request by the Required Banks, gives notice to the
Company that such an Event of
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Default is declared, and such notice may not be given after the date
which is 45 days after the Banks actually receive notice from the
Company to the effect that the matters set forth in clauses (i), (ii)
and (iii) have occurred (for purposes of this provision, "beneficial
ownership" shall mean beneficial ownership within the meaning of Rule
13d-3 of the Securities and Exchange Commission promulgated under the
Securities Exchange Act of 1934, as amended, and the number and
percentage of securities beneficially owned by any Person or Persons
shall be calculated in accordance with such Rule); or
(l) any "Event of Default", as defined in the Other
Credit Agreement, shall occur;
then, and in every such event, the Agent shall (i) if requested by Banks having
at least 51% in the aggregate amount of the Commitments, by notice to the
Company terminate the Commitments and, upon the giving of such notice by the
Agent, they shall thereupon terminate, and (ii) if requested by Banks holding
Notes evidencing at least 51% in aggregate principal amount of the Loans, by
notice to the Company declare the Notes (together with accrued interest
thereon) to be, and, upon the giving of such notice by the Agent, the Notes
shall thereupon become, immediately due and payable without notice of intent to
accelerate, notice of acceleration, presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company; provided
that in the case of any of the Events of Default specified in clause (g) or (h)
above, without any notice to the Company or any other act by the Agent or the
Banks, the Commitments shall thereupon terminate and the Notes (together with
accrued interest thereon) shall become immediately due and payable without
notice of intent to accelerate, notice of acceleration, presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Company.
SECTION 6.02. Notice of Default. The Agent shall give notice
to the Company under Section 6.01(c) promptly upon being requested to do so by
any Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Financing Documents as are
delegated to the Agent by the terms hereof or thereof, together with all such
powers as are reasonably incidental thereto. Each Bank hereby consents and
agrees to the terms of, and authorizes and directs the Agent to enter into, the
Subsidiary Guaranty Agreement.
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SECTION 7.02. Agent and Affiliates. NationsBank shall have
the same rights and powers under the Financing Documents as any other Bank and
may exercise or refrain from exercising the same as though it were not the
Agent, and NationsBank and its affiliates may accept deposits from, lend money
to, and generally engage in any kind of business with the Company or any
Subsidiary or other affiliate of the Company as if it were not the Agent
hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent
under the Financing Documents are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Agent shall not be
required to take any action with respect to any Default, except as expressly
provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may
consult with legal counsel (who may be counsel for the Company or any
Subsidiary), independent public accountants, independent petroleum engineers
and other experts selected by it and the Agent shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants, engineers or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or not taken by it in connection herewith (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the Company
or any Subsidiary; (iii) the satisfaction of any condition specified in Article
III, except receipt of items required to be delivered to the Agent; (iv) the
validity, effectiveness or genuineness of the Financing Documents or any other
instrument or writing furnished in connection herewith; or (v) the accuracy of
any Engineering Report. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent (to the extent not
reimbursed by the Company) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with the Financing Documents or any action
taken or omitted by the Agent hereunder (IT BEING EXPRESSLY UNDERSTOOD AND
AGREED THAT, EXCEPT FOR
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SUCH NEGLIGENCE AS IS SO DETERMINED TO CONSTITUTE GROSS NEGLIGENCE, SUCH
INDEMNIFICATION DOES EXTEND TO THE CONSEQUENCES OF THE ORDINARY NEGLIGENCE,
WHETHER SOLE OR CONTRIBUTORY, OF THE AGENT).
SECTION 7.07. Credit Decision. Each Bank acknowledges that
it has, independently and without reliance upon the Agent or any other Bank,
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 Bank
also acknowledges that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Banks and the Company and may be
removed at any time with or without cause by the Required Banks. Upon any such
resignation or removal, the Company shall have the right, with the consent of
the Required Banks, to appoint a successor Agent. If no successor Agent shall
have been so appointed with the consent of the Required Banks, and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation or the Required Banks' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Banks, appoint a successor Agent,
which shall be a commercial bank organized or licensed under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $50,000,000. Upon the acceptance of its appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Financing Documents. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.09. Agent's Fees. The Company shall pay to the
Agent for its own account fees in the amounts and at the times previously
agreed upon between the Company and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period:
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(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered
to the Reference Banks in the relevant market for such Interest
Period, or
(b) Banks having 50% or more of the aggregate amount of
the Commitments advise the Agent that the London Interbank Offered
Rate as determined by the Agent will not adequately and fairly reflect
the cost to such Banks of funding their Euro-Dollar Loans for such
Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make Euro-Dollar Loans, or make any Conversion (other than changing Euro-Dollar
Loans into Base Rate Loans), shall be suspended, and (ii) unless the Company
notifies the Agent at least two Domestic Business Days before the date of any
Euro-Dollar Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar
Lending Office) to make, maintain or fund its Euro-Dollar Loans, or make any
Conversion (other than changing Euro-Dollar Loans into Base Rate Loans), and
such Bank shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Company, whereupon until such Bank notifies
the Company and the Agent that the circumstances giving rise to such suspension
no longer exist, the obligation of such Bank to make Euro-Dollar Loans, or make
any Conversion (other than changing Euro-Dollar Loans into Base Rate Loans), as
the case may be, shall be suspended. Before giving any notice to the Agent
pursuant to this Section, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise disadvantageous to
such Bank. If such Bank shall determine that it may not lawfully continue to
maintain and fund any of its outstanding Euro-Dollar Loans to maturity and
shall so specify in such notice, each such Euro-Dollar Loan shall be
immediately and automatically Converted into a Base Rate Loan (on which
interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks).
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SECTION 8.03. Increased Cost and Reduced Return. (a) If
after the date hereof, the adoption of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Bank (or its Applicable Lending Office) with any request or directive (whether
or not having the force of law) of any such authority, central bank or
comparable agency:
(i) shall subject any Bank (or its Applicable Lending
Office) to any tax, duty or other charge with respect to its
Euro-Dollar Loans, its Note or its obligation to make Euro-Dollar
Loans, or shall change the basis of taxation of payments to any Bank
(or its Applicable Lending Office) of the principal of or interest on
its Euro-Dollar Loans or any other amounts due under this Agreement in
respect of its Euro-Dollar Loans or its obligation to make Euro-Dollar
Loans (except for changes in the rate of tax on the overall net income
of such Bank or its Applicable Lending Office imposed by the
jurisdiction in which such Bank's principal executive office or
Applicable Lending Office is located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Applicable Lending Office) or
on the United States market for certificates of deposit or the London
interbank market any other condition affecting its Euro-Dollar Loans,
its Note or its obligation to make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan or
making any Conversion (other than changing Euro-Dollar Loans into Base Rate
Loans), or to reduce the amount of any sum received or receivable by such Bank
(or its Applicable Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be material, then, within
15 days after demand by such Bank (with a copy to the Agent), the Company shall
pay to such Bank such additional amount or amounts as will compensate such Bank
for such increased cost or reduction; provided that the Company shall not be
obligated to compensate any Bank for any such reduction attributable to a
period (i) more than 90 days prior to the giving of notice by such Bank to the
Company of its intention to seek compensation under this subsection (a) or (ii)
more than six months prior to the making of demand by such Bank for payment
thereof in accordance herewith.
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(b) If any Bank shall have determined that the adoption
of any applicable law, rule or regulation regarding capital adequacy, or any
change therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or its Parent) as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to the
Agent), the Company shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its Parent) for such reduction; provided that the
Company shall not be obligated to compensate any Bank for any such reduction
attributable to a period (i) more than 90 days prior to the giving of notice by
such Bank to the Company of its intention to seek compensation under this
subsection (b) or (ii) more than six months prior to the making of demand by
such Bank for payment thereof in accordance therewith.
(c) Each Bank will promptly notify the Company and the
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Bank to compensation pursuant to this Section and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A
certificate of any Bank claiming compensation under this Section and setting
forth the additional amount or amounts to be paid to it hereunder shall be
conclusive in the absence of manifest error. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
SECTION 8.04. Base Rate Loans Substituted for Affected
Euro-Dollar Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans
to the Company has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03(a) and the Company shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank through the Agent,
have elected that the provisions of this Section shall apply to such Bank,
then, unless and until such Bank notifies the Company that the circumstances
giving rise to such suspension or demand for compensation no longer apply:
(a) all Loans to the Company which would otherwise be
made by such Bank as, or be Converted by such Bank as or into,
Euro-Dollar Loans shall instead be made as, or Converted into, Base
Rate Loans (on which interest and
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<PAGE> 66
principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans to the Company
has been repaid, all payments of principal which would otherwise be
applied to repay such Euro-Dollar Loans shall be applied to repay its
Base Rate Loans instead.
SECTION 8.05. Substitution of Bank. If (i) the obligation of
any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02,
(ii) any Bank has demanded compensation under Section 8.03 or payment of Taxes
or Other Taxes under Section 2.17, or (iii) after satisfaction of all
applicable conditions precedent, any Bank fails to fund when due any Loan it is
obligated to fund under this Agreement, the Company shall have the right, with
the assistance of the Agent, to seek a mutually satisfactory substitute bank or
banks (which may be one or more of the Banks) to purchase the Notes and assume
the Commitment of such Bank (any such Bank is herein called an "Affected
Bank"). Each Affected Bank agrees to sell, without recourse, all of its
Commitment, its interest in this Agreement and its Note to any such bank for an
amount equal to the sum of the outstanding unpaid principal of and accrued
interest on the Loans of such Affected Bank and all commitment fees and other
fees and amounts due such Affected Bank hereunder, calculated, in each case, to
the date such Commitment, interest in this Agreement and Note are purchased.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Company or the Agent, at its address or telex
number set forth on the signature pages hereof, (y) in the case of any Bank, at
its address or telex number set forth in its Administrative Questionnaire or
(z) in the case of any party, such other address or telex number as such party
may hereafter specify for the purpose by notice to the Agent and the Company.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified in
this Section and the appropriate answer-back is received, (ii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, (iii) if given by facsimile
transmission, when such facsimile is transmitted and accompanied by a telephone
call to the party receiving such transmission or (iv) if given by any other
means, when delivered at the address specified in this Section; provided that
notices to the Agent shall not be effective until received.
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<PAGE> 67
SECTION 9.02. No Waivers. No failure or delay by the Agent
or any Bank in exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in
the Financing Documents shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Company
shall pay (i) all reasonable documented out-of-pocket costs and expenses of
the Agent and the Arranger incurred in connection with the syndication of this
Agreement or the preparation of the Financing Documents, any waiver or consent
thereunder or any amendment thereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket costs and
expenses incurred by the Agent or incurred by any Bank, including fees and
disbursements of counsel, in connection with such Event of Default and
collection and other enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent, each
Co-Agent, the Arranger and each Bank and hold the Agent, each Co-Agent, the
Arranger and each Bank harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (including, without limitation,
the reasonable fees and disbursements of counsel for the Agent, any Co-Agent,
the Arranger or any Bank in connection with any investigative, administrative
or judicial proceedings, whether or not the Agent, such Co-Agent, the Arranger
or such Bank, as the case may be, shall be designated a party thereto) which
may be incurred by the Agent, any Co-Agent, the Arranger or any Bank, relating
to or arising out of this Agreement or any actual or proposed use of proceeds
of Loans hereunder, including specifically, without limitation, all
liabilities, losses, damages, costs and expenses arising out of a violation of
any Environmental Law; provided that neither the Agent nor any Co-Agent nor the
Arranger nor any Bank shall have the right to be indemnified hereunder for its
own gross negligence or willful misconduct as determined by a court of
competent jurisdiction (IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT, EXCEPT
FOR SUCH NEGLIGENCE AS IS SO DETERMINED TO CONSTITUTE GROSS NEGLIGENCE, SUCH
INDEMNIFICATION DOES EXTEND TO THE CONSEQUENCES OF THE ORDINARY NEGLIGENCE,
WHETHER SOLE OR CONTRIBUTORY, OF THE INDEMNITEE).
(c) Within a reasonable period of time after any Person
entitled to indemnification under Section 9.03(b) (an "Indemnified Person")
receives actual notice of the assertion of any claim or the commencement of any
action, or any threatened claim or action, covered by Section 9.03(b), such
Indemnified Person shall, if indemnification with respect thereof is to be
sought from the Company under Section 9.03(b), notify the Company in writing of
such claim or action; provided that the failure
-61-
<PAGE> 68
to so notify the Company shall not relieve the Company from any liability which
the Company may have to the Indemnified Person under Section 9.03(b) unless the
obligations of the Company under Section 9.03(b) have been significantly
increased as a result of such failure. The Company and such Indemnified Person
shall cooperate in the defense of any such claim or action and shall take those
actions reasonably within their power to take which are necessary to preserve
any legal defenses to such matters. If any such claim or action shall be
brought or threatened against an Indemnified Person, so long as no Event of
Default exists, the Company shall be entitled to participate in the defense
thereof, and, with the consent of such Indemnified Person, to assume the
defense thereof with counsel reasonably satisfactory to the Indemnified Person.
Notwithstanding any provision hereof to the contrary, no consent order or
settlement shall be entered into in any such claim or action unless both the
Company and such Indemnified Person have given their prior written consent
thereto; provided that such consent of the Company shall not be required if any
Event of Default exists.
(d) All obligations of the Company to indemnify or
otherwise to make payments to the Agent, any Co-Agent, the Arranger or any
Bank provided in this Agreement shall survive any termination of the
Commitments and the repayment of the Loans.
SECTION 9.04. Sharing of Set-Offs, Etc. Each Bank agrees
that if it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount of principal
and interest due with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Company other than its indebtedness under the Notes. The Company agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Company in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived, if, but only if, such
amendment or waiver is in writing and is signed by the Company and the Required
Banks (and, if the rights or duties of the Agent are affected thereby, by the
Agent); provided that no
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<PAGE> 69
such amendment or waiver shall, unless signed by all the Banks, (i) increase or
decrease the Commitment of any Bank or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of
or interest on any Loan or any fees hereunder or for any reduction or
termination of any Commitment, or (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or the number of
Banks, which shall be required for the Banks or any of them to take any action
under this Section or any other provision of this Agreement; provided further
that no such amendment or waiver shall amend or waive Section 5.05(a) or any of
the definitions relevant to Section 5.05(a) unless signed by Banks having at
least 66-2/3% of the aggregate amount of the Commitments or, if the Commitments
shall have been terminated, holding Notes evidencing at least 66-2/3% of the
aggregate unpaid principal amount of the Loans.
SECTION 9.06. 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, except that the Company may
not assign or otherwise transfer any of its rights under this Agreement without
the prior written consent of all Banks.
(b) Any Bank may at any time and from time to time grant
to one or more banks or other institutions (each a "Participant") participating
interests in its Commitment or any or all of its Loans. In the event of any
such grant by a Bank of a participating interest to a Participant, whether or
not upon notice to the Company and the Agent, such Bank shall remain
responsible for the performance of its obligations hereunder, and the Company
and the Agent shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Company hereunder including, without limitation,
the right to approve any amendment, modification or waiver of any provision of
this Agreement; provided that such participation agreement may provide that
such Bank will not agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii) or (iii) of Section 9.05 without the
consent of the Participant. The Company agrees that each Participant shall, to
the extent provided in its participation agreement, be entitled to the benefits
of Article VIII with respect to its participating interest. An assignment or
other transfer which is not permitted by subsection (c) or (d) below shall be
given effect for purposes of this Agreement only to the extent of a
participating interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks
or other institutions (each an "Assignee") a proportionate part of all of its
rights and obligations under this Agreement and the Notes in an amount which,
when added to the amount
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<PAGE> 70
of the rights and obligations under the Other Credit Agreement
contemporaneously assigned by such transferor Bank to such Assignee pursuant to
the second proviso to the first sentence of Section 9.06(c) of the Other Credit
Agreement, equals $10,000,000 or more, and such Assignee shall assume such
rights and obligations under this Agreement and the Notes, pursuant to an
Assignment executed by such Assignee and such transferor Bank, with (and
subject to) the subscribed consent of the Company and the Agent (which such
consents shall not be unreasonably withheld); provided that if an Assignee is
an affiliate of such transferor Bank or is another Bank, no such consent of the
Company shall be required; provided further that each such assignment shall be
of a constant, and not a varying, percentage of all rights and obligations
under this Agreement and the Notes, and the same constant percentage of all
rights and obligations of such transferor Bank under the Other Credit Agreement
and the notes thereunder shall be contemporaneously assigned by such transferor
Bank to such Assignee pursuant to Section 9.06(c) of the Other Credit
Agreement. Upon execution and delivery of such instrument (and delivery to the
Agent of an Administrative Questionnaire with respect to such Assignee, if such
Assignee has not already done so) and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall be required. Upon
the consummation of any assignment pursuant to this subsection (c), the
transferor Bank, the Agent and the Company shall make appropriate arrangements
so that, if required, a new Note is issued to the Assignee. In connection with
any such assignment, the transferor Bank shall pay to the Agent for its account
an administrative fee for processing such assignment in the amount of $2,500
less any administrative processing fee paid to the Agent on the same date under
Section 9.06(c) of the Other Credit Agreement as a result of the
contemporaneous assignment to such Assignee by such transferor Bank under the
Other Credit Agreement pursuant to the second proviso to the first sentence of
this Section 9.06(c). If the Assignee is not incorporated under the laws of
the United States of America or a state thereof, it shall, prior to the first
date on which interest or fees are payable hereunder for its account, deliver
to the Company and the Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in accordance with
Section 2.17. Notwithstanding the first sentence of this subsection (c), a
Bank may not make an assignment pursuant to this subsection (c) if after giving
effect thereto such Bank would hold less than 1.5% (or until April 16, 1997, 3%
in the case of NationsBank, Bank of America National Trust and Savings
Association and Union Bank of Switzerland, Houston Agency) of the Commitments
(for this purpose such Bank shall be deemed to hold any participating interests
granted by such Bank pursuant to subsection (b) above and any rights assigned
pursuant to subsection (d) below).
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<PAGE> 71
(d) Any Bank may at any time assign all or any portion of
its rights under this Agreement and its Note to a Federal Reserve Bank. No
such assignment shall release the transferor Bank from its obligations
hereunder.
(e) No Assignee, Participant or other transferee of any
Bank's rights shall be entitled to receive any greater payment under Section
8.03 than such Bank would have been entitled to receive with respect to the
rights transferred, unless such transfer is made with the Company's prior
written consent or by reason of the provisions of Section 8.02 or 8.03
requiring such Bank to designate a different Applicable Lending Office under
certain circumstances or at a time when the circumstances giving rise to such
greater payment did not exist.
SECTION 9.07. Collateral. Each of the Banks represents to
each Agent and each of the other Banks that it in good faith is not relying
upon any margin stock (as defined in Regulation G) or any margin stock (as
defined in Regulation U) as collateral in the extension or maintenance of the
credit provided for in this Agreement.
SECTION 9.08. Texas Law. This Agreement and each Note
shall be construed in accordance with and governed by the law of the State of
Texas.
SECTION 9.09. CONSENT TO JURISDICTION. THE COMPANY HEREBY
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF TEXAS AND OF ANY FEDERAL COURT LOCATED IN SUCH STATE OVER IT IN
CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
FINANCING DOCUMENT AND, TO THE FULLEST EXTENT PERMITTED BY LAW, FURTHER AGREES
(AND SHALL NOT CONTEST) THAT THE PROPER VENUE FOR FILING AND MAINTAINING ANY
SUCH ACTION OR PROCEEDING SHALL BE IN THE STATE OF TEXAS. IN ANY SUCH ACTION
OR PROCEEDING, THE COMPANY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN
RECEIPT REQUESTED, TO THE COMPANY AT ITS ADDRESS FOR NOTICES HEREUNDER, OR ANY
FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE AND REMEDIES CODE THEN
IN EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON THE COMPANY.
SECTION 9.10. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
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<PAGE> 72
SECTION 9.11. WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT,
THE CO-AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.12. COMPLETE AGREEMENT. THIS WRITTEN CREDIT
AGREEMENT AND THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
SECTION 9.13. Liability of Co-Agents and Arranger. Neither
the Arranger nor either Co-Agent, in its capacity as Co-Agent hereunder, shall
have any duty or responsibility hereunder.
SECTION 9.14. Termination of 1994 Short-Term Commitments.
Each of the parties hereto agrees that all "Commitments" (as defined in the
$200,000,000 Credit Agreement dated as of May 13, 1994 among the Company,
NationsBank, as agent and the co-agent and lenders parties thereto) are hereby
terminated effective as of the close of business on April 23, 1995 (and the
fees under Section 2.08(a) of such Credit Agreement shall accrue through such
date), and the Company has no further right to borrow thereunder. The Company
represents and warrants that all principal, interest and fees owed thereunder
have been paid in full.
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.
UNION TEXAS PETROLEUM
HOLDINGS, INC.
By: /s/ M.N. MARKOWITZ
-----------------------------------
M.N. Markowitz
Vice President and Treasurer
1330 Post Oak Blvd.
Houston, Texas 77056
Telex number: 762255
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<PAGE> 73
Commitments
$8,181,818.19 NATIONSBANK OF TEXAS, N.A.
By: /s/ PAUL A. SQUIRES
----------------------------------
Paul A. Squires
Senior Vice President
$6,363,636.37 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By: /s/ LAURA B. SHEPARD
----------------------------------
Authorized Officer
$6,363,636.37 UNION BANK OF SWITZERLAND, HOUSTON
AGENCY
By: /s/ EVANS SWANN
----------------------------------
Evans Swann
Managing Director
By: /s/ JAN BUETTGEN
----------------------------------
Jan Beuttgen
Vice President
Corporate Banking
$5,454,545.45 THE BANK OF NOVA SCOTIA
By: /s/ A.S. NORSWORTHY
----------------------------------
A.S. Norsworthy
Assistant Agent
$5,454,545.45 CHEMICAL BANK
By: /s/ [Illegible]
----------------------------------
Authorized Officer
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<PAGE> 74
Commitments
$5,454,545.45 CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/ XAVIER RATOUIS
----------------------------------
Authorized Officer
$5,454,545.45 THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ [Illegible]
----------------------------------
Authorized Officer
$5,454,545.45 MELLON BANK, N.A.
By: /s/ A. GARY CHACE
----------------------------------
A. Gary Chace
Senior Vice President
$5,454,545.45 MORGAN GUARANTY TRUST COMPANY OF NEW
YORK
By: /s/ PHILIP W. MCNEAL
----------------------------------
Philip W. McNeal
Vice President
$4,545,454.55 BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By: /s/ [Illegible]
----------------------------------
Authorized Officer
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<PAGE> 75
Commitments
$4,545,454.55 LTCB TRUST COMPANY
By: /s/ [Illegible]
-------------------------------
Authorized Officer
$4,545,454.55 SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ [Illegible]
-------------------------------
Authorized Officer
$3,181,818.18 THE BANK OF TOKYO, LTD., DALLAS
AGENCY
By: /s/ JOHN M. MCINTYRE
-------------------------------
Authorized Officer
$3,181,818.18 BANQUE PARIBAS, HOUSTON AGENCY
By: /s/ [Illegible]
-------------------------------
Authorized Officer
By: /s/ BART SCHOUEST
-------------------------------
Authorized Officer
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<PAGE> 76
Commitments
$3,181,818.18 CHRISTIANIA BANK
By: /s/ JAHN O. ROISING
----------------------------------
Authorized Officer
By: /s/ [Illegible]
----------------------------------
Authorized Officer
$3,181,818.18 CITIBANK, N.A.
By: /s/ BARBARA A. COHEN
----------------------------------
Barbara A. Cohen
Vice President
$3,181,818.18 DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ B. C. ERICKSON
----------------------------------
Authorized Officer
By: /s/ [Illegible]
----------------------------------
Authorized Officer
$3,181,818.18 THE MITSUBISHI TRUST & BANKING
CORPORATION
By: /s/ [Illegible]
----------------------------------
Authorized Officer
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<PAGE> 77
Commitments
$3,181,818.18 NATIONAL WESTMINSTER BANK PLC (NEW
YORK BRANCH)
By: /s/ DAVID L. SMITH
----------------------------------
David L. Smith
Vice President
NATIONAL WESTMINSTER BANK PLC
(NASSAU BRANCH)
By: /s/ DAVID L. SMITH
----------------------------------
David L. Smith
Vice President
$3,181,818.18 THE YASUDA TRUST AND BANKING
COMPANY, LIMITED, NEW YORK BRANCH
By: /s/ NEIL T. CHAU
----------------------------------
Neil T. Chau
First Vice President
$1,818,181.82 BANK OF TAIWAN
By: /s/ [Illegible]
----------------------------------
Authorized Officer
$1,818,181.82 BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/ IAIN A. WHYTE
----------------------------------
Authorized Officer
By: /s/ [Illegible]
----------------------------------
Authorized Officer
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<PAGE> 78
Commitments
$1,818,181.82 DEN NORSKE BANK AS
By: /s/ [Illegible]
----------------------------------
Authorized Officer
By: /s/ FRAN MEYERS
----------------------------------
Fran Meyers
Vice President
$1,818,181.82 FIRST INTERSTATE BANK OF TEXAS, N.A.
By: /s/ COLLIE C. MICHAELS
----------------------------------
Authorized Officer
Total Commitments: $100,000,000.00
---------------
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<PAGE> 79
NATIONSBANK OF TEXAS, N.A., as Agent
By: /s/ PAUL A. SQUIRES
------------------------------------------
Paul A. Squires
Senior Vice President
700 Louisiana Street
Houston, Texas 77002
Telex Number: 163244
Answerback: NCNBTEXDAL
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Co-Agent
By: /s/ LAURA B. SHEPARD
------------------------------------------
Authorized Officer
UNION BANK OF SWITZERLAND, HOUSTON AGENCY,
as Co-Agent
By: /s/ EVANS SWANN
------------------------------------------
Evans Swann
Managing Director
By: /s/ JAN BUETTGEN
------------------------------------------
Jan Buettgen
Vice President
Corporate Banking
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<PAGE> 80
SCHEDULE II
EXISTING SUBSIDIARIES
PART A
<TABLE>
<CAPTION>
EXISTING UNRESTRICTED SUBSIDIARIES JURISDICTION
- ---------------------------------- ------------
<S> <C>
Four Oaks Insurance, Ltd. Bermuda
Unicon Producing Company [Partnership] Texas
Union Texas I Corporation Delaware
Union Texas Adriatic, Inc. Delaware
Union Texas (Argentina) Ltd. Delaware
Union Texas Asia Corporation Delaware
Union Texas Barakan, Inc. Delaware
Union Texas Brasil, Inc. Delaware
Union Texas Britannia Limited England
Union Texas Carthage, Inc. Delaware
Union Texas Development Corporation Delaware
Union Texas Egypt, Inc. Delaware
Union Texas Espana, Inc. Delaware
Union Texas Finance, Inc. Delaware
Union Texas (Kai) Limited Bahamas
Union Texas Maghreb, Inc. Delaware
Union Texas Methane, Inc. Delaware
Union Texas Metropole, S.A. France
Union Texas PNG, Inc. Delaware
Union Texas Petrochemicals Pipeline, Inc. Delaware
Union Texas Petroleum Alaska Corporation Delaware
Union Texas Petroleum Europe and Middle East, Inc. Delaware
Union Texas Petroleum Services Corporation Delaware
Union Texas (Rebi) Limited Bahamas
Union Texas (South East Asia) Inc. Delaware
Union Texas (Tanimbar) Limited Bahamas
Union Texas Trading Corporation Delaware
Union Texas (Transnational) Limited Bahamas
Union Texas Tunisia, Inc. Delaware
West Gemsa Petroleum Company Egypt
</TABLE>
<PAGE> 81
<TABLE>
<CAPTION>
EXISTING UNIMAR UNRESTRICTED SUBSIDIARIES JURISDICTION
- ----------------------------------------- ------------
<S> <C>
AKI International Finance, N.V. Netherlands
Antilles
Alaska Interstate International Finance, B.V. Netherlands
Alaska Interstate International Finance, N.V. Netherlands
Antilles
ENSTAR Petroleum, Ltd. Canada
Purchasing Services, Inc. Delaware
Unimar Financing Corporation Delaware
VICO Services, Inc. Delaware
VICO Trading, Inc. Delaware
Virginia Services, Ltd. Delaware
</TABLE>
PART B
<TABLE>
<CAPTION>
EXISTING RESTRICTED SUBSIDIARIES
- --------------------------------
<S> <C>
Union Texas East Kalimantan Limited Bahamas
Union Texas International Corporation Delaware
Union Texas Pakistan, Inc. Delaware
Union Texas Petroleum Energy Corporation Delaware
Union Texas Petroleum Limited England
Union Texas Products Corporation Delaware
Unistar, Inc. Delaware
</TABLE>
OTHER RESTRICTED SUBSIDIARY
- ---------------------------
<TABLE>
<S> <C>
Unimar Company [Partnership] Texas
</TABLE>
<TABLE>
<CAPTION>
EXISTING UNIMAR RESTRICTED SUBSIDIARIES
- ---------------------------------------
<S> <C>
ENSTAR Corporation Delaware
ENSTAR Indonesia, Inc. Delaware
VICO 7.5, Inc. Delaware
Virginia Indonesia Company Delaware
Virginia International Company Delaware
</TABLE>
<PAGE> 82
SCHEDULE III
CERTAIN EXISTING LIENS
PART A: LIENS ON OWNERSHIP INTERESTS
1. Amended and Restated Agreement of General Partnership of Unimar Company
("Unimar"), dated as of September 11, 1990, between Unistar, Inc.
("Unistar") and LASMO (USTAR) Inc. ("USTAR," formerly Ultrastar, Inc.)
(the "Unimar Partnership Agreement"):
As security for the payment of all contributions to be made by each
partner pursuant to the Unimar Partnership Agreement, each of Unistar
and USTAR has created a security interest in its partnership interest in
Unimar in favor of the other partner.
2. Articles of Association of Union Texas East Kalimantan Limited ("UTEK")
dated October 26, 1983.
As security for the debts, liabilities and engagements of each member
solely or jointly with any other person to or with UTEK, UTEK has a
first and paramount lien upon all the shares registered in the name of
each member, which lien extends to all dividends from time to time
declared in respect of such shares.
3. Articles of Association of Union Texas Petroleum Limited ("UTPL").
UTPL has a lien under English law that will attach to fully paid shares
and to all shares registered in the name of any person indebted or under
liability to UTPL.
<PAGE> 83
SCHEDULE III
CERTAIN EXISTING LIENS
PART B: OTHER EXISTING LIENS
<TABLE>
<CAPTION>
AMOUNT OF DEBT AS OF
DOCUMENT AND LIEN 3/31/95
----------------- --------------------
<S> <C> <C>
1. Pledge Agreement dated as of September 25, 1984 by Virginia Indonesia No set amount
Company in favor of Irving Trust Company (the "Pledge Agreement"),
and the Indenture, dated as of September 25, 1984 between Unimar, as
Issuer, and Irving Trust Company, as Trustee, providing for
14,077,747 Indonesian Participating Units (the "IPU Indenture"), as
supplemented by the Supplemental Indenture dated as of October 31,
1986:
As security for performance of the obligations of Unimar under the
IPU Indenture, Section 2 of the Pledge Agreement sets forth a first
lien and security interest granted by Virginia Indonesia Company (the
"Pledgor") in all of the Pledgor's rights to receive payments from
the Joint Venture Paying Agent pursuant to the Joint Venture Paying
Agency Agreements, each as defined in the IPU Indenture, and in all
proceeds therefrom. This lien and security interest only becomes
effective upon the occurrence of certain events specified in the IPU
Indenture. As of December 31, 1994, this lien and security interest
is not effective.
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
AMOUNT OF DEBT AS OF
DOCUMENT AND LIEN 3/31/95
----------------- --------------------
<S> <C> <C>
2. Deed of Floating Charge dated December 20, 1988 (the "Deed of $6,874,000
Floating Charge") by Union Texas Pakistan, Inc. ("UT Pakistan") in
favor of the Overseas Private Investment Corporation ("OPIC"), in
connection with the Finance Agreement dated as of December 20, 1988
between UT Pakistan and OPIC (the "OPIC Finance Agreement") and one
or more Notes (the "Notes") issued pursuant to the Issuing and Paying
Agency Agreement of even date:
As security for the obligations of UT Pakistan under the OPIC Finance
Agreement and the Notes, Section 2 of the Deed of Floating Charge
sets forth a first floating charge in favor of OPIC in UT Pakistan's
(i) 30% share as a working interest owner of all crude oil and
natural gas produced or to be produced from the Dedicated Areas, as
defined in the Deed of Floating Charge, and being in transit from the
well head to the various points of delivery, (ii) 30% share as a
working interest owner of all crude oil produced or to be produced
from the Dedicated Areas, and being under storage in tank batteries
in the Dedicated Areas, as defined in the Deed of Floating Charge,
(iii) rights and benefits under certain sale agreements relating to
the sale of crude oil or natural gas and (iv) accounts receivable
under such sales agreements. OPIC's recourse is limited to the
assets of UT Pakistan described in Section 8.2(b) of the OPIC Finance
Agreement.
</TABLE>
<PAGE> 85
SCHEDULE IV
CERTAIN EXISTING RESTRICTIONS
1. Finance Agreement dated as of December 20, 1988 between Union Texas
Pakistan, Inc. ("UT Pakistan") and the Overseas Private Investment
Corporation:
a. Negative covenant of UT Pakistan set forth in Section 7.3
restricting, in the event of a default, payment of dividends,
purchases of capital stock and payments to the Company on any
intercorporate line of credit, among other restrictions.
b. Negative covenant of UT Pakistan set forth in Section 7.5(e)
restricting, among other things, certain loans, advances and
guarantees of loans to persons other than the Company.
2. Amended and Restated Agreement of General Partnership of Unimar Company
("Unimar"), dated as of September 11, 1990 between Unistar, Inc. and
LASMO (USTAR) Inc. (formerly Ultrastar, Inc.) (the "Unimar Partnership
Agreement"):
a. Restrictions resulting from provisions of Article IV regarding
the management of Unimar and shareholder action of certain Unimar
Restricted Subsidiaries.
b. Restrictions resulting from provisions of Article X with respect
to dissolution and liquidation of Unimar.
<PAGE> 86
SCHEDULE V
JOINT VENTURE DEBT AGREEMENTS
1. Producers Agreement No. 2 dated as of June 9, 1987 among Pertamina, Roy
M. Huffington, Inc., Virginia International Company, Ultramar Indonesia
Limited, Virginia Indonesia Company, Union Texas East Kalimantan
Limited, Universe Tankships, Inc., and Huffington Corporation, as
Producers, in favor of The Industrial Bank of Japan Trust Company ("IBJ
Trust"), as Agent and Lender, and the other Lenders named therein, as
amended by Amendment No. 1 to Producers Agreement No. 2, dated as of
February 9, 1988 and Amendment No. 2 to Producers Agreement No. 2 dated
as of May 31, 1988, each among the Producers, the Lenders named therein
and IBJ Trust, as Agent, relating to the Bontang Capital Projects Loan
Agreement No. 2 dated as of June 9, 1987 among Continental Bank
International, as Trustee, and the other parties named therein.
2. Bontang III Producers Agreement dated as of February 9, 1988 among
Pertamina, Roy M. Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company, Ultramar Indonesia
Limited, Union Texas East Kalimantan Limited, Universe Tankships, Inc.,
Total Indonesie, Unocal Indonesia, Ltd. and Indonesia Petroleum, Ltd.,
as Producers, in favor of Train-E Finance Co., Ltd., as Tranche A
Lender, the Banks named therein as Tranche B Lenders and IBJ Trust as
Tranche B Lender and as Agent for such Tranche B Lenders, as amended by
Amendment No. 1 dated as of May 31, 1988, relating to the Bontang III
Loan Agreement dated as of February 9, 1988 among Continental Bank
International, as Trustee, and the other parties named therein.
3. Bontang IV Producers Agreement dated as of August 26, 1991 among
Pertamina, Virginia Indonesia Company, OPICOIL Houston, Inc., Virginia
International Company, Ultramar Indonesia Limited, Union Texas East
Kalimantan Limited, Universe Gas & Oil Company, Inc., Total Indonesie,
Unocal Indonesia, Ltd., and Indonesia Petroleum, Ltd., as Producers, in
favor of The Chase Manhattan Bank, N.A., as Lender and as Agent for the
Lenders, and the other Lenders named therein, relating to the Bontang IV
Loan Agreement dated as of August 26, 1991 among Continental Bank
International, as Trustee, and the other parties named therein.
<PAGE> 87
SCHEDULE VI
OUTSTANDING OPTIONS
1. Preferential right of purchase, and right to reasonably nullify a
proposed disposition, in favor of each of Unistar, Inc. ("Unistar") and
LASMO (USTAR) Inc. ("USTAR," formerly Ultrastar, Inc.), set forth in
Article VIII of the Amended and Restated Agreement of General
Partnership of Unimar Company, dated as of September 11, 1990, between
Unistar and USTAR (the "Unimar Partnership Agreement").
2. Buy-sell option that may be invoked by either Unistar or USTAR in the
event of irreconcilable differences or continued deadlocks, set forth in
Article IX of the Unimar Partnership Agreement.
<PAGE> 88
EXHIBIT A
NOTE
Houston, Texas
$____________________ April __, 1995
For value received, Union Texas Petroleum Holdings, Inc., a Delaware
corporation (the "Company"), promises to pay to the order of ___________
________________________ (the "Bank"), for the account of its Applicable
Lending Office, the unpaid principal amount of each Loan owed to the Bank on
April 15, 1997 or as otherwise required by the Credit Agreement. The Company
promises to pay interest on the unpaid principal amount of each such Loan on
the dates and at the rate or rates provided for in the Credit Agreement
(including, without limitation, Section 2.16 thereof). All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of NationsBank of
Texas, N.A., 700 Louisiana St., Houston, Texas 77002.
All Loans made by the Bank and the respective Types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, prior to
any transfer hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding shall be endorsed
by the Bank on the schedule attached hereto, or on a continuation of such
schedule attached to and made a part hereof; provided that the failure of the
Bank to make any such recordation or endorsement shall not affect the
obligations of the Company hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement
dated as of April 24, 1995 among the Company, the lenders and Co-Agents parties
thereto and NationsBank of Texas, N.A., as Agent (as the same may be amended
from time to time, the "Credit Agreement"). Terms not defined herein and
defined in the Credit Agreement are used herein with the same meanings.
Reference is made to the Credit Agreement for provisions for the prepayment
hereof and the acceleration of the maturity hereof. This note shall be
construed in accordance with and governed by the law of the State of Texas.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: ________________________________
Name: ______________________________
Title: _____________________________
<PAGE> 89
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount of
Amount of Type of Principal Date of Notation
Date Loan Loan Repaid Payment Made By
---- ---- ---- ------ ------- -------
<S> <C> <C> <C> <C> <C>
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
</TABLE>
<PAGE> 90
EXHIBIT B
SUBSIDIARY GUARANTY AGREEMENT
GUARANTY dated as of April 24, 1995 ("Agreement") among each of the
Subsidiary Guarantors listed on the signature pages hereof under the caption
"Subsidiary Guarantors" or which hereafter becomes a party hereto pursuant to
Section 3.08(b) (collectively, the "Subsidiary Guarantors") and NationsBank of
Texas, N.A., as agent for the banks under the Credit Agreement referred to
below (the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of April 24, 1995
among Union Texas Petroleum Holdings, Inc. (the direct or indirect parent of
each of the Subsidiary Guarantors) (the "Company"), the Banks and Co-Agents
parties thereto and the Agent (the "Credit Agreement"), the Company is
entitled, subject to certain conditions, to borrow up to $100,000,000;
WHEREAS, as a condition to borrowings under the Credit Agreement, each
Required Guarantor is required to execute and deliver to the Agent this
Agreement whereby such entity shall, subject to Section 2.08 hereof, guarantee
the payment when due of the principal of and interest on all Loans and all
other amounts payable at any time by any Obligor under any of the Financing
Documents, including, without limitation, interest which accrues during a
proceeding which occurs under the U.S. Bankruptcy Code or which would otherwise
accrue under the terms of any of the Financing Documents, but for a proceeding
under the U.S. Bankruptcy Code (such principal, interest and other amounts
being herein called the "Guaranteed Amounts");
WHEREAS, in consideration of the financial and other support that the
Company has provided, and such financial and other support as the Company may
in the future provide, to the Subsidiary Guarantors and in order to induce the
Banks to enter into the Credit Agreement and to consider requests to extend
financial accommodations to the Company, the Subsidiary Guarantors are willing
to guarantee, subject to Section 2.08 hereof, the Guaranteed Amounts;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as therein defined.
<PAGE> 91
ARTICLE II
GUARANTEES
SECTION 2.01. The Guarantees. Subject to Section 2.08, the
Subsidiary Guarantors hereby jointly, severally, unconditionally and
irrevocably guarantee to the Agent, for the ratable benefit of the Banks, the
full and punctual payment of all present and future Guaranteed Amounts as and
when the same shall become due and payable, whether at maturity, by declaration
or otherwise, according to the terms thereof. In case of failure by the
Company punctually to pay any Guaranteed Amount, the Subsidiary Guarantors
hereby jointly, severally and unconditionally agree, forthwith upon demand by
the Agent, to make payment thereof to the Agent at the place and in the manner
specified in the Credit Agreement.
SECTION 2.02. Guarantees Unconditional. Subject to Section 2.08,
the obligations of each Subsidiary Guarantor under this Article II shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Company or any
other Subsidiary Guarantor under any Financing Document or any
Guaranteed Amount;
(b) any modification or amendment of or supplement to (i)
this Agreement insofar as the same does not purport to modify the
rights or obligations of such Subsidiary Guarantor hereunder or (ii)
any other Financing Document;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect security, or of
any guarantee or other liability of any third party, for any
obligation of the Company or any Subsidiary Guarantor under any
Financing Document or any Guaranteed Amount;
(d) any change in the corporate existence, structure or
ownership of the Company or any Subsidiary, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Company or any other Subsidiary or their respective assets;
(e) the existence of any claim, set-off or other rights
which any Subsidiary Guarantor may have at any time against the
Company or any Subsidiary Guarantor, the Agent, any Bank or any other
Person,
<PAGE> 92
whether or not arising in connection with any Financing Document or
any Guaranteed Amount;provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(f) any invalidity or unenforceability relating to or
against the Company or any Subsidiary Guarantor for any reason of any
Financing Document or any Guaranteed Amount, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Company or any Subsidiary Guarantor of any Guaranteed Amount; or
(g) any other act or omission to act or delay of any kind
by the Company or any Subsidiary Guarantor, the Agent, any Bank or any
other Person or any other circumstances whatsoever that might, but for
the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of a Subsidiary Guarantor under this
Article II.
SECTION 2.03. Discharge; Reinstatement in Certain Circumstances.
Subject to Section 2.08, each Subsidiary Guarantor's obligations under this
Article II shall remain in full force and effect until all of the Commitments
shall have been terminated in their entirety and the Guaranteed Amounts shall
have been paid in full. If at any time any payment of or any amount payable by
the Company or any Subsidiary Guarantor in respect of any Guaranteed Amount is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Person or otherwise, each Subsidiary
Guarantor's obligations under this Article II with respect to such payment
shall be reinstated at such time as though such payment had become due but had
not been made at such time.
SECTION 2.04. Waiver. Each Subsidiary Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Company or any other Subsidiary Guarantor or any other
Person. Each Subsidiary Guarantor hereby irrevocably waives each and every
right to which it may be entitled by virtue of the suretyship laws of the State
of Texas, including, without limitation, any and all rights it may have
pursuant to Rule 31 or Rule 32, Texas Rules of Civil Procedure, Section 17.001
of the Texas Civil Practice and Remedies Code and Chapter 34 of the Texas
Business and Commerce Code.
SECTION 2.05. Subrogation and Contribution. Each Subsidiary
Guarantor irrevocably waives any and all rights to which it may be entitled, by
operation of law or otherwise, upon making any payment hereunder (i) to be
subrogated to the rights of the payee against the Company with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by the Company
in respect thereof or (ii) to receive any payment, in the nature of
contribution or for any other reason, from any other Obligor with respect to
such payment, in each case until such time as all of the
<PAGE> 93
Commitments shall have been terminated in their entirety and the Guaranteed
Amounts shall have been paid in full.
SECTION 2.06. Stay of Acceleration. If acceleration of the time
for payment of any amount payable by the Company or any Subsidiary Guarantor in
respect of any Guaranteed Amount is stayed upon the insolvency, bankruptcy or
reorganization of such Person, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement or any other agreement or
instrument evidencing such Guaranteed Amount shall nonetheless be payable by
each other Subsidiary Guarantor hereunder forthwith on demand by the Agent.
SECTION 2.07. Representations and Warranties. Each Subsidiary
Guarantor represents and warrants that as of the date hereof, and after giving
effect to this Agreement and the contingent obligations evidenced hereby
(including any limitation on the amount payable under this Agreement pursuant
to Section 2.08), it is and will be solvent, and has and will have assets
which, fairly valued, exceed its obligations, liabilities and debts, and has
and will have property and assets sufficient to satisfy and repay its
obligations, liabilities and debts when the same become due.
SECTION 2.08. Limit of Liability. Each Subsidiary Guarantor shall
be liable under this Agreement only for amounts aggregating up to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state or foreign law.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy,
telex, facsimile transmission or similar writing) and (i) in the case of a
Subsidiary Guarantor, shall be given to such Subsidiary Guarantor at c/o Union
Texas Petroleum Holdings, Inc., 1330 Post Oak Boulevard, Houston, Texas 77056
(telex number: 762255) and (ii) in the case of the Company or the Agent, at
its address or telex number set forth on the signature pages of the Credit
Agreement or in any case at such other address or telex number as such party
may hereafter specify for the purpose by notice to the Agent and the Company.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified in
this Section and the appropriate answer is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Agent shall not be effective until received.
<PAGE> 94
SECTION 3.02. No Waiver; Exercise of Remedies. No failure or delay
by the Agent in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law. In
exercising the rights and remedies herein provided, the Agent shall act at the
instructions of the Required Banks or, failing such instruction, at its
discretion.
SECTION 3.03. Amendments and Waivers. Any provision of this
Agreement may be amended or waived, and any Subsidiary Guarantor may be
released from any of its obligations hereunder, if, and only if, such
amendment, waiver or release is in writing and is signed by (i) each Subsidiary
Guarantor affected thereby and (ii) the Agent with the consent of Banks at the
time having at least 66-2/3% of the aggregate amount of the Commitments or, if
the Commitments shall have been terminated, holding Notes evidencing at least
66-2/3% of the aggregate unpaid principal amount of the Loans; provided that
any Subsidiary Guarantor shall be released from its obligations hereunder upon
the terms set forth in Section 5.10 or Section 5.20 of the Credit Agreement.
SECTION 3.04. Texas Law. This Agreement shall be construed in
accordance with and governed by the law of the state of Texas.
SECTION 3.05. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH
SUBSIDIARY GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE OVER EACH OF THEM IN CONNECTION WITH ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY FINANCING DOCUMENT AND, TO THE
FULLEST EXTENT PERMITTED BY LAW, FURTHER AGREES (AND SHALL NOT CONTEST) THAT
THE PROPER VENUE FOR FILING AND MAINTAINING ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE IN THE STATE OF TEXAS. IN ANY SUCH ACTION, SUIT OR PROCEEDING, EACH
SUBSIDIARY GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT
REQUESTED, TO SUCH SUBSIDIARY GUARANTOR AT ITS ADDRESS FOR NOTICES HEREUNDER,
OR ANY FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE AND REMEDIES
CODE THEN IN EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON SUCH
SUBSIDIARY GUARANTOR. EACH SUBSIDIARY GUARANTOR THAT IS NOT ORGANIZED UNDER
THE LAWS OF THE UNITED STATES OR A STATE THEREOF (EACH A "NON-U.S. GUARANTOR")
HEREBY APPOINTS THE PRINCIPAL OFFICE OF CT CORPORATION SYSTEM IN HOUSTON,
TEXAS, WHICH, ON THE DATE HEREOF, IS LOCATED AT 911 DALLAS STREET, HOUSTON,
TEXAS 77002, AS THE AUTHORIZED AGENT THEREOF (THE "AUTHORIZED AGENT") UPON
WHOM PROCESS MAY BE SERVED IN ANY SUCH
<PAGE> 95
ACTION, SUIT OR PROCEEDING WHICH MAY BE INSTITUTED IN THE STATE OF TEXAS. SUCH
APPOINTMENT SHALL BE IRREVOCABLE UNLESS AND UNTIL THE APPOINTMENT OF A
SUCCESSOR AUTHORIZED AGENT FOR SUCH PURPOSE, AND SUCH SUCCESSOR'S ACCEPTANCE OF
SUCH APPOINTMENT, SHALL HAVE OCCURRED AND THE AGENT SHALL HAVE BEEN NOTIFIED
THEREOF. EACH NON-U.S. GUARANTOR AGREES TO TAKE ANY AND ALL ACTIONS,
INCLUDING, WITHOUT LIMITATION, THE FILING OF ANY AND ALL DOCUMENTS AND
INSTRUMENTS, THAT MAY BE NECESSARY TO CONTINUE SUCH APPOINTMENT IN FULL FORCE
AND EFFECT AS AFORESAID. SERVICE OF PROCESS UPON THE AUTHORIZED AGENT WITH
RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE DEEMED, IN EVERY
RESPECT, EFFECTIVE SERVICE OF PROCESS UPON ANY SUCH NON-U.S. GUARANTOR. EACH
NON-U.S. GUARANTOR SHALL REQUIRE THE AUTHORIZED AGENT TO AGREE IN WRITING TO
ACCEPT THE FOREGOING APPOINTMENT AS AGENT FOR SERVICE OF PROCESS.
SECTION 3.06. WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 3.07. WAIVER OF SOVEREIGN IMMUNITY. TO THE EXTENT THAT ANY
SUBSIDIARY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH SUBSIDIARY GUARANTOR
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY DO SO, SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, AGREES, TO THE FULLEST EXTENT IT MAY
LEGALLY DO SO, THAT THE WAIVERS SET FORTH IN THIS SECTION 3.07 SHALL HAVE THE
FULLEST SCOPE PERMITTED UNDER THE FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976 OF
THE UNITED STATES AND ARE INTENDED TO BE IRREVOCABLE FOR PURPOSES OF SUCH ACT.
SECTION 3.08. Successors and Assigns.
(a) All of the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no Subsidiary Guarantor
may assign or transfer any of its rights or obligations under this
Agreement.
(b) Any Subsidiary may become a party hereto and a
Subsidiary Guarantor hereunder, without any further action by any
other party, by executing and delivering a counterpart hereof to the
Agent.
<PAGE> 96
SECTION 3.09. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, and all of which
taken together shall constitute a single instrument, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 3.10. Judgment Currency. Each Non-U.S. Guarantor agrees to
indemnify the Agent and each Bank against any loss incurred by it as a result
of any judgment or order being given or made and expressed and paid in a
currency (the "Judgment Currency") other than United States dollars and as a
result of any variation as between (i) the rate of exchange at which the United
States dollar amount is converted into the Judgment Currency for the purpose of
such judgment or order and (ii) the spot rate of exchange in The City of New
York at which the Agent or such Bank on the date of payment of such judgment or
order is able to purchase United States dollars with the amount of the Judgment
Currency actually received by the Agent or such Bank. The foregoing indemnity
shall constitute a separate and independent obligation of each Non-U.S.
Guarantor and shall continue in full force and effect notwithstanding any such
judgment or order as aforesaid. The term "spot rate of exchange" shall include
any premiums and costs of exchange payable in connection with the purchase of,
or conversion into, United States dollars.
SECTION 3.11. Existence. Each Subsidiary Guarantor agrees to
maintain its existence except as permitted by Section 5.02 of the Credit
Agreement.
SECTION 3.12. Taxes. (a) Any and all payments by any Subsidiary
Guarantor hereunder shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding (i) in the
case of the Agent, each Co-Agent and each Bank, United States federal income
taxes and, without duplication, any taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which the Agent,
such Co-Agent or such Bank, as the case may be, is organized or any political
subdivision thereof and (ii) in the case of each Bank, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Subsidiary
Guarantor shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Bank, any Co-Agent or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.12) such Bank, such Co-Agent or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Subsidiary Guarantor shall make such deductions
and (iii) such Subsidiary Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
<PAGE> 97
(b) Each Subsidiary Guarantor will indemnify each Bank, each
Co-Agent and the Agent for the full amount of Taxes (including, without
limitation, any Taxes imposed by any jurisdiction on amounts payable under this
Section 3.12) paid by such Bank, such Co-Agent or the Agent (as the case may
be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally asserted. Payments under any indemnification provided for in this
Section 3.12(b) shall be made within 30 days from the date such Bank, such
Co-Agent or the Agent (as the case may be) makes written demand therefor.
(c) Within 30 days after the date of any payment of Taxes by a
Subsidiary Guarantor, such Subsidiary Guarantor will furnish to the Agent, at
its address referred to in Section 9.01 of the Credit Agreement, the original
or a certified copy of a receipt evidencing payment thereof. Should any Bank,
any Co-Agent or the Agent ever receive any refund, credit or deduction from any
taxing authority to which such Bank, such Co-Agent or the Agent, as the case
may be, would not be entitled but for the payment by a Subsidiary Guarantor of
Taxes as required by this Section 3.12 (it being understood that the decision
as to whether or not to claim, and if claimed, as to the amount of any such
refund, credit or deduction shall be made by such Bank, such Co-Agent or the
Agent, as the case may be, in its sole discretion), such Bank, such Co-Agent or
the Agent, as the case may be, thereupon shall repay to such Subsidiary
Guarantor an amount with respect to such refund, credit or deduction equal to
any net reduction in taxes actually obtained by such Bank, such Co-Agent or the
Agent, as the case may be, and reasonably determined by such Bank, such
Co-Agent or the Agent, as the case may be, to be attributable to such refund,
credit or deduction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date first
above written.
SUBSIDIARY GUARANTORS:
UNION TEXAS PETROLEUM ENERGY CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
<PAGE> 98
UNION TEXAS PRODUCTS CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
UNION TEXAS EAST KALIMANTAN LIMITED
By: _______________________________
Name: _____________________________
Title: ____________________________
UNION TEXAS INTERNATIONAL
CORPORATION
By: _______________________________
Name: _____________________________
Title: ____________________________
UNISTAR, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
AGENT:
NATIONSBANK OF TEXAS, N.A., as
Agent
By: _______________________________
Name: _____________________________
Title: ____________________________
<PAGE> 99
EXHIBIT C
OPINION OF GENERAL COUNSEL
April 24, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
I am General Counsel, Vice President-Administration, and
Secretary of Union Texas Petroleum Holdings, Inc., a Delaware corporation (the
"Company"), and have acted as counsel (i) for the Company in connection with
the Credit Agreement dated as of April 24, 1995 (the "Credit Agreement") among
the Company, the Banks and Co-Agents listed on the signature pages thereof and
NationsBank of Texas, N.A., as Agent (the "Agent"), and (ii) for Union Texas
Petroleum Energy Corporation, a Delaware corporation, Union Texas International
Corporation, a Delaware corporation, Unistar, Inc., a Delaware corporation,
Union Texas East Kalimantan Limited, a Bahamian corporation, and Union Texas
Products Corporation, a Delaware corporation (collectively, the "Subsidiary
Guarantors" and together with the Company, the "Obligors"), in connection with
the Subsidiary Guaranty Agreement dated as of April 24, 1995 (the "Subsidiary
Guaranty Agreement") among the Subsidiary Guarantors and the Agent. Terms
defined in the Credit Agreement and not otherwise defined herein are used
herein as therein defined.
In connection with the opinions expressed below, I have
examined or caused to be examined executed counterparts of the following
(collectively, the "Financing Documents"):
(a) the Credit Agreement,
(b) the Subsidiary Guaranty Agreement, and
(c) twenty four (24) promissory notes, each substantially
in the form of Exhibit A to the Credit Agreement, one payable to each
Bank.
I have also examined or caused to be examined originals or
copies, certified or otherwise identified to my satisfaction, of such other
instruments, documents and records as I deemed necessary to express the
opinions hereinafter set forth. To the extent relevant to my opinion, I have
assumed, without independent verification, (i) the
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To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 2
due execution and delivery of each Financing Document by each party thereto
(other than the Obligors), (ii) the genuineness of all signatures on all
documents submitted to me, (iii) that each party (other than the Obligors) to
each of the Financing Documents is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has full
power and authority to enter into and to carry out its obligations under such
Financing Documents, (iv) that the execution and delivery of each of the
Financing Documents by each party thereto (other than the Obligors) and the
performance of its obligations under such Financing Documents have been duly
authorized by all necessary proceedings and actions, (v) that each of the
Financing Documents is the legal, valid and binding obligation of each party
thereto (other than the Obligors), enforceable against such party in accordance
with the terms of such Financing Documents, subject to limitations of the types
described in the opinion of Andrews & Kurth L.L.P. delivered to you pursuant to
the Financing Documents, and (vi) the authenticity of all documents submitted
to me as originals and the conformity to authentic original documents of all
documents submitted to me as certified, conformed or photostatic copies. I
have relied, to the extent that I deem such reliance proper, upon certificates
of officers of one or more of the Obligors and of governmental officials as to
matters of fact not independently established by me.
For purposes of the opinion set forth in paragraph 2 below, I
have (i) relied on the opinion of Andrews & Kurth L.L.P. with respect to the
agreements and instruments identified on Schedule I thereto, and (ii) examined
or caused to be examined each other agreement or other instrument binding upon
any Obligor, a breach of or default under which would, in my judgment, have a
material adverse effect upon the Company and its Subsidiaries taken as a whole.
As to other agreements and instruments, I have not undertaken such a review for
purposes of this opinion, given the volume of such documents and given the fact
that by virtue of the character of such documents and the historical practices
of the Company with respect thereto, I have no reason to believe that a breach
of or default under any such document would arise by virtue of the execution,
delivery and performance of the Financing Documents.
Based on the foregoing and subject to the qualifications and
limitations set forth below, I am of the opinion that:
1. Each of the Obligors has all material governmental
licenses, authorizations, consents and approvals required to own its assets and
to carry on its business as now conducted.
<PAGE> 101
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 3
2. To the best of my knowledge, the execution, delivery
and performance by each Obligor of each Financing Document to which it is a
party do not constitute a breach of or default under, or result in the creation
or imposition of any Lien on any material asset of the Company or any
Subsidiary under, any provision of any instrument or agreement evidencing or
governing Debt binding upon such Obligor or any other material agreement,
judgment, injunction, order, decree or other instrument binding upon such
Obligor. However, please be advised that the Company currently has an
aggregate $300 million principal amount of its senior notes outstanding
(individually referred to as the $100 million 8.25% Senior Notes due 1999, the
$125 million 8 3/8% Senior Notes due 2005 and the $75 million 8 1/2% Seniior
Notes due 2007, and collectively referred to as the "Senior Notes"), and that
the sum of the Senior Notes, the Commitments and the commitments under the
Other Credit Agreement equals $850 million, while the total amount of debt
permitted under Section 5.05(a) of the Credit Agreement and the Other Credit
Agreement may not exceed $775 million.
3. To the best of my knowledge, there is no action, suit
or proceeding pending against, threatened against or affecting the Company or
any of its Subsidiaries or any of their respective properties or interests, at
law or in admiralty or equity, before any court or arbitrator or any
governmental body, agency or official, foreign or domestic, in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the business, financial position or results of operations of the Company
and its Subsidiaries, taken as a whole, or which in any manner draws into
question the validity of any Financing Document.
My opinions in paragraph 1 are rendered only with respect to
the constitutions, laws, rules and regulations which are currently in effect
and applicable court rulings and orders which have been published and are
generally available. In addition, the foregoing opinions are rendered only as
of the date hereof, and I disclaim any obligation to advise you of changes
thereafter.
I am a member of the bar of the State of Texas only, and this
opinion is limited in all respects to the laws of the State of Texas, the
General Corporation Law of Delaware and federal law of the United States of
America, and, to the limited extent described below, the laws of The
Commonwealth of The Bahamas and The Republic of Indonesia. In rendering
certain of the opinions expressed above, I have relied, with your approval,
upon an opinion, dated the date hereof, of Andrews & Kurth L.L.P., a copy of
which has been furnished to you. My opinion in paragraph 1 addresses, with
respect to Union Texas East Kalimantan Limited, the laws of The Commonwealth of
<PAGE> 102
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 4
The Bahamas and The Republic of Indonesia and such opinion with respect to such
laws is, with your permission and without independent investigation, given
solely in reliance upon and limited in scope to the opinions of Graham,
Thompson & Co. and Mochtar, Karuwin & Komar, respectively, copies of which have
been furnished to you, and my opinion incorporates by reference all
qualifications, exceptions and limitations set forth therein.
This opinion is for the benefit of and may be relied upon by
the Banks, the Agent, the Co-Agents, their respective successors and assigns,
their respective counsel and Participants in connection with the transactions
contemplated by the Credit Agreement. Otherwise, this opinion may not be used,
published, circulated or relied upon by any other Person for any purpose
without my prior written consent.
Very truly yours,
Newton W. Wilson, III
<PAGE> 103
EXHIBIT D
OPINION OF ANDREWS & KURTH L.L.P.
April 24, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
We have acted as special counsel (i) to Union Texas Petroleum
Holdings, Inc., a Delaware corporation (the "Company"), in connection with the
Credit Agreement dated as of April 24, 1995 (the "Credit Agreement") among the
Company, the Banks and Co-Agents listed on the signature pages thereof and
NationsBank of Texas, N.A., as Agent (the "Agent"), and (ii) to Union Texas
Petroleum Energy Corporation, a Delaware corporation, Union Texas International
Corporation, a Delaware corporation, Unistar, Inc., a Delaware corporation,
Union Texas East Kalimantan Limited, a Bahamian corporation, and Union Texas
Products Corporation, a Delaware corporation (collectively, the "Subsidiary
Guarantors" and together with the Company, the "Obligors"), in connection with
the Subsidiary Guaranty Agreement dated as of April 24, 1995 (the "Subsidiary
Guaranty Agreement") among the Subsidiary Guarantors and the Agent. Terms
defined in the Credit Agreement and not otherwise defined herein are used
herein as therein defined.
In connection with the opinions expressed below, we have
examined executed counterparts of the following (collectively, the "Financing
Documents"):
(a) the Credit Agreement,
(b) the Subsidiary Guaranty Agreement, and
(c) twenty four (24) promissory notes, each substantially
in the form of Exhibit A to the Credit Agreement, one payable to each
Bank (collectively, the "Notes").
We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such other instruments, documents
and records as we deemed necessary to express the opinions hereinafter set
forth. To the extent relevant to our opinion, we have assumed, without
independent verification, (i) the due execution and delivery of each Financing
Document by each party thereto (other than the
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To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 2
Obligors), (ii) the genuineness of all signatures on all documents submitted to
us, (iii) that each party (other than the Obligors) to each of the Financing
Documents is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has full power and authority
to enter into and to carry out its obligations under such Financing Documents,
(iv) that the execution and delivery of each of the Financing Documents by each
party thereto (other than the Obligors) and the performance of its obligations
under such Financing Documents have been duly authorized by all necessary
proceedings and actions, (v) that each of the Financing Documents is the legal,
valid and binding obligation of each party thereto (other than the Obligors)
enforceable against such party in accordance with the terms of such Financing
Documents, subject to limitations of the types described herein, and (vi) the
authenticity of all documents submitted to us as originals and the conformity
to authentic original documents of all documents submitted to us as certified,
conformed or photostatic copies. We have relied, to the extent that we deem
such reliance proper, upon certificates of officers of one or more of the
Obligors and of governmental officials as to matters of fact not independently
established by us. We have also examined the representations and warranties of
the Company contained in the Credit Agreement and have relied, to the extent we
deem such reliance proper, upon the relevant facts stated therein.
Based on the foregoing and subject to the qualifications and
limitations set forth below, we are of the opinion that:
1. (a) Each of the Obligors is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate power and authority
required to own its assets and to carry on its business as now conducted.
(b) The execution, delivery and performance by each
Obligor of each Financing Document to which it is a party will not violate the
Public Utility Holding Company Act of 1935, the Investment Company Act of 1940
or the Interstate Commerce Act.
2. The execution, delivery and performance by each
Obligor of each Financing Document to which it is a party are within such
Obligor's corporate powers, have been duly authorized by all necessary
corporate action, and do not constitute a breach or default under, any
provision of applicable law or regulation known to us after reasonable inquiry
or the certificate of incorporation or bylaws of such Obligor.
<PAGE> 105
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 3
3. To the best of our knowledge, the execution, delivery
and performance by each Obligor of each Financing Document to which it is a
party do not constitute a breach of or default under, or result in the creation
or imposition of any Lien on any material asset of the Company or any
Subsidiary under, any provision of the instruments and agreements identified in
Schedule I hereto. However, please be advised that the Company currently has
an aggregate $300 million principal amount of its senior notes outstanding
(individually referred to as the $100 million 8.25% Senior Notes due 1999, the
$125 million 8 3/8% Senior Notes due 2005 and the $75 million 8 1/2% Senior
Notes due 2007, and collectively referred to as the "Senior Notes"), and that
the sum of the Senior Notes, the Commitments and the commitments under the
Other Credit Agreement equals $850 million, while the total amount of debt
permitted under Section 5.05(a) of the Credit Agreement and the Other Credit
Agreement may not exceed $775 million.
4. No authorization, consent or approval of any
governmental body, agency or official is required in connection with the
execution, delivery or performance by any Obligor of any of the Financing
Documents to which it is a party.
5. (a) The Credit Agreement and the Notes have been
duly executed and delivered by the Company, and constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms.
(b) The Subsidiary Guaranty Agreement has been duly
executed and delivered by each of the Subsidiary Guarantors, and constitutes a
legal, valid and binding obligation of each of the Subsidiary Guarantors,
enforceable against each of the Subsidiary Guarantors in accordance with its
terms.
6. If all material facts (as we understand them) and
issues of law were presented and properly argued, a Texas court or a federal
court sitting in the State of Texas and applying the laws of the State of Texas
should hold that the consent by the Company in Section 9.09 of the Credit
Agreement, and by each Subsidiary Guarantor in Section 3.05 of the Subsidiary
Guaranty Agreement, to the non-exclusive personal jurisdiction of the courts of
the State of Texas and of any federal court located in the State of Texas is
valid. In this regard we call to your attention that such consents to
non-exclusive jurisdiction are not effective to (1) confer subject matter
jurisdiction that does not otherwise exist in such court or (2) establish
diversity jurisdiction that does not otherwise exist in an action brought in
federal court.
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To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 4
7. Neither the execution, delivery and performance by
any Obligor of the Financing Documents to which it is a party, nor the use of
the proceeds of the Loans in accordance with Section 5.09 of the Credit
Agreement, will violate the provisions of Regulations G, T, U or X of the Board
of Governors of the Federal Reserve System.
The opinions set forth above are subject to the following
additional assumptions, limitations and qualifications:
(a) Our opinions with respect to the enforceability of
the Financing Documents are subject to the qualification that such
enforceability may be (i) limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws affecting the
rights of creditors generally, (ii) subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law
or in equity), including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing, and (iii) limited by the power of
a court to award damages in lieu of equitable remedies (including specific
performance or injunctive relief) or otherwise to refuse to grant a particular
remedy sought by the parties to the Financing Documents.
(b) We express no opinion herein as to (1) the right of
any Bank to set-off against funds held in any special account maintained by the
Company with such Bank or which are otherwise subject to special agreement
between the Company and such Bank; (2) whether the provisions of the Credit
Agreement which permit the Agent, the Co-Agents or any Bank to take action or
make determinations may be subject to a requirement that such action be taken
or such determination be made in good faith; (3) whether the holder of a Note
may, under certain circumstances, be called upon to prove the outstanding
principal amount of the loans evidenced thereby; (4) the effect of the law of
any jurisdiction (other than Texas) wherein any Bank may be located which
limits rates of interest which may be charged or collected by such Bank; and
(5) the enforceability of any provision in the Financing Documents that
purports to (i) require indemnification for the negligence or wilful misconduct
of the indemnitee or to otherwise require any Obligor to provide
indemnification to the extent the same may be in conflict with public policy,
(ii) limit the effect of any delay or omission of enforcement of rights or
remedies or any course of performance or course of dealing between the parties,
(iii) create an agreement to agree, (iv) fix evidentiary standards or venue of
any proceeding, (v) waive rights to a trial by jury, or (vi) waive rights to
notices, legal defenses or other benefits that cannot, as a matter of law, be
effectively waived.
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To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 5
(c) Whenever this opinion states the existence or absence
of any fact to the best of our knowledge, such statement is intended to convey
that, during the course of our representation of the Obligors with respect to
matters addressed herein, no information has come to our attention which has
given us actual knowledge of facts contrary to the statements so expressed
herein.
(d) In rendering our opinions in paragraph 1 we have
relied upon the description of the properties, assets and businesses of the
Obligors set forth in the Report on Form 10-K for the year ended December 31,
1994, filed by the Company with the Securities and Exchange Commission.
(e) In rendering the opinions in paragraphs 2 and 5, we
have assumed that (i) there are no fees, points, premiums or other sums
contracted for, charged to or paid or to be paid by the Company to the Banks on
account of the transactions described in the Credit Agreement other than those
described in the Credit Agreement and those described in the letters of even
date herewith from the Agent to us and (ii) the parties to the Financing
Documents will comply strictly with the precise terms of the Financing
Documents, including, without limitation, the usury savings clauses set forth
therein with respect to any consideration contemplated by the Financing
Documents that will constitute interest under Texas law.
(f) In rendering our opinions in paragraph 7 we have
assumed that the representations of the Company and the Banks set forth in
Sections 4.12 and 9.07, respectively, of the Credit Agreement will be true and
correct at all times.
(g) The foregoing opinions are rendered only with respect
to the constitutions, laws, rules and regulations which are currently in effect
and applicable court rulings and orders which have been published and are
generally available. In addition, the foregoing opinions are rendered only as
of the date hereof, and we disclaim any obligation to advise you of changes
thereafter.
This opinion is limited in all respects to the laws of the
State of Texas, the General Corporation Law of Delaware and federal law of the
United States of America, and, to the limited extent described below, the laws
of The Commonwealth of The Bahamas and The Republic of Indonesia. Insofar as
our opinion relates to the laws of The Commonwealth of The Bahamas and The
Republic of Indonesia it is, with your permission and without independent
investigation, given solely in reliance upon and limited in scope to the
opinions of Graham, Thompson & Co. and Mochtar, Karuwin & Komar, respectively,
copies of which have been furnished to you, and our
<PAGE> 108
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 6
opinion incorporates by reference all qualifications, exceptions and
limitations set forth therein.
This opinion is for the benefit of and may be relied upon by
the Banks, the Agent, the Co-Agents, their respective successors and assigns,
their respective counsel and Participants in connection with the transactions
contemplated by the Credit Agreement and may be relied upon by Newton W.
Wilson, III, General Counsel of the Company, in rendering his opinion to the
Banks and the Agent in connection with such transactions. Otherwise, this
opinion may not be used, published, circulated or relied upon by any other
Person for any purpose without our written consent.
Very truly yours,
ANDREWS & KURTH L.L.P.
<PAGE> 109
SCHEDULE I
I. UNION TEXAS PETROLEUM HOLDINGS, INC. ("UTPH")
A. Indenture dated as of November 15, 1992 between UTPH, the
guarantors named therein, and State Street Bank and Trust Company, as trustee,
relating to the $100,000,000 8.25% Senior Notes due November 15, 1999 issued by
UTPH.
B. Indenture dated as of March 15, 1995 between UTPH, the guarantors
named therein, and The First National Bank of Chicago, as trustee, relating to
the $125,000,000 8 3/8% Senior Notes due 2005 issued by UTPH and the
$75,000,000 8 1/2% Senior Notes due 2007 issued by UTPH.
C. $450,000,000 Amended and Restated Credit Agreement dated as of
May 13, 1994 among UTPH, the Banks and Co-Agents listed on the signature pages
thereof and NationsBank of Texas, N.A., as Agent, as amended by the First
Amendment Agreement dated as of November 21, 1994, the Second Amendment
Agreement dated as of January 31, 1995 and the Third Amendment Agreement dated
as of April 24, 1995.
D. $100,000,000 Credit Agreement dated as of April 24, 1995 among
UTPH, the Banks and Co-Agents listed on the signature pages thereof and
NationsBank of Texas, N.A., as Agent.
II. UNION TEXAS PAKISTAN, INC. ("UT PAKISTAN")
A. Finance Agreement dated as of December 20, 1988 between UT
Pakistan and Overseas Private Investment Corporation ("OPIC").
B. Issuing and Paying Agency Agreement dated as of December 20, 1988
among First Trust New York National Association (as successor to Morgan
Guaranty Trust Company of New York), as issuing and paying agent, OPIC, and UT
Pakistan, relating to the Promissory Note dated December 20, 1988 issued by UT
Pakistan to Liberty U.S. Government Money Market Trust in the original
principal amount of US$21,250,000.
C. Guaranty Agreement dated as of December 20, 1988 between UTPH
and OPIC.
D. Deed of Floating Charge dated December 20, 1988 by UT Pakistan in
favor of OPIC.
III. UNISTAR, INC. ("UNISTAR") AND UNIMAR COMPANY ("UNIMAR")
A. Amended and Restated Agreement of General Partnership of Unimar
entered into as of September 11, 1990.
B. Indenture dated as of September 25, 1984 between Unimar and
Irving Trust Company, as trustee, relating to 14,077,747 Indonesian
Participating Units, as supplemented by the First Supplemental Indenture dated
as of October 31, 1986 between such parties.
<PAGE> 110
C. Shareholders Agreement dated as of September 11, 1990 among UTPH,
Unistar, Ultramar America Limited, Ultramar Indonesia Limited and Ultrastar,
Inc.
D. Second Shareholders Agreement dated as of August 26, 1993 among
UTPH, Unistar, LASMO America Limited, LASMO Sanga Sanga Limited and LASMO
(USTAR) Inc. (formerly Ultrastar, Inc.)
IV. UNION TEXAS EAST KALIMANTAN LIMITED ("UTEK")
A. Production Sharing Contract and related Agreements.
1. Amended and Restated Production Sharing Contract dated April 23,
1990, but effective as of August 8, 1968 among Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara ("Pertamina"), and Roy M. Huffington, Inc., Virginia
Indonesia Company, Virginia International Company, Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas & Oil Company, Inc. and
Huffington Corporation (all such parties and their predecessors and successors
in interest are herein collectively referred to as the "IJV Contractors"), and
Production Sharing Contract dated April 23, 1990, but effective as of August 8,
1998 among Pertamina and the IJV Contractors.
2. Joint Venture Agreement effective as of August 8, 1968 by and
between Roy M. Huffington, Inc., Virginia International Company, Austral
Petroleum Gas Corporation, Golden Eagle Indonesia Limited and Union Texas Far
East Corporation, as amended by a Settlement Agreement dated as of January 16,
1976 among these parties and Universe Tankships, Inc., an Agreement dated as of
October 1, 1979 among Roy M. Huffington, Inc., Virginia International Company,
Austral Petroleum Gas Corporation, Golden Eagle Indonesia Limited, Universe
Tankships, Inc. and Union Texas Far East Corporation and a Letter dated October
1, 1979 from Roy M. Huffington, Inc. to Virginia International Company, Austral
Petroleum Gas Corporation, Golden Eagle Indonesia Limited, Universe Tankships,
Inc. and Union Texas Far East Corporation.
3. Operating Agreement dated as of August 8, 1968 between Roy M.
Huffington, Inc., as operator, and Union Texas Far East Corporation, Golden
Eagle Indonesia Limited, Virginia International Company and Austral Petroleum
Gas Corporation, as non-operators, as amended by a letter agreement effective
September 15, 1973 among these parties and an Amendment to Operating Agreement
dated as of April 1, 1990 among Roy M. Huffington, Inc., Ultramar Indonesia
Limited, Virginia Indonesia Company, Virginia International Company, Union
Texas East Kalimantan Limited, and Universe Gas & Oil Company, Inc. and a
Letter dated February 8, 1990 from the IJV Contractors to Pertamina.
4. Amended and Restated Bontang Processing Agreement dated as of
February 9, 1988 among Pertamina, the IJV Contractors, Total Indonesie,
Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd., and P. T. Badak.
B. Supply Agreements.
1. Amended and Restated Supply Agreement (In support of the Amended
and Restated 1973 LNG Sales Contract) dated September 22, 1993, but effective
as of December 3, 1973, between Pertamina and the IJV Contractors.
<PAGE> 111
2. Supply Agreement for Badak LNG Expansion Project dated as of
April 14, 1981 among Pertamina and the IJV Contractors, as supplemented by the
Memorandum of Understanding dated as of April 14, 1981 among Pertamina, the IJV
Contractors, Total Indonesie, and Union Oil Company of Indonesia, and the
Supplemental Memorandum dated August 24, 1983 among Pertamina and the IJV
Contractors and as amended by the Memorandum dated December 1, 1988 among
Pertamina and the IJV Contractors.
3. Badak III LNG Sales Contract Supply Agreement executed October
19, 1987, but effective as of March 19, 1987 among Pertamina and the IJV
Contractors, as supplemented by the Supplemental Memorandum dated as of January
1, 1990 among Pertamina and the IJV Contractors.
4. Amended and Restated Second Supply Agreement for Excess Sales
(Quantities In Kind and LNG Amounts Under Amended and Restated Invoice
Settlement Agreements) dated as of January 19, 1990, but effective December 1,
1988, among Pertamina and the IJV Contractors, as supplemented by the
Supplemental Memorandum dated as of January 1, 1990 among Pertamina and the IJV
Contractors.
5. Badak IV LNG Sales Contract Supply Agreement dated as of August
12, 1991, but effective as of October 23, 1990, among Pertamina and the IJV
Contractors, as supplemented by the Memorandum of Understanding Re: Supply
Agreements and Package IV Sales dated as of August 12, 1991, but effective as
of July 1, 1990, and the Supplemental Memorandum of Understanding dated as of
January 31, 1994, but effective as of July 1, 1990, each among Pertamina, the
IJV Contractors, Total Indonesie, Unocal Indonesia, Ltd., and Indonesia
Petroleum, Ltd., and the Addendum to Badak IV LNG Sales Contract Supply
Agreement dated as of January 31, 1994, but effective as of October 23, 1990
among Pertamina and the IJV Contractors.
C. Miscellaneous Agreements.
1. Amended and Restated Bontang II Trustee and Paying Agent
Agreement dated as of July 15, 1991 among the IJV Contractors, Pertamina, Total
Indonesie, Unocal Indonesia, Ltd., and Indonesia Petroleum Ltd., and
Continental Bank International ("CBI"), as trustee.
2. Amended and Restated Debt Service Allocation Agreement dated as
of February 9, 1988 among Pertamina, the IJV Contractors, Total Indonesie,
Indonesia Petroleum, Ltd. and Unocal Indonesia, Ltd.
3. Amended and Restated Badak Trustee and Paying Agent Agreement
dated as of February 9, 1988 among Pertamina, the IJV Contractors, Total
Indonesie, Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd., and CBI, as
trustee ("Bontang I Trustee").
D. Bontang Capital Project Financing Tier III-2.
1. Producers Agreement No. 2 dated as of June 9, 1987 among the IJV
Contractors, the lenders named therein, and The Industrial Bank of Japan Trust
Company ("IBJ Trust"), as agent for such lenders, as amended by the Amendment
No. 1 to Producers Agreement No. 2 dated as of February 9, 1988 and Amendment
No. 2 to Producers Agreement No. 2 dated as of May 31, 1988, each among the IJV
Contractors, the lenders named therein, and IBJ Trust, as agent for such
lenders.
<PAGE> 112
2. Bontang Capital Projects Loan Agreement No. 2 dated as of June 9,
1987 among the Bontang I Trustee, the lenders named therein, and IBJ Trust, as
agent for such lenders, as amended by the Amendment No. 1 to Bontang Capital
Projects Loan Agreement No. 2 dated as of February 9, 1988 among the Bontang I
Trustee, the lenders named therein, and IBJ Trust, as agent for such lenders.
E. Train E Financing.
1. Bontang III Producers Agreement dated as of February 9, 1988
among Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum,
Ltd., and Unocal Indonesia, Ltd. in favor of Train-E Finance Co., Ltd., as
Tranche A Lender, the banks named therein as Tranche B Lenders and IBJ Trust as
Agent for such Tranche B Lenders, as amended by Amendment No. 1 dated as of May
31, 1988 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia
Petroleum, Ltd., and Unocal Indonesia, Ltd. in favor of Train-E Finance Co.,
Ltd., as Tranche A Lender, the banks named therein as Tranche B Lenders and IBJ
Trust as Agent for such Tranche B Lenders.
2. Bontang III Trustee and Paying Agent Agreement dated as of
February 9, 1988 among Pertamina, the IJV Contractors, Total Indonesie,
Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd. and CBI, as trustee (the
"Bontang III Trustee"), as amended by Amendment No.1 dated as of December 11,
1992 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia
Petroleum, Ltd., Unocal Indonesia, Ltd. and the Bontang III Trustee.
3. Amended and Restated Bontang Excess Sales Trustee and Paying
Agent Agreement dated as of February 9, 1988 among Pertamina, the IJV
Contractors, Total Indonesie, Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd.
and CBI, as trustee.
4. Bontang III Loan Agreement dated as of February 9, 1988 among the
Bontang III Trustee, Train-E Finance Co., Ltd., as Tranche A Lender, the banks
named therein as Lead Managers and Tranche B Lenders and IBJ Trust as Agent for
such Tranche B Lenders.
F. LPG Financing.
1. Amended and Restated Bontang LPG Trustee and Paying Agent
Agreement dated as of December 31, 1991 among Pertamina, the IJV Contractors,
Total Indonesie, Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd. and CBI, as
trustee.
2. Advance Payment Agreement dated as of February 18, 1987 between
Pertamina and Arun Bontang Project Finance Co., Ltd.
G. Train F Financing.
1. Bontang IV Producers Agreement dated as of August 26, 1991 among
Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum, Ltd., and
Unocal Indonesia, Ltd. in favor of the lenders named therein and The Chase
Manhattan Bank, N.A. as agent for such lenders.
<PAGE> 113
2. Bontang IV Trustee and Paying Agent Agreement dated as of August
26, 1991 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia
Petroleum, Ltd., Unocal Indonesia, Ltd. and CBI, as trustee (the "Bontang IV
Trustee").
3. Bontang IV Loan Agreement dated as of August 26, 1991 among the
Bontang IV Trustee, the lenders named therein and The Chase Manhattan Bank,
N.A. as agent for such lenders.
<PAGE> 114
EXHIBIT E
OPINION OF SPECIAL COUNSEL TO THE AGENT
April 24, 1995
To NationsBank of Texas, N.A., as Agent,
and to each of the Banks referred to below
Ladies and Gentlemen:
We have acted as special counsel to NationsBank of Texas, N.A., acting for
itself and as Agent, in connection with the preparation, execution and delivery
of the Credit Agreement dated as of April 24, 1995 (the "Credit Agreement")
among Union Texas Petroleum Holdings, Inc., a Delaware corporation (the
"Company"), the banks listed on the signature pages thereof (the "Banks"),
NationsBank of Texas, N.A., as Agent (the "Agent"), and the Co-Agents.
Capitalized terms defined in the Credit Agreement and not defined herein are
used herein as therein defined.
In that connection, we have examined counterparts of the Credit Agreement
executed by the Agent and the Company respectively and the following documents:
(1) The Notes delivered to the Agent on the date hereof.
(2) The Subsidiary Guaranty Agreement delivered to the Agent on the
date hereof.
(3) The legal opinions delivered to the Agent pursuant to Sections
3.01(d), 3.01(e) and 3.01(g) of the Credit Agreement.
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the
genuineness of all signatures and the conformity to the originals of all such
documents submitted to us as copies. We have also assumed the accuracy of all
matters set forth in the certificates delivered to the Agent on the date hereof
in connection with the Credit Agreement and assumed that each of Company, the
Banks, the Agent and the Co-Agents has duly executed and delivered, with all
necessary power and authority (corporate and otherwise), the Credit Agreement,
that the Company has duly executed and delivered, with all necessary power and
authority (corporate and otherwise), the respective Notes, and that each of the
Required Guarantors and the Agent has duly executed and delivered, with all
necessary power and authority (corporate and otherwise), the Subsidiary
Guaranty Agreement. We have also assumed that no Bank has requested multiple
Notes pursuant to Section 2.05(b) of the Credit Agreement.
<PAGE> 115
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 2
Based upon the foregoing examination of documents and assumptions and upon such
other investigation as we have deemed necessary, we are of the opinion that the
documents referred to in items (1), (2) and (3) above are substantially
responsive to the requirements of the Credit Agreement.
This opinion is delivered to you only in connection with the transactions
contemplated by the Credit Agreement, and may not be quoted, circulated or
published, in whole or in part, or furnished to any Person, other than your
respective successors and assigns and Participants, without our written
consent.
Very truly yours,
Bracewell & Patterson, L.L.P.
<PAGE> 116
EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _____________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), [Union Texas Petroleum Holdings, Inc.
(the "Company")] and NationsBank of Texas, N.A., as Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, this Assignment and Assumption Agreement (this
"Agreement") relates to the Credit Agreement dated as of April 24, 1995 among
the Company, the Banks (including Assignor) and Co-Agents parties thereto and
the Agent (such Credit Agreement, as amended from time to time, is hereinafter
referred to as the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has
a Commitment to make Loans in an aggregate principal amount at any time
outstanding not to exceed $____________;
WHEREAS, Loans made by the Assignor under the Credit Agreement in
the aggregate principal amount of $_____________ are outstanding at the date
hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of
the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Credit
Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor,
<PAGE> 117
the Assignee[, the Company] and the Agent and the payment of the amounts
specified in Section 3 required to be paid on the date hereof, (i) the Assignee
shall, as of the date hereof, succeed to the rights and be obligated to perform
the obligations of a Bank under the Credit Agreement with a Commitment in an
amount equal to the Assigned Amount plus the amount of the Commitment, if any,
of the Assignee immediately prior to the effectiveness of this Agreement, and
(ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by
an amount equal to the Assigned Amount, and the Assignor shall, as of the date
hereof, be released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor. The Assignor
hereby certifies that after giving effect to this Agreement, the Assignor will
be in compliance with the last sentence of Section 9.06(c) of the Credit
Agreement. [The Assignor and the Assignee hereby certify that the Assignee is
[an affiliate of the Assignor/another Bank,] and accordingly, the Company's
consent hereto is not required.]
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor
on the date hereof in Federal funds an amount equal to $__________*. It is
understood that commitment and/or facility fees accrued to the date hereof are
for the account of the Assignor and such fees accruing from and including the
date hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.
As contemplated by Section 9.06(c) of the Credit Agreement, the Assignor agrees
to pay to the Agent for its account on the date hereof in Federal funds an
amount equal to $2,500 as an administrative fee for processing this Agreement
less any administrative processing fee paid to the Agent on the date hereof
under Section 9.06(c) of the Other Credit Agreement as a result of the
contemporaneous assignment to the Assignee made by the Assignor under the Other
Credit Agreement pursuant to the second proviso to the first sentence of
Section 9.06(c) of the Credit Agreement.
SECTION 4. Consent. This Agreement is conditioned upon the
consent of [the Company and] the Agent pursuant to Section 9.06(c) of the
Credit Agreement. The execution of this Agreement by [the Company and] the
Agent is evidence of this consent. Pursuant to Section 9.06(c) the Company
agrees to execute and deliver a Note payable to the order of the Assignee to
evidence the assignment and assumption provided for herein.
__________________________________
* Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any portion
of any upfront fee to be paid by the Assignor to the Assignee. It may be
preferable in an appropriate case to specify these amounts generically or by
formula rather than as a fixed sum.
<PAGE> 118
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Company or any other Obligor, the validity and enforceability of the
obligations of the Company or any other Obligor in respect of the Credit
Agreement, any Note or the Subsidiary Guaranty Agreement or the accuracy of any
Engineering Report. The Assignee acknowledges that it has, independently and
without reliance on the Assignor, and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement and will continue to be responsible for making its
own independent appraisal of the business, affairs and financial condition of
the Company and the other Obligors, the Engineering Reports and other relevant
matters.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas.
SECTION 7. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 8. Representation and Agreement. The Assignee
represents that it is either (i) a corporation, association or other entity
organized under the laws of the United States or any state thereof or (ii)
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 the
Credit Agreement or the Notes. If the Assignee is not organized under the laws
of the United States or any state thereof, it agrees to provide to the Company
and the Agent, on or prior to the date of this Agreement, two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, certifying
in either case that the Assignee is entitled to receive payments from the
Company under the Credit Agreement and the Notes without deduction or
withholding of any United States federal income taxes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By: _________________________
Name: _______________________
Title: ______________________
<PAGE> 119
[ASSIGNEE]
By: __________________________________
Name: ________________________________
Title: _______________________________
[UNION TEXAS PETROLEUM HOLDINGS, INC.
By: __________________________________
Name: ________________________________
Title: _______________________________]
NATIONSBANK OF TEXAS, N.A., as Agent
By: __________________________________
Name: ________________________________
Title: _______________________________
<PAGE> 120
EXHIBIT G-1
OPINION OF SPECIAL INDONESIAN COUNSEL
April 24, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
We have acted as special Indonesian counsel to Union Texas
Petroleum Holdings, Inc., a Delaware corporation (the "Company"), in connection
with the Credit Agreement dated as of April 24, 1995 (the "Credit Agreement")
among the Company, the Banks and Co-Agents listed on the signature pages
thereof and NationsBank of Texas, N.A., as Agent (the "Agent"), and to Union
Texas East Kalimantan Limited, a Bahamian corporation (the "Guarantor"), in
connection with the Subsidiary Guaranty Agreement dated as of April 24, 1995
(the "Subsidiary Guaranty Agreement") among Union Texas Petroleum Energy
Corporation, Union Texas Products Corporation, the Guarantor, Union Texas
International Corporation, Unistar, Inc. and the Agent. Terms defined in the
Credit Agreement and not otherwise defined herein are used herein as therein
defined.
In connection with the opinions expressed below, we have examined
the April 3, 1995 draft of the Credit Agreement and the April 3, 1995 draft of
the Subsidiary Guaranty Agreement. We have also examined copies, certified or
otherwise identified to our satisfaction, of the Production Sharing Contracts
described in Exhibit "A" attached hereto and such other instruments, documents
and records as we have deemed necessary to express the opinions hereinafter set
forth. We have relied, to the extent that we deem such reliance proper, upon
certificates of officers of the Guarantor as to matters of fact not
independently established by us.
For purposes of this opinion, we have assumed the genuineness of
all signatures appearing on the documents examined by us, the authenticity of
all documents submitted to us as originals, the conformity with the original
documents of all documents submitted to us, or otherwise in our possession, as
copies, and the due authorization, execution and delivery of all such
documents. Wherever the phrase "to the best of our knowledge" appears in this
opinion, its use reflects that we have no actual knowledge to the contrary,
that we have made due inquiry of the Guarantor, but that we have not made any
independent investigation into any of the matters to which we refer.
<PAGE> 121
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 2
Based on the foregoing, and subject to the qualifications and
limitations set forth below, we are of the opinion so far as the laws of the
Republic of Indonesia are concerned that:
1. The Guarantor is duly qualified as a foreign corporation
under the laws of the Republic of Indonesia, to the extent required by
Indonesian law and to the extent necessary to carry out its obligations under
the Production Sharing Contracts, and has all material governmental licenses,
authorizations, consents and approvals required to own property and assets
situated in Indonesia and to carry on business in the Republic of Indonesia in
accordance with the terms of the Production Sharing Contracts.
2. The execution, delivery and performance by the Guarantor
of the Subsidiary Guaranty Agreement do not constitute a breach of or default
under any provision of applicable law or regulation of the Republic of
Indonesia.
3. To the best of our knowledge, the execution, delivery and
performance by the Guarantor of the Subsidiary Guaranty Agreement do not
constitute a breach of or default under, or result in the creation or
imposition of any Lien on any material asset of the Guarantor under, any
judgment, injunction, order or decree of any court or governmental
instrumentality of the Republic of Indonesia binding upon the Guarantor.
4. No authorization, consent or approval of any Indonesian
governmental body, agency or official is required in connection with the
execution, delivery or performance by the Guarantor of the Subsidiary Guaranty
Agreement. The Guarantor is obligated to report the execution and delivery of
the Subsidiary Guaranty Agreement to the Foreign Commercial Loan Team (the
"Team") established pursuant to Presidential Decree No. 39 of 1991 and to
deliver to the Team and to Bank Indonesia copies of the Credit Agreement and
the Subsidiary Guaranty Agreement.
5. To the best of our knowledge, there is no action, suit or
proceeding pending against, threatened against or affecting the Guarantor or
any of its properties or interests, at law or in admiralty or equity, before
any court, arbitrator, governmental body, agency or official of the Republic of
Indonesia.
6. The choice of Texas law as the proper law of the
Subsidiary Guaranty Agreement would be upheld as a valid choice of law by the
courts of the Republic of Indonesia, and the submission by the Guarantor to the
nonexclusive jurisdiction of the courts referred to in Section 3.05 of the
Subsidiary Guaranty
<PAGE> 122
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 3
Agreement with respect to proceedings in connection with the Subsidiary
Guaranty Agreement would be treated by the courts of the Republic of Indonesia
as legal, valid, binding and enforceable in accordance with the terms of such
Section 3.05. We note, however, that judgments of foreign courts are not
enforceable in Indonesia.
7. All amounts payable by the Guarantor under the Subsidiary
Guaranty Agreement may be made free and clear of and without deduction for or
on account of any taxes, imposts, withholdings or other deductions imposed,
assessed or levied by the Republic of Indonesia or any department, agency,
political subdivision, instrumentality or authority thereof or therein,
irrespective of the fact that the Agent or any of the Banks may have a
representative office or subsidiary in Indonesia, except that to the extent any
payments of interest and other payments in the nature of interest made by the
Guarantor under the Subsidiary Guaranty Agreement are recognized as being
effectively connected with the carrying on of the Guarantor's business in the
Republic of Indonesia, Indonesian withholding tax is payable at a rate of 20%
thereof, except where a recipient qualifies for a lower rate under a bilateral
tax treaty and an approval pursuant to the Circular Letter of the Director
General of Taxation No. SE-22/PJ.35/1993 dated August 31, 1993, has been
obtained from the Indonesian tax authorities acknowledging that the recipient
is entitled to the benefits of the treaty.
8. No stamp or registration duty or similar taxes or charges
are payable in the Republic of Indonesia in respect of the Subsidiary Guaranty
Agreement, except nominal stamp taxes.
9. Under the laws of the Republic of Indonesia, neither the
Agent nor any Bank will be deemed to be resident, domiciled or carrying on any
commercial activity in the Republic of Indonesia or, except as provided in
subparagraph 7 above, subject to any Indonesian taxes, imposts or duties as a
result only of the entry into and performance of the Subsidiary Guaranty
Agreement or the transactions contemplated thereby.
This opinion is limited in all respects to the laws of the
Republic of Indonesia. This opinion is for the benefit of and may be relied
upon by the Company, the Guarantor, the Banks, the Agent, the Co-Agents, their
respective successors and assigns, their respective counsel and Participants in
connection with the transactions contemplated by the Credit Agreement and may
be relied upon by Newton W. Wilson, III, General Counsel of the Company, and
Andrews & Kurth L.L.P., special counsel to the Company, in rendering their
respective opinions to the Banks and the Agent in connection with such
transactions. Otherwise, this opinion may not be used,
<PAGE> 123
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 4
published, circulated or relied upon by any other person for any purpose
without our prior written consent.
Very truly yours,
MOCHTAR, KARUWIN & KOMAR
<PAGE> 124
EXHIBIT A
PRODUCTION SHARING CONTRACTS
1. Amended and Restated Production Sharing Contract dated
April 23, 1990, but effective as of August 8, 1968 among Perusahaan
Pertambangan Minyak Dan Gas Bumi Negara, and Roy M. Huffington, Inc., Virginia
Indonesia Company, Virginia International Company, Ultramar Indonesia Limited,
Union Texas East Kalimantan Limited, Universe Gas & Oil Company, Inc. and
Huffington Corporation.
2. Production Sharing Contract dated April 23, 1990, but
effective as of August 8, 1998 among Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara, and Roy M. Huffington, Inc., Virginia Indonesia Company, Virginia
International Company, Ultramar Indonesia Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc. and Huffington Corporation.
<PAGE> 125
EXHIBIT G-2
OPINION OF SPECIAL BAHAMIAN COUNSEL
April 24, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
We have acted as special Bahamian counsel to Union Texas
Petroleum Holdings, Inc., a Delaware corporation (the "Company"), in connection
with the Credit Agreement dated as of April 24, 1995 (the "Credit Agreement")
among the Company, the Banks and Co-Agents listed on the signature pages
thereof and NationsBank of Texas, N.A., as Agent (the "Agent"), and to Union
Texas East Kalimantan Limited, a Bahamian corporation (the "Guarantor") in
connection with the Subsidiary Guaranty Agreement dated as of April 24, 1995
(the "Subsidiary Guaranty Agreement") among Union Texas Petroleum Energy
Corporation, Union Texas Products Corporation, the Guarantor, Union Texas
international Corporation, Unistar, Inc. and the Agent. Terms defined in the
Credit Agreement and not otherwise defined herein are used herein as therein
defined.
In connection with the opinions expressed below, we have examined
the April 3, 1995 draft of the Credit Agreement and the April 3, 1995 draft of
the Subsidiary Guaranty Agreement. We have also examined copies, certified or
otherwise identified to our satisfaction, of such other instruments, documents
and records as we have deemed necessary to express the opinions hereinafter set
forth. We have relied, to the extent that we deem such reliance proper, upon
certificates of officers of the Guarantor as to matters of fact not
independently established by us.
For purposes of this opinion, we have assumed the genuineness of
all signatures appearing on the documents examined by us, the authenticity of
all documents submitted to us as originals, the conformity with the original
documents of all documents submitted to us, or otherwise in our possession, as
copies, and the due authorization, execution and delivery of all such documents
(other than the Subsidiary Guaranty Agreement insofar as it relates to the
Guarantor). Wherever the phrase "to the best of our knowledge" appears in this
opinion, its use reflects that we have no actual knowledge to the contrary,
that we have made due inquiry of the Guarantor, but that we have not made any
independent investigation into any of the matters to which we refer.
<PAGE> 126
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 2
Based on the foregoing and subject to the qualifications and
limitations set forth below, we are of the opinion that:
1. The Guarantor is a corporation duly organized, validly
existing and in good standing, and has all corporate power and authority and
all material governmental licenses, authorizations, consents and approvals
required to own its assets and to carry on its business as now conducted.
2. The execution, delivery and performance by the Guarantor
of the Subsidiary Guaranty Agreement are within the Guarantor's corporate
powers, have been duly authorized by all necessary corporate action, and do not
constitute a breach of or default under any provision of applicable law or
regulation of The Bahamas or the Memorandum of Association or the Articles of
Association of the Guarantor.
3. To the best of our knowledge, the execution, delivery and
performance by the Guarantor of the Subsidiary Guaranty Agreement do not
constitute a breach of or default under, or result in the creation or
imposition of any Lien on any material asset of the Company or the Guarantor
under, any judgment, injunction, order or decree of any court or governmental
instrumentality of The Bahamas binding upon the Guarantor.
4. No authorization, consent or approval of any Bahamian
governmental body, agency or official is required in connection with the
execution, delivery or performance by the Guarantor of the Subsidiary Guaranty
Agreement.
5. To the best of our knowledge, there is no pending or
threatened action, suit or proceeding before any court or any governmental
agency or body or any arbitrator in The Bahamas involving the Guarantor.
6. The choice of Texas law as the proper law of the
Subsidiary Guaranty Agreement would be upheld as a valid choice of law by the
courts of The Bahamas, and the submission by the Guarantor to the nonexclusive
jurisdiction of the courts referred to in Section 3.05 of the Subsidiary
Guaranty Agreement with respect to proceedings in connection with the
Subsidiary Guaranty Agreement is legal, valid, binding and enforceable in
accordance with the terms of such Section 3.05.
7. (a) Any of William M. Krips, President, Larry D.
Kalmbach, Vice President, Johnnie J. Cox, Vice President, James E. Knight, Vice
President, Newton W. Wilson, III, Secretary, Michael N. Markowitz, Treasurer,
Robert V. Deere,
<PAGE> 127
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 3
Controller, Alan R. Crain, Assistant Secretary, and Luis H. Derrota, Assistant
Secretary (collectively, the "Authorized Officers") of the Guarantor has been
duly authorized to sign the Subsidiary Guaranty Agreement and any other
required documents on behalf of the Guarantor and will bind the Guarantor by
such Authorized Officer's actions.
(b) Upon execution and delivery of the Subsidiary Guaranty
Agreement by any Authorized Officer, the Subsidiary Guaranty Agreement will
constitute a legal, valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other similar laws affecting
creditors' rights generally and to general principles of equity, and the
Subsidiary Guaranty Agreement is in proper form for its enforcement in the
courts of The Bahamas.
8. All amounts payable by the Guarantor under the Subsidiary
Guaranty Agreement may be made free and clear of and without deduction for or
on account of any taxes, imposts, withholdings or deductions of any kind
imposed, assessed or levied by The Bahamas or any authority thereof or therein,
irrespective of the fact that the Agent or any of the Banks may have a
representative office or subsidiary in The Bahamas.
9. A stamp duty of Ten dollars Bahamian currency (B$10.00) is
payable in The Bahamas in respect of the Subsidiary Guaranty Agreement. No
other duty, tax or charge is payable in The Bahamas in respect of the
Subsidiary Guaranty Agreement.
10. Under the laws of The Bahamas, neither the Agent nor any
Bank will be deemed to be resident, domiciled or carrying on any commercial
activity in The Bahamas or subject to any Bahamian taxes, imposts or duties as
a result only of the entry into and performance of the Subsidiary Guaranty
Agreement or the transactions contemplated thereby.
This opinion is limited in all respects to the laws of The
Bahamas. This opinion is for the benefit of and may be relied upon by the
Company, the Guarantor, the Banks, the Agent, the Co-Agents, their respective
successors and assigns, their respective counsel and Participants in connection
with the transactions contemplated by the Credit Agreement and may be relied
upon by Newton W. Wilson, III, General Counsel of the Company, and Andrews &
Kurth L.L.P., special counsel to the Company, in rendering their respective
opinions to the Banks and the Agent in connection with such transactions.
Otherwise, this opinion may not be used, published,
<PAGE> 128
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
April 24, 1995
Page 4
circulated or relied upon by any other person for any purpose without our prior
written consent.
Yours faithfully,
GRAHAM, THOMPSON & CO.
<PAGE> 1
Exhibit 10.4
SUBSIDIARY GUARANTY AGREEMENT
GUARANTY dated as of April 24, 1995 ("Agreement") among each of the
Subsidiary Guarantors listed on the signature pages hereof under the caption
"Subsidiary Guarantors" or which hereafter becomes a party hereto pursuant to
Section 3.08(b) (collectively, the "Subsidiary Guarantors") and NationsBank of
Texas, N.A., as agent for the banks under the Credit Agreement referred to
below (the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement dated as of April 24, 1995
among Union Texas Petroleum Holdings, Inc. (the direct or indirect parent of
each of the Subsidiary Guarantors) (the "Company"), the Banks and Co-Agents
parties thereto and the Agent (the "Credit Agreement"), the Company is
entitled, subject to certain conditions, to borrow up to $100,000,000;
WHEREAS, as a condition to borrowings under the Credit Agreement, each
Required Guarantor is required to execute and deliver to the Agent this
Agreement whereby such entity shall, subject to Section 2.08 hereof, guarantee
the payment when due of the principal of and interest on all Loans and all
other amounts payable at any time by any Obligor under any of the Financing
Documents, including, without limitation, interest which accrues during a
proceeding which occurs under the U.S. Bankruptcy Code or which would otherwise
accrue under the terms of any of the Financing Documents, but for a proceeding
under the U.S. Bankruptcy Code (such principal, interest and other amounts
being herein called the "Guaranteed Amounts");
WHEREAS, in consideration of the financial and other support that the
Company has provided, and such financial and other support as the Company may
in the future provide, to the Subsidiary Guarantors and in order to induce the
Banks to enter into the Credit Agreement and to consider requests to extend
financial accommodations to the Company, the Subsidiary Guarantors are willing
to guarantee, subject to Section 2.08 hereof, the Guaranteed Amounts;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as therein defined.
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ARTICLE II
GUARANTEES
SECTION 2.01. The Guarantees. Subject to Section 2.08, the
Subsidiary Guarantors hereby jointly, severally, unconditionally and
irrevocably guarantee to the Agent, for the ratable benefit of the Banks, the
full and punctual payment of all present and future Guaranteed Amounts as and
when the same shall become due and payable, whether at maturity, by declaration
or otherwise, according to the terms thereof. In case of failure by the
Company punctually to pay any Guaranteed Amount, the Subsidiary Guarantors
hereby jointly, severally and unconditionally agree, forthwith upon demand by
the Agent, to make payment thereof to the Agent at the place and in the manner
specified in the Credit Agreement.
SECTION 2.02. Guarantees Unconditional. Subject to Section 2.08,
the obligations of each Subsidiary Guarantor under this Article II shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise,
waiver or release in respect of any obligation of the Company or any
other Subsidiary Guarantor under any Financing Document or any
Guaranteed Amount;
(b) any modification or amendment of or supplement to (i)
this Agreement insofar as the same does not purport to modify the
rights or obligations of such Subsidiary Guarantor hereunder or (ii)
any other Financing Document;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect security, or of
any guarantee or other liability of any third party, for any
obligation of the Company or any Subsidiary Guarantor under any
Financing Document or any Guaranteed Amount;
(d) any change in the corporate existence, structure or
ownership of the Company or any Subsidiary, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Company or any other Subsidiary or their respective assets;
(e) the existence of any claim, set-off or other rights
which any Subsidiary Guarantor may have at any time against the
Company or any Subsidiary Guarantor, the Agent, any Bank or any other
Person, whether or not arising in connection with any Financing
Document or
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any Guaranteed Amount; provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(f) any invalidity or unenforceability relating to or
against the Company or any Subsidiary Guarantor for any reason of any
Financing Document or any Guaranteed Amount, or any provision of
applicable law or regulation purporting to prohibit the payment by the
Company or any Subsidiary Guarantor of any Guaranteed Amount; or
(g) any other act or omission to act or delay of any kind
by the Company or any Subsidiary Guarantor, the Agent, any Bank or any
other Person or any other circumstances whatsoever that might, but for
the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of a Subsidiary Guarantor under this
Article II.
SECTION 2.03. Discharge; Reinstatement in Certain Circumstances.
Subject to Section 2.08, each Subsidiary Guarantor's obligations under this
Article II shall remain in full force and effect until all of the Commitments
shall have been terminated in their entirety and the Guaranteed Amounts shall
have been paid in full. If at any time any payment of or any amount payable by
the Company or any Subsidiary Guarantor in respect of any Guaranteed Amount is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Person or otherwise, each Subsidiary
Guarantor's obligations under this Article II with respect to such payment
shall be reinstated at such time as though such payment had become due but had
not been made at such time.
SECTION 2.04. Waiver. Each Subsidiary Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Company or any other Subsidiary Guarantor or any other
Person. Each Subsidiary Guarantor hereby irrevocably waives each and every
right to which it may be entitled by virtue of the suretyship laws of the State
of Texas, including, without limitation, any and all rights it may have
pursuant to Rule 31 or Rule 32, Texas Rules of Civil Procedure, Section 17.001
of the Texas Civil Practice and Remedies Code and Chapter 34 of the Texas
Business and Commerce Code.
SECTION 2.05. Subrogation and Contribution. Each Subsidiary
Guarantor irrevocably waives any and all rights to which it may be entitled, by
operation of law or otherwise, upon making any payment hereunder (i) to be
subrogated to the rights of the payee against the Company with respect to such
payment or otherwise to be reimbursed, indemnified or exonerated by the Company
in respect thereof or (ii) to receive any payment, in the nature of
contribution or for any other reason, from any other Obligor with respect to
such payment, in each case until such time as all of the
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Commitments shall have been terminated in their entirety and the Guaranteed
Amounts shall have been paid in full.
SECTION 2.06. Stay of Acceleration. If acceleration of the time
for payment of any amount payable by the Company or any Subsidiary Guarantor in
respect of any Guaranteed Amount is stayed upon the insolvency, bankruptcy or
reorganization of such Person, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement or any other agreement or
instrument evidencing such Guaranteed Amount shall nonetheless be payable by
each other Subsidiary Guarantor hereunder forthwith on demand by the Agent.
SECTION 2.07. Representations and Warranties. Each Subsidiary
Guarantor represents and warrants that as of the date hereof, and after giving
effect to this Agreement and the contingent obligations evidenced hereby
(including any limitation on the amount payable under this Agreement pursuant
to Section 2.08), it is and will be solvent, and has and will have assets
which, fairly valued, exceed its obligations, liabilities and debts, and has
and will have property and assets sufficient to satisfy and repay its
obligations, liabilities and debts when the same become due.
SECTION 2.08. Limit of Liability. Each Subsidiary Guarantor shall
be liable under this Agreement only for amounts aggregating up to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state or foreign law.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including telecopy,
telex, facsimile transmission or similar writing) and (i) in the case of a
Subsidiary Guarantor, shall be given to such Subsidiary Guarantor at c/o Union
Texas Petroleum Holdings, Inc., 1330 Post Oak Boulevard, Houston, Texas 77056
(telex number: 762255) and (ii) in the case of the Company or the Agent, at
its address or telex number set forth on the signature pages of the Credit
Agreement or in any case at such other address or telex number as such party
may hereafter specify for the purpose by notice to the Agent and the Company.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified in
this Section and the appropriate answer is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (iii) if given by any other means,
when delivered at the address specified in this Section; provided that notices
to the Agent shall not be effective until received.
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SECTION 3.02. No Waiver; Exercise of Remedies. No failure or delay
by the Agent in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law. In
exercising the rights and remedies herein provided, the Agent shall act at the
instructions of the Required Banks or, failing such instruction, at its
discretion.
SECTION 3.03. Amendments and Waivers. Any provision of this
Agreement may be amended or waived, and any Subsidiary Guarantor may be
released from any of its obligations hereunder, if, and only if, such
amendment, waiver or release is in writing and is signed by (i) each Subsidiary
Guarantor affected thereby and (ii) the Agent with the consent of Banks at the
time having at least 66-2/3% of the aggregate amount of the Commitments or, if
the Commitments shall have been terminated, holding Notes evidencing at least
66-2/3% of the aggregate unpaid principal amount of the Loans; provided that
any Subsidiary Guarantor shall be released from its obligations hereunder upon
the terms set forth in Section 5.10 or Section 5.20 of the Credit Agreement.
SECTION 3.04. Texas Law. This Agreement shall be construed in
accordance with and governed by the law of the state of Texas.
SECTION 3.05. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH
SUBSIDIARY GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE OVER EACH OF THEM IN CONNECTION WITH ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY FINANCING DOCUMENT AND, TO THE
FULLEST EXTENT PERMITTED BY LAW, FURTHER AGREES (AND SHALL NOT CONTEST) THAT
THE PROPER VENUE FOR FILING AND MAINTAINING ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE IN THE STATE OF TEXAS. IN ANY SUCH ACTION, SUIT OR PROCEEDING, EACH
SUBSIDIARY GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT
REQUESTED, TO SUCH SUBSIDIARY GUARANTOR AT ITS ADDRESS FOR NOTICES HEREUNDER,
OR ANY FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE AND REMEDIES
CODE THEN IN EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON SUCH
SUBSIDIARY GUARANTOR. EACH SUBSIDIARY GUARANTOR THAT IS NOT ORGANIZED UNDER
THE LAWS OF THE UNITED STATES OR A STATE THEREOF (EACH A "NON-U.S. GUARANTOR")
HEREBY APPOINTS THE PRINCIPAL OFFICE OF CT CORPORATION SYSTEM IN HOUSTON,
TEXAS, WHICH, ON THE DATE HEREOF, IS LOCATED AT 911 DALLAS STREET, HOUSTON,
TEXAS 77002, AS THE AUTHORIZED AGENT THEREOF (THE "AUTHORIZED AGENT") UPON
WHOM PROCESS MAY BE SERVED IN ANY SUCH
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ACTION, SUIT OR PROCEEDING WHICH MAY BE INSTITUTED IN THE STATE OF TEXAS. SUCH
APPOINTMENT SHALL BE IRREVOCABLE UNLESS AND UNTIL THE APPOINTMENT OF A
SUCCESSOR AUTHORIZED AGENT FOR SUCH PURPOSE, AND SUCH SUCCESSOR'S ACCEPTANCE OF
SUCH APPOINTMENT, SHALL HAVE OCCURRED AND THE AGENT SHALL HAVE BEEN NOTIFIED
THEREOF. EACH NON-U.S. GUARANTOR AGREES TO TAKE ANY AND ALL ACTIONS,
INCLUDING, WITHOUT LIMITATION, THE FILING OF ANY AND ALL DOCUMENTS AND
INSTRUMENTS, THAT MAY BE NECESSARY TO CONTINUE SUCH APPOINTMENT IN FULL FORCE
AND EFFECT AS AFORESAID. SERVICE OF PROCESS UPON THE AUTHORIZED AGENT WITH
RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE DEEMED, IN EVERY
RESPECT, EFFECTIVE SERVICE OF PROCESS UPON ANY SUCH NON-U.S. GUARANTOR. EACH
NON-U.S. GUARANTOR SHALL REQUIRE THE AUTHORIZED AGENT TO AGREE IN WRITING TO
ACCEPT THE FOREGOING APPOINTMENT AS AGENT FOR SERVICE OF PROCESS.
SECTION 3.06. WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 3.07. WAIVER OF SOVEREIGN IMMUNITY. TO THE EXTENT THAT ANY
SUBSIDIARY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION
OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH SUBSIDIARY GUARANTOR
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY DO SO, SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, AGREES, TO THE FULLEST EXTENT IT MAY
LEGALLY DO SO, THAT THE WAIVERS SET FORTH IN THIS SECTION 3.07 SHALL HAVE THE
FULLEST SCOPE PERMITTED UNDER THE FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976 OF
THE UNITED STATES AND ARE INTENDED TO BE IRREVOCABLE FOR PURPOSES OF SUCH ACT.
SECTION 3.08. Successors and Assigns.
(a) All of the provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no Subsidiary Guarantor
may assign or transfer any of its rights or obligations under this
Agreement.
(b) Any Subsidiary may become a party hereto and a
Subsidiary Guarantor hereunder, without any further action by any
other party, by executing and delivering a counterpart hereof to the
Agent.
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SECTION 3.09. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, and all of which
taken together shall constitute a single instrument, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 3.10. Judgment Currency. Each Non-U.S. Guarantor agrees to
indemnify the Agent and each Bank against any loss incurred by it as a result
of any judgment or order being given or made and expressed and paid in a
currency (the "Judgment Currency") other than United States dollars and as a
result of any variation as between (i) the rate of exchange at which the United
States dollar amount is converted into the Judgment Currency for the purpose of
such judgment or order and (ii) the spot rate of exchange in The City of New
York at which the Agent or such Bank on the date of payment of such judgment or
order is able to purchase United States dollars with the amount of the Judgment
Currency actually received by the Agent or such Bank. The foregoing indemnity
shall constitute a separate and independent obligation of each Non-U.S.
Guarantor and shall continue in full force and effect notwithstanding any such
judgment or order as aforesaid. The term "spot rate of exchange" shall include
any premiums and costs of exchange payable in connection with the purchase of,
or conversion into, United States dollars.
SECTION 3.11. Existence. Each Subsidiary Guarantor agrees to
maintain its existence except as permitted by Section 5.02 of the Credit
Agreement.
SECTION 3.12. Taxes. (a) Any and all payments by any Subsidiary
Guarantor hereunder shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding (i) in the
case of the Agent, each Co-Agent and each Bank, United States federal income
taxes and, without duplication, any taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which the Agent,
such Co-Agent or such Bank, as the case may be, is organized or any political
subdivision thereof and (ii) in the case of each Bank, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Subsidiary
Guarantor shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Bank, any Co-Agent or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 3.12) such Bank, such Co-Agent or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Subsidiary Guarantor shall make such deductions
and (iii) such Subsidiary Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
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(b) Each Subsidiary Guarantor will indemnify each Bank, each
Co-Agent and the Agent for the full amount of Taxes (including, without
limitation, any Taxes imposed by any jurisdiction on amounts payable under this
Section 3.12) paid by such Bank, such Co-Agent or the Agent (as the case may
be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes were correctly or
legally asserted. Payments under any indemnification provided for in this
Section 3.12(b) shall be made within 30 days from the date such Bank, such
Co-Agent or the Agent (as the case may be) makes written demand therefor.
(c) Within 30 days after the date of any payment of Taxes by a
Subsidiary Guarantor, such Subsidiary Guarantor will furnish to the Agent, at
its address referred to in Section 9.01 of the Credit Agreement, the original
or a certified copy of a receipt evidencing payment thereof. Should any Bank,
any Co-Agent or the Agent ever receive any refund, credit or deduction from any
taxing authority to which such Bank, such Co-Agent or the Agent, as the case
may be, would not be entitled but for the payment by a Subsidiary Guarantor of
Taxes as required by this Section 3.12 (it being understood that the decision
as to whether or not to claim, and if claimed, as to the amount of any such
refund, credit or deduction shall be made by such Bank, such Co-Agent or the
Agent, as the case may be, in its sole discretion), such Bank, such Co-Agent or
the Agent, as the case may be, thereupon shall repay to such Subsidiary
Guarantor an amount with respect to such refund, credit or deduction equal to
any net reduction in taxes actually obtained by such Bank, such Co-Agent or the
Agent, as the case may be, and reasonably determined by such Bank, such
Co-Agent or the Agent, as the case may be, to be attributable to such refund,
credit or deduction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date first
above written.
SUBSIDIARY GUARANTORS:
UNION TEXAS PETROLEUM ENERGY CORPORATION
By: /s/ M.N. MARKOWITZ
-------------------------------------
M.N. Markowitz
Treasurer
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UNION TEXAS PRODUCTS CORPORATION
By: /s/ M.N. MARKOWITZ
---------------------------------
M.N. Markowitz
Treasurer
UNION TEXAS EAST KALIMANTAN LIMITED
By: /s/ M.N. MARKOWITZ
---------------------------------
M.N. Markowitz
Treasurer
UNION TEXAS INTERNATIONAL CORPORATION
By: /s/ M.N. MARKOWITZ
---------------------------------
M.N. Markowitz
Treasurer
UNISTAR, INC.
By: /s/ M.N. MARKOWITZ
---------------------------------
M.N. Markowitz
Vice President
AGENT:
NATIONSBANK OF TEXAS, N.A., as Agent
By: /s/ PAUL A. SQUIRES
---------------------------------
Paul A. Squires
Senior Vice President
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Exhibit 10.5
FOURTH AMENDMENT AGREEMENT
This Fourth Amendment Agreement, effective as of June 16, 1995
("Amendment"), is by and among (i) Union Texas Petroleum Holdings, Inc., a
Delaware corporation ("Company"), (ii) the undersigned lenders ("Banks") which
are parties to the Amended and Restated Credit Agreement dated as of May 13,
1994, as amended by the First Amendment Agreement dated as of November 21,
1994, the Second Amendment Agreement dated as of January 31, 1995 and the Third
Amendment Agreement dated as of April 24, 1995 (as so amended, the "Agreement")
among the Company, the lenders party thereto, NationsBank of Texas, N.A., as
agent ("Agent"), and the Co-Agents named therein, (iii) the Agent and (iv) the
Co-Agents. In consideration of the mutual covenants contained herein, the
Company, the Banks, the Co-Agents and the Agent agree as set forth herein.
1. Amendments to Credit Agreement. The Agreement is hereby
amended as follows:
1.1. Section 1.01. The following respective definitions set
forth in Section 1.01 of the Agreement are hereby amended to read as follows:
"Adjusted Equity" means the consolidated stockholders equity
of the Company and its Consolidated Subsidiaries, as determined on a
consolidated basis in accordance with generally accepted accounting
principles, adjusted to exclude (i) any cumulative foreign exchange
translation adjustments, (ii) any non-cash write-up or writedown of
any assets of the Company and its Consolidated Subsidiaries made after
March 31, 1995 in accordance with generally accepted accounting
principles, and (iii) the non-cash effect of the adoption of any
change after March 31, 1995 required by generally accepted accounting
principles.
"Margin Increase Condition" exists at all times during which
any senior unsecured long-term debt of the Company is rated below BBB-
by S&P.
Section 1.01 of the Agreement is hereby further amended by deleting
therefrom the definitions of "Additional Margin Increase Condition" and "Margin
Period".
1.2. Section 2.07(a). The first sentence of Section
2.07(a) of the Agreement is hereby amended to read as follows:
(a) If such Loan is a Base Rate Loan, for each day that
such Loan is a Base Rate Loan, at a rate per annum equal to the sum of (i) the
Base Rate for such day plus (ii) at such times as the Margin Increase Condition
exists, 1/4% plus (iii) at such times as any Event of Default exists, 1%.
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1.3. Section 2.07(b). The first sentence of Section
2.07(b) is hereby amended to read as follows:
(b) If such Loan is a Euro-Dollar Loan, at a rate per
annum equal at all times during any Interest Period for such Loan to the sum of
(i) 0.575% plus (ii) the applicable London Interbank Offered Rate plus (iii) at
such times as the Margin Increase Condition exists, 1/4% plus (iv) at such
times as any Event of Default exists, 1%; provided that if any Euro-Dollar Loan
or any portion thereof shall, as a result of clause (1)(c)(i) of the definition
herein of "Interest Period", have an Interest Period of less than one month,
such portion shall bear interest during such Interest Period at the rate
applicable to Base Rate Loans during such period.
1.4. Section 2.07(c). The first sentence of Section
2.07(c) is hereby amended to read as follows:
(c) If such Loan is a Sterling Loan, at a rate per annum
equal at all times during any Interest Period for such Loan to the sum of (i)
0.575% plus (ii) the applicable Sterling Interbank Offered Rate plus (iii) at
such times as the Margin Increase Condition exists, 1/4% plus (iv) at such
times as any Event of Default exists, 1%; provided that if any Sterling Loan or
any portion thereof shall, as a result of clause (4)(c)(i) of the definition
herein of "Interest Period", have an Interest Period of less than one month,
such portion shall bear interest during such Interest Period at the rate
otherwise applicable to such Sterling Loans during such period plus 1/2%.
1.5. Section 2.07(d). Section 2.07(d) is hereby amended
to read as follows:
(d) Any overdue principal of or interest on any
Euro-Dollar Loan shall bear interest, payable on demand, for each day from and
including the date payment thereof was due to but excluding the date of actual
payment, at a rate per annum equal to the sum of 1% plus the higher of (i) the
sum of 0.575% plus the London Interbank Offered Rate applicable to such Loan
plus at such times as the Margin Increase Condition exists, 1/4% and (ii) the
sum of (1) 0.575% plus (2) the average (rounded upward, if necessary, to the
next higher 1/16 of 1%) of the respective rates per annum at which one day (or,
if such amount due remains unpaid more than three Euro-Dollar Business Days,
then for such other period of time not longer than three months as the Agent
may select) deposits in Dollars in an amount approximately equal to such
overdue payment due to each of the Reference Banks are offered to such
Reference Bank in the London interbank market for the applicable period
determined as provided above plus (3) at such times as the Margin Increase
Condition exists, 1/4% (or, if the circumstances described in clause (i) or
(ii) of Section 8.01(a) shall exist, at a rate per annum equal to the sum of 1%
plus the rate applicable to Base Rate Loans for such day).
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1.6. Section 2.07(e). Section 2.07(e) is hereby amended
to read as follows:
(e) Any overdue principal of or interest on any Sterling
Loan shall bear interest, payable on demand, for each day from and including
the date payment thereof was due to but excluding the date of actual payment,
at a rate per annum equal to the sum of 1% plus the higher of (i) the sum of
0.575% plus the Sterling Interbank Offered Rate applicable to such Loan plus at
such times as the Margin Increase Condition exists, 1/4% and (ii) the sum of
(1) 0.575% plus (2) the average (rounded upward, if necessary, to the next
higher 1/16 of 1%) of the respective rates per annum at which one day (or, if
such amount due remains unpaid more than three Sterling Business Days, then for
such other period of time not longer than three months as the Agent may select)
deposits in Sterling in an amount approximately equal to such overdue payment
due to each of the Reference Banks are offered to such Reference Bank in the
London interbank market for the applicable period determined as provided above
plus (3) at such times as the Margin Increase Condition exists, 1/4% (or, if
the circumstances described in clause (i) or (ii) of Section 8.01(b) shall
exist, at a rate per annum equal to the sum of 1% plus the rate applicable to
Base Rate Loans for such day).
1.7. Section 5.01(d). Section 5.01(d) of the Agreement is
hereby amended to read as follows:
(d) as soon as available and in any event within 60 days
after the end of each fiscal quarter of the Company, a certificate of
the chief financial officer, the chief accounting officer or the
treasurer of the Company certifying (i) whether the Margin Increase
Condition exists as of the date of such certificate, (ii) the Unimar
Percentage as of the end of such quarter and the amounts as of the end
of such quarter of Consolidated Debt, Defeased Debt, Excluded
Subordinated Debt, Debt of the Company and its Consolidated
Subsidiaries determined on a consolidated basis, Debt of the Company
and the Restricted Subsidiaries determined on a consolidated basis,
Debt of Unimar, Debt of Unrestricted Subsidiaries, Excess Letter of
Credit/Guarantee Amount, Non-Restricted Asset Non-Recourse Debt,
Non-Recourse Debt of the Company and the Restricted Subsidiaries, and
Restricted Subsidiaries Recourse Debt, and (iii) each Asset Sale that
has been consummated during such quarter, the Fair Market Value of the
Restricted Assets subject thereto, the amount of fees, commissions,
expenses and taxes related thereto, the Net Sales Proceeds therefrom
and the cumulative amount of the Excess Net Sales Proceeds from all
Assets Sales since December 31, 1993;
1.8. Section 5.05(a). Section 5.05(a) of the Agreement is
hereby deleted from the Agreement.
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1.9. Section 5.15. Section 5.15 of the Agreement is
hereby amended by changing the amount "$300,000,000" set forth therein to
"$350,000,000".
1.10. Section 8.01(a). Clause (y) of Section 8.01(a) of
the Agreement is hereby amended to read as follows:
(y) if such Fixed Rate Borrowing is a Money Market
LIBOR Borrowing, the Money Market LIBOR Loans comprising such
Borrowing shall bear interest for each day from and including
the first day to but excluding the last day of the Interest
Period applicable thereto at the sum of the Base Rate for such
day plus at such times as the Margin Increase Condition
exists, 1/4% plus at such times as any Event of Default
exists, 1%.
1.11. Section 9.05. Section 9.05 of the Agreement is
hereby amended by deleting the second proviso thereof (which pertains to
amendments to or waivers of Section 5.05(a)).
2. Effectiveness. The effectiveness of this Amendment is subject
to the receipt by the Agent of:
2.1. counterparts of this Amendment signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
and
2.2. a consent, duly executed by each of the Required
Guarantors, substantially in the form of Exhibit A hereto.
3. Miscellaneous.
3.1. Amendments, Etc. No amendment or waiver of any
provision of this Amendment, nor consent to any departure by the Company
therefrom, shall in any event be effective unless effected in accordance with
Section 9.05 of the Agreement.
3.2. Governing Law. This Amendment and the Agreement as
amended hereby shall be construed in accordance with and governed by the laws
of the State of Texas.
3.3. Preservation. Except as specifically modified by the
terms of this Amendment, all of the terms, provisions, covenants, warranties
and agreements contained in the Agreement (including, without limitation,
exhibits thereto) or any other
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<PAGE> 5
Financing Document remain in full force and effect. Undefined capitalized
terms used herein are used herein as defined in the Agreement as amended
hereby.
3.4. Execution in Counterparts. This Amendment may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
3.5. Representations and Warranties. The Company hereby
represents and warrants to the Banks, the Co-Agents and the Agent that (i) the
representations and warranties contained in Article IV of the Agreement (other
than the representations and warranties contained in Sections 4.04(a) and
4.04(c) thereof) are correct on and as of the date hereof as though made on and
as of the date hereof, with this Amendment and the Agreement as amended hereby,
constituting "Financing Documents" for purposes thereof, and (ii) no event has
occurred and is continuing which constitutes a Default or an Event of Default.
3.6. Default. Without limiting any other event which may
constitute an Event of Default, in the event that any representation or
warranty set forth herein shall be incorrect or misleading in any material
respect when made, such event shall constitute an "Event of Default" under the
Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: /s/ M.N. MARKOWITZ
---------------------------------
M.N. Markowitz
Vice President and Treasurer
BANKS:
NATIONSBANK OF TEXAS, N.A. BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ PAUL A. SQUIRES By: /s/ LAURA B. SHEPARD
------------------------------ --------------------------------
Paul A. Squires Authorized Officer
Senior Vice President
-5-
<PAGE> 6
UNION BANK OF SWITZERLAND, MELLON BANK, N.A.
HOUSTON AGENCY
By: /s/ EVANS SWANN By: /s/ A. J. SABATELLE
------------------------ ----------------------
Evans Swann
Managing Director Authorized Officer
By: /s/ DAN O. BOYLE
------------------------
Dan O. Boyle
Vice President
THE BANK OF NOVA SCOTIA MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ [Illegible] By: /s/ JOHN KOWALCZUK
------------------------ ----------------------
Authorized Officer Authorized Officer
CHEMICAL BANK BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By: /s/ [Illegible] By: /s/ [Illegible]
------------------------ ----------------------
Authorized Officer Authorized Officer
CREDIT LYONNAIS CAYMAN LTCB TRUST COMPANY
ISLAND BRANCH
By: /s/ XAVIER RATOUIS By: /s/ [Illegible]
------------------------ ----------------------
Authorized Officer Authorized Officer
THE FIRST NATIONAL BANK OF SOCIETE GENERALE, SOUTHWEST
CHICAGO AGENCY
By: /s/ [Illegible] By: /s/ [Illegible]
------------------------ ----------------------
Authorized Agent Authorized Officer
THE BANK OF TOKYO, LTD.,
DALLAS AGENCY
By: /s/ JOHN M. MCINTYRE
----------------------
Authorized Officer
-6-
<PAGE> 7
BANQUE PARIBAS, HOUSTON THE MITSUBISHI TRUST &
AGENCY BANKING CORPORATION
By: /s/ [Illegible] By: /s/ [Illegible]
------------------------ ----------------------
Authorized Officer Authorized Officer
By: /s/ BART SCHOUEST
------------------------
Authorized Officer
CHRISTIANIA BANK NATIONAL WESTMINSTER BANK
PLC (NEW YORK BRANCH)
By: /s/ JAHN O. ROISING By: /s/ [Illegible]
------------------------ ----------------------
Authorized Officer Authorized Officer
By: /s/ [Illegible]
------------------------
Authorized Officer
CITIBANK, N.A. NATIONAL WESTMINSTER BANK
PLC (NASSAU BRANCH)
By: /s/ BARBARA A. COHEN By: /s/ [Illegible]
------------------------ ----------------------
Barbara A. Cohen Authorized Officer
Vice President
DRESDNER BANK AG, NEW YORK THE YASUDA TRUST AND BANKING
AND GRAND CAYMAN BRANCHES COMPANY, LIMITED, NEW YORK
BRANCH
By: /s/ [Illegible] By: /s/ GERARD GILL
------------------------ ----------------------
Authorized Officer Authorized Officer
By: /s/ B. C. ERICKSON
------------------------
Authorized Officer
BANK OF TAIWAN
By: /s/ [Illegible]
----------------------
Authorized Officer
-7-
<PAGE> 8
BANQUE FRANCAISE DU DEN NORSKE BANK AS
COMMERCE EXTERIEUR
By: /s/ IAIN A. WHYTE By: /s/ EDWARD L. METE
------------------------ ------------------------
Iain A. Whyte Edward L. Mete
Assistant Vice President Senior Vice President
By: /s/ MARK A. HARRINGTON By: /s/ FRAN MEYERS
------------------------ ------------------------
Mark A. Harrington Fran Meyers
Vice President & Vice President
Regional Manager
FIRST INTERSTATE BANK OF
TEXAS, N.A.
By: /s/ COLLIE C. MICHAELS
------------------------
Authorized Officer
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: /s/ PAUL A. SQUIRES
------------------------
Paul A. Squires
Senior Vice President
BANK OF AMERICA NATIONAL UNION BANK OF SWITZERLAND,
TRUST AND SAVINGS HOUSTON AGENCY, as Co-Agent
ASSOCIATION, as Co-Agent
By: /s/ LAURA B. SHEPARD By: /s/ EVANS SWANN
------------------------ ------------------------
Authorized Officer Evans Swann
Managing Director
By: /s/ DAN O. BOYLE
------------------------
Dan O. Boyle
Vice President
-8-
<PAGE> 9
EXHIBIT A
ACKNOWLEDGEMENT AND CONSENT
June 16, 1995
Reference is made to the Amended and Restated Credit Agreement
dated as of May 13, 1994, as amended by the First Amendment Agreement dated as
of November 21, 1994, the Second Amendment Agreement dated as of January 31,
1995, and the Third Amendment Agreement dated as of April 24, 1995 (as so
amended, the "Credit Agreement"), among Union Texas Petroleum Holdings, Inc., a
Delaware corporation ("Company"), the Banks and Co-Agents parties thereto, and
NationsBank of Texas, N.A., as Agent ("Agent") and to the Fourth Amendment
Agreement dated as of June 16, 1995 (the "Amendment") among the Company, the
Banks and Co-Agents parties thereto, and the Agent. Undefined capitalized
terms are used herein as defined in the Credit Agreement as amended by the
Amendment (the "Amended Credit Agreement").
To induce the Agent and the Banks to execute the Amendment,
each of the undersigned Subsidiary Guarantors hereby (a) acknowledges the
execution, delivery and performance of the Amendment by the Company, (b) agrees
that (i) none of such Subsidiary Guarantor's obligations under or in connection
with the Subsidiary Guaranty Agreement and none of the Banks' or the Agent's
rights and remedies with respect to any Subsidiary Guarantor is released,
impaired or affected thereby or by the foregoing, (ii) the Subsidiary Guaranty
Agreement is not released, impaired or affected thereby or by any of the
foregoing, and (iii) this acknowledgement shall not be construed as requiring
the consent or agreement of any Subsidiary Guarantor in any circumstance, (c)
ratifies and confirms all provisions of the Subsidiary Guaranty Agreement, and
(d) agrees that none of such Subsidiary Guarantor's obligations, none of the
Banks' or the Agent's rights and remedies nor the Subsidiary Guaranty
Agreement, would be released, impaired or affected if such Subsidiary Guarantor
had not executed this Acknowledgment and Consent.
IN WITNESS WHEREOF, the parties hereto have caused this
Acknowledgement and Consent to be duly executed and delivered by their
respective officers thereunto duly authorized, as of the 16th day of June,
1995.
SUBSIDIARY GUARANTORS:
UNION TEXAS PETROLEUM ENERGY UNION TEXAS PRODUCTS
CORPORATION CORPORATION
By: By:
----------------------- -------------------
M.N. Markowitz M.N. Markowitz
Treasurer Treasurer
<PAGE> 10
EXHIBIT A
UNION TEXAS EAST KALIMANTAN UNION TEXAS INTERNATIONAL
LIMITED CORPORATION
By: By:
----------------------- -----------------------
M.N. Markowitz M.N. Markowitz
Treasurer Treasurer
UNISTAR, INC.
By:
------------------------
M.N. Markowitz
Vice President
-2-
<PAGE> 1
Exhibit 10.6
FIRST AMENDMENT AGREEMENT
This First Amendment Agreement, effective as of June 16, 1995 (this
"Amendment"), is by and among (i) Union Texas Petroleum Holdings, Inc., a
Delaware corporation ("Company"), (ii) the undersigned lenders ("Banks") which
are parties to the Credit Agreement dated as of April 24, 1995 (the
"Agreement") among the Company, the lenders party thereto, NationsBank of
Texas, N.A., as agent ("Agent"), and the Co-Agents named therein, (iii) the
Agent and (iv) the Co-Agents. In consideration of the mutual covenants
contained herein, the Company, the Banks, the Co-Agents and the Agent agree as
set forth herein.
1. Amendments to Credit Agreement. The Agreement is hereby
amended as follows:
1.1. Section 1.01. The following respective definitions set
forth in Section 1.01 of the Agreement are hereby amended to read as follows:
"Adjusted Equity" means the consolidated stockholders equity
of the Company and its Consolidated Subsidiaries, as determined on a
consolidated basis in accordance with generally accepted accounting
principles, adjusted to exclude (i) any cumulative foreign exchange
translation adjustments, (ii) any non-cash write-up or writedown of
any assets of the Company and its Consolidated Subsidiaries made after
March 31, 1995 in accordance with generally accepted accounting
principles, and (iii) the non-cash effect of the adoption of any
change after March 31, 1995 required by generally accepted accounting
principles.
"Margin Increase Condition" exists at all times during which
any senior unsecured long-term debt of the Company is rated below BBB-
by S&P.
Section 1.01 of the Agreement is hereby further amended by deleting
therefrom the definitions of "Additional Margin Increase Condition" and "Margin
Period".
1.2. Section 2.07(a). The first sentence of Section
2.07(a) of the Agreement is hereby amended to read as follows:
(a) If such Loan is a Base Rate Loan, for each day that
such Loan is a Base Rate Loan, at a rate per annum equal to the sum of (i) the
Base Rate for such day plus (ii) at such times as the Margin Increase Condition
exists, 1/4% plus (iii) at such times as any Event of Default exists, 1%.
1.3. Section 2.07(b). The first sentence of Section
2.07(b) is hereby amended to read as follows:
<PAGE> 2
(a) If such Loan is a Euro-Dollar Loan, at a rate per
annum equal at all times during any Interest Period for such Loan to the sum of
(i) 0.6875% plus (ii) the applicable London Interbank Offered Rate plus (iii)
at such times as the Margin Increase Condition exists, 1/4% plus (iv) at such
times as any Event of Default exists, 1%; provided that any overdue principal
of or interest on any Euro-Dollar Loan shall bear interest, payable on demand,
for each day from and including the date payment thereof was due to but
excluding the date of actual payment, at a rate per annum equal to the sum of
1% plus the higher of (i) the sum of 0.6875% plus the London Interbank Offered
Rate applicable to such Loan plus at such times as the Margin Increase
Condition exists, 1/4% and (ii) the sum of (1) 0.6875% plus (2) the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which one day (or, if such amount due remains unpaid more
than three Euro-Dollar Business Days, then for such other period of time not
longer than three months as the Agent may select) deposits in dollars in an
amount approximately equal to such overdue payment due to each of the Reference
Banks are offered to such Reference Bank in the London interbank market for the
applicable period determined as provided above plus (3) at such times as the
Margin Increase Condition exists, 1/4% (or, if the circumstances described in
clause (a) or (b) of Section 8.01 shall exist, at a rate per annum equal to the
sum of 1% plus the rate applicable to Base Rate Loans for such day).
1.4. Section 5.01(d). Section 5.01(d) of the Agreement is
hereby amended to read as follows:
(d) as soon as available and in any event within 60 days
after the end of each fiscal quarter of the Company, a certificate of
the chief financial officer, the chief accounting officer or the
treasurer of the Company certifying (i) whether the Margin Increase
Condition exists as of the date of such certificate, (ii) the Unimar
Percentage as of the end of such quarter and the amounts as of the end
of such quarter of Consolidated Debt, Defeased Debt, Excluded
Subordinated Debt, Debt of the Company and its Consolidated
Subsidiaries determined on a consolidated basis, Debt of the Company
and the Restricted Subsidiaries determined on a consolidated basis,
Debt of Unimar, Debt of Unrestricted Subsidiaries, Excess Letter of
Credit/Guarantee Amount, Non-Restricted Asset Non-Recourse Debt,
Non-Recourse Debt of the Company and the Restricted Subsidiaries, and
Restricted Subsidiaries Recourse Debt, and (iii) each Asset Sale that
has been consummated during such quarter, the Fair Market Value of the
Restricted Assets subject thereto, the amount of fees, commissions,
expenses and taxes related thereto, the Net Sales Proceeds therefrom
and the cumulative amount of the Excess Net Sales Proceeds from all
Assets Sales since December 31, 1993;
1.5. Section 5.05(a). Section 5.05(a) of the Agreement is
hereby deleted from the Agreement.
-2-
<PAGE> 3
1.6. Section 5.15. Section 5.15 of the Agreement is
hereby amended by changing the amount "$300,000,000" set forth therein to
"$350,000,000".
1.7. Section 9.05. Section 9.05 of the Agreement is
hereby amended by deleting the second proviso thereof (which pertains to
amendments to or waivers of Section 5.05(a)).
2. Effectiveness. The effectiveness of this Amendment is subject
to the receipt by the Agent of:
2.1. counterparts of this Amendment signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
and
2.2. a consent, duly executed by each of the Required
Guarantors, substantially in the form of Exhibit A hereto.
3. Miscellaneous.
3.1. Amendments, Etc. No amendment or waiver of any
provision of this Amendment, nor consent to any departure by the Company
therefrom, shall in any event be effective unless effected in accordance with
Section 9.05 of the Agreement.
3.2. Governing Law. This Amendment and the Agreement as
amended hereby shall be construed in accordance with and governed by the laws
of the State of Texas.
3.3. Preservation. Except as specifically modified by the
terms of this Amendment, all of the terms, provisions, covenants, warranties
and agreements contained in the Agreement (including, without limitation,
exhibits thereto) or any other Financing Document remain in full force and
effect. Undefined capitalized terms used herein are used herein as defined in
the Agreement as amended hereby.
3.4. Execution in Counterparts. This Amendment may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
3.5. Representations and Warranties. The Company hereby
represents and warrants to the Banks, the Co-Agents and the Agent that (i) the
representations and warranties contained in Article IV of the Agreement (other
than the representations and
-3-
<PAGE> 4
warranties contained in Sections 4.04(a) and 4.04(c) thereof) are correct on
and as of the date hereof as though made on and as of the date hereof, with
this Amendment and the Agreement as amended hereby, constituting "Financing
Documents" for purposes thereof, and (ii) no event has occurred and is
continuing which constitutes a Default or an Event of Default.
3.6. Default. Without limiting any other event which may
constitute an Event of Default, in the event that any representation or
warranty set forth herein shall be incorrect or misleading in any material
respect when made, such event shall constitute an "Event of Default" under the
Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: /s/ M.N. MARKOWITZ
----------------------------
M.N. Markowitz
Vice President and Treasurer
BANKS:
NATIONSBANK OF TEXAS, N.A. UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
By: /s/ PAUL A. SQUIRES
-----------------------------
Paul A. Squires By: /s/ EVANS SWANN
Senior Vice President ----------------------------
Evans Swann
Managing Director
BANK OF AMERICA NATIONAL By: /s/ DAN O. BOYLE
TRUST AND SAVINGS ASSOCIATION ----------------------------
Dan O. Boyle
Vice President
By: /s/ LAURA B. SHEPARD
----------------------------- THE BANK OF NOVA SCOTIA
Authorized Officer
By: /s/ [Illegible]
----------------------------
Authorized Officer
-4-
<PAGE> 5
CHEMICAL BANK BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By: /s/ [Illegible] By: /s/ [Illegible]
--------------------------- -----------------------
Authorized Officer Authorized Officer
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH LTCB TRUST COMPANY
By: /s/ XAVIER RATOUIS By: /s/ [Illegible]
--------------------------- -----------------------
Authorized Officer Authorized Officer
THE FIRST NATIONAL BANK OF SOCIETE GENERALE, SOUTHWEST
CHICAGO AGENCY
By: /s/ [Illegible] By: /s/ [Illegible]
--------------------------- -----------------------
Authorized Agent Authorized Officer
MELLON BANK, N.A. THE BANK OF TOKYO, LTD.,
DALLAS AGENCY
By: /s/ A. J. SABATELLE By: /s/ JOHN M. MCINTYRE
--------------------------- -----------------------
Authorized Officer Authorized Officer
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK BANQUE PARIBAS, HOUSTON
AGENCY
By: /s/ JOHN KOWALCZUK By: /s/ [Illegible]
--------------------------- -----------------------
Authorized Officer Authorized Officer
By: /s/ BART SCHOUEST
-----------------------
Authorized Officer
-5-
<PAGE> 6
CHRISTIANIA BANK NATIONAL WESTMINSTER BANK
PLC (NEW YORK BRANCH)
By: /s/ JAHN O. ROISING By: /s/ [Illegible]
--------------------------- ---------------------------
Authorized Officer Authorized Officer
By: /s/ [Illegible]
--------------------------- NATIONAL WESTMINSTER BANK
Authorized Officer PLC (NASSAU BRANCH)
CITIBANK, N.A. By: /s/ [Illegible]
--------------------------
Authorized Officer
By: /s/ BARBARA A. COHEN THE YASUDA TRUST AND BANKING
--------------------------- COMPANY, LIMITED, NEW YORK
Barbara A. Cohen BRANCH
Vice President
DRESDNER BANK AG, NEW YORK By: /s/ GERALD GILL
AND GRAND CAYMAN BRANCHES ---------------------------
Authorized Officer
By: /s/ [Illegible] BANK OF TAIWAN
---------------------------
Authorized Officer
By: /s/ [Illegible]
---------------------------
By: /s/ B. C. ERICKSON Authorized Officer
---------------------------
Authorized Officer
BANQUE FRANCAISE DU
THE MITSUBISHI TRUST & COMMERCE EXTERIEUR
BANKING CORPORATION
By: /s/ IAIN A. WHYTE
---------------------------
By: /s/ [Illegible] Iain A. Whyte
--------------------------- Assistant Vice President
Authorized Officer
By: /s/ MARK A. HARRINGTON
---------------------------
Mark A. Harrington
Vice President &
Regional Manager
-6-
<PAGE> 7
DEN NORSKE BANK AS FIRST INTERSTATE BANK OF
TEXAS, N.A.
By: /s/ EDWARD L. METE By: /s/ COLLIE C. MICHAELS
--------------------------- -------------------------
Edward L. Mete Authorized Officer
Senior Vice President
By: /s/ FRAN MEYERS
---------------------------
Fran Meyers
Vice President
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: /s/ PAUL A. SQUIRES
-------------------------
Paul A. Squires
Senior Vice President
BANK OF AMERICA NATIONAL UNION BANK OF SWITZERLAND,
TRUST AND SAVINGS HOUSTON AGENCY, as
ASSOCIATION, as Co-Agent Co-Agent
By: /s/ LAURA B. SHEPARD By: /s/ EVANS SWANN
--------------------------- -------------------------
Authorized Officer Evans Swann
Managing Director
By: /s/ DAN O. BOYLE
-------------------------
Dan O. Boyle
Vice President
-7-
<PAGE> 8
EXHIBIT A
ACKNOWLEDGEMENT AND CONSENT
June 16, 1995
Reference is made to the Credit Agreement dated as of April
24, 1995 (the "Credit Agreement"), among Union Texas Petroleum Holdings, Inc.,
a Delaware corporation ("Company"), the Banks and Co-Agents parties thereto,
and NationsBank of Texas, N.A., as Agent ("Agent") and to the First Amendment
Agreement dated as of June 16, 1995 (the "Amendment") among the Company, the
Banks and Co-Agents parties thereto, and the Agent. Undefined capitalized
terms are used herein as defined in the Credit Agreement as amended by the
Amendment (the "Amended Credit Agreement").
To induce the Agent and the Banks to execute the Amendment,
each of the undersigned Subsidiary Guarantors hereby (a) acknowledges the
execution, delivery and performance of the Amendment by the Company, (b) agrees
that (i) none of such Subsidiary Guarantor's obligations under or in connection
with the Subsidiary Guaranty Agreement and none of the Banks' or the Agent's
rights and remedies with respect to any Subsidiary Guarantor is released,
impaired or affected thereby or by the foregoing, (ii) the Subsidiary Guaranty
Agreement is not released, impaired or affected thereby or by any of the
foregoing, and (iii) this acknowledgement shall not be construed as requiring
the consent or agreement of any Subsidiary Guarantor in any circumstance, (c)
ratifies and confirms all provisions of the Subsidiary Guaranty Agreement, and
(d) agrees that none of such Subsidiary Guarantor's obligations, none of the
Banks' or the Agent's rights and remedies nor the Subsidiary Guaranty
Agreement, would be released, impaired or affected if such Subsidiary Guarantor
had not executed this Acknowledgment and Consent.
IN WITNESS WHEREOF, the parties hereto have caused this
Acknowledgement and Consent to be duly executed and delivered by their
respective officers thereunto duly authorized, as of the 16th day of June,
1995.
SUBSIDIARY GUARANTORS:
UNION TEXAS PETROLEUM UNION TEXAS PRODUCTS
ENERGY CORPORATION CORPORATION
By: By:
--------------------------- ----------------------
M.N. Markowitz M.N. Markowitz
Treasurer Treasurer
-1-
<PAGE> 9
EXHIBIT A
UNION TEXAS EAST UNION TEXAS INTERNATIONAL
KALIMANTAN LIMITED CORPORATION
By: By:
--------------------------- --------------------
M.N. Markowitz M.N. Markowitz
Treasurer Treasurer
UNISTAR, INC.
By:
--------------------
M.N. Markowitz
Vice President
-2-
<PAGE> 1
Exhibit 10.7
================================================================================
$100,000,000
CREDIT AGREEMENT
dated as of
June 30, 1995
among
UNION TEXAS PETROLEUM HOLDINGS, INC.
The BANKS Listed Herein
and
NATIONSBANK OF TEXAS, N.A.
as Agent
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
UNION BANK OF SWITZERLAND, HOUSTON AGENCY
as Co-Agents
THE INDEMNIFICATION PROVISIONS OF SECTIONS 7.06 AND 9.03(b)
OF THIS AGREEMENT INCLUDE INDEMNIFICATION FROM THE
CONSEQUENCES OF THE NEGLIGENCE OF THE PERSONS INDEMNIFIED
THEREBY TO THE EXTENT SET FORTH THEREIN
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . . . . . . 20
SECTION 1.03. Types of Borrowings . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.04. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.05. Unimar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 1.06. Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.01. Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.02. Notice of Borrowings . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.03. Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.04. Notice to Banks; Funding of Loans . . . . . . . . . . . . . . . . 24
SECTION 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.06. Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.07. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.08. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.09. Optional Termination or Reduction of Commitments . . . . . . . . 27
SECTION 2.10. Mandatory Termination or Reduction of Commitments . . . . . . . . 28
SECTION 2.11. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.12. General Provisions as to Payments . . . . . . . . . . . . . . . . 28
SECTION 2.13. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 2.14. Computation of Interest and Fees . . . . . . . . . . . . . . . . 30
SECTION 2.15. Chapter 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.16. Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE III
CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.01. Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.02. All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . 35
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . . . . . . . 35
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.02. Corporate and Governmental Authorization; Contravention . . . . . 36
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.04. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.05. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.06. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.07. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.08. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 4.09. Ownership of Restricted Subsidiaries . . . . . . . . . . . . . . 38
SECTION 4.10. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.11. Taxes and Other Obligations . . . . . . . . . . . . . . . . . . . 39
SECTION 4.12. Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.13. Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.14. United Kingdom Assets . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.02. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.03. Primary Business . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.05. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.06. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.07. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.08. Consolidations and Mergers . . . . . . . . . . . . . . . . . . . 47
SECTION 5.09. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.10. Parties to Subsidiary Guaranty Agreement . . . . . . . . . . . . 48
SECTION 5.11. Restrictions on Dividends, Intercompany Loans, or Investments . . 48
SECTION 5.12. Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.13. Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.14. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 5.15. Adjusted Equity and Interest Coverage . . . . . . . . . . . . . . 49
SECTION 5.16. Excluded Subordinated Debt and Preferred Stock . . . . . . . . . 50
SECTION 5.17. Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.18. Restrictions on Asset Sales . . . . . . . . . . . . . . . . . . . 50
SECTION 5.19. UTEK Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 5.20. Conversion to Unrestricted Subsidiary . . . . . . . . . . . . . . 50
ARTICLE VI
DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE VII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.01. Appointment and Authorization . . . . . . . . . . . . . . . . . . 54
SECTION 7.02. Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.03. Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.05. Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.08. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 7.09. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VIII
CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . 56
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair . . . . 56
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . . . . . . . . . 57
SECTION 8.04. Base Rate Loans Substituted for Affected Euro-Dollar Loans . . . 59
SECTION 8.05. Substitution of Bank . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.03. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . 60
SECTION 9.04. Sharing of Set-Offs, Etc. . . . . . . . . . . . . . . . . . . . . 61
SECTION 9.05. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.06. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.07. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.08. Texas Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.09. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.11. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.12. COMPLETE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 9.13. Liability of Co-Agents . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
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<PAGE> 5
Schedule I - [Not used]
Schedule II - Existing Subsidiaries
Schedule III - Existing Liens
Schedule IV- Existing Restrictions
Schedule V - Joint Venture Debt Agreements
Schedule VI- Outstanding Options
Exhibit A - Note
Exhibit B - Subsidiary Guaranty Agreement
Exhibit C - Opinion of General Counsel of the Company
Exhibit D - Opinion of Special Counsel for the Company
Exhibit E - Opinion of Special Counsel for the Agent
Exhibit F - Assignment and Assumption Agreement
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<PAGE> 6
CREDIT AGREEMENT
Credit Agreement dated as of June 30, 1995 among Union Texas Petroleum
Holdings, Inc., the Banks party hereto, NationsBank of Texas, N.A., as Agent,
and Bank of America National Trust and Savings Association and Union Bank of
Switzerland, Houston Agency, as Co-Agents.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Acceptable Engineer" means DeGolyer & MacNaughton or such other
independent engineering firm that is mutually acceptable to the Agent and the
Company.
"Adjusted Equity" means the consolidated stockholders equity of the
Company and its Consolidated Subsidiaries, as determined on a consolidated basis
in accordance with generally accepted accounting principles, adjusted to exclude
(i) any cumulative foreign exchange translation adjustments, (ii) any non-cash
write-up or writedown of any assets of the Company and its Consolidated
Subsidiaries made after March 31, 1995 in accordance with generally accepted
accounting principles, and (iii) the non-cash effect of the adoption of any
change after March 31, 1995 required by generally accepted accounting
principles.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form requested by the Agent submitted to the
Agent (with a copy to the Company) duly completed by such Bank.
"Affiliate" means (i) any Person holding 5% or more of any class of
capital stock of the Company, and (ii) any Person (other than the Company, a
Subsidiary or a Partnership) directly or indirectly controlling, controlled by
or under common control with any Person described in clause (i). As used in this
definition of "Affiliate", the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
"Agent" means NationsBank in its capacity as agent for the Banks
hereunder and any successor in such capacity.
<PAGE> 7
"Agreement" means this Credit Agreement dated as of June 30, 1995 among
the Company, the Banks, the Co-Agents and the Agent, as amended from time to
time in accordance with the terms hereof.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of its Base Rate Loans, its Domestic Lending Office, and (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Asset Sale" means any sale, lease, transfer or other disposition of
any Restricted Asset by the Company or any Restricted Subsidiary, whether such
sale, lease, transfer or other disposition is direct or indirect (such as by
selling capital stock of the Subsidiary that owns such Restricted Asset, but
excluding sales of capital stock of the Company), other than (i) farm-outs in
the ordinary course of business of properties containing substantially no proved
reserves at the time of the farm-out, (ii) sales in the ordinary course of
business of Hydrocarbons after severance, (iii) sales, transfers, leases or
other dispositions of inventory and obsolete or surplus equipment in the
ordinary course of business, and (iv) sales, transfers, leases or other
dispositions to the Company or any Restricted Subsidiary if no Default then
exists or would result therefrom.
"Assignee" has the meaning set forth in Section 9.06(c).
"Assignment" means an Assignment and Assumption Agreement in
substantially the form of Exhibit F hereto.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the higher of
(i) the Corporate Base Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means a Loan which bears interest as provided in
Section 2.07(a).
"Benefit Arrangement" means at any time an employee benefit plan within
the meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan
and which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrowing" has the meaning set forth in Section 1.03.
"Cash Interest Expense" means, for any period, the sum of (i) the
aggregate amount accrued during such period by the Company and its Consolidated
Subsidiaries for interest determined on a consolidated basis, but excluding
interest on
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<PAGE> 8
Non-Recourse Debt and interest on Debt of Unrestricted Subsidiaries to the
extent such Debt does not constitute Debt of the Company or any Restricted
Subsidiary plus (ii) the aggregate amount paid during such period by the Company
and its Consolidated Subsidiaries for dividends on Restricted Preferred Stock,
determined on a consolidated basis.
"Co-Agents" means Bank of America National Trust and Savings
Association and Union Bank of Switzerland, Houston Agency in their capacities as
Co-Agents hereunder.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof (or, if such Bank
is an Assignee and its name is not set forth on the signature pages hereof, the
amount of its Commitment as set forth in the Assignment pursuant to which it
became a Bank), as such amount may be reduced from time to time pursuant to
Sections 2.09 and 2.10 or reduced or increased from time to time pursuant to any
Assignment to which it is a party.
"Company" means Union Texas Petroleum Holdings, Inc., a Delaware
corporation.
"Company's 1993 Form 10-K" means the Company's annual report on Form
10-K for 1993, as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Company's 1994 Form 10-K" means the Company's annual report on Form
10-K for 1994, as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Consolidated Debt" means, at any date, an amount equal to (a) the sum
(without duplication) of (i) the aggregate amount of Debt (other than Defeased
Debt, Excluded Subordinated Debt not exceeding $100,000,000 and Debt that would
not constitute Debt of the Company or any of its Consolidated Subsidiaries if
clause (viii) were not included in the definition herein of Debt) of the Company
and its Consolidated Subsidiaries, determined on a consolidated basis as of such
date, plus (ii) the Unimar Percentage at such date of the aggregate Debt (other
than Defeased Debt and Debt that would not constitute Debt of Unimar or any of
the Unimar Restricted Subsidiaries if clause (viii) were not included in the
definition herein of Debt) of Unimar and the Unimar Restricted Subsidiaries,
determined on a consolidated basis as of such date, plus (iii) the Excess Letter
of Credit/Guarantee Amount at such date, minus (b) the sum (without duplication
and only to the extent that any of the following are included in the foregoing
clause (a)) at such date of (1) Debt of Unrestricted Subsidiaries to the extent
such Debt does not constitute Debt of the Company or any Restricted Subsidiary,
plus (2) Non-Restricted Asset Non-Recourse Debt, plus (3) Existing Pakistan
Non-Recourse Debt.
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<PAGE> 9
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company in
its consolidated financial statements as of such date.
"Convert", "Conversion" and "Converted" each refers to (i) the change
of Loans of one Type into Loans of the other Type pursuant to Section 2.03 or
Article VIII, (ii) the continuation of all Euro-Dollar Loans comprising the same
Borrowing as such for an additional Interest Period pursuant to Section 2.03,
and (iii) an election to change, pursuant to Section 2.03, the Interest Period
applicable to all Euro-Dollar Loans comprising the same Borrowing prior to the
end of the Interest Period then applicable thereto.
"Corporate Base Rate" means a fluctuating interest rate per annum as
shall be in effect from time to time equal to the rate of interest publicly
announced by NationsBank as its base rate, whether or not the Company has notice
thereof. Such rate is set by NationsBank as a general reference rate of
interest, taking into account such factors as NationsBank may deem appropriate,
it being understood that many of NationsBank's commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that NationsBank may make various
commercial or other loans at rates of interest having no relationship to such
rate.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except accrued expenses, trade accounts payable and taxes payable
arising in the ordinary course of business, (iv) the present value, determined
in accordance with generally accepted accounting principles, of the obligations
of such Person to make payments under capital leases, (v) all obligations of
such Person which shall have been outstanding for more than five days owed to a
bank or other Person in respect of amounts theretofore paid under a letter of
credit or similar instrument, (vi) all Debt of others secured by a Lien on any
asset owned by such Person whether or not such Debt is assumed by such Person
(except that Joint Venture Debt shall for purposes of this Agreement be deemed
to be Debt of Pertamina and not of the Company or a Subsidiary), (vii) all
Restricted Preferred Stock issued by such Person or as to which such Person is
otherwise liable, (viii) all Debt of others Guaranteed by such Person, to the
extent of such Guarantee, and (ix) all obligations of such Person which have
been outstanding for more than five days to pay any margin call (or similar
requirement) on any Derivative Transaction (excluding, in the case of the
Company and its Subsidiaries, such obligations not exceeding $5,000,000 in the
aggregate); provided that neither Debt nor Guarantee includes (a) obligations
under leases other than capital leases and under bona fide Derivative
Transactions (except as provided in clause (ix) above) and obligations with
respect to take-or-pay payments theretofore received which remain subject to
cash settlement or make-up; (b) Debt of the
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<PAGE> 10
Company or a Subsidiary owing to the Company or a Subsidiary, except for Debt
not eliminated in consolidation pursuant to the proviso in Section 1.02; (c)
obligations under the Indonesian Participating Units; (d) any preferred stock
that does not constitute Restricted Preferred Stock; and (e) the existing
agreements relating to Joint Venture Debt set forth in the contracts described
on Schedule V of the parties thereto as to allocation of responsibility for
damages caused by reason of an act or failure to act by, or otherwise related
to, any such party, or any similar agreement hereafter entered into providing
for a similar allocation of liability in respect of similar actions or failures
to act. The amount of Debt attributable to any Restricted Preferred Stock shall
be the maximum consideration required to be paid upon the purchase, retirement,
redemption, exchange, or conversion of the portion thereof constituting Debt
(such consideration, if other than cash, to be valued at the fair market value
thereof); provided that in computing such consideration there shall be excluded
(A) any consideration payable solely in common stock of the Company, (B)
dividends to the extent such dividends do not materially exceed the generally
prevailing market rate (at the time of issuance of such Restricted Preferred
Stock) on preferred stock of comparable risk and maturity; and (C) any premium
payable upon any such purchase, retirement, redemption, exchange or conversion
only as a result of the exercise by the issuer of a call provision exercisable
only at the option of the issuer, if failure to exercise such option would not
have an adverse effect on the Company or any Subsidiary pursuant to the terms of
any such Restricted Preferred Stock or any documents related thereto.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Defeased Debt" means any Debt of the Company or any Subsidiary (i)
which has been defeased in accordance with the terms of the applicable Debt
instruments, (ii) which is deemed to be extinguished under generally accepted
accounting principles applicable to the Company or such Subsidiary, and (iii)
with respect to which the Agent has received a certificate of an officer of the
Company or such Subsidiary to the effect that the requirements of clauses (i)
and (ii) of this definition have been met as to such Debt and such evidence, if
any, in support of such certificate as the Agent may reasonably request.
"Derivative Transactions" means foreign exchange transactions and
commodity, currency and interest rate swaps, floors, caps, collars, forward
sales, options, other similar transactions and combinations of the foregoing.
"Dollar" (whether or not capitalized) and "$" mean lawful money of the
United States of America.
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<PAGE> 11
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City, San Francisco or Houston
are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address set forth in its Administrative Questionnaire (or identified in its
Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Agent.
"EBITDA" means, for any period, the sum of (i) the consolidated net
income of the Company and its Consolidated Subsidiaries for such period before
non-cash non-recurring items, gains or losses on dispositions of assets and the
cumulative effect of changes in accounting principles, plus (ii) to the extent
included in the determination of such income, the consolidated charges for such
period for interest, depreciation, depletion and amortization plus (or, if there
is a benefit from income taxes, minus) (iii) to the extent included in the
determination of such income, the amount of the provision for or benefit from
income taxes; provided that in determining such consolidated net income, such
consolidated charges and such provision for or benefit from income taxes, there
shall be excluded therefrom (to the extent otherwise included therein) (a) the
net income (or loss) of, charges for interest, depreciation, depletion and
amortization of, and such provision for or benefit from income taxes of, any
Person acquired by the Company or a Subsidiary in a pooling-of-interest
transaction for any period prior to the date of such transaction, and (b) the
net income (but not loss) of, charges for interest, depreciation, depletion and
amortization of, and such provision for (but not benefit from) income taxes of,
any Person which is subject to any contractual restriction which prevents the
payment of dividends or the making of distributions on the capital stock or
other ownership interests of such Person to the extent of such contractual
restrictions.
"Effective Date" means the date of this Agreement, which is June 30,
1995.
"Engineering Report" means a report of an Acceptable Engineer providing
an estimate of the proved reserves of Hydrocarbons attributable to the
properties of the Company and the Restricted Subsidiaries.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the
-6-
<PAGE> 12
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes or
the clean-up or other remediation thereof, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act, the
Resource Conservation and Recovery Act, the Oil Pollution Act, and their state
analogs, in each case as they have been or may be amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Obligors and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with any Obligor, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch
or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Company and the Agent.
"Euro-Dollar Loan" means a Loan which bears interest as provided in
Section 2.07(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Excess Letter of Credit/Guarantee Amount" means, at any date, the
excess of (a) the sum of (i) the aggregate undrawn amount, at such date, of all
letters of credit as to which the Company or any Restricted Subsidiary (other
than Unimar and the Unimar Restricted Subsidiaries) is the account party or in
respect of which the Company or any Restricted Subsidiary (other than Unimar and
the Unimar Restricted Subsidiaries) has Guaranteed payment plus the unpaid drawn
portions, at such date, of all such letters of credit to the extent such drawn
portions do not constitute Debt of the Company or a Restricted Subsidiary (other
than Unimar and the Unimar Restricted Subsidiaries), plus (ii) the Unimar
Percentage of the aggregate undrawn amount, at such date, of all letters of
credit as to which Unimar or any of the Unimar Restricted Subsidiaries is the
account party or in respect of which Unimar or any of the Unimar Restricted
Subsidiaries has Guaranteed payment plus the unpaid drawn portions, at such
date, of such letters of credit to the extent such drawn portions do not
constitute Debt of Unimar or any of the
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<PAGE> 13
Unimar Restricted Subsidiaries, plus (iii) Debt that constitutes Debt of the
Company or any Restricted Subsidiary (other than Unimar or any Unimar Restricted
Subsidiary) pursuant to clause (viii) of the definition herein of Debt, plus
(iv) the Unimar Percentage at such date of Debt that constitutes Debt of Unimar
or any of the Unimar Restricted Subsidiaries pursuant to clause (viii) of the
definition herein of Debt, over (b) $50,000,000.
"Excess Net Sales Proceeds" means
(i) with respect to any Asset Sale involving, directly or
indirectly, a UK Asset (a "UK Asset Sale"),
(a) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all UK Asset Sales
since December 31, 1993 would be less than or equal to
$50,000,000 and the aggregate Net Sales Proceeds from
all Asset Sales since such date would be less than or
equal to $100,000,000, zero; or
(b) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all UK Asset Sales
since December 31, 1993 ("UK Aggregate Amount") would
be greater than $50,000,000 or the aggregate Net Sales
Proceeds from all Asset Sales since such date ("Total
Aggregate Amount") would be greater than $100,000,000,
the lesser of (1) the greater of the amount by which
the UK Aggregate Amount exceeds $50,000,000 or the
amount by which the Total Aggregate Amount exceeds
$100,000,000 or (2) the Net Sales Proceeds from such
Asset Sale; and
(ii) with respect to any Asset Sale not involving, directly or
indirectly, a UK Asset,
(a) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all Asset Sales
since December 31, 1993 would be less than or equal to
$100,000,000, zero; or
(b) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all Asset Sales
since December 31, 1993 would be greater than
$100,000,000, the lesser of (1) the amount by which
such aggregate Net Sales Proceeds exceeds $100,000,000
or (2) the Net Sales Proceeds from such Asset Sale.
"Excluded Subordinated Debt" means Debt that (i) is subordinate and
junior, on terms reasonably satisfactory to the Agent, to the Loans in all
respects and
-8-
<PAGE> 14
(ii) has no requirement, absent a default under such Debt, that any principal
thereof be paid, purchased, redeemed, defeased, acquired, exchanged or converted
(other than exchange for or conversion to common stock of the Company) prior to
April 30, 2000.
"Existing Pakistan Non-Recourse Debt" means the Debt, not exceeding the
principal amount of $9,500,000, evidenced by that certain promissory note dated
December 20, 1988, issued by UT Pakistan in the original principal amount of
$21,250,000, the related Finance Agreement between UT Pakistan and the Overseas
Private Investment Corporation ("OPIC") and the related Issuing and Paying
Agency Agreement among First Trust New York, National Association (as successor
to Morgan Guaranty Trust Company of New York) as issuing and paying agent, OPIC
and UT Pakistan.
"Fair Market Value" means with respect to any asset of the Company or
any Subsidiary at any date the open market cash purchase price that an informed
and willing purchaser would pay for such asset in an arm's length transaction to
a willing and informed owner under no compulsion to sell, all as reasonably
determined in good faith by the Company.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day, as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to NationsBank on such day on such
transactions as determined by the Agent.
"Financing Documents" means this Agreement, the Notes and the
Subsidiary Guaranty Agreement.
"Guarantee" by any Person means any obligation, contingent or otherwise
(including, without limitation, any obligation to repay to a payor or creditor
of a payor amounts previously paid to such Person by such payor), of such Person
directly or indirectly guaranteeing any Debt of any other Person or otherwise
incurred for the purpose of assuring the holder of payment of any such Debt;
provided that (i) the obligations of any Person in respect of Debt of any
Partnership in which such Person is a general partner shall not constitute a
Guarantee of such Debt so long as substantially all assets of such Person are
comprised of its Investment in such Partnership, (ii) the obligation of a Person
to transfer or restore cash to the account of a Partnership,
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<PAGE> 15
Subsidiary or Affiliate pursuant to periodic settlements or adjustments under
cash management practices of such Persons shall not constitute a Guarantee,
(iii) the contractual obligation of a Person to assure that a Subsidiary,
Partnership or Affiliate conducts its operations as a prudent operator shall not
constitute a Guarantee of indebtedness of the Subsidiary, Partnership or
Affiliate, (iv) the obligation of a Person to cause net amounts of cash owned by
a Subsidiary, Partnership or Affiliate to be applied to payment of indebtedness
of such Subsidiary, Partnership or Affiliate shall not constitute a Guarantee of
such indebtedness and (v) the reaffirmation to or for the benefit of a lender of
contractual obligations (as, for example, those set forth in the Production
Sharing Contracts) previously entered into in good faith and not in
contemplation of the incurrence of Debt shall not constitute a Guarantee so long
as the other arrangements entered into in connection with such reaffirmation do
not increase the likelihood that additional funds will be required to meet such
obligations (as would be the case, for example, if revenues otherwise available
to meet such obligations were dedicated to such lender).
"HPG Plant" means the five-twelfths interest in the Geismar, Louisiana
olefins plant owned by UTPC and its subsidiaries, the supply and distribution
assets related to such plant and all other operating assets of UTPC and its
subsidiaries as of December 31, 1993.
"Hydrocarbons" means crude oil, including all kinds of hydrocarbons and
bitumens in solid or liquid form, and natural gas, including all gaseous
hydrocarbons produced from wells, and liquefied natural gas and liquefied
petroleum gases.
"Indonesian Participating Units" means the Indonesian Participating
Units issued by Unimar pursuant to the Indenture dated as of September 24, 1984
between Unimar and Irving Trust Company, Trustee, as amended and in effect on
April 24, 1995, and as thereafter amended to the extent such subsequent
amendments do not change the term thereof, provide additional security therefor,
or increase the payments to be made to holders thereof.
"Interest Period" means, with respect to each Euro-Dollar Loan
comprising part of the same Borrowing, the period commencing on the date of such
Loan or the date of the Conversion of any Base Rate Loan into such Euro-Dollar
Loan and ending on the last day of the period selected by the Company pursuant
to the provisions below and, thereafter, each subsequent period commencing on
the last day of the immediately preceding Interest Period (or on any other date
selected by the Company pursuant to Section 2.03) and ending on the last day of
the period selected by the Company pursuant to the provisions below and Section
2.03. The duration of each such Interest Period shall be 1, 2, 3 or 6 months or
(subject to Section 2.02(b)) 9 or 12 months, in each case as the Company may,
upon notice received by the Agent not later than 10:00 a.m. (Houston
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<PAGE> 16
time) on the third Euro-Dollar Business Day prior to the first day of such
Interest Period, select; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Euro-Dollar Business Day of a
calendar month;
(c) the Company may not select an Interest Period for any Loan
if the last day of such Interest Period would be after June 15, 1997;
and
(d) Interest Periods for all Loans comprising the same
Borrowing shall commence on the same date and shall be of the same
duration.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, advance, Guarantee or otherwise. It
is understood that a joint operating agreement or similar arrangement with
respect to Hydrocarbon properties or the HPG Plant does not constitute a Person
and hence that payments in respect of the acquisition or maintenance of an
interest in such Hydrocarbon properties or the HPG Plant do not constitute an
Investment.
"Joint Venture Debt" means obligations secured by a Lien on the
interests of the Company or a Subsidiary, as the case may be, arising under
either of the Production Sharing Contracts or any related supply contracts, if
such Lien covers ratably the interests of Pertamina and all production sharing
contractors thereunder.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
(including, without limitation, any production payment, advance payment or
similar arrangement with respect to minerals in place), whether or not filed,
recorded or otherwise perfected under applicable law. For the purposes of this
Agreement, the Company or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or
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<PAGE> 17
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset. The right of set-off, whether by operation of law or by contract, does
not constitute a Lien unless there is a related obligation to maintain a deposit
of cash or other assets in respect of which such right of set-off may be
exercised.
"Loan" means a loan made by a Bank to the Company pursuant to section
2.01 and refers to a Base Rate Loan or a Euro-Dollar Loan (each of which shall
be a "Type" of Loan), and "Loans" means Base Rate Loans or Euro-Dollar Loans or
any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.07(b).
"Margin Increase Condition" exists at all times during which any senior
unsecured long-term debt of the Company is rated below BBB- by S&P.
"material" means, with respect to any matter so characterized herein,
that such matter would reasonably be expected to be significant to a Bank in
determining whether to enter into this Agreement or to extend credit hereunder.
"Material Debt" means Debt of the Company and/or any one or more
Restricted Subsidiaries (other than Non-Recourse Debt) in an aggregate principal
amount equal to or greater than $15,000,000, whether incurred under one or more
related or unrelated documents or instruments.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $15,000,000.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association.
"Net Sales Proceeds" means, with respect to any Asset Sale, the Fair
Market Value of the Restricted Asset that is sold, leased, transferred or
otherwise disposed of in such Asset Sale, minus the sum of (i) all reasonable
fees, commissions and expenses incurred by the Company or any Subsidiary as a
result of or in connection with
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<PAGE> 18
such Asset Sale and (ii) all taxes required to be paid by the Company or any
Subsidiary as a result of such Asset Sale.
"Non-Recourse Debt" means, at any date, (a) the aggregate amount at
such date of Debt of the Company or a Subsidiary (other than Unimar and each
Unimar Subsidiary) and (b) the Unimar Percentage of the aggregate amount at such
date of all Debt of each of Unimar and each Unimar Subsidiary, in respect of
which, in the case of either (a) or (b), (i) the recourse of the holder of such
Debt, whether direct or indirect and whether contingent or otherwise, shall be
effectively limited to Non-Restricted Assets (or, in the case of the Existing
Pakistan Non-Recourse Debt, the assets described in Schedule III) and (ii) in
the case of any such Debt incurred after April 24, 1995, the Company shall have,
at or prior to the time of incurrence thereof or at or prior to the date of this
Agreement, notified the Agent of such incurrence and delivered to the Agent a
certificate of an officer of the Company certifying that such Debt constitutes
Non-Recourse Debt (or that such Debt will be converted into Non-Recourse Debt at
some specified time or upon the occurrence of some specified event); provided
that if any such Debt is secured by any interest in a license, concession,
production sharing contract or other right and any of the Restricted Assets
consists of an interest in such license, concession, production sharing contract
or other right, then the agreements evidencing such Debt must provide that
default under such Debt will not impair or affect such license, concession,
production sharing contract or other right. In the case of any Non-Recourse Debt
incurred after April 24, 1995, such limitation on recourse (i) must be set forth
in the instrument evidencing such Debt, and (ii) must be on terms acceptable to
the Agent as evidenced by the written approval thereof by the Agent (which
approval will not be unreasonably withheld, and in deciding whether to approve
such terms the Agent will, if requested by the Company, take into account what
terms are usual and customary in non-recourse financings) and in any event must
provide that the holder of such Debt waives, to the extent such holder may
effectively do so, such holder's right to elect recourse treatment under 11
U.S.C. Section 1111(b) unless such holder obtains the prior written consent of
the Required Banks. For avoidance of doubt, (a) if any such Debt is Guaranteed
by the Company or a Restricted Subsidiary in a limited amount, the excess over
such amount (but only the excess) constitutes Non-Recourse Debt, and (b) Debt
shall not be determined to not be Non-Recourse Debt solely as a result of the
existence of either of the following: (i) an agreement by a direct or indirect
parent corporation to repay to a subsidiary amounts received by such parent
corporation from such subsidiary in the event such subsidiary has a need for
such amounts in future periods or (ii) an agreement by a direct or indirect
parent corporation to cause a subsidiary to comply with such subsidiary's
contractual obligations so long as the parent corporation is not obligated to
contribute funds to the subsidiary to enable it to comply with such contractual
obligations and has not otherwise Guaranteed such obligations.
"Non-Restricted Asset Non-Recourse Debt" means, at any date, the
aggregate amount at such date of Non-Recourse Debt as to which the recourse of
the
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<PAGE> 19
holder is limited exclusively to Non-Restricted Assets as contemplated by clause
(i) of the first sentence of the definition of Non-Recourse Debt.
"Non-Restricted Assets" means all assets of the Company and its
Subsidiaries other than Restricted Assets.
"Non-UK Asset" means any Restricted Asset other than a UK Asset.
"Notes" means promissory notes of the Company, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Company to repay the
Loans made to it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning specified in Section 2.02.
"Obligors" means the Company and the Required Guarantors, and "Obligor"
means any one of them.
"Operating Cash Flow" means, with respect to any period, an amount
equal to
(i) the "net cash (required) provided by operating activities before
changes in other assets and liabilities" of the Company and its
Consolidated Subsidiaries for such period, that should be reflected in
the consolidated statement of cash flows of the Company and its
Consolidated Subsidiaries for such period prepared in accordance with
generally accepted accounting principles on substantially the same
basis as the consolidated statement of cash flows of the Company and
its Consolidated Subsidiaries for the year ended December 31, 1993 as
set forth in the Company's 1993 Form 10-K; provided that in determining
such "net cash (required) provided by operating activities before
changes in other assets and liabilities" there shall be excluded
therefrom (to the extent otherwise included therein) (a) the portion of
such net cash provided by assets securing any Non-Recourse Debt other
than the Existing Pakistan Non-Recourse Debt, (b) the net cash provided
or required by operating activities before changes in other assets and
liabilities of any Person acquired by the Company or a Subsidiary in a
pooling-of-interest transaction for any period prior to the date of
such transaction, and (c) the net cash provided by operating activities
before changes in other assets and liabilities of any Person which is
subject to any contractual restriction which prevents the payment of
dividends or the making of distributions on the capital stock or other
ownership interests of such Person to the extent of such contractual
restrictions,
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<PAGE> 20
plus (ii) to the extent included in the determination of the "net cash
(required) provided by operating activities before changes in other
assets and liabilities" for such period in accordance with the
foregoing clause (i), exploration expenses incurred by the Company or
any Consolidated Subsidiary during such period other than (a)
exploration expenses incurred in connection with assets securing any
Non-Recourse Debt other than the Existing Pakistan Non-Recourse Debt,
(b) the exploration expenses of any Person acquired by the Company or a
Subsidiary in a pooling-of-interest transaction for any period prior to
the date of such transaction, and (c) the exploration expenses of any
Person which is subject to any contractual restriction which prevents
the payment of dividends or the making of distributions on the capital
stock or other ownership interests of such Person to the extent of such
contractual restrictions,
plus (or, if cash is required by equity investee, minus) (iii) the
amount of the "cash (required) provided by equity investee" of the
Company and its Consolidated Subsidiaries for such period, that should
be reflected in the consolidated statement of cash flows of the Company
and its Consolidated Subsidiaries for such period prepared in
accordance with generally accepted accounting principles on
substantially the same basis as the consolidated statement of cash
flows of the Company and its Consolidated Subsidiaries for the year
ended December 31, 1993 as set forth in the Company's 1993 Form 10-K,
excluding the effect of any cash required by such equity investee for
the payment of the principal of its Debt and any cash provided by such
equity investee from incurrence of its Debt,
minus (iv) dividends on preferred stock paid during such period by the
Company or any Consolidated Subsidiary, determined on a consolidated
basis.
"Other Credit Agreements" means the Amended and Restated Credit
Agreement dated as of May 13, 1994, as amended and as may be further amended or
modified from time to time, among the Company, NationsBank, as agent, and the
co-agents and banks party thereto currently providing a $450,000,000 credit
facility to the Company and the Credit Agreement dated as of April 24, 1995, as
amended and as may be further amended or modified from time to time, among the
Company, NationsBank, as agent, and the co-agents and banks party thereto
currently providing a $100,000,000 credit facility to the Company.
"Other Credit Agreement Commitments" means the aggregate amount of the
"Commitments" as defined in the Other Credit Agreements.
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<PAGE> 21
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"Partnership" means any general or limited partnership which is
accounted for on the equity method in the Company's consolidated financial
statements and in which the Company or a Subsidiary is a general partner.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof. It is
understood that a joint operating agreement or similar arrangement with respect
to Hydrocarbon properties or the HPG Plant does not constitute a Person.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Production Sharing Contracts" means the production sharing contracts
pertaining to certain operations in Indonesia filed as Exhibits 10.102 and
10.103 to the Company's quarterly report on Form 10-Q for the quarter ending
June 30, 1990, as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Reference Banks" means the principal London offices of NationsBank,
Bank of America National Trust and Savings Association and Union Bank of
Switzerland and such substitute Bank or Banks as may be mutually agreed to by
the Company and the Agent, and "Reference Bank" means any one of such Reference
Banks.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
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<PAGE> 22
"Required Banks" means at any time Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 51% of the aggregate unpaid
principal amount of the Loans.
"Required Guarantors" means (a) each of Union Texas Petroleum Energy
Corporation, UTPC, Union Texas East Kalimantan Limited, Union Texas
International Corporation and Unistar, Inc. and (b) any Subsidiary that acquires
a Restricted Asset (other than any Restricted Asset in Pakistan or, if such
Subsidiary's entering into the Subsidiary Guaranty Agreement would have a
material adverse tax consequence on the Company, in the United Kingdom
(including the United Kingdom Sector of the North Sea)) after December 31, 1993
or the capital stock of any Required Guarantor after December 31, 1993. Each
Required Guarantor shall continue to be a Required Guarantor unless released
from its obligations under the Subsidiary Guaranty Agreement in accordance with
the terms of the Financing Documents.
"Restricted Assets" means (1) all proved reserves of the Company and
the Subsidiaries as of December 31, 1993 in Indonesia, the United Kingdom
(including the United Kingdom Sector of the North Sea) and Pakistan, (2) all
licenses, concessions, production sharing contracts and other rights pertaining
to any such proved reserves (excluding the portion thereof that does not pertain
to any of such proved reserves, if such portion can be severed without material
adverse consequences on the portion pertaining to such proved reserves), (3)
equipment used in the production of any such proved reserves or in the
transportation of production from any such proved reserves if such equipment is
a fixture or otherwise attached to realty, constitutes all or a part of any
pipeline or related equipment, is all or part of a production platform or
related equipment or is equipment similar to any of the foregoing or used for a
similar purpose, and (4) the HPG Plant.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Company's capital stock (except dividends payable solely in
shares of its common stock), or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Company's capital
stock or (b) any option, warrant or other right to acquire shares of the
Company's capital stock (except any such payment made solely in shares of its
common stock); provided that payments of stock-related and other employee
benefits (including purchases by the Company of its common stock in connection
with the payment of such benefits) in the ordinary course of business to
employees of the Company or a Subsidiary shall not be deemed Restricted
Payments.
"Restricted Preferred Stock" means (i) all preferred stock which (a) is
subject to purchase, retirement, redemption, exchange or conversion (other than
exchange for or conversion to common stock of the Company), in whole or in part
under any circumstance whatsoever (other than purchase, retirement, redemption,
exchange or
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<PAGE> 23
conversion by the issuer thereof, at the sole option of such issuer, if failure
to exercise such option would not have an adverse effect on the Company or any
Subsidiary pursuant to the terms of any such preferred stock or any documents
related thereto) and (b) provides for dividends materially in excess of the
generally prevailing market dividend rate (at the time of issuance of such
preferred stock) for preferred stock of comparable risk and maturity, and (ii)
the portion of all other preferred stock which is subject to purchase,
retirement, redemption, exchange or conversion (other than exchange for or
conversion to common stock of the Company) at any date or dates on or prior to
April 30, 2000 under any circumstance whatsoever (other than purchase,
retirement, redemption, exchange or conversion by the issuer thereof, at the
sole option of such issuer, if failure to exercise such option would not have an
adverse effect on the Company or any Subsidiary pursuant to the terms of any
such preferred stock or any documents related thereto). For avoidance of doubt,
to the extent that any shares of Restricted Preferred Stock are exchanged for or
converted to common stock of the Company and as a consequence such shares of
Restricted Preferred Stock are cancelled, such shares shall no longer constitute
Restricted Preferred Stock.
"Restricted Subsidiaries Recourse Debt" means, at any date, the sum of
(a) the aggregate amount of all Debt (other than (i) Non-Recourse Debt, (ii) any
Guarantee of Debt of the Company (including the Loans) and (iii) the amount, if
any, by which the Guarantees of the Restricted Subsidiaries (other than Unimar
and the Unimar Restricted Subsidiaries) included in the determination of Excess
Letter of Credit/Guarantee Amount exceeds the Excess Letter of Credit/Guarantee
Amount) of each Restricted Subsidiary (other than Unimar and the Unimar
Restricted Subsidiaries), determined on a consolidated basis as of such date,
and (b) the Unimar Percentage of the aggregate amount of all Debt (other than
(i) Non-Recourse Debt, (ii) any Guarantee of Debt of the Company and (iii) the
amount, if any, by which the Unimar Percentage of the Guarantees of Unimar and
the Unimar Restricted Subsidiaries included in the determination of Excess
Letter of Credit/Guarantee Amount exceeds the Excess Letter of Credit/Guarantee
Amount) of Unimar and the Unimar Restricted Subsidiaries, determined on a
consolidated basis as of such date.
"Restricted Subsidiary" means each Person listed in Part B of Schedule
II hereto and each Subsidiary that owns directly or indirectly any interest in
any Restricted Assets or any Restricted Subsidiary; provided that a Restricted
Subsidiary shall cease to be such at such time as it is converted to an
Unrestricted Subsidiary pursuant to Section 5.20 or ceases to be a Subsidiary as
a result of a transaction permitted by Section 5.14.
"Restricted Transfer" means (i) any Investment in an Affiliate, any
Unrestricted Subsidiary or any subsidiary of an Unrestricted Subsidiary, but
excluding to the extent otherwise included in the foregoing, Investments in
Unimar and the Unimar Subsidiaries, or (ii) any payment by the Company or any
Subsidiary, directly or
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<PAGE> 24
indirectly, in respect of Non-Recourse Debt to the extent such Person is not
legally obligated to make such payment by the terms of such Debt, or solely in
the case of Unimar, Unistar, Inc. or any of the Unimar Subsidiaries, to the
extent such Person is not legally obligated to fund such payment under the terms
of the Unimar Partnership Agreement.
"Revolving Credit Period" means the period from and including the
Effective Date to but not including the Termination Date.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill,
Inc. on the date hereof.
"Subsidiary" means (a) Unimar and the Unimar Subsidiaries (except at
such times as the Company does not own, directly or indirectly, any of the
ownership interest in Unimar) and (b) any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Company, it being understood
that the power to elect exactly 50% of the board of directors or such other
persons does not constitute a "majority" as used herein.
"Subsidiary Guarantors" means the Subsidiaries from time to time
parties to the Subsidiary Guaranty Agreement, and their respective successors.
"Subsidiary Guaranty Agreement" means the Subsidiary Guaranty Agreement
dated as of June 30, 1995 among the Subsidiary Guarantors and NationsBank, as
Agent, substantially in the form of Exhibit B hereto, as the same may be amended
from time to time in accordance with the terms thereof.
"Termination Date" means June 15, 1996, or, if such day is not a
Euro-Dollar Business Day, the Termination Date shall be the next preceding
Euro-Dollar Business Day.
"Type" has the meaning specified in the definition of Loan.
"UK Assets" means all Restricted Assets of UTPL as of December 31,
1993.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
as determined by such Plan's actuary exceeds (ii) the fair market value of all
Plan assets allocable to such benefits (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date for
such Plan, but only to the extent
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<PAGE> 25
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA if such Plan terminated
as of such date.
"Unimar" means Unimar Company, a partnership organized and existing
under the laws of Texas.
"Unimar Partnership Agreement" means the Amended and Restated Agreement
of General Partnership of Unimar dated as of September 11, 1990 between Unistar,
Inc. and Ultrastar, Inc., as amended from time to time.
"Unimar Percentage" means, at any date, the aggregate percentage
ownership interest in Unimar owned at such date by the Company and the
Subsidiaries.
"Unimar Restricted Subsidiary" means any Unimar Subsidiary that is also
a Restricted Subsidiary at the relevant date.
"Unimar Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by Unimar, it being understood that
the power to elect exactly 50% of the board of directors or such other persons
does not constitute a majority as used herein.
"Unrestricted Subsidiary" means any Subsidiary which is not a
Restricted Subsidiary.
"UT Pakistan" means Union Texas Pakistan, Inc., a Delaware corporation.
"UTPC" means Union Texas Products Corporation, a Delaware corporation.
"UTPL" means Union Texas Petroleum Limited, an English company.
SECTION 1.02. Accounting Terms and Determinations. 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
generally accepted accounting principles as in effect from time to time, applied
on a basis consistent with the most recent audited consolidated financial
statements of the Company and its Consolidated Subsidiaries delivered to the
Banks (except for changes concurred in by the Company's independent public
accountants); provided that in any determination of Consolidated Debt if (i) the
Company or any Restricted Subsidiary owes any Debt to an
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<PAGE> 26
Unrestricted Subsidiary which would otherwise be eliminated in such
determination of Consolidated Debt (the "intercompany Debt") (other than Debt in
an amount not exceeding $10,000,000 in the aggregate at any time and
representing advances by the Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary made in the ordinary course of the cash management
practices of the Company and its Subsidiaries) and (ii) such Unrestricted
Subsidiary owes, at the date of determination, any Debt for borrowed money to a
Person other than the Company or a Subsidiary (the "third party Debt") (other
than any such Debt that also constitutes Debt of the Company or a Restricted
Subsidiary), then an amount equal to the lesser of (1) such intercompany Debt
and (2) such third party Debt, shall not be eliminated in such determination of
Consolidated Debt.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregate of Loans made by Banks to the Company pursuant to Article II on a
single date, of a single Type and, if such Loans are Euro-Dollar Loans, for a
single Interest Period. Borrowings are classified for purposes of this Agreement
by reference to the pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans).
SECTION 1.04. Miscellaneous. 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 and Exhibit references are to Articles
and Sections of and Schedules and Exhibits to this Agreement, unless otherwise
specified. The term "including" as used herein means "including without
limitation". Definitions of terms defined herein shall be applicable to both the
singular and plural forms of the terms defined as appropriate. References to
"directly or indirectly" in respect of ownership of any interest in any assets
shall include, without limitation, direct ownership, indirect ownership through
capital stock or other ownership interest (whether through one or more levels of
subsidiaries, affiliates or other Persons) and any other direct or indirect
ownership arrangement.
SECTION 1.05. Unimar. To the extent this Agreement or any other
Financing Document obligates the Company or a Subsidiary to cause Unimar and the
Unimar Subsidiaries to take any action, such obligation shall be satisfied if
(a) the Company votes (or causes a Subsidiary to vote) the Unimar Percentage in
a manner consistent with the obligations of the Company and the Subsidiaries
under the Financing Documents and (b) any representative of the Company sitting
on any management board or board of directors of Unimar or any of the Unimar
Subsidiaries votes, as a member of such management board or board of directors,
in a manner consistent with the obligations of the Company and the Subsidiaries
under the Financing Documents.
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SECTION 1.06. Ratings. A rating, whether public or private, by S&P
shall be deemed to be in effect on the date of announcement or publication by
S&P, as the case may be, of such rating or, in the absence of such announcement
or publication, on the effective date of such rating and will remain in effect
until the effective date of any change in such rating. In the event the
standards for any rating by S&P are revised, or such rating is designated
differently (such as by changing letter designations to numerical designations),
then the references herein to such rating shall be changed to the revised or
redesignated rating for which the standards are closest to, but not lower than,
the standards at the date hereof for the rating which has been revised or
redesignated, all as determined by the Agent in good faith. Long-term debt
supported by a letter of credit, guaranty (other than guaranties of
Subsidiaries) or other similar credit enhancement mechanism shall not be
considered as senior unsecured long-term debt.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the Revolving Credit Period
each Bank severally agrees, on the terms and conditions set forth in this
Agreement, to make loans to the Company pursuant to this Section 2.01 from time
to time in amounts such that the aggregate principal amount of Loans by such
Bank at any one time outstanding to the Company shall not exceed the amount of
such Bank's Commitment at such time. Each Borrowing under this Section 2.01
shall be in an aggregate principal amount of $10,000,000 or any larger multiple
of $1,000,000 (except that any such Borrowing may be, subject to the other terms
hereof, in the aggregate amount of the remaining unused Commitments) and shall
be made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Company may borrow under this
Section 2.01, repay (whether pursuant to Section 2.10 or otherwise), or to the
extent permitted by Section 2.11, prepay Loans and reborrow at any time during
the Revolving Credit Period under this Section 2.01.
SECTION 2.02. Notice of Borrowings. (a) The Company shall give the
Agent notice (a "Notice of Borrowing") not later than 10:00 A.M. (Houston time)
on (x) the date of each Base Rate Borrowing, and (y) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the
case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
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(iii) whether the Loans comprising such Borrowing are to be Base Rate
Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
Notwithstanding the foregoing, not more than ten Euro-Dollar Borrowings shall be
outstanding at any one time, and any Borrowing which would exceed such
limitation shall be made as a Base Rate Borrowing.
(b) If requested to do so by the Company through the Agent at
least ten Euro-Dollar Business Days before the first day of a proposed Interest
Period for Euro-Dollar Loans, each Bank will advise the Agent before 10:00 A.M.
(Houston time) on the sixth Euro-Dollar Business Day preceding the date of such
proposed Interest Period as to whether, if the Company selects a specified
duration of nine or twelve months for such Interest Period, such Bank expects
that deposits in dollars with a corresponding term will be available to it in
the relevant market on the first day of such Interest Period in the amount
required to fund its Loan to which such Interest Period would apply. Unless a
Bank responds by such time to the effect that it expects such deposits will not
be available to it, the Company shall be entitled to select such proposed
duration for such Interest Period.
SECTION 2.03. Conversions. (a) The Company may on any Euro-Dollar
Business Day, upon notice given to the Agent no later than 10:00 a.m. (Houston
time) on the third Euro-Dollar Business Day prior to the date of the proposed
Conversion and subject to the provisions of Section 2.02 and Article VIII and
the other provisions hereof, Convert all Loans comprising one or more
Borrowings; provided that (i) Loans comprising a Borrowing may not be Converted
if after giving effect to such Conversion, such Borrowing would be a Euro-Dollar
Borrowing and the outstanding principal amount of such Borrowing would be less
than $10,000,000 and (ii) no Conversion (other than changing Euro-Dollar Loans
into Base Rate Loans) may be made if any Event of Default is then existing. Each
such notice of a Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Loans to be Converted, (iii)
if after giving effect to such Conversion, such Borrowing would be a Euro-Dollar
Borrowing, the commencement date and duration of the proposed Interest Period
for each Loan comprising such Borrowing, and (iv) the nature of such Conversion
(i.e., whether such Conversion is a change of Loans of one Type into another
Type, a continuation of Euro-Dollar Loans as such for an additional Interest
Period or an election to change an Interest Period). Each such notice shall be
irrevocable.
(b) If the aggregate unpaid principal amount of Euro-Dollar Loans
comprising any Borrowing shall be reduced by payment or prepayment or otherwise,
to
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less than $10,000,000, such Loans shall automatically, on the last day of the
then existing Interest Period therefor, Convert into Base Rate Loans.
(c) If the Company shall fail to select the duration of any Interest
Period for any Euro-Dollar Loans in accordance with the provisions contained in
the definition of "Interest Period" in Section 1.01, or if there shall be any
Event of Default, such Loans will automatically on the last day of the then
existing Interest Period therefor, Convert into Base Rate Loans.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly,
(by no later than 10:30 A.M. (Houston time) by telephone or facsimile
transmission) notify each Bank of the contents thereof and of such Bank's share
of such Borrowing and such Notice of Borrowing shall not thereafter be revocable
by the Company.
(b) Not later than 12:00 Noon (Houston time) on the date of each
Borrowing, each Bank shall (except as provided in subsection (c) of this Section
2.04) make available its share of such Borrowing, in Federal or other funds
immediately available in Houston, to the Agent at its address specified in or
pursuant to Section 9.01. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent will make
the funds so received from the Banks available to the Company at the Agent's
aforesaid address.
(c) If any Bank makes a new Loan hereunder to the Company on a day on
which the Company is to repay all or any part of an outstanding Loan from such
Bank, such Bank shall apply the proceeds of its new Loan to make such repayment
and only an amount equal to the difference (if any) between the amount being
borrowed by the Company and the amount being repaid shall be made available by
such Bank to the Agent as provided in subsection (b), or remitted by the Company
to the Agent as provided in Section 2.12, as the case may be.
(d) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section 2.04 and the Agent may,
in reliance upon such assumption, make available to the Company on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Agent, such Bank and the Company severally agree to
repay to the Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Company until the date such amount is repaid to the Agent, at (i) in the
case of the Company, a rate per annum equal to the higher of
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the Federal Funds Rate and the interest rate applicable thereto pursuant to
Section 2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such
Bank shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Bank's Loan included in such Borrowing for purposes of
this Agreement.
SECTION 2.05. Notes. (a) The Loans of each Bank to the Company shall
be evidenced by a single Note of the Company payable to the order of such Bank
for the account of its Applicable Lending Office in an amount equal to the
aggregate unpaid principal amount of such Bank's Loans to the Company.
(b) Each Bank may, by notice to the Company and the Agent, request that
its Loans of a particular Type payable to such Bank (or such lending office,
agency or branch of such Bank as such Bank may specify in such request) be
evidenced by a separate Note of the Company in an amount equal to the aggregate
unpaid principal amount of such Loans. Each such Note shall be in substantially
the form of Exhibit A hereto with appropriate modifications to reflect the fact
that it evidences solely Loans of the relevant Type. Any Bank that receives
multiple Notes pursuant to this Section 2.05(b) agrees that: (1) the aggregate
principal amount payable by the Company under such Notes shall never exceed the
aggregate principal amount of the Loans owed to such Bank (including, if
applicable, the separate lending offices, agencies or branches of such Bank) and
(2) the payees of the Notes issued at the request of such Bank shall enjoy no
greater rights (voting or otherwise) than such Bank would enjoy in the absence
of such request and such payees (including, if applicable, the separate lending
offices, agencies or branches of such Bank) shall be considered a single Bank
for purposes of this Agreement. Each reference in this Agreement to the "Note"
of such Bank shall be deemed to refer to and include any or all of such Notes,
as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b), the
Agent shall mail or send by private delivery service such Note to such Bank.
Each Bank shall record the date, amount and Type of each Loan made by it to the
Company and the date and amount of each payment of principal made with respect
thereto, and prior to any transfer of its Note shall endorse on the schedule
forming a part thereof appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding; provided that the
failure of any Bank to make any such recordation or endorsement shall not affect
the obligations of any Obligor under any of the Financing Documents. Each Bank
is hereby irrevocably authorized by the Company so to endorse any Note and to
attach to and make a part of any Note a continuation of any such schedule as and
when required.
SECTION 2.06. Maturity of Loans. Each Loan shall mature, and the
principal amount thereof shall be due and payable, on June 15, 1997.
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SECTION 2.07. Interest Rates. The Company shall pay interest on the
unpaid principal amount of each Loan from the date of such Loan until such
principal amount shall be paid in full, at the following rates per annum:
(a) If such Loan is a Base Rate Loan, for each day that such Loan is a
Base Rate Loan, at a rate per annum equal to the sum of (i) the Base Rate for
such day, plus (ii) at such times as the Margin Increase Condition exists, 1/4%,
plus (iii) at such times as any Event of Default exists, 1%. Such interest shall
be payable quarterly on each March 31, June 30, September 30 and December 31 and
on the date such Base Rate Loan is Converted or paid in full. Any overdue
interest on any Base Rate Loan shall bear interest, payable on demand, for each
day until paid at a rate per annum equal to the sum of 1% plus the otherwise
applicable rate for such day.
(b) If such Loan is a Euro-Dollar Loan, at a rate per annum equal at
all times during any Interest Period for such Loan to the sum of (i) 0.6875%
plus (ii) the applicable London Interbank Offered Rate plus (iii) at such times
as the Margin Increase Condition exists, 1/4% plus (iv) at such times as any
Event of Default exists, 1%; provided that any overdue principal of or interest
on any Euro-Dollar Loan shall bear interest, payable on demand, for each day
from and including the date payment thereof was due to but excluding the date of
actual payment, at a rate per annum equal to the sum of 1% plus the higher of
(i) the sum of 0.6875% plus the London Interbank Offered Rate applicable to such
Loan plus at such times as the Margin Increase Condition exists, 1/4% and (ii)
the sum of (1) 0.6875% plus (2) the average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of the respective rates per annum at which one day
(or, if such amount due remains unpaid more than three Euro-Dollar Business
Days, then for such other period of time not longer than three months as the
Agent may select) deposits in dollars in an amount approximately equal to such
overdue payment due to each of the Reference Banks are offered to such Reference
Bank in the London interbank market for the applicable period determined as
provided above plus (3) at such times as the Margin Increase Condition exists,
1/4% (or, if the circumstances described in clause (a) or (b) of Section 8.01
shall exist, at a rate per annum equal to the sum of 1% plus the rate applicable
to Base Rate Loans for such day). Such interest shall be payable for each
Interest Period on the last day thereof and, if such Interest Period is longer
than three months, at intervals of three months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest Period
means the arithmetic average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of
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such Reference Bank to which such Interest Period is to apply and for a period
of time comparable to such Interest Period.
(c) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Company and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error. Upon
request of the Company, the Agent shall furnish to it such information as to its
determinations hereunder as the Company may reasonably request.
(d) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section 2.07. If any Reference
Bank does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available on
a timely basis, the provisions of Section 8.01 shall apply.
(e) This Section 2.07 and each other provision in any of the Financing
Documents or in any other agreement executed in connection herewith are
specifically made subject to Section 2.16.
SECTION 2.08. Fees. (a) During the Revolving Credit Period, the
Company shall pay to the Agent for the account of the Banks ratably in
proportion to their Commitments a commitment fee at a rate per annum equal to
0.1875% on the daily average amount by which the aggregate amount of the
Commitments exceed the aggregate outstanding principal amount of the Loans.
Such commitment fee shall accrue from and including the Effective Date to but
excluding the Termination Date. Additionally, the Company shall pay to the
Agent for the account of the Banks ratably a facility fee at a rate per annum
equal to 0.1875% on the daily average aggregate outstanding principal amount of
the Loans. Such facility fee shall accrue from and including the Effective Date
to but excluding the date the Loans shall be repaid in their entirety.
(b) Payments. Accrued fees under this Section 2.08 shall be payable
quarterly on each March 31, June 30, September 30 and December 31 and upon the
date of termination of the Commitments in their entirety (and, if later, the
date the Loans shall be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. The
Company may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any
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larger multiple of $5,000,000 the aggregate amount of the Commitments in excess
of the aggregate outstanding principal amount of the Loans.
SECTION 2.10. Mandatory Termination or Reduction of Commitments.
(a) The Commitments shall terminate on the Termination Date.
(b) On the fifth Domestic Business Day following any Asset Sale that
results in positive Excess Net Sales Proceeds, (i) the Company will deliver to
each of the Banks a certificate of the chief financial officer, the chief
accounting officer or the treasurer of the Company certifying the amount of such
Excess Net Sales Proceeds from such Asset Sale, (ii) the Commitments shall be
automatically reduced ratably by an amount equal to (a) 100% of the amount of
such Excess Net Sales Proceeds minus (b) the amount by which the Other Credit
Agreement Commitments are reduced, pursuant to Section 2.10(d)(ii) of the Other
Credit Agreement that provides a $450,000,000 credit facility to the Company or
pursuant to Section 2.10(b)(ii) of the Other Credit Agreement that provides a
$100,000,000 credit facility to the Company, as a result of such Excess Net
Sales Proceeds from such Asset Sale, (iii) the Company shall be obligated to
repay such principal amount (together with accrued interest thereon) of each
Bank's outstanding Loans, if any, as may be necessary so that after such
repayment the aggregate outstanding principal amount of such Bank's Loans does
not exceed the amount of such Bank's Commitment as then reduced.
SECTION 2.11. Optional Prepayments. (a) The Company may, upon at
least one Domestic Business Day's notice to the Agent, prepay any Borrowing in
whole at any time, or from time to time in part in amounts aggregating
$10,000,000 or any larger multiple of $1,000,000, by paying the principal
amount to be prepaid together with accrued interest thereon to the date of
prepayment; provided that no partial prepayment of a Euro-Dollar Borrowing
shall be made if after giving effect thereto the principal amount of such
Borrowing would be less than $10,000,000. Each such optional prepayment shall
be applied to prepay ratably the Loans of the several Banks included in such
Borrowing.
(b) Upon receipt of a notice of prepayment pursuant to this Section
2.11, the Agent shall promptly notify each Bank of the contents thereof and of
such Bank's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Company.
SECTION 2.12. General Provisions as to Payments. (a) The
Company shall make each payment of principal of, and interest on, the Loans and
of fees hereunder, not later than 12:00 Noon (Houston time) on the date when
due, in Federal or other funds immediately available in Houston, to the Agent
at its address referred to in Section 9.01. The Agent will promptly distribute
to each Bank its ratable
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share of each such payment received by the Agent for the account of the Banks.
Whenever any payment of principal of, or interest on, the Base Rate Loans or of
fees shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Company prior
to the date on which any payment is due from the Company to the Banks hereunder
that the Company will not make such payment in full, the Agent may assume that
the Company has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent that the Company shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
(c) At the time of each payment of principal of any Loan, the Company
shall specify, by notice to the Agent, the Loan or Loans to which such payment
shall be applied. If the Company fails to so specify, the Agent shall apply such
payment to the Loans as the Agent may select.
SECTION 2.13. Funding Losses. If any Obligor makes any payment of
principal with respect to any Euro-Dollar Loan (pursuant to Article II, VI or
VIII or otherwise) on any day other than the last day of an Interest Period
applicable thereto, or the end of an applicable period fixed pursuant to the
proviso to Section 2.07(b), or if the Company fails to borrow any Euro-Dollar
Loan after notice has been given to any Bank in accordance with Section 2.04(a),
or if any Conversion of any Euro-Dollar Loan occurs on any day other than the
last day of an Interest Period applicable thereto or fails to occur as
contemplated herein, the Company shall reimburse each Bank within 15 days after
demand for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin from the period after any such payment or
failure to borrow; provided that such Bank shall have delivered to the Company a
certificate as to the amount of such loss or expense, which certificate shall be
conclusive in the absence of manifest error.
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SECTION 2.14. Computation of Interest and Fees. Interest based on the
Base Rate hereunder shall be computed on the basis of a year of 365 days (or 366
days in a leap year) and paid for the actual number of days elapsed (including
the first day but excluding the last day). All other interest and fees shall be
computed on the basis of a year of 360 days and paid for the actual number of
days elapsed (including the first day but excluding the last day).
SECTION 2.15. Chapter 15. In no event shall the provisions of Article
5069, Chapter 15 of the Revised Civil Statutes of Texas (which regulates certain
revolving credit loan accounts and revolving tri-party accounts) apply to any
Loan made hereunder.
SECTION 2.16. Maximum Interest Rate. (a) Nothing contained in this
Agreement or the Notes shall require the Company to pay interest at a rate
exceeding the maximum rate permitted without penalty by applicable law. Each
provision in the Financing Documents and any other agreement executed in
connection herewith is expressly limited so that in no event whatsoever shall
the amount paid thereunder, or otherwise paid, by the Company for the use,
forbearance or detention of the money to be loaned under this Agreement, exceed
that amount of money which would cause the effective rate of interest thereon
to exceed the maximum rate of interest permitted without penalty under
applicable law, and all amounts payable under the Financing Documents or any
other agreement executed in connection herewith, or otherwise payable in
connection therewith, shall be subject to reduction so that such amounts paid
or payable for the use, forbearance or detention of money to be loaned under
this Agreement shall not exceed that amount of money which would cause the
effective rate of interest thereon to exceed the maximum rate of interest
permitted without penalty under applicable law.
(b) If the amount of interest payable for the account of any Bank on
any interest payment date in respect of the immediately preceding interest
computation period, computed pursuant to Section 2.07, would exceed the maximum
amount permitted without penalty by applicable law to be charged by such Bank,
the amount of interest payable for its account on such interest payment date
shall be automatically reduced to such maximum permissible amount.
(c) If the amount of interest payable for the account of any Bank in
respect of any interest computation period is reduced pursuant to clause (b) of
this Section 2.16 and the amount of interest payable for its account in respect
of any subsequent interest computation period, computed pursuant to Section
2.07, would be less than the maximum amount permitted without penalty by
applicable law to be charged by such Bank, then the amount of interest payable
for its account in respect of such subsequent interest computation period shall
be automatically increased to such maximum permissible amount; provided that at
no time shall the aggregate amount by which
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interest paid for the account of any Bank has been increased pursuant to this
clause (c) exceed the aggregate amount by which interest paid for its account
has theretofore been reduced pursuant to clause (b) of this Section 2.16.
(d) In the event that maturity of the Loans is accelerated for any
reason, or in the event of any required or permitted prepayment of the Loans,
then such consideration that constitutes interest payable for the account of any
Bank shall never include more than the maximum amount allowed without penalty by
applicable law to be charged by such Bank and excess interest, if any, payable
for the account of such Bank pursuant to its Note, this Agreement or otherwise
shall be cancelled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited on the Loans of such Bank
(or, to the extent in excess of such Loans, refunded by such Bank to the
Company).
(e) It is further agreed that, without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received for the
account of any Bank under the Note held by it, under this Agreement, under any
other agreement executed in connection herewith or otherwise in connection with
the Loans or the Commitment of such Bank for the purpose of determining whether
such rate exceeds the maximum nonusurious interest rate applicable to such Bank,
shall be made, to the extent permitted by usury laws applicable to such Bank
(now or hereafter enacted), by amortizing, prorating and spreading in equal
parts during the period of the full stated terms of the Loans evidenced by such
Note all interest at any time contracted for, charged or received by such Bank
in connection therewith.
(f) To the extent that any Bank may be subject to Texas law limiting
the amount of interest payable for its account, such Bank shall utilize the
indicated (weekly) rate ceiling from time to time in effect as provided in
Article 5069-1.04 of the Revised Civil Statutes of Texas, as amended.
SECTION 2.17. Taxes. (a) Any and all payments by the Company
hereunder or under the Notes shall be made, in accordance with Section 2.12,
free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges and withholdings, and all
liabilities with respect thereto, excluding (i) in the case of the Agent, each
Co-Agent and each Bank, United States federal income taxes and, without
duplication, any taxes imposed on its income, and franchise taxes imposed on
it, by the jurisdiction under the laws of which the Agent, such Co-Agent or
such Bank, as the case may be, is organized or any political subdivision
thereof and (ii) in the case of each Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Company shall be required by law to
deduct any Taxes
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from or in respect of any sum payable hereunder or under any Note to any Bank,
any Co-Agent or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.17) such Bank, such
Co-Agent or the Agent (as the case may be) receives an amount equal to the sum
it would have received had no such deductions been made, (ii) the Company shall
make such deductions and (iii) the Company shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Company agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, assessments, charges
or similar levies which arise from any payment made hereunder or under the Notes
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement, any of the Notes or the Subsidiary Guaranty Agreement
(hereinafter referred to as "Other Taxes").
(c) The Company will indemnify each Bank, each Co-Agent and the Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.17) paid by such Bank, such Co-Agent or the Agent (as the case may be)
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Payments under any indemnification provided for in this
Section 2.17(c) shall be made within 30 days from the date such Bank, such
Co-Agent or the Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Company
will furnish to the Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof. Should any
Bank, any Co-Agent or the Agent ever receive any refund, credit or deduction
from any taxing authority to which such Bank, such Co-Agent or the Agent, as the
case may be, would not be entitled but for the payment by the Company of Taxes
as required by this Section 2.17 (it being understood that the decision as to
whether or not to claim, and if claimed, as to the amount of any such refund,
credit or deduction shall be made by such Bank, such Co-Agent or the Agent, as
the case may be, in its sole discretion), such Bank, such Co-Agent or the Agent,
as the case may be, thereupon shall repay to the Company an amount with respect
to such refund, credit or deduction equal to any net reduction in taxes actually
obtained by such Bank, such Co-Agent or the Agent, as the case may be, and
reasonably determined by such Bank, such Co-Agent or the Agent, as the case may
be, to be attributable to such refund, credit or deduction.
(e) Each Bank represents that it is either (i) a corporation,
association or other entity organized under the laws of the United States or any
state thereof or (ii) entitled
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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 the Notes. Each Bank that is not organized under the laws of the
United States or any state thereof (a "Foreign Bank") agrees to provide to the
Company and the Agent, on or prior to the date of this Agreement in the case of
each Foreign Bank signatory hereto, and on the date of the Assignment pursuant
to which it became a Bank in the case of each other Foreign Bank, two duly
completed copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Foreign Bank is entitled to receive payments
from the Company under this Agreement and the Notes without deduction or
withholding of any United States federal income taxes. Each Foreign Bank which
so delivers a Form 1001 or 4224 further undertakes to deliver to each of the
Company and the Agent two additional copies of such form (or a successor form)
on or before the date that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by the Company or the Agent, in each case certifying that
such Foreign Bank is entitled to receive payments from the Company under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Foreign Bank from duly completing and delivering any
such form with respect to it and such Foreign Bank advises the Company and the
Agent that it is not capable of receiving such payments without any deduction or
withholding of United States federal income tax. Each Bank agrees to indemnify
and hold the Company and the Agent harmless from any United States taxes,
penalties, interest and other expenses, costs and losses incurred or payable by
them as a result of either (a) such Bank's failure to submit any form that it is
required to provide pursuant to this Section 2.17(e) or (b) the Agent's and the
Company's reliance on any such form which such Bank has provided to them, or on
the representation of such Bank made to them pursuant to this Section 2.17(e).
(f) If any Taxes are paid by the Company pursuant to this Section 2.17
in respect of the Applicable Lending Office of any Bank, such Bank will, if
requested to do so by the Company, designate a different Applicable Lending
Office if such designation will avoid the need to pay, or reduce the amount of,
such Taxes and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank.
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ARTICLE III
CONDITIONS
SECTION 3.01. Initial Borrowing. The obligation of any Bank to make a
Loan on the occasion of the initial Borrowing is subject to the satisfaction (or
waiver in accordance with Section 9.05) of each of the following conditions:
(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each Bank of a duly
executed Note of the Company dated on the date of this Agreement complying
with the provisions of Section 2.05;
(c) receipt by the Agent of the Subsidiary Guaranty Agreement, duly
executed by each of the Required Guarantors;
(d) receipt by the Agent of an opinion of Newton W. Wilson, III,
General Counsel of the Company, substantially in the form of Exhibit C
hereto;
(e) receipt by the Agent of an opinion of Andrews & Kurth L.L.P.,
special counsel for the Obligors, substantially in the form of Exhibit D
hereto;
(f) receipt by the Agent of an opinion of Bracewell & Patterson,
special counsel for the Agent, substantially in the form of Exhibit E
hereto;
(g) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Obligors, the corporate authority for and
the validity of each of the Financing Documents, and any other matters
relevant thereto, all in form and substance satisfactory to the Agent;
(h) receipt by the Agent of a certificate of an officer of the Company
stating the rating by S&P of all senior unsecured long-term debt of the
Company as in effect on the date of this Agreement; and
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(i) receipt by the Agent of a certificate of the chief financial
officer, the chief accounting officer or the treasurer of the Company
certifying, as of the Effective Date, that no Default exists.
SECTION 3.02. All Borrowings. The obligation of any Bank to make a Loan
on the occasion of any Borrowing is subject to the satisfaction of the following
conditions (in addition to the conditions set forth in Section 3.01):
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02;
(b) the fact that immediately prior to and immediately after such
Borrowing, no Default shall have occurred and be continuing; and
(c) the fact that the representations and warranties of the Company
contained in this Agreement (except, in the case of any Borrowing subsequent
to the first Borrowing, the representations and warranties set forth in
Section 4.04(a), (c) or (f)) shall be true and correct in all material
respects on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Company on the date of such Borrowing as to the facts specified in this
Section 3.02.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
SECTION 4.01. Corporate Existence and Power. Each of the Obligors is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to own its assets and to carry on its business as now conducted and is duly
qualified as a foreign corporation in good standing in each jurisdiction where
the nature of its business or the ownership or leasing of its properties
requires such qualification and where the failure so to qualify could have a
material adverse effect on the business, financial position, results of
operations or prospects of the Company and its Subsidiaries, taken as a whole.
Neither the Company nor any Subsidiary or Affiliate is subject to regulation
under the Public Utility Holding Company Act of 1935, the Investment Company Act
of 1940, the Interstate Commerce Act or any other law or regulation which limits
the incurrence by the Company or any Subsidiary of Debt, including, but not
limited to, laws relating to
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common or contract carriers or the sale of electricity, gas, steam, water or
other public utility services.
SECTION 4.02. Corporate and Governmental Authorization; Contravention.
The execution, delivery and performance by each Obligor of each Financing
Document to which it is shown as being a party are within such Obligor's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene, or constitute a default under, any provision of
applicable law or regulation (including, without limitation, Regulations G, T, U
and X of the Board of Governors of the Federal Reserve System) or the
certificate of incorporation, by-laws or other charter documents of such Obligor
or of any instrument or agreement evidencing or governing Debt or any other
material agreement, judgment, injunction, order, decree or other instrument
binding upon such Obligor or result in the creation or imposition of any
material Lien on any asset of the Company or any Subsidiary. All authorizations,
consents and approvals of governmental bodies, agencies or officials required in
connection with the execution, delivery and performance by each Obligor of the
Financing Documents to which it is shown as being a party have been obtained and
are in full force and effect.
SECTION 4.03. Binding Effect. This Agreement and each of the Notes have
been duly executed and delivered by the Company and constitute legal, valid and
binding agreements of the Company, and the Subsidiary Guaranty Agreement has
been duly executed and delivered by each Required Guarantor and constitutes a
legal, valid and binding obligation of each Required Guarantor.
SECTION 4.04. Information.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1994 and the related consolidated statements of
operations, cash flows and common stock and other shareholders' equity for the
fiscal year then ended, reported on by Price Waterhouse and set forth in the
Company's 1994 Form 10-K, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted accounting
principles, 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 fiscal year.
(b) To the best knowledge of the Company, there are no statements or
conclusions in any Engineering Report delivered pursuant hereto which are based
upon or include misleading information or fail to take into account material
information regarding the matters reported therein, it being understood that
such statements and conclusions are necessarily based upon professional
opinions, estimates and forecasts, and the Company does not warrant that such
opinions, estimates and forecasts will ultimately prove to have been accurate.
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(c) The Company's 1994 Form 10-K, as supplemented by the Company
reports on Form 10-Q for the fiscal quarter ended March 31, 1995 and its reports
on Form 8-K filed during 1995, a copy of each of which has been delivered to
each of the Banks, does not contain any untrue statement of material fact or
omit to state a material fact necessary in order to make the statements
contained therein not misleading. Except for matters of general public knowledge
with respect to the oil and gas industry, the Company has disclosed to the Banks
in writing any and all facts which materially and adversely affect or may be
reasonably expected so to affect (to the extent the Company can now reasonably
foresee), the business, assets, operations, prospects or condition, financial or
otherwise, of the Company and its Subsidiaries or the ability of any Obligor to
perform its obligations under the Financing Documents.
(d) Since December 31, 1994 there has been no material adverse change
in the business, financial position, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole.
(e) No Default exists.
(f) The unaudited consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of March 31, 1995 and the related unaudited
consolidated statements of operations and cash flows for the three months then
ended, set forth in the Company's quarterly report for the fiscal quarter ended
March 31, 1995 as filed with the Securities and Exchange Commission on Form
10-Q, a copy of which has been delivered to each of the Banks, fairly present,
in conformity with generally accepted accounting principles (except for the
absence of footnotes) applied on a basis consistent with the financial
statements referred to in subsection (a) of this Section 4.04, 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 six
month period (subject to normal year-end adjustments).
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries or any of their respective
properties or interests at law or in admiralty or equity, before any court or
arbitrator or any governmental body, agency or official, foreign or domestic, in
which there is a reasonable possibility of an adverse decision which could
materially adversely affect the business, financial position or results of
operations of the Company and its Subsidiaries, taken as a whole, or which in
any manner draws into question the validity of any Financing Document.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue
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Code with respect to each Plan. No member of the ERISA Group has (i) sought a
waiver of the minimum funding standard under Section 412 of the Internal Revenue
Code in respect of any Plan, (ii) failed to make any contribution or payment to
any Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or made
any amendment to any Plan or Benefit Arrangement, which has resulted or could
result in the imposition of a Lien or the posting of a bond or other security
under ERISA or the Internal Revenue Code or (iii) incurred any liability under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Company conducts an ongoing review of the effect of existing
Environmental Laws on the business, operations and properties of the Company and
the Subsidiaries, in the course of which it attempts to identify and evaluate
associated liabilities and costs (including, without limitation, any capital or
operating expenditures required for clean-up or closure of properties presently
or previously owned, any capital or operating expenditures required to achieve
or maintain compliance with environmental protection standards imposed by law or
as a condition of any license, permit or contract, any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat and any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). On the basis of this
review, the Company has reasonably concluded that existing Environmental Laws
are unlikely to have a material adverse effect on the business, financial
condition, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole.
SECTION 4.08. Subsidiaries. All Restricted Assets are owned as of the
date of this Agreement by the Company and the Persons listed in Part B of
Schedule II hereto or, in the case of Restricted Assets sold since December 31,
1993, by Persons other than Unrestricted Subsidiaries. The list of entities
under the caption "Subsidiary Guarantors" on the signature pages of the
Subsidiary Guaranty Agreement constitutes a true, complete and accurate list of
all Required Guarantors as of the date of this Agreement. Part A of Schedule II
hereto contains a true, complete and accurate list of all Unrestricted
Subsidiaries, and Part B of Schedule II hereto contains a true, complete and
accurate list of all Restricted Subsidiaries as of the date of this Agreement.
SECTION 4.09. Ownership of Restricted Subsidiaries. The Company or a
Restricted Subsidiary is the record and beneficial owner, free and clear of all
Liens (other than those permitted by Section 5.07), of (i) all of the issued and
outstanding capital stock (other than directors' qualifying shares and shares
beneficially owned by the Company or a Restricted Subsidiary and held by
nominees of the Company or a Restricted Subsidiary solely to satisfy
requirements of local law) and other ownership interests of each Restricted
Subsidiary (except Unimar and the Unimar Restricted Subsidiaries and any other
Restricted Subsidiary the capital stock of which is sold
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pursuant to a sale permitted by Section 5.14) and (ii) except during any period
during which Unimar is an Unrestricted Subsidiary or ceases to be a Subsidiary,
at least 50% of the ownership interest in Unimar and the Unimar Restricted
Subsidiaries. Except as disclosed on Schedule VI, there are no outstanding
options, warrants or other rights to acquire any capital stock or other
ownership interest of any Restricted Subsidiary.
SECTION 4.10. Title to Properties. The Company and each of the
Subsidiaries have good title, free and clear of all Liens, claims, burdens and
title defects, to all of the material assets reflected in the Company's or such
Subsidiary's books and records as being owned by them except Liens permitted by
this Agreement and claims, burdens and title defects not materially adverse in
the aggregate.
SECTION 4.11. Taxes and Other Obligations. Consolidated United States
Federal income tax returns of the Company and the Subsidiaries have been
examined by the Internal Revenue Service, or the statutory period for such
examination has expired, for all years up to and including the year ended
December 31, 1989, and all assessed deficiencies resulting from such examination
have been discharged or reserved against as required by generally accepted
accounting principles. The Company and the Subsidiaries have filed all United
States Federal, state and local income tax returns and all other material
domestic tax returns which are required to be filed by them and have paid, or
provided for the payment before the same became delinquent of, all taxes due
pursuant to such returns or pursuant to any assessment received by the Company
or any Subsidiary, other than those taxes being diligently contested in good
faith by appropriate proceedings. The charges, accruals and reserves on the
books of the Company and the Subsidiaries in respect of taxes are, in the
opinion of the Company, adequate. The Company and the Subsidiaries have set up
such reserves as are required by generally accepted accounting principles for
the payment of additional taxes for years which have not been audited by the
respective tax authorities. The Company and the Subsidiaries have paid all other
material obligations when due other than those being contested in good faith by
appropriate proceedings.
SECTION 4.12. Regulation U. Neither the Company nor any Subsidiary is
engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation G) or margin stock
(within the meaning of Regulation U). Following the application of the proceeds
of each Loan, not more than 25% of the value of the assets of the Company, or of
the Company and its Subsidiaries, which are subject to any arrangement with the
Agent or any Bank (herein or otherwise) whereby the Company's or any
Subsidiary's right or ability to sell, pledge or otherwise dispose of assets is
in any way restricted will be any such margin stock.
SECTION 4.13. Certain Obligations. Neither the Company nor any
Subsidiary has any obligation to make payments on the Joint Venture Debt other
than
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those permitted by Section 5.17. The only Non-Recourse Debt existing on the
date of this Agreement is the Existing Pakistan Non-Recourse Debt.
SECTION 4.14. United Kingdom Assets. Substantially all of the
Restricted Assets located in the United Kingdom (including the United Kingdom
Sector of the North Sea) are directly owned by UTPL as of the date of this
Agreement.
ARTICLE V
COVENANTS
The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Company will deliver to each of the
Banks:
(a) as soon as available and in any event within 100 days after the end
of each fiscal year of the Company, 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 operations, cash flows and common
stock and other shareholders' equity for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
reported on in a manner acceptable to the Securities and Exchange Commission
by Price Waterhouse or other independent public accountants of nationally
recognized standing;
(b) 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
consolidated balance sheet of the Company and its Consolidated Subsidiaries
as of the end of such quarter and the related consolidated statements of
operations and cash flows for such quarter and 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 preparation in
accordance with generally accepted accounting principles and consistency by
the chief financial officer, the chief accounting officer or the treasurer
of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer, the chief accounting officer or the treasurer of
the Company (i) setting forth in reasonable detail the calculations required
to establish whether the Company was
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in compliance with the requirements of Sections 5.05 and 5.15 on the date of
such financial statements and (ii) stating whether any Default exists on the
date of such certificate and, if any Default then exists, setting forth the
details thereof and the action which the Company and its Subsidiaries are
taking or propose to take with respect thereto;
(d) as soon as available and in any event within 60 days after the end
of each fiscal quarter of the Company, a certificate of the chief financial
officer, the chief accounting officer or the treasurer of the Company
certifying (i) whether the Margin Increase Condition exists as of the date
of such certificate, (ii) the Unimar Percentage as of the end of such
quarter and the amounts as of the end of such quarter of Consolidated Debt,
Defeased Debt, Excluded Subordinated Debt, Debt of the Company and its
Consolidated Subsidiaries determined on a consolidated basis, Debt of the
Company and the Restricted Subsidiaries determined on a consolidated basis,
Debt of Unimar, Debt of Unrestricted Subsidiaries, Excess Letter of
Credit/Guarantee Amount, Non-Restricted Asset Non-Recourse Debt,
Non-Recourse Debt of the Company and the Restricted Subsidiaries, and
Restricted Subsidiaries Recourse Debt, and (iii) each Asset Sale that has
been consummated during such quarter, the Fair Market Value of the
Restricted Assets subject thereto, the amount of fees, commissions, expenses
and taxes related thereto, the Net Sales Proceeds therefrom and the
cumulative amount of the Excess Net Sales Proceeds from all Assets Sales
since December 31, 1993;
(e) within five days after the chief financial officer, the chief
accounting officer or treasurer of the Company obtains knowledge of any
Default, if such Default is then continuing, a certificate of the chief
financial officer, the chief accounting officer or the treasurer of the
Company setting forth the details thereof and the action which the Company
and its Subsidiaries are taking or propose to take with respect thereto;
(f) immediately upon the filing of, or any material development in, any
litigation or the occurrence of any other event or contingency, if such
development, litigation, event or contingency could reasonably be expected
to have a material adverse effect on the business, assets, operations,
prospects or condition, financial or otherwise, of the Company and its
Subsidiaries, taken as a whole, a certificate of the chief financial
officer, the chief accounting officer or the treasurer of the Company
setting forth the details of such development, litigation, event or
contingency and the action which the Company and its Subsidiaries are taking
or propose to take with respect thereto;
(g) as soon as available and in any event within 100 days after the end
of each fiscal year of each Restricted Subsidiary (other than the Unimar
Restricted Subsidiaries), a consolidated balance sheet of such Restricted
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Subsidiary and its consolidated subsidiaries as of the end of such fiscal
year and the related consolidated statements of operations, cash flows and
common stock and other shareholders' equity for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all certified as to preparation in accordance with generally accepted
accounting principles and consistency by the chief financial officer, the
chief accounting officer or the treasurer of such Restricted Subsidiary;
(h) as soon as available and in any event within 60 days after the end
of the first three quarters of each fiscal year of each Restricted
Subsidiary (other than the Unimar Restricted Subsidiaries, Union Texas
Petroleum Energy Corporation and Union Texas International Corporation), a
consolidated balance sheet of such Restricted Subsidiary and its
consolidated subsidiaries as of the end of such quarter and the related
consolidated statements of operations and cash flows for such quarter and
for the portion of such Restricted Subsidiary'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
Restricted Subsidiary's previous fiscal year, all certified (subject to
normal year-end adjustments) as to preparation in accordance with generally
accepted accounting principles and consistency by the chief financial
officer, the chief accounting officer or the treasurer of such Restricted
Subsidiary;
(i) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
(j) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Company shall have filed with the Securities
and Exchange Commission;
(k) at least 45 days prior to the closing of each Asset Sale that will
result in aggregate Net Sales Proceeds (for such sale or, if such sale is
one of a series of related sales, for all sales and contemplated sales in
such series) of $50,000,000 or more, notice of such sale describing the
assets to be sold and the estimated Net Sales Proceeds thereof;
(l) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) (other than a "reportable event" not subject to the
provisions for 30-day notice to the PBGC under the regulations issued under
Section 4043 of ERISA) with respect to any Plan which might constitute
grounds
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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; (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; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from
any Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii)
fails to make any payment or contribution to any Plan or Multiemployer Plan
or in respect of any Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer, the chief accounting officer or
the treasurer of the Company setting forth details as to such occurrence and
action, if any, which the Company or applicable member of the ERISA Group is
required or proposes to take;
(m) within 5 days after the chief financial officer, the Vice
President-Finance, the treasurer or the controller of the Company has
knowledge of any filing under Rule 13d of the Securities and Exchange
Commission, promulgated under the Securities Exchange Act of 1934, as
amended, a copy thereof;
(n) within 5 days after receipt by the Company of any written agreement
of the type referred to in Section 6.01(k)(iii)(c), (A) a copy thereof
except that (i) if such written agreement has not been filed with the
Securities and Exchange Commission and is not otherwise public information,
each Bank as a condition to receiving a copy of such written agreement may
be required to sign, prior to receipt thereof, a confidentiality agreement
pursuant to which it agrees that it will treat such written agreement in a
confidential manner until such written agreement otherwise becomes public,
except for disclosure (a) to counsel for and other advisors, accountants and
auditors of such Bank, (b) as may be required by statute, decision, order,
rule, regulation or other law, (c) to regulatory authorities, (d) in
connection with any litigation involving such written agreement, such
confidentiality agreement or any of the Financing Documents, and (e) in
connection with any assignment, prospective assignment, sale, prospective
sale, participation or prospective participation or other transfer or
prospective transfer of any of such Bank's interests hereunder; provided
that any
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such assignee, prospective assignee, purchaser, prospective purchaser,
participant, prospective participant, transferee, or prospective transferee
shall have entered into a confidentiality agreement for the benefit of the
Company substantially upon the terms of this Section 5.01(n), and (ii) if
the Company is contractually prohibited from delivering a copy of such
written agreement to the Banks, the Company shall not be required to deliver
such written agreement unless such prohibition has been waived, but the
Company shall use reasonable efforts to obtain such waiver or if it is a
party to such written agreement to prevent any such prohibition from being
included therein, and (B) if the Company is a party to such written
agreement, but is excused pursuant to clause (A)(ii) of this Section 5.01(n)
from delivering a copy thereof to the Banks, the Company shall notify the
Banks of the existence of such written agreement (but not the content
thereof or other parties thereto), but as a condition to receiving such
notice the Banks may be required to sign, prior to receipt of such notice, a
confidentiality agreement conforming to clause (A)(i) of this Section
5.01(n);
(o) by May 1 of each year, an Engineering Report as of the last day of
the immediately preceding year;
(p) promptly upon the closing of the sale or other disposition of any
capital stock of UTPC or any option, warrant or other right to acquire any
such capital stock, notice thereof;
(q) promptly after any change in or termination of the rating of any
senior unsecured long-term debt of the Company by S&P, notice thereof.
(r) from time to time such additional information regarding the
financial position or business of the Company or any Subsidiary as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Affirmative Covenants. The Company will maintain its
existence and cause each Restricted Subsidiary to maintain its existence except
in the case of (i) a merger of a Restricted Subsidiary into the Company in a
merger permitted by Section 5.08 hereof, (ii) the merger of a Restricted
Subsidiary into another Restricted Subsidiary, if immediately after such merger
(and giving effect thereto), no Default shall have occurred and be continuing,
and (iii) any Asset Sale in the form of the merger of a Restricted Subsidiary
into another Person, if immediately after such merger (and giving effect
thereto), no Event of Default shall have occurred and be continuing. The Company
and each Subsidiary shall:
(a) Conduct of Business; Property. Cause all material property useful
and necessary in its business to be maintained in good working order and
condition and to be operated prudently in accordance with good
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industry practice; and to the extent consistent with prudent business
practices, defend its right, title and interest in its material properties
against all adverse claims.
(b) Compliance with Laws. Comply with all applicable laws, ordinances,
rules, regulations and reporting, filing and other requirements of
governmental authorities (including, without limitation, Environmental Laws
and ERISA and the rules and regulations thereunder), except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to so comply would not have a material
adverse effect on the Company and its Subsidiaries, taken as a whole.
(c) Inspection of Property, Books and Records. Keep proper books of
record and account in accordance with sound accounting practices; and permit
representatives of any Bank, at such Bank's sole risk and expense, to visit
and inspect any of its properties (subject to obtaining any required consent
of third-party operators), to examine and make abstracts and copies from any
of its books and records and to discuss its affairs, finances and accounts
with its officers and employees, and use its best efforts to make its
independent public accountants available to discuss the affairs, finances
and accounts of the Company and any of its Subsidiaries, all at such
reasonable times and as often as may reasonably be desired.
SECTION 5.03. Primary Business. The exploration for,
and production and marketing of, Hydrocarbons will continue to be the
primary business of the Company and its Subsidiaries taken as whole.
SECTION 5.04. Insurance. The Company will maintain, and will cause each
Subsidiary to maintain (either in the name of the Company or in such
Subsidiary's own name) with financially sound and reputable insurance
companies, insurance on their property in at least such amounts and against
at least such risks as are usually insured against in the same general area
by companies of established repute engaged in the same or similar business;
and will furnish to the Banks, upon written request from the Agent, full
information as to the insurance carried.
SECTION 5.05. Debt. (a) [intentionally deleted]
(b) At no time will Restricted Subsidiaries Recourse Debt exceed
$75,000,000.
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(c) Consolidated Debt will not, on the last day of any calendar
quarter, exceed 3.75 times Operating Cash Flow for the four calendar
quarters ending on such day.
(d) Neither the Company nor any Restricted Subsidiary will create,
assume or otherwise incur any Debt if at the time of creation, assumption or
incurrence of such Debt or after giving effect to the creation, assumption
or incurrence of such Debt, any Event of Default would exist; provided that
the Company or any Restricted Subsidiary may renew or extend (but not
increase) its own Debt.
SECTION 5.06. Restricted Payments. Neither the Company nor any
Subsidiary shall declare or make any Restricted Payment unless, immediately
prior thereto and immediately thereafter, no Event of Default shall have
occurred and be continuing. Neither the Company nor any Subsidiary shall make
any Restricted Transfer unless, immediately prior thereto and immediately
thereafter, no Event of Default shall have occurred and be continuing; provided
that the Company or any Subsidiary can make Restricted Transfers in the form of
Investments in an Affiliate, Unrestricted Subsidiary or subsidiary of an
Unrestricted Subsidiary if (i) such Affiliate, Unrestricted Subsidiary or
subsidiary, as the case may be, has no outstanding Debt at the time of such
Investment and does not thereafter create, assume or otherwise incur any Debt
while any Event of Default is continuing and (ii) the Company notifies the Banks
of any such Investment in excess of $5,000,000 at least ten days prior to such
Investment. Nothing in this Section 5.06 shall prohibit the payment of any
dividend or distribution within 45 days after the declaration thereof if payment
of such dividend or distribution was not prohibited by this Agreement at the
time such declaration was made.
SECTION 5.07. Negative Pledge. Neither the Company nor any Restricted
Subsidiary will create, assume or suffer to exist (i) any Lien on any capital
stock or other ownership interest of any Restricted Subsidiary now owned or
hereafter acquired by it or any Lien on any option, warrant or other right to
acquire any capital stock or other ownership interest of any Restricted
Subsidiary now owned or hereafter acquired by it, other than those described in
Part A of Schedule III or (ii) any Lien on any other asset now owned or
hereafter acquired by it, except for the following Liens on assets not referred
to in the foregoing clause (i) of this Section 5.07:
(a) Liens existing on the date of this Agreement, securing Debt
outstanding and other obligations (including contractual obligations)
existing on the date of this Agreement and, except in the case of inchoate
operator's Liens, described in Part B of Schedule III hereto;
(b) any Lien (i) on any Non-Restricted Asset securing only
Non-Restricted Asset Non-Recourse Debt of the Company or any Restricted
Subsidiary or (ii) on any asset of Virginia Indonesia Company, Virginia
International Company or Union Texas East Kalimantan Limited securing Joint
Venture Debt;
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(c) mechanics', materialmen's, carriers' and other statutory Liens, but
only if arising, and only so long as continuing, in the ordinary course of
business; or deposits or pledges to obtain the release of any such Lien; or
easements, encroachments or other title defects which do not materially
detract from the value of its assets or materially impair the use thereof in
the operation of its business;
(d) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any obligation in an amount exceeding
$15,000,000 and (iii) do not in the aggregate materially detract from the
value of its assets or materially impair the use thereof in the operation of
its business;
(e) Liens on any interest in a Partnership arising under any agreement
creating or governing such Partnership (including Unimar) and securing only
obligations of the members of such Partnership to make Investments in such
Partnership;
(f) Liens arising under any customary provision of any joint operating
agreement or similar agreement relating to the exploration, production,
development or transportation of oil and gas;
(g) Liens not otherwise permitted by the foregoing clauses of this
Section 5.07 on assets (other than any of the Restricted Assets) securing
Debt in an aggregate principal amount at any time outstanding not to exceed
$20,000,000; and
(h) any Lien securing the refinancing, extension, renewal or refunding
of any Debt secured by any Lien permitted by the foregoing subsection (a) of
this Section 5.07; provided that such Debt is not increased from the lesser
of the amount of such Debt set forth on Schedule III hereto or the amount of
such Debt outstanding immediately prior to such refinancing, extension,
renewal or refunding, and such Lien does not cover any property that is not
described on Schedule III hereto as securing such Debt.
SECTION 5.08. Consolidations and Mergers. The Company will not
consolidate or merge with or into any Person; provided that the Company may
merge with another Person if the Company is the surviving corporation and,
immediately after such merger (and giving effect thereto), no Default shall have
occurred and be continuing.
SECTION 5.09. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Company for general corporate purposes;
provided that none of such proceeds will be used in any manner or for any
purpose that results in
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any violation of any applicable law or regulation (including, without
limitation, Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System).
SECTION 5.10. Parties to Subsidiary Guaranty Agreement. The Company
shall cause each Person that shall at any time after the date of this Agreement
become a Required Guarantor to enter into the Subsidiary Guaranty Agreement and
deliver, not later than 30 days after the date on which such Person shall have
become a Required Guarantor, to the Agent, in addition to a duly executed
counterpart of the Subsidiary Guaranty Agreement, duly executed documents, in
form and substance satisfactory to the Agent, of the type referred to in Section
3.01(c), (d), (e) and (g) pertaining to such Required Guarantor and the
Subsidiary Guaranty Agreement executed by it. Upon any sale or other disposition
of all of the capital stock of a Required Guarantor in an Asset Sale permitted
by Section 5.14, so long as no Default exists, such Required Guarantor shall be
released from its obligations under the Subsidiary Guaranty Agreement, and the
Agent shall execute such releases and other documents as such Subsidiary or the
Company may reasonably request to further evidence such release.
SECTION 5.11. Restrictions on Dividends, Intercompany Loans, or
Investments. The Company will not create or otherwise cause or permit to exist
or become effective, or permit any Subsidiary to create or otherwise cause or
permit to exist or become effective, any consensual encumbrance or restriction
(other than the Financing Documents) on the ability of any Restricted Subsidiary
to (i) pay dividends or make any other distributions on its capital stock or
other ownership interests or pay any Debt or other obligation owed to the
Company or any Restricted Subsidiary, or (ii) make any loans or advances to or
other Investments in the Company or any Restricted Subsidiary, except any
encumbrance or restriction in effect on the date of this Agreement and described
on Schedule IV hereto.
SECTION 5.12. Loans and Advances. The Company will not make or permit
to remain outstanding any cash loan or advance to any Person, or permit any
Restricted Subsidiary to make or permit to remain outstanding any cash loan or
advance to any Person, except (i) loans and advances to Subsidiaries or joint
ventures, partnerships or other business ventures in which the Company or any
Subsidiary has or is contemporaneously acquiring an interest or participation;
and (ii) other loans and advances not exceeding $10,000,000 at any time
outstanding.
SECTION 5.13. Cross-Default. The Company will not create, assume,
otherwise incur or suffer to exist, or permit any Restricted Subsidiary to
create, assume, otherwise incur or suffer to exist, any Debt if the maturity of
such Debt is or may be accelerated (assuming the giving of notice or lapse of
time or both), in whole or in part, as a result of any default under, or
acceleration of (i) any Non-Recourse Debt of the Company or any Restricted
Subsidiary or (ii) any Debt of any Unrestricted Subsidiary, unless the Required
Banks shall have given their prior written consent to such Debt of
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the Company or Restricted Subsidiary to be so created, assumed or otherwise
incurred, which consent will not be unreasonably withheld; provided that this
Section 5.13 shall not prohibit a provision in a Guarantee of the Company or a
Restricted Subsidiary Guaranteeing Debt of an Unrestricted Subsidiary that
provides that the payment obligation under such Guarantee may be accelerated
upon default under or acceleration of such Debt.
SECTION 5.14. Subsidiaries. The Company will at all times own, either
directly or through one or more Restricted Subsidiaries, free and clear of all
Liens (other than those permitted by Section 5.07), 100% of all issued and
outstanding capital stock (other than directors' qualifying shares and shares
beneficially owned by the Company or a Restricted Subsidiary and held by
nominees of the Company or a Restricted Subsidiary solely to satisfy
requirements of local law) and other ownership interests of each Restricted
Subsidiary and all options, warrants and other rights to acquire any such
capital stock or any such ownership interest, except for (i) Unimar and the
Unimar Restricted Subsidiaries, (ii) any Restricted Subsidiary sold or otherwise
disposed of pursuant to an Asset Sale, if after giving effect to such Asset
Sale, the Company does not own, directly or indirectly, any interest in such
Restricted Subsidiary, and (iii) those options described on Schedule VI. The
Company will at all times own, either directly or through one or more Restricted
Subsidiaries, free and clear of all Liens (other than those permitted by Section
5.07), 50% or more of the ownership interest in Unimar and the Unimar Restricted
Subsidiaries and all options, warrants and other rights to acquire any such
ownership interest (other than those described on Schedule VI); provided that
the Company and the Restricted Subsidiaries may sell all of their ownership
interest in Unimar and the Unimar Restricted Subsidiaries and such options,
warrants and other rights if, after giving effect to such sale, the Company does
not own, directly or indirectly, any interest in Unimar, the Unimar Restricted
Subsidiaries or any such option, warrant or other right. The Company will not at
any time permit any Restricted Subsidiary that is not a Unimar Restricted
Subsidiary to become a Unimar Restricted Subsidiary. The Company will not permit
any Restricted Asset to be sold, leased, transferred or otherwise disposed of to
any Person that was an Unrestricted Subsidiary immediately prior thereto if any
Default then exists or would result. The Company will not permit any Restricted
Subsidiary to issue any preferred stock unless such preferred stock at all times
is owned only by the Company. The Company will not permit any Restricted
Subsidiary to own, directly, both (a) any UK Asset and (b) any Non-UK Asset.
SECTION 5.15. Adjusted Equity and Interest Coverage. The Company will
at all times maintain Adjusted Equity of $350,000,000 or more. The Company will
cause EBITDA for each period of four consecutive calendar quarters to exceed
4.00 times Cash Interest Expense for such period.
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SECTION 5.16. Excluded Subordinated Debt and Preferred Stock. Neither
the Company nor any Subsidiary will pay, prepay, purchase, redeem, defease,
acquire, exchange or convert any preferred stock (other than Restricted
Preferred Stock) or any Excluded Subordinated Debt, except (a) exchanges for or
conversions to common stock of the Company, (b) payments of interest when due
required by the terms of any such Excluded Subordinated Debt as such terms are
in effect on the date such Excluded Subordinated Debt is incurred and (c) if no
Event of Default exists, payments of ordinary periodic dividends (excluding
liquidating dividends) on such preferred stock in accordance with the terms
thereof as such terms are in effect on the date such preferred stock is issued.
SECTION 5.17. Certain Obligations. Neither the Company nor any
Subsidiary will create, incur, assume or suffer to exist any obligation on its
part to make any payment on the Joint Venture Debt other than (a) the
obligations set forth in the agreements listed on Schedule V hereto with respect
to Joint Venture Debt in existence on April 24, 1995 and (b) obligations
substantially similar to those referred to in clause (a) with respect to Joint
Venture Debt created, incurred, assumed or arising after April 24, 1995.
SECTION 5.18. Restrictions on Asset Sales. (a) The Company will not and
will not permit any of its Restricted Subsidiaries to enter into any Asset Sale
if after giving effect thereto any Event of Default would exist.
(b) The Company will not permit to occur any Asset Sale involving, directly
or indirectly, any UK Assets if the aggregate Net Sales Proceeds of all Asset
Sales involving, directly or indirectly, UK Assets since December 31, 1993 would
exceed $250,000,000.
SECTION 5.19. UTEK Guaranty. The Company will cause Union Texas East
Kalimantan Limited to report, as promptly as reasonably practicable, the
execution and delivery of the Subsidiary Guaranty Agreement to the Indonesian
Foreign Commercial Loan Team ("Team") established pursuant to Indonesian
Presidential Decree No. 39 of 1991 and to deliver, as promptly as reasonably
practicable, to the Team and to Bank Indonesia copies of this Agreement and the
Subsidiary Guaranty Agreement. The Company will cause Union Texas East
Kalimantan Limited, as promptly as reasonably practical following execution from
time to time of amendments hereto or to the Subsidiary Guaranty Agreement, (i)
to report the execution and delivery of such amendments to the Team and (ii) to
deliver copies of such amendments to the Team and to Bank Indonesia.
SECTION 5.20. Conversion to Unrestricted Subsidiary. The Company may
convert a Restricted Subsidiary into an Unrestricted Subsidiary by giving the
Agent notice of such conversion at least 5 Domestic Business Days prior to such
conversion;
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provided that (i) no Restricted Subsidiary shall be so converted so long as it
owns directly or indirectly any interest in any Restricted Asset and (ii) no
such conversion shall be made if at the time of such notice or after giving
effect to such conversion, any Default would exist. Upon any such conversion of
a Required Guarantor to an Unrestricted Subsidiary such Subsidiary shall be
released from its obligations under the Subsidiary Guaranty Agreement, and the
Agent shall execute such releases and other documents as such Subsidiary or the
Company may reasonably request to further evidence such release.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Company shall fail to pay when due any principal of any Loan,
or shall fail to pay within five days of the due date thereof any interest
on any Loan, any fees or any other amount payable hereunder;
(b) the Company or any Subsidiary shall fail to observe or perform any
covenant contained in Sections 5.05 to 5.18, inclusive;
(c) the Company or any Subsidiary shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those covered
by clause (a) or (b) above) or in the Subsidiary Guaranty Agreement for 30
days after written notice thereof has been given to the Company by the Agent
at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Company or any Subsidiary in this Agreement or in the Subsidiary
Guaranty Agreement or made in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
(e) the Company or any Restricted Subsidiary shall fail to make any
payment in respect of any Material Debt (other than the Notes) when due or
within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt of the Company or any
Restricted Subsidiary (other than the Notes) or enables (or, with the giving
of notice or lapse of time
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or both, would enable) the holder of such Material Debt or any Person
acting on such holder's behalf to accelerate the maturity thereof;
(g) the Company or any Restricted 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, insolvency or other similar law now or hereafter in effect
or seeking 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 any such relief or to the appointment
of or taking possession by any such official in an 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;
(h) an involuntary case or other proceeding shall be commenced
against the Company or any Restricted Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect 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 the Company or any Restricted
Subsidiary under the federal bankruptcy laws as now or hereafter in
effect;
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $5,000,000 which it shall
have become liable to pay under Title IV of ERISA; or notice of intent
to terminate a Material Plan shall be filed under Title IV of ERISA by
any member of the ERISA Group, 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 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; 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 could cause one or more members of the
ERISA Group to incur a current payment obligation in excess of
$5,000,000;
(j) a judgment or order for the payment of money in excess of
$15,000,000 (net of applicable insurance coverage which is acknowledged
by the insurer) shall be rendered against the Company or any Restricted
Subsidiary and
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such judgment or order shall continue unsatisfied and unstayed for a
period of 30 days;
(k) any Person or two or more Persons acting in concert,
together with any affiliates thereof, (i) shall have acquired
beneficial ownership, directly or indirectly, (a) within any 12 month
period, of (1) more than 25% of the Company's common stock or (2)
securities representing more than 25% of the combined voting power of
all securities of the Company entitled to vote in the election of
directors (other than securities having such power only by reason of
the happening of a contingency) ("Voting Securities"), or (b) within
any 24 month period, of (1) more than 40% of the Company's common stock
or (2) more than 40% of the Company's Voting Securities, (ii) owns a
higher percentage of the Company's common stock or Voting Securities
than the percentage owned by Kohlberg Kravis Roberts & Co. and/or
non-operating investment entities it controls, and (iii) either (a)
owns 50% or more of the Company's common stock or Voting Securities,
(b) directly or indirectly elects or causes the election of Persons
constituting in the aggregate a majority of the Board of Directors of
the Company or any Restricted Subsidiary, or (c) exercises, directly or
indirectly, by written agreement, control over the Company or any
Restricted Subsidiary; provided that no Default or Event of Default
shall occur under this subsection (k) until the Agent, following
request by the Required Banks, gives notice to the Company that such
an Event of Default is declared, and such notice may not be given
after the date which is 45 days after the Banks actually receive
notice from the Company to the effect that the matters set forth in
clauses (i), (ii) and (iii) have occurred (for purposes of this
provision, "beneficial ownership" shall mean beneficial ownership
within the meaning of Rule 13d-3 of the Securities and Exchange
Commission promulgated under the Securities Exchange Act of 1934, as
amended, and the number and percentage of securities beneficially
owned by any Person or Persons shall be calculated in accordance with
such Rule); or
(l) any "Event of Default", as defined in either of the Other
Credit Agreements, shall occur;
then, and in every such event, the Agent shall (i) if requested by Banks having
at least 51% in the aggregate amount of the Commitments, by notice to the
Company terminate the Commitments and, upon the giving of such notice by the
Agent, they shall thereupon terminate, and (ii) if requested by Banks holding
Notes evidencing at least 51% in aggregate principal amount of the Loans, by
notice to the Company declare the Notes (together with accrued interest thereon)
to be, and, upon the giving of such notice by the Agent, the Notes shall
thereupon become, immediately due and payable without notice of intent to
accelerate, notice of acceleration, presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company; provided
that in the case of any of the Events of Default specified in clause (g) or (h)
above, without any
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notice to the Company or any other act by the Agent or the Banks, the
Commitments shall thereupon terminate and the Notes (together with accrued
interest thereon) shall become immediately due and payable without notice of
intent to accelerate, notice of acceleration, presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Company.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Company under Section 6.01(c) promptly upon being requested to do so by any Bank
and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Financing Documents as are delegated to the
Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto. Each Bank hereby consents and agrees to the terms
of, and authorizes and directs the Agent to enter into, the Subsidiary Guaranty
Agreement.
SECTION 7.02. Agent and Affiliates. NationsBank shall have the same
rights and powers under the Financing Documents as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent,
and NationsBank and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Company or any Subsidiary or
other affiliate of the Company as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent under the
Financing Documents are only those expressly set forth herein. Without limiting
the generality of the foregoing, the Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Company or any Subsidiary),
independent public accountants, independent petroleum engineers and other
experts selected by it and the Agent shall not be liable for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants, engineers or experts.
SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
not taken by it in connection herewith (i) with the consent or at the request of
the Required Banks or (ii) in the absence of its own gross negligence or willful
misconduct. Neither the
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Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Company or any Subsidiary; (iii) the satisfaction
of any condition specified in Article III, except receipt of items required to
be delivered to the Agent; (iv) the validity, effectiveness or genuineness of
the Financing Documents or any other instrument or writing furnished in
connection herewith; or (v) the accuracy of any Engineering Report. The Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Agent (to the extent not reimbursed by the
Company) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from the Agent's
gross negligence or willful misconduct) that the Agent may suffer or incur in
connection with the Financing Documents or any action taken or omitted by the
Agent hereunder (IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT, EXCEPT FOR SUCH
NEGLIGENCE AS IS SO DETERMINED TO CONSTITUTE GROSS NEGLIGENCE, SUCH
INDEMNIFICATION DOES EXTEND TO THE CONSEQUENCES OF THE ORDINARY NEGLIGENCE,
WHETHER SOLE OR CONTRIBUTORY, OF THE AGENT).
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, 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 Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company and may be removed at
any time with or without cause by the Required Banks. Upon any such resignation
or removal, the Company shall have the right, with the consent of the Required
Banks, to appoint a successor Agent. If no successor Agent shall have been so
appointed with the consent of the Required Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Banks' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Banks, appoint a successor Agent, which
shall be a commercial bank organized or licensed under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $50,000,000. Upon the acceptance of its appointment as Agent
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hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Financing Documents. After any retiring Agent's resignation or removal hereunder
as Agent, the provisions of this Article VII shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent.
SECTION 7.09. Agent's Fees. The Company shall pay to the Agent for its
own account fees in the amounts and at the times previously agreed upon between
the Company and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period:
(a) the Agent is advised by the Reference Banks that deposits
in dollars (in the applicable amounts) are not being offered to the
Reference Banks in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the London Interbank Offered Rate as
determined by the Agent will not adequately and fairly reflect the cost
to such Banks of funding their Euro-Dollar Loans for such Interest
Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make Euro-Dollar Loans, or make any Conversion (other than changing Euro-Dollar
Loans into Base Rate Loans), shall be suspended, and (ii) unless the Company
notifies the Agent at least two Domestic Business Days before the date of any
Euro-Dollar Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for any Bank (or its Euro-Dollar
-56-
<PAGE> 62
Lending Office) to make, maintain or fund its Euro-Dollar Loans, or make any
Conversion (other than changing Euro-Dollar Loans into Base Rate Loans), and
such Bank shall so notify the Agent, the Agent shall forthwith give notice
thereof to the other Banks and the Company, whereupon until such Bank notifies
the Company and the Agent that the circumstances giving rise to such suspension
no longer exist, the obligation of such Bank to make Euro-Dollar Loans, or make
any Conversion (other than changing Euro-Dollar Loans into Base Rate Loans), as
the case may be, shall be suspended. Before giving any notice to the Agent
pursuant to this Section 8.02, such Bank shall designate a different Euro-Dollar
Lending Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Bank, be otherwise disadvantageous to such
Bank. If such Bank shall determine that it may not lawfully continue to maintain
and fund any of its outstanding Euro-Dollar Loans to maturity and shall so
specify in such notice, each such Euro-Dollar Loan shall be immediately and
automatically Converted into a Base Rate Loan (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar Loans of the
other Banks).
SECTION 8.03. Increased Cost and Reduced Return. (a) If after the date
hereof, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency:
(i) shall subject any Bank (or its Applicable Lending Office)
to any tax, duty or other charge with respect to its Euro-Dollar Loans,
its Note or its obligation to make Euro-Dollar Loans, or shall change
the basis of taxation of payments to any Bank (or its Applicable
Lending Office) of the principal of or interest on its Euro- Dollar
Loans or any other amounts due under this Agreement in respect of its
Euro-Dollar Loans or its obligation to make Euro-Dollar Loans (except
for changes in the rate of tax on the overall net income of such Bank
or its Applicable Lending Office imposed by the jurisdiction in which
such Bank's principal executive office or Applicable Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal
Reserve System against assets of, deposits with or for the account of,
or credit extended by, any Bank (or its Applicable Lending Office) or
on the United States market for certificates of deposit or the London
interbank market any other condition affecting its Euro-Dollar Loans,
its Note or its obligation to make Euro-Dollar Loans;
-57-
<PAGE> 63
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan or
making any Conversion (other than changing Euro-Dollar Loans into Base Rate
Loans), or to reduce the amount of any sum received or receivable by such Bank
(or its Applicable Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be material, then, within
15 days after demand by such Bank (with a copy to the Agent), the Company shall
pay to such Bank such additional amount or amounts as will compensate such Bank
for such increased cost or reduction; provided that the Company shall not be
obligated to compensate any Bank for any such reduction attributable to a period
(i) more than 90 days prior to the giving of notice by such Bank to the Company
of its intention to seek compensation under this subsection (a) or (ii) more
than six months prior to the making of demand by such Bank for payment thereof
in accordance herewith.
(b) If any Bank shall have determined that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or its Parent) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank (with a copy to the Agent), the Company shall pay
to such Bank such additional amount or amounts as will compensate such Bank (or
its Parent) for such reduction; provided that the Company shall not be obligated
to compensate any Bank for any such reduction attributable to a period (i) more
than 90 days prior to the giving of notice by such Bank to the Company of its
intention to seek compensation under this subsection (b) or (ii) more than six
months prior to the making of demand by such Bank for payment thereof in
accordance therewith.
(c) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section 8.03 and will
designate a different Applicable Lending Office if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section 8.03 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
-58-
<PAGE> 64
SECTION 8.04. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to the
Company has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03(a) and the Company shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank through the Agent,
have elected that the provisions of this Section 8.04 shall apply to such Bank,
then, unless and until such Bank notifies the Company that the circumstances
giving rise to such suspension or demand for compensation no longer apply:
(a) all Loans to the Company which would otherwise be made by
such Bank as, or be Converted by such Bank as or into, Euro-Dollar
Loans shall instead be made as, or Converted into, Base Rate Loans (on
which interest and principal shall be payable contemporaneously with
the related Euro-Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans to the Company has
been repaid, all payments of principal which would otherwise be applied
to repay such Euro-Dollar Loans shall be applied to repay its Base Rate
Loans instead.
SECTION 8.05. Substitution of Bank. If (i) the obligation of any Bank
to make Euro-Dollar Loans has been suspended pursuant to Section 8.02, (ii) any
Bank has demanded compensation under Section 8.03 or payment of Taxes or Other
Taxes under Section 2.17, or (iii) after satisfaction of all applicable
conditions precedent, any Bank fails to fund when due any Loan it is obligated
to fund under this Agreement, the Company shall have the right, with the
assistance of the Agent, to seek a mutually satisfactory substitute bank or
banks (which may be one or more of the Banks) to purchase the Notes and assume
the Commitment of such Bank (any such Bank is herein called an "Affected Bank").
Each Affected Bank agrees to sell, without recourse, all of its Commitment, its
interest in this Agreement and its Note to any such bank for an amount equal to
the sum of the outstanding unpaid principal of and accrued interest on the Loans
of such Affected Bank and all commitment fees and other fees and amounts due
such Affected Bank hereunder, calculated, in each case, to the date such
Commitment, interest in this Agreement and Note are purchased.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Company or the Agent, at its address or telex
number set forth on the signature pages hereof, (y) in the case of any Bank, at
its address or telex number set forth in its
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<PAGE> 65
Administrative Questionnaire or (z) in the case of any party, such other address
or telex number as such party may hereafter specify for the purpose by notice to
the Agent and the Company. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in this Section 9.01 and the appropriate answer-back is
received, (ii) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid, (iii) if
given by facsimile transmission, when such facsimile is transmitted and
accompanied by a telephone call to the party receiving such transmission or (iv)
if given by any other means, when delivered at the address specified in this
Section 9.01; provided that notices to the Agent shall not be effective until
received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any Bank
in exercising any right, power or privilege under any Financing Document shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in the Financing
Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Company shall pay (i)
all reasonable documented out-of-pocket costs and expenses of the Agent incurred
in connection with the syndication of this Agreement or the preparation of the
Financing Documents, any waiver or consent thereunder or any amendment thereof
or any Default or alleged Default hereunder and (ii) if an Event of Default
occurs, all reasonable out-of-pocket costs and expenses incurred by the Agent or
incurred by any Bank, including fees and disbursements of counsel, in connection
with such Event of Default and collection and other enforcement proceedings
resulting therefrom.
(b) The Company agrees to indemnify the Agent, each Co-Agent and each
Bank and hold the Agent, each Co-Agent and each Bank harmless from and against
any and all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements of counsel
for the Agent, any Co-Agent or any Bank in connection with any investigative,
administrative or judicial proceedings, whether or not the Agent, such Co-Agent
or such Bank, as the case may be, shall be designated a party thereto) which may
be incurred by the Agent, any Co-Agent or any Bank, relating to or arising out
of this Agreement or any actual or proposed use of proceeds of Loans hereunder,
including specifically, without limitation, all liabilities, losses, damages,
costs and expenses arising out of a violation of any Environmental Law; provided
that neither the Agent nor any Co-Agent nor any Bank shall have the right to be
indemnified hereunder for its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction (IT BEING EXPRESSLY UNDERSTOOD
AND AGREED THAT, EXCEPT FOR SUCH NEGLIGENCE AS IS SO DETERMINED TO CONSTITUTE
GROSS NEGLIGENCE, SUCH INDEMNIFICATION DOES EXTEND TO THE CONSEQUENCES OF THE
-60-
<PAGE> 66
ORDINARY NEGLIGENCE, WHETHER SOLE OR CONTRIBUTORY, OF THE INDEMNITEE).
(c) Within a reasonable period of time after any Person entitled to
indemnification under Section 9.03(b) (an "Indemnified Person") receives actual
notice of the assertion of any claim or the commencement of any action, or any
threatened claim or action, covered by Section 9.03(b), such Indemnified Person
shall, if indemnification with respect thereof is to be sought from the Company
under Section 9.03(b), notify the Company in writing of such claim or action;
provided that the failure to so notify the Company shall not relieve the Company
from any liability which the Company may have to the Indemnified Person under
Section 9.03(b) unless the obligations of the Company under Section 9.03(b) have
been significantly increased as a result of such failure. The Company and such
Indemnified Person shall cooperate in the defense of any such claim or action
and shall take those actions reasonably within their power to take which are
necessary to preserve any legal defenses to such matters. If any such claim or
action shall be brought or threatened against an Indemnified Person, so long as
no Event of Default exists, the Company shall be entitled to participate in the
defense thereof, and, with the consent of such Indemnified Person, to assume the
defense thereof with counsel reasonably satisfactory to the Indemnified Person.
Notwithstanding any provision hereof to the contrary, no consent order or
settlement shall be entered into in any such claim or action unless both the
Company and such Indemnified Person have given their prior written consent
thereto; provided that such consent of the Company shall not be required if any
Event of Default exists.
(d) All obligations of the Company to indemnify or otherwise to make
payments to the Agent, any Co-Agent or any Bank provided in this Agreement shall
survive any termination of the Commitments and the repayment of the Loans.
SECTION 9.04. Sharing of Set-Offs, Etc. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section 9.04 shall impair the
right of any Bank to exercise any right of set-off or counterclaim it may have
and to apply the amount subject to such exercise to the payment of indebtedness
of the Company other than its indebtedness under the Notes. The Company agrees,
to the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of
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<PAGE> 67
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the Company
in the amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this Agreement
or the Notes may be amended or waived, if, but only if, such amendment or waiver
is in writing and is signed by the Company and the Required Banks (and, if the
rights or duties of the Agent are affected thereby, by the Agent); provided that
no such amendment or waiver shall, unless signed by all the Banks, (i) increase
or decrease the Commitment of any Bank or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on any Loan or any
fees hereunder, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for any reduction or termination
of any Commitment, or (iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Notes, or the number of Banks, which
shall be required for the Banks or any of them to take any action under this
Section 9.05 or any other provision of this Agreement.
SECTION 9.06. 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, except that the Company may not
assign or otherwise transfer any of its rights under this Agreement without the
prior written consent of all Banks.
(b) Any Bank may at any time and from time to time grant to one or more
banks or other institutions (each a "Participant") participating interests in
its Commitment or any or all of its Loans. In the event of any such grant by a
Bank of a participating interest to a Participant, whether or not upon notice to
the Company and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Company and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Company hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such participation agreement may provide that such Bank will not agree to
any modification, amendment or waiver of this Agreement described in clause (i),
(ii) or (iii) of Section 9.05 without the consent of the Participant. The
Company agrees that each Participant shall, to the extent provided in its
participation agreement, be entitled to the benefits of Article VIII with
respect to its participating interest. An assignment or other transfer which is
not permitted by subsection (c) or (d) below shall be given effect for purposes
of this Agreement only to the extent of a participating interest granted in
accordance with this subsection (b).
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<PAGE> 68
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") a proportionate part of all of its rights and
obligations under this Agreement and the Notes in an amount which equals
$10,000,000 or more, and such Assignee shall assume such rights and obligations
under this Agreement and the Notes, pursuant to an Assignment executed by such
Assignee and such transferor Bank, with (and subject to) the subscribed consent
of the Company and the Agent (which such consents shall not be unreasonably
withheld); provided that if an Assignee is an affiliate of such transferor Bank
or is another Bank, no such consent of the Company shall be required; provided,
further, that each such assignment shall be of a constant, and not a varying,
percentage of all rights and obligations under this Agreement and the Notes.
Upon execution and delivery of such instrument (and delivery to the Agent of an
Administrative Questionnaire with respect to such Assignee, if such Assignee has
not already done so) and payment by such Assignee to such transferor Bank of an
amount equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Agent and the Company
shall make appropriate arrangements so that, if required, a new Note is issued
to the Assignee. In connection with any such assignment, the transferor Bank
shall pay to the Agent for its account an administrative fee in the amount of
$2,500 for processing such assignment. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall, prior to
the first date on which interest or fees are payable hereunder for its account,
deliver to the Company and the Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in accordance
with Section 2.17.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 than such
Bank would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Company's prior written consent or by
reason of the provisions of Section 8.02 or 8.03 requiring such Bank to
designate a different Applicable Lending Office under certain circumstances or
at a time when the circumstances giving rise to such greater payment did not
exist.
SECTION 9.07. Collateral. Each of the Banks represents to the Agent and
each of the other Banks that it in good faith is not relying upon any margin
stock (as
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<PAGE> 69
defined in Regulation G) or any margin stock (as defined in Regulation U) as
collateral in the extension or maintenance of the credit provided for in this
Agreement.
SECTION 9.08. Texas Law. This Agreement and each Note shall be
construed in accordance with and governed by the law of the State of Texas.
SECTION 9.09. CONSENT TO JURISDICTION. THE COMPANY HEREBY IRREVOCABLY
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS
AND OF ANY FEDERAL COURT LOCATED IN SUCH STATE OVER IT IN CONNECTION WITH ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY FINANCING DOCUMENT AND,
TO THE FULLEST EXTENT PERMITTED BY LAW, FURTHER AGREES (AND SHALL NOT CONTEST)
THAT THE PROPER VENUE FOR FILING AND MAINTAINING ANY SUCH ACTION OR PROCEEDING
SHALL BE IN THE STATE OF TEXAS. IN ANY SUCH ACTION OR PROCEEDING, THE COMPANY
WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS OR NOTICE AND
AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT REQUESTED, TO THE
COMPANY AT ITS ADDRESS FOR NOTICES HEREUNDER, OR ANY FORM OF SERVICE PROVIDED
FOR IN THE TEXAS CIVIL PRACTICE AND REMEDIES CODE THEN IN EFFECT SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON THE COMPANY.
SECTION 9.10. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
SECTION 9.11. WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT, THE
CO-AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.12. COMPLETE AGREEMENT. THIS WRITTEN CREDIT AGREEMENT AND THE
OTHER FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
SECTION 9.13. Liability of Co-Agents. No Co-Agent, in its capacity as a
Co-Agent hereunder, shall have any duty or responsibility hereunder.
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<PAGE> 70
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
-65-
<PAGE> 71
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.
UNION TEXAS PETROLEUM
HOLDINGS, INC.
By /s/ M.N. MARKOWITZ
----------------------------------
M.N. Markowitz
Vice President and Treasurer
1330 Post Oak Blvd.
Houston, Texas 77056
Telex number: 762255
Commitments
$40,000,000 NATIONSBANK OF TEXAS, N.A.
By /s/ PAUL A. SQUIRES
----------------------------------
Paul A. Squires
Senior Vice President
$30,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ LAURA B. SHEPARD
----------------------------------
Laura B. Shepard
Vice President
By /s/ JOHN M. ROBINSON
----------------------------------
John M. Robinson
Managing Director
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<PAGE> 72
$30,000,000 UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
By /s/ EVANS R. SWANN
----------------------------------
Evans R. Swann
Managing Director
By /s/ ALFRED IMHOLZ
----------------------------------
Alfred Imholz
Managing Director
Total Commitments: $100,000,000
================================
NATIONSBANK OF TEXAS, N.A.,
as Agent
By /s/ PAUL A. SQUIRES
----------------------------------
Paul A. Squires
Senior Vice President
700 Louisiana Street, 8th Floor
Houston, Texas 77002
Telex Number: 163244
Answerback: NCNBTEXDAL
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Co-Agent
By /s/ LAURA B. SHEPARD
----------------------------------
Laura B. Shepard
Vice President
By /s/ JOHN M. ROBINSON
----------------------------------
John M. Robinson
Managing Director
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<PAGE> 73
UNION BANK OF SWITZERLAND,
HOUSTON AGENCY,
as Co-Agent
By /s/ EVANS R. SWANN
----------------------------------
Evans R. Swann
Managing Director
By /s/ ALFRED IMHOLZ
----------------------------------
Alfred Imholz
Managing Director
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<PAGE> 74
SCHEDULE II
EXISTING SUBSIDIARIES
PART A
EXISTING UNRESTRICTED SUBSIDIARIES JURISDICTION
- ---------------------------------- ------------
Four Oaks Insurance, Ltd. Bermuda
Unicon Producing Company [Partnership] Texas
Union Texas I Corporation Delaware
Union Texas Adriatic, Inc. Delaware
Union Texas (Argentina) Ltd. Delaware
Union Texas Asia Corporation Delaware
Union Texas Barakan, Inc. Delaware
Union Texas Brasil, Inc. Delaware
Union Texas Britannia Limited England
Union Texas Carthage, Inc. Delaware
Union Texas Development Corporation Delaware
Union Texas Egypt, Inc. Delaware
Union Texas Espana, Inc. Delaware
Union Texas Finance, Inc. Delaware
Union Texas (Kai) Limited Bahamas
Union Texas Maghreb, Inc. Delaware
Union Texas Methane, Inc. Delaware
Union Texas Metropole, S.A. France
Union Texas PNG, Inc. Delaware
Union Texas Petrochemicals Pipeline, Inc. Delaware
Union Texas Petroleum Alaska Corporation Delaware
Union Texas Petroleum Europe and Middle East, Inc. Delaware
Union Texas Petroleum Services Corporation Delaware
Union Texas (Rebi) Limited Bahamas
Union Texas (South East Asia) Inc. Delaware
Union Texas (Tanimbar) Limited Bahamas
Union Texas Trading Corporation Delaware
Union Texas (Transnational) Limited Bahamas
Union Texas Tunisia, Inc. Delaware
West Gemsa Petroleum Company Egypt
<PAGE> 75
EXISTING UNIMAR UNRESTRICTED SUBSIDIARIES JURISDICTION
- ----------------------------------------- ------------
AKI International Finance, N.V. Netherlands Antilles
Alaska Interstate International Finance, B.V. Netherlands
Alaska Interstate International Finance, N.V. Netherlands Antilles
ENSTAR Petroleum, Ltd. Canada
Purchasing Services, Inc. Delaware
Unimar Financing Corporation Delaware
VICO Services, Inc. Delaware
VICO Trading, Inc. Delaware
Virginia Services, Ltd. Delaware
PART B
EXISTING RESTRICTED SUBSIDIARIES
- --------------------------------
Union Texas East Kalimantan Limited Bahamas
Union Texas International Corporation Delaware
Union Texas Pakistan, Inc. Delaware
Union Texas Petroleum Energy Corporation Delaware
Union Texas Petroleum Limited England
Union Texas Products Corporation Delaware
Unistar, Inc. Delaware
OTHER RESTRICTED SUBSIDIARY
- ---------------------------
Unimar Company [Partnership] Texas
EXISTING UNIMAR RESTRICTED SUBSIDIARIES
- ---------------------------------------
ENSTAR Corporation Delaware
ENSTAR Indonesia, Inc. Delaware
VICO 7.5, Inc. Delaware
Virginia Indonesia Company Delaware
Virginia International Company Delaware
<PAGE> 76
SCHEDULE III
CERTAIN EXISTING LIENS
PART A: LIENS ON OWNERSHIP INTERESTS
1. Amended and Restated Agreement of General Partnership of Unimar Company
("Unimar"), dated as of September 11, 1990, between Unistar, Inc.
("Unistar") and LASMO (USTAR) Inc. ("USTAR," formerly Ultrastar, Inc.) (the
"Unimar Partnership Agreement"):
As security for the payment of all contributions to be made by each partner
pursuant to the Unimar Partnership Agreement, each of Unistar and USTAR has
created a security interest in its partnership interest in Unimar in favor
of the other partner.
2. Articles of Association of Union Texas East Kalimantan Limited ("UTEK")
dated October 26, 1983.
As security for the debts, liabilities and engagements of each member solely
or jointly with any other person to or with UTEK, UTEK has a first and
paramount lien upon all the shares registered in the name of each member,
which lien extends to all dividends from time to time declared in respect of
such shares.
3. Articles of Association of Union Texas Petroleum Limited ("UTPL").
UTPL has a lien under English law that will attach to fully paid shares and
to all shares registered in the name of any person indebted or under
liability to UTPL.
<PAGE> 77
SCHEDULE III
CERTAIN EXISTING LIENS
PART B: OTHER EXISTING LIENS
<TABLE>
<CAPTION>
DOCUMENT AND LIEN AMOUNT OF DEBT AS
----------------- OF 3/31/95
-----------------
<S> <C>
1. Pledge Agreement dated as of September 25, 1984 by No set amount
Virginia Indonesia Company in favor of Irving Trust
Company (the "Pledge Agreement"), and the Indenture,
dated as of September 25, 1984 between Unimar, as
Issuer, and Irving Trust Company, as Trustee,
providing for 14,077,747 Indonesian Participating
Units (the "IPU Indenture"), as supplemented by the
Supplemental Indenture dated as of October 31, 1986:
As security for performance of the obligations of
Unimar under the IPU Indenture, Section 2 of the
Pledge Agreement sets forth a first lien and
security interest granted by Virginia Indonesia
Company (the "Pledgor") in all of the Pledgor's
rights to receive payments from the Joint Venture
Paying Agent pursuant to the Joint Venture Paying
Agency Agreements, each as defined in the IPU
Indenture, and in all proceeds therefrom. This lien
and security interest only becomes effective upon
the occurrence of certain events specified in the
IPU Indenture. As of December 31, 1994, this lien
and security interest is not effective.
</TABLE>
<PAGE> 78
<TABLE>
<CAPTION>
DOCUMENT AND LIEN AMOUNT OF DEBT AS
----------------- OF 6/30/95
------------------
<S> <C>
2. Deed of Floating Charge dated December 20, 1988 (the $5,728,000
"Deed of Floating Charge") by Union Texas Pakistan,
Inc. ("UT Pakistan") in favor of the Overseas
Private Investment Corporation ("OPIC"), in
connection with the Finance Agreement dated as of
December 20, 1988 between UT Pakistan and OPIC (the
"OPIC Finance Agreement") and one or more Notes
(the "Notes") issued pursuant to the Issuing and
Paying Agency Agreement of even date:
As security for the obligations of UT Pakistan under
the OPIC Finance Agreement and the Notes, Section 2
of the Deed of Floating Charge sets forth a first
floating charge in favor of OPIC in UT Pakistan's
(i) 30% share as a working interest owner of all
crude oil and natural gas produced or to be produced
from the Dedicated Areas, as defined in the Deed of
Floating Charge, and being in transit from the well
head to the various points of delivery, (ii) 30%
share as a working interest owner of all crude oil
produced or to be produced from the Dedicated Areas,
and being under storage in tank batteries in the
Dedicated Areas, as defined in the Deed of Floating
Charge, (iii) rights and benefits under certain sale
agreements relating to the sale of crude oil or
natural gas and (iv) accounts receivable under such
sales agreements. OPIC's recourse is limited to
the assets of UT Pakistan described in Section
8.2(b) of the OPIC Finance Agreement.
</TABLE>
<PAGE> 79
SCHEDULE IV
CERTAIN EXISTING RESTRICTIONS
1. Finance Agreement dated as of December 20, 1988 between Union Texas
Pakistan, Inc. ("UT Pakistan") and the Overseas Private Investment
Corporation:
a. Negative covenant of UT Pakistan set forth in Section 7.3 restricting,
in the event of a default, payment of dividends, purchases of capital
stock and payments to the Company on any intercorporate line of credit,
among other restrictions.
b. Negative covenant of UT Pakistan set forth in Section 7.5(e)
restricting, among other things, certain loans, advances and guarantees
of loans to persons other than the Company.
2. Amended and Restated Agreement of General Partnership of Unimar Company
("Unimar"), dated as of September 11, 1990 between Unistar, Inc. and LASMO
(USTAR) Inc. (formerly Ultrastar, Inc.) (the "Unimar Partnership
Agreement"):
a. Restrictions resulting from provisions of Article IV regarding the
management of Unimar and shareholder action of certain Unimar Restricted
Subsidiaries.
b. Restrictions resulting from provisions of Article X with respect to
dissolution and liquidation of Unimar.
<PAGE> 80
SCHEDULE V
JOINT VENTURE DEBT AGREEMENTS
1. Producers Agreement No. 2 dated as of June 9, 1987 among Pertamina, Roy M.
Huffington, Inc., Virginia International Company, Ultramar Indonesia
Limited, Virginia Indonesia Company, Union Texas East Kalimantan Limited,
Universe Tankships, Inc., and Huffington Corporation, as Producers, in
favor of The Industrial Bank of Japan Trust Company ("IBJ Trust"), as Agent
and Lender, and the other Lenders named therein, as amended by Amendment
No. 1 to Producers Agreement No. 2, dated as of February 9, 1988 and
Amendment No. 2 to Producers Agreement No. 2 dated as of May 31, 1988, each
among the Producers, the Lenders named therein and IBJ Trust, as Agent,
relating to the Bontang Capital Projects Loan Agreement No. 2 dated as of
June 9, 1987 among Continental Bank International, as Trustee, and the
other parties named therein.
2. Bontang III Producers Agreement dated as of February 9, 1988 among
Pertamina, Roy M. Huffington, Inc., Huffington Corporation, Virginia
International Company, Virginia Indonesia Company, Ultramar Indonesia
Limited, Union Texas East Kalimantan Limited, Universe Tankships, Inc.,
Total Indonesie, Unocal Indonesia, Ltd. and Indonesia Petroleum, Ltd., as
Producers, in favor of Train-E Finance Co., Ltd., as Tranche A Lender, the
Banks named therein as Tranche B Lenders and IBJ Trust as Tranche B Lender
and as Agent for such Tranche B Lenders, as amended by Amendment No. 1
dated as of May 31, 1988, relating to the Bontang III Loan Agreement dated
as of February 9, 1988 among Continental Bank International, as Trustee,
and the other parties named therein.
3. Bontang IV Producers Agreement dated as of August 26, 1991 among Pertamina,
Virginia Indonesia Company, OPICOIL Houston, Inc., Virginia International
Company, Ultramar Indonesia Limited, Union Texas East Kalimantan Limited,
Universe Gas & Oil Company, Inc., Total Indonesie, Unocal Indonesia, Ltd.,
and Indonesia Petroleum, Ltd., as Producers, in favor of The Chase
Manhattan Bank, N.A., as Lender and as Agent for the Lenders, and the other
Lenders named therein, relating to the Bontang IV Loan Agreement dated as
of August 26, 1991 among Continental Bank International, as Trustee, and
the other parties named therein.
<PAGE> 81
SCHEDULE VI
OUTSTANDING OPTIONS
1. Preferential right of purchase, and right to reasonably nullify a proposed
disposition, in favor of each of Unistar, Inc. ("Unistar") and LASMO
(USTAR) Inc. ("USTAR," formerly Ultrastar, Inc.), set forth in Article VIII
of the Amended and Restated Agreement of General Partnership of Unimar
Company, dated as of September 11, 1990, between Unistar and USTAR (the
"Unimar Partnership Agreement").
2. Buy-sell option that may be invoked by either Unistar or USTAR in the event
of irreconcilable differences or continued deadlocks, set forth in Article
IX of the Unimar Partnership Agreement.
63
<PAGE> 82
EXHIBIT A
NOTE
Houston, Texas
_________, 199_
For value received, Union Texas Petroleum Holdings, Inc., a Delaware
corporation (the "Company"), promises to pay to the order of__________________
______________(the "Bank"), for the account of its Applicable Lending Office,
the unpaid principal amount of each Loan owed to the Bank on June 15, 1997 or as
otherwise required by the Credit Agreement. The Company promises to pay interest
on the unpaid principal amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement (including, without limitation,
Section 2.16 thereof). All such payments of principal and interest shall be made
in lawful money of the United States in Federal or other immediately available
funds at the office of NationsBank of Texas, N.A., 700 Louisiana Street,
Houston, Texas 77002.
All Loans made by the Bank and the respective Types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, prior to
any transfer hereof, appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding shall be endorsed by the Bank on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Company
hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement dated
as of June 30, 1995 among the Company, the lenders and Co-Agents parties thereto
and NationsBank of Texas, N.A., as Agent (as the same may be amended from time
to time, the "Credit Agreement"). Terms not defined herein and defined in the
Credit Agreement are used herein with the same meanings. Reference is made to
the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof. This note shall be construed in accordance
with and governed by the law of the State of Texas.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By:___________________________________
M.N. Markowitz
Vice President and Treasurer
<PAGE> 83
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Type of Principal Date of Notation
Date Loan Loan Repaid Payment Made By
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EXHIBIT B
SUBSIDIARY GUARANTY AGREEMENT
SUBSIDIARY GUARANTY AGREEMENT dated as of June 30, 1995 (as may be
amended or otherwise modified from time to time in accordance with the terms
hereof, this "Agreement") among each of the Subsidiary Guarantors listed on the
signature pages hereof under the caption "Subsidiary Guarantors" or which
hereafter becomes a party hereto pursuant to Section 3.08(b) (collectively, the
"Subsidiary Guarantors") and NationsBank of Texas, N.A., as agent for the banks
under the Credit Agreement referred to below (the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement dated as of June 30, 1995
among Union Texas Petroleum Holdings, Inc. (the direct or indirect parent of
each of the Subsidiary Guarantors) (the "Company"), the Banks and Co-Agents
parties thereto and the Agent (as may be amended or otherwise modified from time
to time, the "Credit Agreement"), the Company is entitled, subject to certain
conditions, to borrow up to $100,000,000 or such other amount as may be
available pursuant thereto;
WHEREAS, as a condition to borrowings under the Credit Agreement, each
Required Guarantor is required to execute and deliver to the Agent this
Agreement whereby such entity shall, subject to Section 2.08 hereof, guarantee
the payment when due of the principal of and interest on all Loans and all other
amounts payable at any time by any Obligor under any of the Financing Documents,
including, without limitation, interest which accrues during a proceeding which
occurs under the U.S. Bankruptcy Code or which would otherwise accrue under the
terms of any of the Financing Documents, but for a proceeding under the U.S.
Bankruptcy Code (such principal, interest and other amounts being herein called
the "Guaranteed Amounts");
WHEREAS, in consideration of the financial and other support that the
Company has provided, and such financial and other support as the Company may in
the future provide, to the Subsidiary Guarantors and in order to induce the
Banks to enter into the Credit Agreement and to consider requests to extend
financial accommodations to the Company, the Subsidiary Guarantors are willing
to guarantee, subject to Section 2.08 hereof, the Guaranteed Amounts;
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE> 85
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as therein defined.
ARTICLE II
GUARANTEES
SECTION 2.01. The Guarantees. Subject to Section 2.08, the Subsidiary
Guarantors hereby jointly, severally, unconditionally and irrevocably guarantee
to the Agent, for the ratable benefit of the Banks, the full and punctual
payment of all present and future Guaranteed Amounts as and when the same shall
become due and payable, whether at maturity, by declaration or otherwise,
according to the terms thereof. In case of failure by the Company punctually to
pay any Guaranteed Amount, the Subsidiary Guarantors hereby jointly, severally
and unconditionally agree, forthwith upon demand by the Agent, to make payment
thereof to the Agent at the place and in the manner specified in the Credit
Agreement.
SECTION 2.02. Guarantees Unconditional. Subject to Section 2.08, the
obligations of each Subsidiary Guarantor under this Article II shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company or any other
Subsidiary Guarantor under any Financing Document or any Guaranteed
Amount;
(b) any modification or amendment of or supplement to (i) this
Agreement insofar as the same does not purport to modify the rights or
obligations of such Subsidiary Guarantor hereunder or (ii) any other
Financing Document;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect security, or of
any guarantee or other liability of any third party, for any obligation
of the Company or any Subsidiary Guarantor under any Financing Document
or any Guaranteed Amount;
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<PAGE> 86
(d) any change in the corporate existence, structure or
ownership of the Company or any Subsidiary, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Company or any other Subsidiary or their respective assets;
(e) the existence of any claim, set-off or other rights which
any Subsidiary Guarantor may have at any time against the Company or
any Subsidiary Guarantor, the Agent, any Bank or any other Person,
whether or not arising in connection with any Financing Document or any
Guaranteed Amount, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(f) any invalidity or unenforceability relating to or against
the Company or any Subsidiary Guarantor for any reason of any Financing
Document or any Guaranteed Amount, or any provision of applicable law
or regulation purporting to prohibit the payment by the Company or any
Subsidiary Guarantor of any Guaranteed Amount; or
(g) any other act or omission to act or delay of any kind by
the Company or any Subsidiary Guarantor, the Agent, any Bank or any
other Person or any other circumstances whatsoever that might, but for
the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of a Subsidiary Guarantor under this
Article II.
SECTION 2.03. Discharge; Reinstatement in Certain Circumstances.
Subject to Section 2.08, each Subsidiary Guarantor's obligations under this
Article II shall remain in full force and effect until all of the Commitments
shall have been terminated in their entirety and the Guaranteed Amounts shall
have been paid in full. If at any time any payment of or any amount payable by
the Company or any Subsidiary Guarantor in respect of any Guaranteed Amount is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Person or otherwise, each Subsidiary
Guarantor's obligations under this Article II with respect to such payment shall
be reinstated at such time as though such payment had become due but had not
been made at such time.
SECTION 2.04. Waiver. Each Subsidiary Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Company or any other Subsidiary Guarantor or any other
Person. Each Subsidiary Guarantor hereby irrevocably waives each and every right
to which it may be entitled by virtue of the suretyship laws of the State of
Texas, including, without limitation, any and all rights it may have pursuant to
Rule 31 or Rule 32, Texas Rules of Civil Procedure, Section 17.001 of the Texas
Civil Practice and Remedies Code and Chapter 34 of the Texas Business and
Commerce Code.
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<PAGE> 87
SECTION 2.05. Subrogation and Contribution. Each Subsidiary Guarantor
irrevocably waives any and all rights to which it may be entitled, by operation
of law or otherwise, upon making any payment hereunder (i) to be subrogated to
the rights of the payee against the Company with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by the Company in respect
thereof or (ii) to receive any payment, in the nature of contribution or for any
other reason, from any other Obligor with respect to such payment, in each case
until such time as all of the Commitments shall have been terminated in their
entirety and the Guaranteed Amounts shall have been paid in full.
SECTION 2.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Company or any Subsidiary Guarantor in
respect of any Guaranteed Amount is stayed upon the insolvency, bankruptcy or
reorganization of such Person, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement or any other agreement or
instrument evidencing such Guaranteed Amount shall nonetheless be payable by
each other Subsidiary Guarantor hereunder forthwith on demand by the Agent.
SECTION 2.07. Representations and Warranties. Each Subsidiary Guarantor
represents and warrants that as of the date hereof, and after giving effect to
this Agreement and the contingent obligations evidenced hereby (including any
limitation on the amount payable under this Agreement pursuant to Section 2.08),
it is and will be solvent, and has and will have assets which, fairly valued,
exceed its obligations, liabilities and debts, and has and will have property
and assets sufficient to satisfy and repay its obligations, liabilities and
debts when the same become due.
SECTION 2.08. Limit of Liability. Each Subsidiary Guarantor shall be
liable under this Agreement only for amounts aggregating up to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state or foreign law.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy, telex, facsimile
transmission or similar writing) and (i) in the case of a Subsidiary Guarantor,
shall be given to such Subsidiary Guarantor at c/o Union Texas Petroleum
Holdings, Inc., 1330 Post Oak Boulevard, Houston, Texas 77056 (telex number:
762255) and (ii) in the case of the Company or the Agent, at its address or
telex number set forth on the signature pages of the Credit Agreement or in any
case at such other address or telex
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<PAGE> 88
number as such party may hereafter specify for the purpose by notice to the
Agent and the Company. Each such notice, request or other communication shall be
effective (i) if given by telex, when such telex is transmitted to the telex
number specified in this Section and the appropriate answer is received, (ii) if
given by mail, 72 hours after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid or (iii) if given by any
other means, when delivered at the address specified in this Section; provided
that notices to the Agent shall not be effective until received.
SECTION 3.02. No Waiver; Exercise of Remedies. No failure or delay by
the Agent in exercising any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law. In exercising the rights
and remedies herein provided, the Agent shall act at the instructions of the
Required Banks or, failing such instruction, at its discretion.
SECTION 3.03. Amendments and Waivers. Any provision of this Agreement
may be amended or waived, and any Subsidiary Guarantor may be released from any
of its obligations hereunder, if, and only if, such amendment, waiver or release
is in writing and is signed by (i) each Subsidiary Guarantor affected thereby
and (ii) the Agent with the consent of Banks at the time having at least 66-2/3%
of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 66-2/3% of the aggregate
unpaid principal amount of the Loans; provided that any Subsidiary Guarantor
shall be released from its obligations hereunder upon the terms set forth in
Section 5.10 or Section 5.20 of the Credit Agreement.
SECTION 3.04. Texas Law. This Agreement shall be construed in
accordance with and governed by the law of the state of Texas.
SECTION 3.05. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH
SUBSIDIARY GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE OVER EACH OF THEM IN CONNECTION WITH ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY FINANCING DOCUMENT AND, TO THE
FULLEST EXTENT PERMITTED BY LAW, FURTHER AGREES (AND SHALL NOT CONTEST) THAT THE
PROPER VENUE FOR FILING AND MAINTAINING ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE IN THE STATE OF TEXAS. IN ANY SUCH ACTION, SUIT OR PROCEEDING, EACH
SUBSIDIARY GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT
REQUESTED, TO SUCH SUBSIDIARY
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<PAGE> 89
GUARANTOR AT ITS ADDRESS FOR NOTICES HEREUNDER, OR ANY FORM OF SERVICE PROVIDED
FOR IN THE TEXAS CIVIL PRACTICE AND REMEDIES CODE THEN IN EFFECT SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON SUCH SUBSIDIARY GUARANTOR. EACH
SUBSIDIARY GUARANTOR THAT IS NOT ORGANIZED UNDER THE LAWS OF THE UNITED STATES
OR A STATE THEREOF (EACH A "NON-U.S. GUARANTOR") HEREBY APPOINTS THE PRINCIPAL
OFFICE OF CT CORPORATION SYSTEM IN HOUSTON, TEXAS, WHICH, ON THE DATE HEREOF, IS
LOCATED AT 911 DALLAS ST., HOUSTON, TEXAS 77002, AS THE AUTHORIZED AGENT THEREOF
(THE "AUTHORIZED AGENT") UPON WHOM PROCESS MAY BE SERVED IN ANY SUCH ACTION,
SUIT OR PROCEEDING WHICH MAY BE INSTITUTED IN THE STATE OF TEXAS. SUCH
APPOINTMENT SHALL BE IRREVOCABLE UNLESS AND UNTIL THE APPOINTMENT OF A SUCCESSOR
AUTHORIZED AGENT FOR SUCH PURPOSE, AND SUCH SUCCESSOR'S ACCEPTANCE OF SUCH
APPOINTMENT, SHALL HAVE OCCURRED AND THE AGENT SHALL HAVE BEEN NOTIFIED THEREOF.
EACH NON-U.S. GUARANTOR AGREES TO TAKE ANY AND ALL ACTIONS, INCLUDING, WITHOUT
LIMITATION, THE FILING OF ANY AND ALL DOCUMENTS AND INSTRUMENTS, THAT MAY BE
NECESSARY TO CONTINUE SUCH APPOINTMENT IN FULL FORCE AND EFFECT AS AFORESAID.
SERVICE OF PROCESS UPON THE AUTHORIZED AGENT WITH RESPECT TO ANY SUCH ACTION,
SUIT OR PROCEEDING SHALL BE DEEMED, IN EVERY RESPECT, EFFECTIVE SERVICE OF
PROCESS UPON ANY SUCH NON-U.S. GUARANTOR. EACH NON-U.S. GUARANTOR SHALL REQUIRE
THE AUTHORIZED AGENT TO AGREE IN WRITING TO ACCEPT THE FOREGOING APPOINTMENT AS
AGENT FOR SERVICE OF PROCESS.
SECTION 3.06. WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 3.07. WAIVER OF SOVEREIGN IMMUNITY. TO THE EXTENT THAT ANY
SUBSIDIARY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH SUBSIDIARY GUARANTOR
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY DO SO, SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING,
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<PAGE> 90
AGREES, TO THE FULLEST EXTENT IT MAY LEGALLY DO SO, THAT THE WAIVERS SET FORTH
IN THIS SECTION 3.07 SHALL HAVE THE FULLEST SCOPE PERMITTED UNDER THE FOREIGN
SOVEREIGN IMMUNITIES ACT OF 1976 OF THE UNITED STATES AND ARE INTENDED TO BE
IRREVOCABLE FOR PURPOSES OF SUCH ACT.
SECTION 3.08. Successors and Assigns.
(a) All of the provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no Subsidiary Guarantor
may assign or transfer any of its rights or obligations under this
Agreement.
(b) Any Subsidiary may become a party hereto and a Subsidiary
Guarantor hereunder, without any further action by any other party, by
executing and delivering a counterpart hereof to the Agent.
SECTION 3.09. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, and all of which taken
together shall constitute a single instrument, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 3.10. Judgment Currency. Each Non-U.S. Guarantor agrees to
indemnify the Agent and each Bank against any loss incurred by it as a result of
any judgment or order being given or made and expressed and paid in a currency
(the "Judgment Currency") other than United States dollars and as a result of
any variation as between (i) the rate of exchange at which the United States
dollar amount is converted into the Judgment Currency for the purpose of such
judgment or order and (ii) the spot rate of exchange in The City of New York at
which the Agent or such Bank on the date of payment of such judgment or order is
able to purchase United States dollars with the amount of the Judgment Currency
actually received by the Agent or such Bank. The foregoing indemnity shall
constitute a separate and independent obligation of each Non-U.S. Guarantor and
shall continue in full force and effect notwithstanding any such judgment or
order as aforesaid. The term "spot rate of exchange" shall include any premiums
and costs of exchange payable in connection with the purchase of, or conversion
into, United States dollars.
SECTION 3.11. Existence. Each Subsidiary Guarantor agrees to maintain
its existence except as permitted by Section 5.02 of the Credit Agreement.
SECTION 3.12. Taxes. (a) Any and all payments by any Subsidiary
Guarantor hereunder shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding (i) in the
case of the Agent, each Co-Agent
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<PAGE> 91
and each Bank, United States federal income taxes and, without duplication, any
taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which the Agent, such Co-Agent or such Bank, as
the case may be, is organized or any political subdivision thereof and (ii) in
the case of each Bank, taxes imposed on its income, and franchise taxes imposed
on it, by the jurisdiction of such Bank's Applicable Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If any Subsidiary Guarantor shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to any Bank, any Co-Agent
or the Agent, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.12) such Bank, such Co-Agent or the
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Subsidiary Guarantor shall
make such deductions and (iii) such Subsidiary Guarantor shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) Each Subsidiary Guarantor will indemnify each Bank, each Co-Agent
and the Agent for the full amount of Taxes (including, without limitation, any
Taxes imposed by any jurisdiction on amounts payable under this Section 3.12)
paid by such Bank, such Co-Agent or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally asserted.
Payments under any indemnification provided for in this Section 3.12(b) shall be
made within 30 days from the date such Bank, such Co-Agent or the Agent (as the
case may be) makes written demand therefor.
(c) Within 30 days after the date of any payment of Taxes by a
Subsidiary Guarantor, such Subsidiary Guarantor will furnish to the Agent, at
its address referred to in Section 9.01 of the Credit Agreement, the original or
a certified copy of a receipt evidencing payment thereof. Should any Bank, any
Co-Agent or the Agent ever receive any refund, credit or deduction from any
taxing authority to which such Bank, such Co-Agent or the Agent, as the case may
be, would not be entitled but for the payment by a Subsidiary Guarantor of Taxes
as required by this Section 3.12 (it being understood that the decision as to
whether or not to claim, and if claimed, as to the amount of any such refund,
credit or deduction shall be made by such Bank, such Co-Agent or the Agent, as
the case may be, in its sole discretion), such Bank, such Co-Agent or the Agent,
as the case may be, thereupon shall repay to such Subsidiary Guarantor an amount
with respect to such refund, credit or deduction equal to any net reduction in
taxes actually obtained by such Bank, such Co-Agent or the Agent, as the case
may be, and reasonably determined by such Bank, such Co-Agent or the Agent, as
the case may be, to be attributable to such refund, credit or deduction.
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<PAGE> 92
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
SUBSIDIARY GUARANTORS:
UNION TEXAS PETROLEUM ENERGY UNION TEXAS EAST KALIMANTAN
CORPORATION LIMITED
By:_________________________ By:_________________________
M.N. Markowitz M.N. Markowitz
Treasurer Treasurer
UNION TEXAS PRODUCTS UNION TEXAS INTERNATIONAL
CORPORATION CORPORATION
By:_________________________ By:_________________________
M.N. Markowitz M.N. Markowitz
Treasurer Treasurer
UNISTAR, INC.
By:_________________________
M.N. Markowitz
Vice President
AGENT:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By:_________________________
Paul A. Squires
Senior Vice President
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<PAGE> 93
EXHIBIT C
OPINION OF GENERAL COUNSEL
June 30, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
I am General Counsel, Vice President-Administration, and Secretary of
Union Texas Petroleum Holdings, Inc., a Delaware corporation (the "Company"),
and have acted as counsel for the Company in connection with the Credit
Agreement dated as of June 30, 1995 (the "Credit Agreement") among the Company,
the Banks and Co-Agents listed on the signature pages thereof and NationsBank of
Texas, N.A., as Agent (the "Agent"), and for Union Texas Petroleum Energy
Corporation, a Delaware corporation, Union Texas International Corporation, a
Delaware corporation, Unistar, Inc., a Delaware corporation, Union Texas East
Kalimantan Limited, a Bahamian corporation, and Union Texas Products
Corporation, a Delaware corporation (collectively, the "Subsidiary Guarantors"
and together with the Company, the "Obligors"), in connection with the
Subsidiary Guaranty Agreement dated as of June 30, 1995 (the "Subsidiary
Guaranty Agreement") among the Subsidiary Guarantors and the Agent. Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
as therein defined.
In connection with the opinions expressed below, I have examined or
caused to be examined executed counterparts of the following (collectively, the
"Financing Documents"):
(a) the Credit Agreement,
(b) the Subsidiary Guaranty Agreement, and
(c) three (3) promissory notes, each substantially in the form of
Exhibit A to the Credit Agreement, one payable to each Bank.
I have also examined or caused to be examined originals or copies,
certified or otherwise identified to my satisfaction, of such other instruments,
documents
<PAGE> 94
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
June 30, 1995
Page 2
and records as I deemed necessary to express the opinions hereinafter set forth.
To the extent relevant to my opinion, I have assumed, without independent
verification, (i) the due execution and delivery of each Financing Document by
each party thereto (other than the Obligors), (ii) the genuineness of all
signatures on all documents submitted to me, (iii) that each party (other than
the Obligors) to each of the Financing Documents is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to enter into and to carry out its
obligations under such Financing Documents, (iv) that the execution and delivery
of each of the Financing Documents by each party thereto (other than the
Obligors) and the performance of its obligations under such Financing Documents
have been duly authorized by all necessary proceedings and actions, (v) that
each of the Financing Documents is the legal, valid and binding obligation of
each party thereto (other than the Obligors), enforceable against such party in
accordance with the terms of such Financing Documents, subject to limitations of
the types described in the opinion of Andrews & Kurth L.L.P. delivered to you
pursuant to the Financing Documents, and (vi) the authenticity of all documents
submitted to me as originals and the conformity to authentic original documents
of all documents submitted to me as certified, conformed or photostatic copies.
I have relied, to the extent that I deem such reliance proper, upon certificates
of officers of one or more of the Obligors and of governmental officials as to
matters of fact not independently established by me.
For purposes of the opinion set forth in paragraph 2 below, I have (i)
relied on the opinion of Andrews & Kurth L.L.P. with respect to the agreements
and instruments identified on Schedule I thereto, and (ii) examined or caused to
be examined each other agreement or other instrument binding upon any Obligor, a
breach of or default under which would, in my judgment, have a material adverse
effect upon the Company and its Subsidiaries taken as a whole. As to other
agreements and instruments, I have not undertaken such a review for purposes of
this opinion, given the volume of such documents and given the fact that by
virtue of the character of such documents and the historical practices of the
Company with respect thereto, I have no reason to believe that a breach of or
default under any such document would arise by virtue of the execution, delivery
and performance of the Financing Documents.
Based on the foregoing and subject to the qualifications and
limitations set forth below, I am of the opinion that:
<PAGE> 95
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
June 30, 1995
Page 3
1. Each of the Obligors has all material governmental licenses,
authorizations, consents and approvals required to own its assets and to carry
on its business as now conducted.
2. To the best of my knowledge, the execution, delivery and performance
by each Obligor of each Financing Document to which it is a party do not
constitute a breach of or default under, or result in the creation or imposition
of any Lien on any material asset of the Company or any Subsidiary under, any
provision of any instrument or agreement evidencing or governing Debt binding
upon such Obligor or any other material agreement, judgment, injunction, order,
decree or other instrument binding upon such Obligor.
3. To the best of my knowledge, there is no action, suit or proceeding
pending against, threatened against or affecting the Company or any of its
Subsidiaries or any of their respective properties or interests, at law or in
admiralty or equity, before any court or arbitrator or any governmental body,
agency or official, foreign or domestic, in which there is a reasonable
possibility of an adverse decision which could materially adversely affect the
business, financial position or results of operations of the Company and its
Subsidiaries, taken as a whole, or which in any manner draws into question the
validity of any Financing Document.
My opinions in paragraph 1 are rendered only with respect to the
constitutions, laws, rules and regulations which are currently in effect and
applicable court rulings and orders which have been published and are generally
available. In addition, the foregoing opinions are rendered only as of the date
hereof, and I disclaim any obligation to advise you of changes thereafter.
I am a member of the bar of the State of Texas only, and this opinion
is limited in all respects to the laws of the State of Texas, the General
Corporation Law of Delaware and federal law of the United States of America,
and, to the limited extent described below, the laws of The Commonwealth of The
Bahamas and The Republic of Indonesia. In rendering certain of the opinions
expressed above, I have relied, with your approval, upon an opinion, dated the
date hereof, of Andrews & Kurth L.L.P., a copy of which has been furnished to
you. My opinion in paragraph 1 addresses, with respect to Union Texas East
Kalimantan Limited, the laws of The Commonwealth of The Bahamas and The Republic
of Indonesia, and such opinion with respect to such laws is, with your
permission and without independent investigation, given solely in reliance upon
and limited in scope to the opinions of Graham, Thompson & Co. and Mochtar,
Karuwin
<PAGE> 96
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
June 30, 1995
Page 4
& Komar, respectively, dated April 24, 1995 (the "Foreign Opinions") addressed
to each of you as "Banks" under the Credit Agreement dated as of April 24, 1995
among the Company, the banks and co-agents listed on the signature pages thereof
and NationsBank of Texas, N.A., as agent, copies of which Foreign Opinions have
been furnished to you, and my opinion incorporates by reference all
qualifications, exceptions and limitations set forth therein. As you know,
neither Graham, Thompson & Co. nor Mochtar, Karuwin & Komar have reviewed the
Financing Documents, nor have they updated their respective opinions since April
24, 1995. I have assumed, with your permission and without independent
investigation, that the Foreign Opinions are true and correct as of the date
hereof as if such opinions were published on the date hereof and the Financing
Documents were the "Financing Documents" referred to therein.
This opinion is for the benefit of and may be relied upon by the Banks,
the Agent, the Co-Agents, their respective successors and assigns, their
respective counsel and Participants in connection with the transactions
contemplated by the Credit Agreement. Otherwise, this opinion may not be used,
published, circulated or relied upon by any other Person for any purpose without
my prior written consent.
Very truly yours,
Newton W. Wilson, III
<PAGE> 97
EXHIBIT D
OPINION OF ANDREWS & KURTH L.L.P.
June 30, 1995
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A., as Agent
700 Louisiana Street
Houston, Texas 77002
Dear Sirs:
We have acted as special counsel to Union Texas Petroleum Holdings,
Inc., a Delaware corporation (the "Company"), in connection with the Credit
Agreement dated as of June 30, 1995 (the "Credit Agreement") among the Company,
the Banks and Co-Agents listed on the signature pages thereof and NationsBank of
Texas, N.A., as Agent (the "Agent"), and to Union Texas Petroleum Energy
Corporation, a Delaware corporation, Union Texas International Corporation, a
Delaware corporation, Unistar, Inc., a Delaware corporation, Union Texas East
Kalimantan Limited, a Bahamian corporation, and Union Texas Products
Corporation, a Delaware corporation (collectively, the "Subsidiary Guarantors"
and together with the Company, the "Obligors"), in connection with the
Subsidiary Guaranty Agreement dated as of June 30, 1995 (the "Subsidiary
Guaranty Agreement") among the Subsidiary Guarantors and the Agent. Terms
defined in the Credit Agreement and not otherwise defined herein are used herein
as therein defined.
In connection with the opinions expressed below, we have examined
executed counterparts of the following (collectively, the "Financing
Documents"):
(a) the Credit Agreement,
(b) the Subsidiary Guaranty Agreement, and
(c) three (3) promissory notes, each substantially in the form of
Exhibit A to the Credit Agreement, one payable to each Bank (collectively,
the "Notes").
We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such other instruments, documents and records
as we deemed necessary to express the opinions hereinafter set forth. To the
extent relevant
<PAGE> 98
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
June 30, 1995
Page 2
to our opinion, we have assumed, without independent verification, (i) the due
execution and delivery of each Financing Document by each party thereto (other
than the Obligors), (ii) the genuineness of all signatures on all documents
submitted to us, (iii) that each party (other than the Obligors) to each of the
Financing Documents is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has full power and
authority to enter into and to carry out its obligations under such Financing
Documents, (iv) that the execution and delivery of each of the Financing
Documents by each party thereto (other than the Obligors) and the performance of
its obligations under such Financing Documents have been duly authorized by all
necessary proceedings and actions, (v) that each of the Financing Documents is
the legal, valid and binding obligation of each party thereto (other than the
Obligors) enforceable against such party in accordance with the terms of such
Financing Documents, subject to limitations of the types described herein, and
(vi) the authenticity of all documents submitted to us as originals and the
conformity to authentic original documents of all documents submitted to us as
certified, conformed or photostatic copies. We have relied, to the extent that
we deem such reliance proper, upon certificates of officers of one or more of
the Obligors and of governmental officials as to matters of fact not
independently established by us. We have also examined the representations and
warranties of the Company contained in the Credit Agreement and have relied, to
the extent we deem such reliance proper, upon the relevant facts stated therein.
Based on the foregoing and subject to the qualifications and
limitations set forth below, we are of the opinion that:
1. (a) Each of the Obligors is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, and has all corporate power and authority required to own its
assets and to carry on its business as now conducted.
(b) The execution, delivery and performance by each Obligor of each
Financing Document to which it is a party will not violate the Public Utility
Holding Company Act of 1935, the Investment Company Act of 1940 or the
Interstate Commerce Act.
2. The execution, delivery and performance by each Obligor of each
Financing Document to which it is a party are within such Obligor's corporate
powers, have been duly authorized by all necessary corporate action, and do not
constitute a
<PAGE> 99
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
June 30, 1995
Page 3
breach or default under, any provision of applicable law or regulation known to
us after reasonable inquiry or the certificate of incorporation or bylaws of
such Obligor.
3. To the best of our knowledge, the execution, delivery and
performance by each Obligor of each Financing Document to which it is a party do
not constitute a breach of or default under, or result in the creation or
imposition of any Lien on any material asset of the Company or any Subsidiary
under, any provision of the instruments and agreements identified in Schedule I
hereto.
4. No authorization, consent or approval of any governmental body,
agency or official is required in connection with the execution, delivery or
performance by any Obligor of any of the Financing Documents to which it is a
party.
5. (a) The Credit Agreement and the Notes have been duly executed and
delivered by the Company, and constitute legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their respective
terms.
(b) The Subsidiary Guaranty Agreement has been duly executed and
delivered by each of the Subsidiary Guarantors, and constitutes a legal, valid
and binding obligation of each of the Subsidiary Guarantors, enforceable against
each of the Subsidiary Guarantors in accordance with its terms.
6. If all material facts (as we understand them) and issues of law were
presented and properly argued, a Texas court or a federal court sitting in the
State of Texas and applying the laws of the State of Texas should hold that the
consent by the Company in Section 9.09 of the Credit Agreement, and by each
Subsidiary Guarantor in Section 3.05 of the Subsidiary Guaranty Agreement, to
the non-exclusive personal jurisdiction of the courts of the State of Texas and
of any federal court located in the State of Texas is valid. In this regard we
call to your attention that such consents to non-exclusive jurisdiction are not
effective to (1) confer subject matter jurisdiction that does not otherwise
exist in such court or (2) establish diversity jurisdiction that does not
otherwise exist in an action brought in federal court.
7. Neither the execution, delivery and performance by any Obligor of
the Financing Documents to which it is a party, nor the use of the proceeds of
the Loans in accordance with Section 5.09 of the Credit Agreement, will violate
the
<PAGE> 100
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
June 30, 1995
Page 4
provisions of Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
The opinions set forth above are subject to the following additional
assumptions, limitations and qualifications:
(a) Our opinions with respect to the enforceability of the Financing
Documents are subject to the qualification that such enforceability may be (i)
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or similar laws affecting the rights of creditors
generally, (ii) subject to general principles of equity (regardless of whether
such enforceability is considered in a proceeding at law or in equity),
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing, and (iii) limited by the power of a court to award
damages in lieu of equitable remedies (including specific performance or
injunctive relief) or otherwise to refuse to grant a particular remedy sought by
the parties to the Financing Documents.
(b) We express no opinion herein as to (1) the right of any Bank to
set-off against funds held in any special account maintained by the Company with
such Bank or which are otherwise subject to special agreement between the
Company and such Bank; (2) whether the provisions of the Credit Agreement which
permit the Agent, the Co-Agents or any Bank to take action or make
determinations may be subject to a requirement that such action be taken or such
determination be made in good faith; (3) whether the holder of a Note may, under
certain circumstances, be called upon to prove the outstanding principal amount
of the loans evidenced thereby; (4) the effect of the law of any jurisdiction
(other than Texas) wherein any Bank may be located which limits rates of
interest which may be charged or collected by such Bank; and (5) the
enforceability of any provision in the Financing Documents that purports to (i)
require indemnification for the negligence or wilful misconduct of the
indemnitee or to otherwise require any Obligor to provide indemnification to the
extent the same may be in conflict with public policy, (ii) limit the effect of
any delay or omission of enforcement of rights or remedies or any course of
performance or course of dealing between the parties, (iii) create an agreement
to agree, (iv) fix evidentiary standards or venue of any proceeding, (v) waive
rights to a trial by jury, or (vi) waive rights to notices, legal defenses or
other benefits that cannot, as a matter of law, be effectively waived.
(c) Whenever this opinion states the existence or absence of any fact
either to the best of our knowledge or known to us, such statement is intended
to convey that, during the course of our representation of the Obligors with
respect to matters
<PAGE> 101
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
June 30, 1995
Page 5
addressed herein, no information has come to our attention which has given us
actual knowledge of facts contrary to the statements so expressed herein.
(d) In rendering our opinions in paragraph 1 we have relied upon the
description of the properties, assets and businesses of the Obligors set forth
in the Report on Form 10-K for the year ended December 31, 1994, and on Form
10-Q for the three months ended on March 31, 1995, filed by the Company with the
Securities and Exchange Commission.
(e) In rendering the opinions in paragraphs 2 and 5, we have assumed
that (i) there are no fees, points, premiums or other sums contracted for,
charged to or paid or to be paid by the Company to the Banks on account of the
transactions described in the Credit Agreement other than those described in the
Credit Agreement and those described in the letters of even date herewith from
the Agent to the Company and (ii) the parties to the Financing Documents will
comply strictly with the precise terms of the Financing Documents, including,
without limitation, the usury savings clauses set forth therein with respect to
any consideration contemplated by the Financing Documents that will constitute
interest under Texas law.
(f) In rendering our opinions in paragraph 7 we have assumed that the
representations of the Company and the Banks set forth in Sections 4.12 and
9.07, respectively, of the Credit Agreement will be true and correct at all
times.
(g) The foregoing opinions are rendered only with respect to the
constitutions, laws, rules and regulations which are currently in effect and
applicable court rulings and orders which have been published and are generally
available. In addition, the foregoing opinions are rendered only as of the date
hereof, and we disclaim any obligation to advise you of changes thereafter.
(h) Insofar as our opinion relates to the laws of The Commonwealth of
The Bahamas and The Republic of Indonesia it is, with your permission and
without independent investigation, and subject to the other qualifications set
forth in this paragraph (h), given solely in reliance upon and limited in scope
to the opinions of Graham, Thompson & Co. and Mochtar, Karuwin & Komar,
respectively, dated April 24, 1995 (the "Foreign Opinions") addressed to each of
you as "Banks" under the Credit Agreement dated as of April 24, 1995 among the
Company, the banks and co-agents listed on the signature pages thereof and
NationsBank of Texas, N.A., as agent, copies of which Foreign Opinions have been
furnished to each of you, and our opinion
<PAGE> 102
To the Banks and the Agent
Referred to Below
c/o NationsBank of Texas, N.A. as Agent
June 30, 1995
Page 6
incorporates by reference all qualifications, exceptions and limitations set
forth therein. As you know, neither Graham, Thompson & Co. nor Mochtar, Karuwin
& Komar have reviewed the Financing Documents, nor have they updated their
respective opinions since April 24, 1995. We have assumed, with your permission
and without independent investigation, that the Foreign Opinions are true and
correct as of the date hereof as if such opinions were published on the date
hereof and the Financing Documents were the "Financing Documents" referred to
therein.
This opinion is limited in all respects to the laws of the State of
Texas, the General Corporation Law of Delaware and federal law of the United
States of America, and, to the limited extent described in paragraph (h) above,
the laws of The Commonwealth of The Bahamas and The Republic of Indonesia.
This opinion is for the benefit of and may be relied upon by the Banks,
the Agent, the Co-Agents, their respective successors and assigns, their
respective counsel and Participants in connection with the transactions
contemplated by the Credit Agreement and may be relied upon by Newton W. Wilson,
III, General Counsel of the Company, in rendering his opinion to the Banks and
the Agent in connection with such transactions. Otherwise, this opinion may not
be used, published, circulated or relied upon by any other Person for any
purpose without our prior written consent.
Very truly yours,
ANDREWS & KURTH L.L.P.
<PAGE> 103
SCHEDULE I
I. UNION TEXAS PETROLEUM HOLDINGS, INC. ("UTPH")
A. Indenture dated as of November 15, 1992 between UTPH, the guarantors
named therein, and State Street Bank and Trust Company, as trustee, relating to
the $100,000,000 8.25% Senior Notes due November 15, 1999 issued by UTPH.
B. Indenture dated as of March 15, 1995 between UTPH, the guarantors
named therein, and The First National Bank of Chicago, as trustee, relating to
the $125,000,000 8 3/8% Senior Notes due 2005 issued by UTPH and the
$75,000,000 8 1/2% Senior Notes due 2007 issued by UTPH.
C. $450,000,000 Amended and Restated Credit Agreement dated as of May 13,
1994 among UTPH, the Banks and Co-Agents listed on the signature pages thereof
and NationsBank of Texas, N.A., as Agent, as amended by the First Amendment
Agreement dated as of November 21, 1994, the Second Amendment Agreement dated as
of January 31, 1995, the Third Amendment Agreement dated as of April 24, 1995,
and the Fourth Amendment Agreement dated as of June 16, 1995.
D. $100,000,000 Credit Agreement dated as of April 24, 1995 among UTPH,
the Banks and Co-Agents listed on the signature pages thereof and NationsBank of
Texas, N.A., as Agent, as amended by the First Amendment Agreement dated as of
June 16, 1995.
E. $100,000,000.00 Credit Agreement dated as of June 30, 1995 among UTPH,
the Banks and Co-Agents listed therein and NationsBank of Texas, N.A., as Agent.
II. UNION TEXAS PAKISTAN, INC. ("UT PAKISTAN")
A. Finance Agreement dated as of December 20, 1988 between UT Pakistan
and Overseas Private Investment Corporation ("OPIC").
B. Issuing and Paying Agency Agreement dated as of December 20, 1988
among First Trust New York National Association (as successor to Morgan Guaranty
Trust Company of New York), as issuing and paying agent, OPIC, and UT Pakistan,
relating to the Promissory Note dated December 20, 1988 issued by UT Pakistan to
Liberty U.S. Government Money Market Trust in the original principal amount of
US$21,250,000.
C. Guaranty Agreement dated as of December 20, 1988 between UTPH and
OPIC.
D. Deed of Floating Charge dated December 20, 1988 by UT Pakistan in
favor of OPIC.
III. UNISTAR, INC. ("UNISTAR") AND UNIMAR COMPANY ("UNIMAR")
A. Amended and Restated Agreement of General Partnership of Unimar
entered into as of September 11, 1990.
<PAGE> 104
B. Indenture dated as of September 25, 1984 between Unimar and Irving
Trust Company, as trustee, relating to 14,077,747 Indonesian Participating
Units, as supplemented by the First Supplemental Indenture dated as of October
31, 1986 between such parties.
C. Shareholders Agreement dated as of September 11, 1990 among UTPH,
Unistar, Ultramar America Limited, Ultramar Indonesia Limited and Ultrastar,
Inc.
D. Second Shareholders Agreement dated as of August 26, 1993 among UTPH,
Unistar, LASMO America Limited, LASMO Sanga Sanga Limited and LASMO (USTAR) Inc.
(formerly Ultrastar, Inc.)
IV. UNION TEXAS EAST KALIMANTAN LIMITED ("UTEK")
A. Production Sharing Contract and related Agreements.
1. Amended and Restated Production Sharing Contract dated April 23, 1990,
but effective as of August 8, 1968 among Perusahaan Pertambangan Minyak Dan Gas
Bumi Negara ("Pertamina"), and Roy M. Huffington, Inc., Virginia Indonesia
Company, Virginia International Company, Ultramar Indonesia Limited, Union Texas
East Kalimantan Limited, Universe Gas & Oil Company, Inc. and Huffington
Corporation (all such parties and their predecessors and successors in interest
are herein collectively referred to as the "IJV Contractors"), and Production
Sharing Contract dated April 23, 1990, but effective as of August 8, 1998 among
Pertamina and the IJV Contractors.
2. Joint Venture Agreement effective as of August 8, 1968 by and between
Roy M. Huffington, Inc., Virginia International Company, Austral Petroleum Gas
Corporation, Golden Eagle Indonesia Limited and Union Texas Far East
Corporation, as amended by a Settlement Agreement dated as of January 16, 1976
among these parties and Universe Tankships, Inc., an Agreement dated as of
October 1, 1979 among Roy M. Huffington, Inc., Virginia International Company,
Austral Petroleum Gas Corporation, Golden Eagle Indonesia Limited, Universe
Tankships, Inc. and Union Texas Far East Corporation and a Letter dated October
1, 1979 from Roy M. Huffington, Inc. to Virginia International Company, Austral
Petroleum Gas Corporation, Golden Eagle Indonesia Limited, Universe Tankships,
Inc. and Union Texas Far East Corporation.
3. Operating Agreement dated as of August 8, 1968 between Roy M.
Huffington, Inc., as operator, and Union Texas Far East Corporation, Golden
Eagle Indonesia Limited, Virginia International Company and Austral Petroleum
Gas Corporation, as non-operators, as amended by a letter agreement effective
September 15, 1973 among these parties and an Amendment to Operating Agreement
dated as of April 1, 1990 among Roy M. Huffington, Inc., Ultramar Indonesia
Limited, Virginia Indonesia Company, Virginia International Company, Union Texas
East Kalimantan Limited, and Universe Gas & Oil Company, Inc. and a Letter dated
February 8, 1990 from the IJV Contractors to Pertamina.
4. Amended and Restated Bontang Processing Agreement dated as of February
9, 1988 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia
Petroleum, Ltd., Unocal Indonesia, Ltd., and P. T. Badak.
<PAGE> 105
B. Supply Agreements.
1. Amended and Restated Supply Agreement (In support of the Amended and
Restated 1973 LNG Sales Contract) dated September 22, 1993, but effective as of
December 3, 1973, between Pertamina and the IJV Contractors.
2. Supply Agreement for Badak LNG Expansion Project dated as of April 14,
1981 among Pertamina and the IJV Contractors, as supplemented by the Memorandum
of Understanding dated as of April 14, 1981 among Pertamina, the IJV
Contractors, Total Indonesie, and Union Oil Company of Indonesia, and the
Supplemental Memorandum dated August 24, 1983 among Pertamina and the IJV
Contractors and as amended by the Memorandum dated December 1, 1988 among
Pertamina and the IJV Contractors.
3. Badak III LNG Sales Contract Supply Agreement executed October 19,
1987, but effective as of March 19, 1987 among Pertamina and the IJV
Contractors, as supplemented by the Supplemental Memorandum dated as of January
1, 1990 among Pertamina and the IJV Contractors.
4. Amended and Restated Second Supply Agreement for Excess Sales
(Quantities In Kind and LNG Amounts Under Amended and Restated Invoice
Settlement Agreements) dated as of January 19, 1990, but effective December 1,
1988, among Pertamina and the IJV Contractors, as supplemented by the
Supplemental Memorandum dated as of January 1, 1990 among Pertamina and the IJV
Contractors.
5. Badak IV LNG Sales Contract Supply Agreement dated as of August 12,
1991, but effective as of October 23, 1990, among Pertamina and the IJV
Contractors, as supplemented by the Memorandum of Understanding Re: Supply
Agreements and Package IV Sales dated as of August 12, 1991, but effective as of
July 1, 1990, and the Supplemental Memorandum of Understanding dated as of
January 31, 1994, but effective as of July 1, 1990, each among Pertamina, the
IJV Contractors, Total Indonesie, Unocal Indonesia, Ltd., and Indonesia
Petroleum, Ltd., and the Addendum to Badak IV LNG Sales Contract Supply
Agreement dated as of January 31, 1994, but effective as of October 23, 1990
among Pertamina and the IJV Contractors.
6. Package V Supply Agreement for Natural Gas in support of the 1973 LNG
Sales Contract Extension, dated June 16, 1995, effective October 6, 1994,
between Pertamina and Virginia Indonesia Company, LASMO Sanga Sanga Limited,
OPICOIL Houston, Inc., Union Texas East Kalimantan Limited, Universe Gas & Oil
Company, Inc. and Virginia International Company.
7. Package V Supply Agreement (1995 - 1999 LNG Sales to Korea Gas
Corporation), dated June 16, 1995, effective September 30, 1994, between
Pertamina and Virginia Indonesia Company, LASMO Sanga Sanga Limited, OPICOIL
Houston, Inc., Union Texas East Kalimantan Limited, Universe Gas & Oil Company,
Inc. and Virginia International Company.
8. Package V Supply Agreement (1998 - 1999 LNG Sales to Chinese Petroleum
Corporation), dated June 16, 1995, effective December 6, 1994, between Pertamina
and Virginia Indonesia Company, LASMO Sanga Sanga Limited, OPICOIL Houston,
Inc., Union Texas East Kalimantan Limited, Universe Gas & Oil Company, Inc. and
Virginia International Company.
<PAGE> 106
C. Miscellaneous Agreements.
1. Amended and Restated Bontang II Trustee and Paying Agent Agreement
dated as of July 15, 1991 among the IJV Contractors, Pertamina, Total Indonesie,
Unocal Indonesia, Ltd., and Indonesia Petroleum Ltd., and Continental Bank
International ("CBI"), as trustee.
2. Amended and Restated Debt Service Allocation Agreement dated as of
February 9, 1988 among Pertamina, the IJV Contractors, Total Indonesie,
Indonesia Petroleum, Ltd. and Unocal Indonesia, Ltd.
3. Amended and Restated Badak Trustee and Paying Agent Agreement dated as
of February 9, 1988 among Pertamina, the IJV Contractors, Total Indonesie,
Unocal Indonesia, Ltd., Indonesia Petroleum, Ltd., and CBI, as trustee ("Bontang
I Trustee").
D. Bontang Capital Project Financing Tier III-2.
1. Producers Agreement No. 2 dated as of June 9, 1987 among the IJV
Contractors, the lenders named therein, and The Industrial Bank of Japan Trust
Company ("IBJ Trust"), as agent for such lenders, as amended by the Amendment
No. 1 to Producers Agreement No. 2 dated as of February 9, 1988 and Amendment
No. 2 to Producers Agreement No. 2 dated as of May 31, 1988, each among the IJV
Contractors, the lenders named therein, and IBJ Trust, as agent for such
lenders.
2. Bontang Capital Projects Loan Agreement No. 2 dated as of June 9, 1987
among the Bontang I Trustee, the lenders named therein, and IBJ Trust, as agent
for such lenders, as amended by the Amendment No. 1 to Bontang Capital Projects
Loan Agreement No. 2 dated as of February 9, 1988 among the Bontang I Trustee,
the lenders named therein, and IBJ Trust, as agent for such lenders.
E. Train E Financing.
1. Bontang III Producers Agreement dated as of February 9, 1988 among
Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum, Ltd., and
Unocal Indonesia, Ltd. in favor of Train-E Finance Co., Ltd., as Tranche A
Lender, the banks named therein as Tranche B Lenders and IBJ Trust as Agent for
such Tranche B Lenders, as amended by Amendment No. 1 dated as of May 31, 1988
among Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum,
Ltd., and Unocal Indonesia, Ltd. in favor of Train-E Finance Co., Ltd., as
Tranche A Lender, the banks named therein as Tranche B Lenders and IBJ Trust as
Agent for such Tranche B Lenders.
2. Bontang III Trustee and Paying Agent Agreement dated as of February 9,
1988 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum,
Ltd., Unocal Indonesia, Ltd. and CBI, as trustee (the "Bontang III Trustee"), as
amended by Amendment No.1 dated as of December 11, 1992 among Pertamina, the IJV
Contractors, Total Indonesie, Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd.
and the Bontang III Trustee.
3. Amended and Restated Bontang Excess Sales Trustee and Paying Agent
Agreement dated as of February 9, 1988 among Pertamina, the IJV Contractors,
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Total Indonesie, Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd. and CBI, as
trustee.
4. Bontang III Loan Agreement dated as of February 9, 1988 among the
Bontang III Trustee, Train-E Finance Co., Ltd., as Tranche A Lender, the banks
named therein as Lead Managers and Tranche B Lenders and IBJ Trust as Agent for
such Tranche B Lenders.
F. LPG Financing.
1. Amended and Restated Bontang LPG Trustee and Paying Agent Agreement
dated as of December 31, 1991 among Pertamina, the IJV Contractors, Total
Indonesie, Indonesia Petroleum, Ltd., Unocal Indonesia, Ltd. and CBI, as
trustee.
2. Advance Payment Agreement dated as of February 18, 1987 between
Pertamina and Arun Bontang Project Finance Co., Ltd.
G. Train F Financing.
1. Bontang IV Producers Agreement dated as of August 26, 1991 among
Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum, Ltd., and
Unocal Indonesia, Ltd. in favor of the lenders named therein and The Chase
Manhattan Bank, N.A. as agent for such lenders.
2. Bontang IV Trustee and Paying Agent Agreement dated as of August 26,
1991 among Pertamina, the IJV Contractors, Total Indonesie, Indonesia Petroleum,
Ltd., Unocal Indonesia, Ltd. and CBI, as trustee (the "Bontang IV Trustee").
3. Bontang IV Loan Agreement dated as of August 26, 1991 among the
Bontang IV Trustee, the lenders named therein and The Chase Manhattan Bank, N.A.
as agent for such lenders.
V. UNION TEXAS PETROLEUM LIMITED ("UTPL")
A. Britannia financing.
1. Facility Agreement dated May 26, 1995, between Union Texas Britannia
Limited ("UTBL") and the Arranger, Co-Arrangers, Facility Agent, Technical
Agents, Funding Agent, Account Bank and the Banks named therein.
2. Administrative Services Agreement dated May 26, 1995, between UTPL and
UTBL.
3. Sponsor Direct Agreement dated May 26, 1995, between UTPL, as Sponsor,
UTBL, as Borrower, and NationsBank N.A. (Carolinas), as Facility Agent.
4. Sponsor Support Agreement dated May 26, 1995, between UTBL, as
Borrower, and UTPL, as Sponsor.
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EXHIBIT E
OPINION OF SPECIAL COUNSEL TO THE AGENT
June 30, 1995
To NationsBank of Texas, N.A., as Agent,
and to each of the Banks referred to
below
Ladies and Gentlemen:
We have acted as special counsel to NationsBank of Texas, N.A., acting for
itself and as Agent, in connection with the preparation, execution and delivery
of the Credit Agreement dated as of June 30, 1995 (the "Credit Agreement"),
among Union Texas Petroleum Holdings, Inc., a Delaware corporation (the
"Company"), the banks listed on the signature pages thereof (the "Banks"),
NationsBank of Texas, N.A., as Agent, and the Co-Agents. Capitalized terms
defined in the Credit Agreement and not defined herein are used herein as
therein defined.
In that connection, we have examined counterparts of the Credit Agreement
executed by the Agent and the Company respectively and the following documents:
(1) The Notes delivered to the Agent on the date hereof.
(2) The Subsidiary Guaranty Agreement delivered to the Agent on the
date hereof.
(3) The legal opinions delivered to the Agent pursuant to Sections
3.01(d) and 3.01(e) of the Credit Agreement.
In our examination of the documents referred to above, we have assumed the
authenticity of all such documents submitted to us as originals, the genuineness
of all signatures and the conformity to the originals of all such documents
submitted to us as copies. We have also assumed the accuracy of all matters set
forth in the certificates delivered to the Agent on the date hereof in
connection with the Credit Agreement and assumed that each of Company, the
Banks, the Agent and the Co-Agents has duly executed and delivered, with all
necessary power and authority (corporate and otherwise), the Credit Agreement,
that the Company has duly executed and delivered, with all necessary power and
authority (corporate and otherwise), the respective Notes and that each of the
Required Guarantors and the Agent has duly executed and delivered, with all
necessary power and authority (corporate and otherwise), the Subsidiary Guaranty
Agreement. We have also
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NationsBank of Texas, N.A.,
as Agent and the Banks
June 30, 1995
Page 2
assumed that no Bank has requested multiple Notes pursuant to Section 2.05(b) of
the Credit Agreement.
Based upon the foregoing examination of documents and assumptions and upon such
other investigation as we have deemed necessary, we are of the opinion that the
documents referred to in items (1), (2) and (3) above are substantially
responsive to the requirements of the Credit Agreement.
This opinion is delivered to you only in connection with the transactions
contemplated by the Credit Agreement and may not be quoted, circulated or
published, in whole or in part, or furnished to any Person, other than your
respective successors and assigns and Participants, without our prior written
consent.
Very truly yours,
Bracewell & Patterson, L.L.P.
<PAGE> 110
EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
AGREEMENT dated as of _____________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), [UNION TEXAS PETROLEUM HOLDINGS, INC.
(the "Company")] and NATIONS BANK OF TEXAS, N.A., as Agent (the "Agent").
W I T N E S S E T H:
WHEREAS, this Assignment and Assumption Agreement (this "Agreement")
relates to the Credit Agreement dated as of June 30, 1995 among the Company, the
Banks (including Assignor) and Co-Agents parties thereto and the Agent (such
Credit Agreement, as amended from time to time, is hereinafter referred to as
the "Credit Agreement");
WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans in an aggregate principal amount at any time
outstanding not to exceed $____________;
WHEREAS, Loans made by the Assignor under the Credit Agreement in the
aggregate principal amount of $_____________ are outstanding at the date hereof;
and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Loans, and the Assignee
proposes to accept assignment of such rights and assume the corresponding
obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Credit Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Credit Agreement to the extent of the Assigned Amount, including the purchase
from the Assignor of the
<PAGE> 111
corresponding portion of the principal amount of the Loans made by the Assignor
outstanding at the date hereof. Upon the execution and delivery hereof by the
Assignor, the Assignee[, the Company] and the Agent and the payment of the
amounts specified in Section 3 required to be paid on the date hereof, (i) the
Assignee shall, as of the date hereof, succeed to the rights and be obligated to
perform the obligations of a Bank under the Credit Agreement with a Commitment
in an amount equal to the Assigned Amount plus the amount of the Commitment, if
any, of the Assignee immediately prior to the effectiveness of this Agreement,
and (ii) the Commitment of the Assignor shall, as of the date hereof, be reduced
by an amount equal to the Assigned Amount, and the Assignor shall, as of the
date hereof, be released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor. [The Assignor and
the Assignee hereby certify that the Assignee is [an affiliate of the
Assignor/another Bank,] and accordingly, the Company's consent hereto is not
required.]
SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds an amount equal to $__________ *. It is understood
that commitment and/or facility fees accrued to the date hereof are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit
Agreement which is for the account of the other party hereto, it shall receive
the same for the account of such other party to the extent of such other
party's interest therein and shall promptly pay the same to such other party.
As contemplated by Section 9.06(c) of the Credit Agreement, the Assignor agrees
to pay to the Agent for its account on the date hereof in Federal funds an
amount equal to $2,500 as an administrative fee for processing this Agreement.
SECTION 4. Consent. This Agreement is conditioned upon the consent of
[the Company and] the Agent pursuant to Section 9.06(c) of the Credit Agreement.
The execution of this Agreement by [the Company and] the Agent is evidence of
this consent. Pursuant to Section 9.06(c) the Company agrees to execute and
deliver a Note payable to the order of the Assignee to evidence the assignment
and assumption provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the Company
or any other Obligor, the validity and enforceability of the obligations of the
Company or any other
________________
*Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.
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<PAGE> 112
Obligor in respect of the Credit Agreement, any Note or the Subsidiary Guaranty
Agreement or the accuracy of any Engineering Report. The Assignee acknowledges
that it has, independently and without reliance on the Assignor, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Company and the other Obligors, the Engineering
Reports and other relevant matters.
SECTION 6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
SECTION 8. Representation and Agreement. The Assignee represents that
it is either (i) a corporation, association or other entity organized under the
laws of the United States or any state thereof or (ii) 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 the Credit Agreement or
the Notes. If the Assignee is not organized under the laws of the United States
or any state thereof, it agrees to provide to the Company and the Agent, on or
prior to the date of this Agreement, two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that the
Assignee is entitled to receive payments from the Company under the Credit
Agreement and the Notes without deduction or withholding of any United States
federal income taxes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By:__________________________
Title:
[ASSIGNEE]
By:__________________________
Title:
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<PAGE> 113
[UNION TEXAS PETROLEUM
HOLDINGS, INC.
By:___________________________
Title:]
NATIONSBANK OF TEXAS, N.A.,
as Agent
By:___________________________
Title:
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<PAGE> 1
Exhibit 10.8
SUBSIDIARY GUARANTY AGREEMENT
SUBSIDIARY GUARANTY AGREEMENT dated as of June 30, 1995 (as may be
amended or otherwise modified from time to time in accordance with the terms
hereof, this "Agreement") among each of the Subsidiary Guarantors listed on the
signature pages hereof under the caption "Subsidiary Guarantors" or which
hereafter becomes a party hereto pursuant to Section 3.08(b) (collectively, the
"Subsidiary Guarantors") and NationsBank of Texas, N.A., as agent for the banks
under the Credit Agreement referred to below (the "Agent").
W I T N E S S E T H:
WHEREAS, pursuant to the Credit Agreement dated as of June 30, 1995
among Union Texas Petroleum Holdings, Inc. (the direct or indirect parent of
each of the Subsidiary Guarantors) (the "Company"), the Banks and Co-Agents
parties thereto and the Agent (as may be amended or otherwise modified from time
to time, the "Credit Agreement"), the Company is entitled, subject to certain
conditions, to borrow up to $100,000,000 or such other amount as may be
available pursuant thereto;
WHEREAS, as a condition to borrowings under the Credit Agreement, each
Required Guarantor is required to execute and deliver to the Agent this
Agreement whereby such entity shall, subject to Section 2.08 hereof, guarantee
the payment when due of the principal of and interest on all Loans and all other
amounts payable at any time by any Obligor under any of the Financing Documents,
including, without limitation, interest which accrues during a proceeding which
occurs under the U.S. Bankruptcy Code or which would otherwise accrue under the
terms of any of the Financing Documents, but for a proceeding under the U.S.
Bankruptcy Code (such principal, interest and other amounts being herein called
the "Guaranteed Amounts");
WHEREAS, in consideration of the financial and other support that the
Company has provided, and such financial and other support as the Company may in
the future provide, to the Subsidiary Guarantors and in order to induce the
Banks to enter into the Credit Agreement and to consider requests to extend
financial accommodations to the Company, the Subsidiary Guarantors are willing
to guarantee, subject to Section 2.08 hereof, the Guaranteed Amounts;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein as therein defined.
<PAGE> 2
ARTICLE II
GUARANTEES
SECTION 2.01. The Guarantees. Subject to Section 2.08, the Subsidiary
Guarantors hereby jointly, severally, unconditionally and irrevocably guarantee
to the Agent, for the ratable benefit of the Banks, the full and punctual
payment of all present and future Guaranteed Amounts as and when the same shall
become due and payable, whether at maturity, by declaration or otherwise,
according to the terms thereof. In case of failure by the Company punctually to
pay any Guaranteed Amount, the Subsidiary Guarantors hereby jointly, severally
and unconditionally agree, forthwith upon demand by the Agent, to make payment
thereof to the Agent at the place and in the manner specified in the Credit
Agreement.
SECTION 2.02. Guarantees Unconditional. Subject to Section 2.08, the
obligations of each Subsidiary Guarantor under this Article II shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company or any other
Subsidiary Guarantor under any Financing Document or any Guaranteed
Amount;
(b) any modification or amendment of or supplement to (i) this
Agreement insofar as the same does not purport to modify the rights or
obligations of such Subsidiary Guarantor hereunder or (ii) any other
Financing Document;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect security, or of
any guarantee or other liability of any third party, for any obligation
of the Company or any Subsidiary Guarantor under any Financing Document
or any Guaranteed Amount;
(d) any change in the corporate existence, structure or
ownership of the Company or any Subsidiary, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the
Company or any other Subsidiary or their respective assets;
(e) the existence of any claim, set-off or other rights which
any Subsidiary Guarantor may have at any time against the Company or
any Subsidiary Guarantor, the Agent, any Bank or any other Person,
whether or not arising in connection with any Financing Document or any
Guaranteed Amount, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
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<PAGE> 3
(f) any invalidity or unenforceability relating to or against
the Company or any Subsidiary Guarantor for any reason of any Financing
Document or any Guaranteed Amount, or any provision of applicable law
or regulation purporting to prohibit the payment by the Company or any
Subsidiary Guarantor of any Guaranteed Amount; or
(g) any other act or omission to act or delay of any kind by
the Company or any Subsidiary Guarantor, the Agent, any Bank or any
other Person or any other circumstances whatsoever that might, but for
the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of a Subsidiary Guarantor under this
Article II.
SECTION 2.03. Discharge; Reinstatement in Certain Circumstances.
Subject to Section 2.08, each Subsidiary Guarantor's obligations under this
Article II shall remain in full force and effect until all of the Commitments
shall have been terminated in their entirety and the Guaranteed Amounts shall
have been paid in full. If at any time any payment of or any amount payable by
the Company or any Subsidiary Guarantor in respect of any Guaranteed Amount is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of such Person or otherwise, each Subsidiary
Guarantor's obligations under this Article II with respect to such payment shall
be reinstated at such time as though such payment had become due but had not
been made at such time.
SECTION 2.04. Waiver. Each Subsidiary Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Company or any other Subsidiary Guarantor or any other
Person. Each Subsidiary Guarantor hereby irrevocably waives each and every right
to which it may be entitled by virtue of the suretyship laws of the State of
Texas, including, without limitation, any and all rights it may have pursuant to
Rule 31 or Rule 32, Texas Rules of Civil Procedure, Section 17.001 of the Texas
Civil Practice and Remedies Code and Chapter 34 of the Texas Business and
Commerce Code.
SECTION 2.05. Subrogation and Contribution. Each Subsidiary Guarantor
irrevocably waives any and all rights to which it may be entitled, by operation
of law or otherwise, upon making any payment hereunder (i) to be subrogated to
the rights of the payee against the Company with respect to such payment or
otherwise to be reimbursed, indemnified or exonerated by the Company in respect
thereof or (ii) to receive any payment, in the nature of contribution or for any
other reason, from any other Obligor with respect to such payment, in each case
until such time as all of the Commitments shall have been terminated in their
entirety and the Guaranteed Amounts shall have been paid in full.
SECTION 2.06. Stay of Acceleration. If acceleration of the time for
payment of any amount payable by the Company or any Subsidiary Guarantor in
respect of any Guaranteed Amount is stayed upon the insolvency, bankruptcy or
reorganization of such Person, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement or any other
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<PAGE> 4
agreement or instrument evidencing such Guaranteed Amount shall nonetheless be
payable by each other Subsidiary Guarantor hereunder forthwith on demand by the
Agent.
SECTION 2.07. Representations and Warranties. Each Subsidiary Guarantor
represents and warrants that as of the date hereof, and after giving effect to
this Agreement and the contingent obligations evidenced hereby (including any
limitation on the amount payable under this Agreement pursuant to Section 2.08),
it is and will be solvent, and has and will have assets which, fairly valued,
exceed its obligations, liabilities and debts, and has and will have property
and assets sufficient to satisfy and repay its obligations, liabilities and
debts when the same become due.
SECTION 2.08. Limit of Liability. Each Subsidiary Guarantor shall be
liable under this Agreement only for amounts aggregating up to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the United States Bankruptcy Code or any comparable
provisions of any applicable state or foreign law.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy, telex, facsimile
transmission or similar writing) and (i) in the case of a Subsidiary Guarantor,
shall be given to such Subsidiary Guarantor at c/o Union Texas Petroleum
Holdings, Inc., 1330 Post Oak Boulevard, Houston, Texas 77056 (telex number:
762255) and (ii) in the case of the Company or the Agent, at its address or
telex number set forth on the signature pages of the Credit Agreement or in any
case at such other address or telex number as such party may hereafter specify
for the purpose by notice to the Agent and the Company. Each such notice,
request or other communication shall be effective (i) if given by telex, when
such telex is transmitted to the telex number specified in this Section and the
appropriate answer is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Agent shall
not be effective until received.
SECTION 3.02. No Waiver; Exercise of Remedies. No failure or delay by
the Agent in exercising any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law. In exercising the rights
and remedies herein provided, the Agent shall act at the instructions of the
Required Banks or, failing such instruction, at its discretion.
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<PAGE> 5
SECTION 3.03. Amendments and Waivers. Any provision of this Agreement
may be amended or waived, and any Subsidiary Guarantor may be released from any
of its obligations hereunder, if, and only if, such amendment, waiver or release
is in writing and is signed by (i) each Subsidiary Guarantor affected thereby
and (ii) the Agent with the consent of Banks at the time having at least 66-2/3%
of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 66-2/3% of the aggregate
unpaid principal amount of the Loans; provided that any Subsidiary Guarantor
shall be released from its obligations hereunder upon the terms set forth in
Section 5.10 or Section 5.20 of the Credit Agreement.
SECTION 3.04. Texas Law. This Agreement shall be construed in
accordance with and governed by the law of the state of Texas.
SECTION 3.05. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. EACH
SUBSIDIARY GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE OVER EACH OF THEM IN CONNECTION WITH ANY ACTION, SUIT OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY FINANCING DOCUMENT AND, TO THE
FULLEST EXTENT PERMITTED BY LAW, FURTHER AGREES (AND SHALL NOT CONTEST) THAT THE
PROPER VENUE FOR FILING AND MAINTAINING ANY SUCH ACTION, SUIT OR PROCEEDING
SHALL BE IN THE STATE OF TEXAS. IN ANY SUCH ACTION, SUIT OR PROCEEDING, EACH
SUBSIDIARY GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN RECEIPT
REQUESTED, TO SUCH SUBSIDIARY GUARANTOR AT ITS ADDRESS FOR NOTICES HEREUNDER, OR
ANY FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE AND REMEDIES CODE
THEN IN EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON SUCH SUBSIDIARY
GUARANTOR. EACH SUBSIDIARY GUARANTOR THAT IS NOT ORGANIZED UNDER THE LAWS OF THE
UNITED STATES OR A STATE THEREOF (EACH A "NON-U.S. GUARANTOR") HEREBY APPOINTS
THE PRINCIPAL OFFICE OF CT CORPORATION SYSTEM IN HOUSTON, TEXAS, WHICH, ON THE
DATE HEREOF, IS LOCATED AT 911 DALLAS ST., HOUSTON, TEXAS 77002, AS THE
AUTHORIZED AGENT THEREOF (THE "AUTHORIZED AGENT") UPON WHOM PROCESS MAY BE
SERVED IN ANY SUCH ACTION, SUIT OR PROCEEDING WHICH MAY BE INSTITUTED IN THE
STATE OF TEXAS. SUCH APPOINTMENT SHALL BE IRREVOCABLE UNLESS AND UNTIL THE
APPOINTMENT OF A SUCCESSOR AUTHORIZED AGENT FOR SUCH PURPOSE, AND SUCH
SUCCESSOR'S ACCEPTANCE OF SUCH APPOINTMENT, SHALL HAVE OCCURRED AND THE AGENT
SHALL HAVE BEEN NOTIFIED THEREOF. EACH NON-U.S. GUARANTOR AGREES TO TAKE ANY AND
ALL ACTIONS, INCLUDING, WITHOUT LIMITATION, THE FILING OF ANY AND ALL DOCUMENTS
AND INSTRUMENTS, THAT MAY BE NECESSARY TO CONTINUE SUCH APPOINTMENT IN FULL
FORCE AND EFFECT AS AFORESAID. SERVICE
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<PAGE> 6
OF PROCESS UPON THE AUTHORIZED AGENT WITH RESPECT TO ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE DEEMED, IN EVERY RESPECT, EFFECTIVE SERVICE OF PROCESS UPON
ANY SUCH NON-U.S. GUARANTOR. EACH NON-U.S. GUARANTOR SHALL REQUIRE THE
AUTHORIZED AGENT TO AGREE IN WRITING TO ACCEPT THE FOREGOING APPOINTMENT AS
AGENT FOR SERVICE OF PROCESS.
SECTION 3.06. WAIVER OF JURY TRIAL. EACH SUBSIDIARY GUARANTOR HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 3.07. WAIVER OF SOVEREIGN IMMUNITY. TO THE EXTENT THAT ANY
SUBSIDIARY GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH SUBSIDIARY GUARANTOR
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY DO SO, SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, AGREES, TO THE FULLEST EXTENT IT MAY
LEGALLY DO SO, THAT THE WAIVERS SET FORTH IN THIS SECTION 3.07 SHALL HAVE THE
FULLEST SCOPE PERMITTED UNDER THE FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976 OF
THE UNITED STATES AND ARE INTENDED TO BE IRREVOCABLE FOR PURPOSES OF SUCH ACT.
SECTION 3.08. Successors and Assigns.
(a) All of the provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that no Subsidiary Guarantor
may assign or transfer any of its rights or obligations under this
Agreement.
(b) Any Subsidiary may become a party hereto and a Subsidiary
Guarantor hereunder, without any further action by any other party, by
executing and delivering a counterpart hereof to the Agent.
SECTION 3.09. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, and all of which taken
together shall constitute a single instrument, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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<PAGE> 7
SECTION 3.10. Judgment Currency. Each Non-U.S. Guarantor agrees to
indemnify the Agent and each Bank against any loss incurred by it as a result of
any judgment or order being given or made and expressed and paid in a currency
(the "Judgment Currency") other than United States dollars and as a result of
any variation as between (i) the rate of exchange at which the United States
dollar amount is converted into the Judgment Currency for the purpose of such
judgment or order and (ii) the spot rate of exchange in The City of New York at
which the Agent or such Bank on the date of payment of such judgment or order is
able to purchase United States dollars with the amount of the Judgment Currency
actually received by the Agent or such Bank. The foregoing indemnity shall
constitute a separate and independent obligation of each Non-U.S. Guarantor and
shall continue in full force and effect notwithstanding any such judgment or
order as aforesaid. The term "spot rate of exchange" shall include any premiums
and costs of exchange payable in connection with the purchase of, or conversion
into, United States dollars.
SECTION 3.11. Existence. Each Subsidiary Guarantor agrees to maintain
its existence except as permitted by Section 5.02 of the Credit Agreement.
SECTION 3.12. Taxes. (a) Any and all payments by any Subsidiary
Guarantor hereunder shall be made free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges and
withholdings, and all liabilities with respect thereto, excluding (i) in the
case of the Agent, each Co-Agent and each Bank, United States federal income
taxes and, without duplication, any taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which the Agent, such
Co-Agent or such Bank, as the case may be, is organized or any political
subdivision thereof and (ii) in the case of each Bank, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Subsidiary
Guarantor shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder to any Bank, any Co-Agent or the Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 3.12) such Bank, such Co-Agent or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Subsidiary Guarantor shall make such deductions
and (iii) such Subsidiary Guarantor shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) Each Subsidiary Guarantor will indemnify each Bank, each Co-Agent
and the Agent for the full amount of Taxes (including, without limitation, any
Taxes imposed by any jurisdiction on amounts payable under this Section 3.12)
paid by such Bank, such Co-Agent or the Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, whether or not such Taxes were correctly or legally asserted.
Payments under any indemnification provided for in this Section 3.12(b) shall be
made
-7-
<PAGE> 8
within 30 days from the date such Bank, such Co-Agent or the Agent (as the case
may be) makes written demand therefor.
(c) Within 30 days after the date of any payment of Taxes by a
Subsidiary Guarantor, such Subsidiary Guarantor will furnish to the Agent, at
its address referred to in Section 9.01 of the Credit Agreement, the original or
a certified copy of a receipt evidencing payment thereof. Should any Bank, any
Co-Agent or the Agent ever receive any refund, credit or deduction from any
taxing authority to which such Bank, such Co-Agent or the Agent, as the case may
be, would not be entitled but for the payment by a Subsidiary Guarantor of Taxes
as required by this Section 3.12 (it being understood that the decision as to
whether or not to claim, and if claimed, as to the amount of any such refund,
credit or deduction shall be made by such Bank, such Co-Agent or the Agent, as
the case may be, in its sole discretion), such Bank, such Co-Agent or the Agent,
as the case may be, thereupon shall repay to such Subsidiary Guarantor an amount
with respect to such refund, credit or deduction equal to any net reduction in
taxes actually obtained by such Bank, such Co-Agent or the Agent, as the case
may be, and reasonably determined by such Bank, such Co-Agent or the Agent, as
the case may be, to be attributable to such refund, credit or deduction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
SUBSIDIARY GUARANTORS:
UNION TEXAS PETROLEUM ENERGY UNION TEXAS EAST KALIMANTAN
CORPORATION LIMITED
By: /S/ M.N. MARKOWITZ By: /S/ M.N. MARKOWITZ
----------------------------------- -----------------------------------
M.N. Markowitz M.N. Markowitz
Treasurer Treasurer
UNION TEXAS PRODUCTS UNION TEXAS INTERNATIONAL
CORPORATION CORPORATION
By: /S/ M.N. MARKOWITZ By: /S/ M.N. MARKOWITZ
----------------------------------- -----------------------------------
M.N. Markowitz M.N. Markowitz
Treasurer Treasurer
UNISTAR, INC.
By: /S/ M.N. MARKOWITZ
-----------------------------------
M.N. Markowitz
Vice President
-8-
<PAGE> 9
AGENT:
NATIONSBANK OF TEXAS, N.A.,
as Agent
By: /S/ PAUL A. SQUIRES
-----------------------------------
Paul A. Squires
Senior Vice President
-9-
<PAGE> 1
EXHIBIT 10.9
CONFORMED COPY
FACILITY AGREEMENT
between
UNION TEXAS BRITANNIA LIMITED
as borrower
CHEMICAL BANK
as arranger
NATIONSBANK, N.A. (CAROLINAS)
and
NATIONAL WESTMINSTER BANK PLC
as co-arrangers
NATIONSBANK, N.A. (CAROLINAS)
as facility agent
NATIONSBANK, N.A. (CAROLINAS)
and
CHEMICAL BANK
as technical agents
NATIONAL WESTMINSTER BANK PLC
as funding agent
and
OTHERS
Clifford Chance
London
<PAGE> 2
CONTENTS
PART 1
INTERPRETATION
<TABLE>
<S> <C>
1. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . 1
PART 2
THE FACILITY
2. THE FACILITY . . . . . . . . . . . . . . . . . . . . . . . 27
3. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . 27
4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . 28
5. NATURE OF BANKS' OBLIGATIONS . . . . . . . . . . . . . . . 29
PART 3
AVAILABILITY OF THE FACILITY
6. AVAILABILITY OF THE FACILITY . . . . . . . . . . . . . . . 30
PART 4
INTEREST
7. INTEREST PERIODS . . . . . . . . . . . . . . . . . . . . . 33
8. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 34
9. ALTERNATIVE INTEREST RATES . . . . . . . . . . . . . . . . 34
PART 5
REPAYMENT, CANCELLATION AND PREPAYMENT
10. REPAYMENT OF THE LOAN . . . . . . . . . . . . . . . . . . 36
11. CANCELLATION AND PREPAYMENT . . . . . . . . . . . . . . . 37
PART 6
CHANGES IN CIRCUMSTANCES
12. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13. TAX RECEIPTS . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
14. INCREASED COSTS . . . . . . . . . . . . . . . . . . . . . 42
15. ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . 44
16. MITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 44
PART 7
INFORMATION AND FORECASTS
17. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . 46
18. PROJECT EXPENDITURE AND OTHER REPORTS . . . . . . . . . . 47
19. BANKING CASES . . . . . . . . . . . . . . . . . . . . . . 48
20. ENGINEERING REPORTS . . . . . . . . . . . . . . . . . . . 55
21. COMPLETION CERTIFICATES . . . . . . . . . . . . . . . . . 56
PART 8
REPRESENTATIONS, COVENANTS AND SECURITY
22. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . 58
23. POSITIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 63
24. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 68
25. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . 72
PART 9
INSURANCES
26. INSURANCES . . . . . . . . . . . . . . . . . . . . . . . . 74
27. INSURANCE COVENANTS . . . . . . . . . . . . . . . . . . . 76
PART 10
DEFAULT
28. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 80
29. DEFAULT INTEREST AND INDEMNITY . . . . . . . . . . . . . . 87
PART 11
PAYMENTS
30. CURRENCY OF ACCOUNT AND PAYMENT . . . . . . . . . . . . . 90
31. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 90
32. SET-OFF . . . . . . . . . . . . . . . . . . . . . . . . . 92
33. REDISTRIBUTION OF PAYMENTS . . . . . . . . . . . . . . . . 92
</TABLE>
<PAGE> 4
PART 12
PROJECT ACCOUNTS
<TABLE>
<S> <C>
34. THE PROJECT ACCOUNTS . . . . . . . . . . . . . . . . . . . 93
35. AUTHORISED INVESTMENTS . . . . . . . . . . . . . . . . . . 100
36. UTPL CREDIT TEST . . . . . . . . . . . . . . . . . . . . . 103
PART 13
FEES, COSTS AND EXPENSES
37. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
38. COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . . . 105
PART 14
AGENCY PROVISIONS
39. THE AGENTS, THE ARRANGER, THE CO-ARRANGERS
AND THE FINANCE PARTIES . . . . . . . . . . . . . . . . 107
40. THE FACILITY AGENT AS TRUSTEE . . . . . . . . . . . . . . 111
41. THE ACCOUNT BANK . . . . . . . . . . . . . . . . . . . . . 114
42. THE TECHNICAL AGENTS . . . . . . . . . . . . . . . . . . . 116
PART 15
ASSIGNMENTS AND TRANSFERS
43. BENEFIT OF AGREEMENT . . . . . . . . . . . . . . . . . . . 117
44. ASSIGNMENTS AND TRANSFERS BY THE BORROWER . . . . . . . . 117
45. ASSIGNMENTS AND TRANSFERS BY BANKS . . . . . . . . . . . . 117
46. DISCLOSURE OF INFORMATION . . . . . . . . . . . . . . . . 118
PART 16
MISCELLANEOUS
47. CALCULATIONS AND EVIDENCE OF DEBT . . . . . . . . . . . . 120
48. REMEDIES AND WAIVERS . . . . . . . . . . . . . . . . . . . 120
49. PARTIAL INVALIDITY . . . . . . . . . . . . . . . . . . . . 121
50. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . 121
51. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 122
52. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . 123
</TABLE>
PART 17
<PAGE> 5
LAW
<TABLE>
<S> <C>
53. LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
54. JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . 124
THE FIRST SCHEDULE
THE BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
THE SECOND SCHEDULE
FORM OF TRANSFER CERTIFICATE . . . . . . . . . . . . . . . . . . . 126
THE THIRD SCHEDULE
CONDITION PRECEDENT DOCUMENTS . . . . . . . . . . . . . . . . . . 129
THE FOURTH SCHEDULE
NOTICE OF DRAWDOWN . . . . . . . . . . . . . . . . . . . . . . . . 134
THE FIFTH SCHEDULE
REPAYMENT SCHEDULE . . . . . . . . . . . . . . . . . . . . . . . . 136
THE SIXTH SCHEDULE
PROJECT AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 137
THE SEVENTH SCHEDULE
PROJECT COMPLETION TESTS . . . . . . . . . . . . . . . . . . . . . 140
THE EIGHTH SCHEDULE
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
THE NINTH SCHEDULE
ASSOCIATED COSTS RATE . . . . . . . . . . . . . . . . . . . . . . 147
THE TENTH SCHEDULE
THE ORIGINAL BANKING CASE . . . . . . . . . . . . . . . . . . . . 149
THE ELEVENTH SCHEDULE
MINIMUM VOLUMES . . . . . . . . . . . . . . . . . . . . . . . . . 157
</TABLE>
<PAGE> 6
THIS AGREEMENT is made the 26 day of May, 1995
BETWEEN
(1) UNION TEXAS BRITANNIA LIMITED a company registered in England and Wales
with company registration number 2894635 (the "BORROWER");
(2) CHEMICAL BANK (the "ARRANGER");
(3) NATIONSBANK, N.A. (CAROLINAS) and NATIONAL WESTMINSTER BANK PLC as
co-arrangers (the "CO-ARRANGERS");
(4) NATIONSBANK, N.A. (CAROLINAS) as facility agent (the "FACILITY AGENT");
(5) NATIONSBANK, N.A. (CAROLINAS) and CHEMICAL BANK as technical agents
(the "TECHNICAL AGENTS" and each a "TECHNICAL AGENT");
(6) NATIONAL WESTMINSTER BANK PLC as funding agent (the "FUNDING AGENT");
(7) NATIONAL WESTMINSTER BANK PLC as account bank (the "ACCOUNT BANK"); and
(8) THE FINANCIAL INSTITUTIONS named in the First Schedule (in their
capacities as providers of the loan facility described herein, together
the "BANKS" and each a "BANK" and, in their capacities as
counterparties to the Borrower under any hedging agreement entered into
pursuant to the Approved Hedging Programme (as hereinafter defined),
together the "HEDGE COUNTERPARTIES" and each a "HEDGE COUNTERPARTY").
IT IS HEREBY AGREED as follows:
PART 1
INTERPRETATION
1. INTERPRETATION
1.1 In this Agreement:
"ABANDONMENT COSTS" means all costs and expenses incurred, or to be incurred, by
the Borrower in connection with the abandonment and/or demolition and removal of
the Britannia Field Facilities (together with any site reinstatement) required
at the time of such abandonment by the Unit Operating Agreement, any applicable
laws, rules and regulations, to the extent attributable to the Borrower's
interest therein but so as to exclude any costs or expenses which have been
classified hereunder as Capital Expenditure, GSA Refunds, Hedging Payments,
Insurance Costs, Financing Expenses, Operating Costs, Overlifting Costs,
- 1 -
<PAGE> 7
Project Taxes, Royalties, Transportation Costs, Trust Fund Costs and any amounts
payable by the Borrower in respect of its indebtedness for borrowed money;
"ABANDONMENT COSTS AGREEMENT" means the agreement brief particulars of which are
set out at paragraph 5 of the Sixth Schedule;
"ABANDONMENT DATE" means the day on which the Britannia Field Facilities and the
Britannia Field have been abandoned in accordance with the terms of the Unit
Operating Agreement and all applicable laws, rules and regulations;
"ADMINISTRATIVE SERVICES AGREEMENT" means the agreement of even date herewith
and made between the Sponsor and the Borrower pursuant to which the Sponsor has
agreed to provide certain management and administrative services to the
Borrower;
"ADVANCE" means, save as otherwise provided herein, an advance (as from time to
time reduced by repayment) made or to be made by the Banks hereunder;
"AGENTS" means the Facility Agent, the Technical Agents and the Funding Agent
(and "AGENT" means any of them);
"ANNEX B APPROVAL" in relation to the Britannia Field means the giving of
consent to, the approval of or the serving of a programme for the development of
such field by the Secretary of State pursuant to the relevant Model Clauses or
the equivalent provision under any licence applicable to such development;
"APPLICABLE MARGIN" means:
(i) at any time prior to the Project Completion Date 0.875% (zero
point eight seven five per cent.) per annum; and
(ii) at any time on or after the Project Completion Date 0.75%
(zero point seven five per cent.) per annum,
Provided that if at any time an Event of Default has occurred and has not been
remedied or waived the Applicable Margin at such time as determined pursuant to
(i) or (ii) above shall be increased by 1% (one per cent.) per annum;
"APPROVED HEDGING PROGRAMME" at any time means the programme (if any) from time
to time entered into or adopted by the Borrower and approved by an Instructing
Group (acting reasonably) on behalf of the Beneficiaries for the entering into
and performance of Hedging Agreements by the Borrower which such programme shall
provide for Hedging Agreements the object of which is to reduce (and, for the
avoidance of doubt, not to speculate in respect of the following):
(i) the Borrower's exposure to changes in floating rates of
interest;
(ii) the Borrower's exposure to changes in exchange rates;
- 2 -
<PAGE> 8
(iii) the Borrower's exposure to changes in the contract price of
gas sold under the Gas Sales Agreements; and
(iv) such other exposures or risks associated with the Project's
cash flow as the Borrower and the Facility Agent may from time
to time agree;
"ARRANGEMENT/UNDERWRITING FEES LETTERS" means the letters dated 22nd February
1995 from Chemical Bank, 17th February 1995 from NationsBank, N.A. (Carolinas)
and of even date herewith from National Westminster Bank Plc to the Borrower;
"ASSIGNMENT OF INSURANCES" means the assignment brief particulars of which are
set out at paragraph (ii) of Part 2 of the Third Schedule;
"ASSOCIATED COSTS RATE" means, in relation to any Advance or unpaid sum, the
rate determined in accordance with the Ninth Schedule;
"ASSUMPTIONS" means Technical Assumptions and Economic Assumptions;
"AUTHORISED INVESTMENT" means:
(i) any security having a remaining maturity not exceeding 1 year
that is issued by the Government of the United Kingdom or other
security containing direct obligations of the United Kingdom or
any agency thereof;
(ii) a sterling denominated time deposit (of an original maturity
not exceeding six months) with a bank which is an authorised
institution under the Banking Act 1987 and whose short-term
debt securities are for the time being rated at least P-1 by
Moody's Investors Service, Inc and A-1 by Standard & Poor's
Corporation;
(iii) any medium term note, asset backed security, bond, note and
letter of credit supported instruments in each case rated in
any of the three highest categories by Standard & Poor's
Corporation or Moody's Investors Service, Inc; and
(iv) any other security of a type permitted under the Sponsor's then
current investment policy and guidelines and notified to the
Facility Agent in writing and which security shall, unless an
Instructing Group shall have notified the Facility Agent in
writing within 30 days after receipt of such notice that it
objects in its sole discretion to securities of such type, be
deemed to be an Authorised Investment;
"AVAILABLE CASH FLOW" in respect of any period means Net Cash Flow for such
period less Financing Expenses for such period;
"AVAILABLE COMMITMENT" means, in relation to a Bank at any time and save as
otherwise provided herein, the amount set opposite its name in the First
Schedule LESS the aggregate amount which it has advanced hereunder at such time;
- 3 -
<PAGE> 9
"AVAILABLE FACILITY" means, at any time, the aggregate amount of the Available
Commitments at such time;
"BANKING CASE" means the Original Banking Case or any draft banking case
delivered by the Borrower pursuant to Clause 19.1 as such draft banking case may
be approved by an Instructing Group in accordance with Clause 19.6 or revised by
the Borrower in accordance with Clause 19.10;
"BARREL" means a volume of 42 U.S. gallons, corrected to 60 degrees Fahrenheit
and 14.7 psia;
"BASLE PAPER" means the paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988 prepared by the Basle
Committee on Banking Regulations and Supervisory Practices;
"BENEFICIARIES" at any time means each of the Agents, the Account Bank, the
Arranger, the Co-Arrangers and the Finance Parties at such time and
"BENEFICIARY" means any one of them;
"BRITANNIA COVENTURERS" means the parties from time to time considered
Coventurers under, and as defined in, the Unit Operating Agreement;
"BRITANNIA FIELD" means the Unitised Formation as defined in the Unit Operating
Agreement;
"BRITANNIA FIELD FACILITIES" means:
(i) all wells drilled or which may be drilled in the Britannia
Field (including production and injection wells) and all
equipment installed or which may be installed in and on such
wells and sub-sea equipment (including flowlines and risers)
connected to such wells;
(ii) the stationary platform in Block 16/26 (the "BRITANNIA
PLATFORM") and the subsea centre in Block 15/30 from which such
wells are drilled or are to be drilled and the production and
quarters platform installed or which may be installed in or on
the Britannia Field including the structure and equipment
erected or which may be erected thereon;
(iii) the Britannia Gas Terminal;
(iv) the Britannia Trunkline;
(v) the Britannia - Forties Pipeline; and
(vi) all other pipelines, structures, machinery and equipment,
vessels, vehicles and other facilities constructed or which may
be constructed insofar as the same relate directly to the
Britannia Field or any Petroleum won and saved therefrom or
which are or will be used in the development and operation of
the Britannia Field,
to the extent, in each case, that the Britannia Coventurers have an interest
therein;
- 4 -
<PAGE> 10
"BRITANNIA-FORTIES PIPELINE" has the meaning specified in the agreement brief
particulars of which are set out in paragraph 25 of the Sixth Schedule;
"BRITANNIA GAS TERMINAL" has the meaning given thereto in the Unit Operating
Agreement;
"BRITANNIA PETROLEUM" means Unitised Substances (as defined in the Unit
Operating Agreement) won and saved from the Britannia Field;
"BRITANNIA TRUNKLINE" has the meaning given thereto in the Unit Operating
Agreement;
"BRITANNIA UNIT AREA" means the Unit Area (as defined in the Unit Operating
Agreement);
"CALCULATION DATE" means:
(i) the Project Completion Date; and
(ii) thereafter each and every 30 June and 31 December;
"CAPITAL EXPENDITURE" in respect of any period means all costs and expenses of a
capital (but not an operating) nature incurred, or to be incurred, by the
Borrower pursuant to the Project Agreements during such period and in respect of
the Britannia Field to the extent attributable to the Borrower's interest
therein but so as to exclude any costs or expenses which have been classified
hereunder as Abandonment Costs, Financing Expenses, GSA Refunds, Hedging
Payments, Insurance Costs, Operating Costs, Overlifting Costs, Project Taxes,
Royalties, Transportation Costs, Trust Fund Costs and any amounts payable by the
Borrower in respect of its indebtedness for borrowed money (other than any
indebtedness for borrowed money permitted by Clause 24 (x)(c) but without double
counting such indebtedness for borrowed money with the expenditure which such
indebtedness for borrowed money is financing);
"CHARGE OVER ACCOUNTS" means the charge brief particulars of which are set out
at paragraph (iii) of Part 2 of the Third Schedule;
"COMPLETION CERTIFICATE" means a certificate delivered by the Borrower to the
Facility Agent pursuant to Clause 21 (and signed by a duly authorised officer of
the Borrower) certifying that, in the opinion of the Borrower, the Project
Completion Tests have been satisfied;
"CONDENSATE" has the meaning specified in the Unit Operating Agreement;
"CURRENT BANKING CASE" at any time prior to the adoption of a Banking Case as
the Current Banking Case pursuant to Clause 19 means the Original Banking Case
and at any time thereafter means the Banking Case most recently adopted as the
Current Banking Case pursuant to Clause 19;
"DAILY CAPACITY" means, in relation to the Britannia Field Facilities, and for
any day, their daily delivery capacity of 740 million cubic feet of Gas per day,
as such daily capacity may reduce every year pro rata to the reduction in the
Britannia Field Delivery Capacity (as defined in the Gas Sales Agreements) for
each Contract Year (as also defined therein);
- 5 -
<PAGE> 11
"DEBENTURE" means the debenture brief particulars of which are set out at
paragraph (i) of Part 2 of the Third Schedule;
"DEVELOPMENT BUDGET" means the Development Budget, as defined in, and from time
to time in effect under, the Unit Operating Agreement;
"DEVELOPMENT PLAN" means the Development Programme, as defined in, and from time
to time in effect under, the Unit Operating Agreement;
"DISCHARGE DATE" means the date on which:
(i) the Beneficiaries have ceased to be under any commitment to
make any Advance hereunder; and
(ii) the Loan has been repaid in full and no other amount is
outstanding under or pursuant to the terms of any of the
Financing Agreements (whether or not the same is due);
"DISCOUNT RATE" means the rate specified in the Current Banking Case for use in
determining the Net Present Value of the Forecast Net Cash Flow estimated
therein;
"DOUBLE TAXATION TREATY BANK" is defined in Clause 12.5;
"ECONOMIC ASSUMPTIONS" means assumptions as to the following matters used in the
preparation of a Banking Case:
(i) the price of Gas sales under each of the Gas Sales Agreements,
the price of NGL sales and the price of Condensate sales;
(ii) the price of Gas sales under any agreements for the sale of
Gas with a term of less than one year which the Borrower and
an Instructing Group have agreed should constitute an Economic
Assumption;
(iii) the price and volumes of raw gas to be sold under the
agreement brief particulars of which are set out in paragraph
26 of the sixth Schedule;
(iv) the Brent Crude price;
(v) general currency exchange rates;
(vi) relevant rates of inflation;
(vii) sterling rates of interest;
(viii) Discount Rates;
- 6 -
<PAGE> 12
(ix) costs of items comprising Permitted Expenditure;
(x) corporation taxes; and
(xi) any other assumptions required to be used for the preparation
of a Banking Case which the Facility Agent and the Borrower
determine should be treated as an Economic Assumption;
"ENGINEERING REPORT" means the Initial Engineering Report and any subsequent
report prepared by the Independent Engineers and delivered to the Facility Agent
pursuant to Clause 20.1 or 20.3;
"ENVIRONMENTAL LAW" means all or any applicable statutes, rules, regulations,
statutory instruments, treaties, directives, directions, by-laws, codes of
practice, orders, notices, demands, injunctions, statute law or common law or
duty of care legally binding on the Borrower and affecting the Project and
concerning the environment and/or the protection of human health;
"ENVIRONMENTAL LICENCE" means any permit, licence, authorisation, approval,
consent or like matter required by any Environmental Law;
"ESTIMATED ULTIMATE RECOVERABLE RESERVES" means at any time those quantities of
Petroleum which are the aggregate of (i) those quantities of Petroleum actually
recovered from the Britannia Field at such time and (ii) the Proved Reserves of
Petroleum from the Britannia Field at such time;
"EVENT OF DEFAULT" means any of those events specified in Clause 28;
"FACILITY" means the sterling loan facility granted to the Borrower in this
Agreement;
"FACILITY AGENT FEE LETTER" means the letter dated 17 February 1995 from
NationsBank, N.A. (Carolinas) to the Borrower;
"FACILITY AMOUNT" means pound sterling 150,000,000 or such other lesser amount
in accordance with Clause 2.4;
"FACILITY OFFICE" means, in relation to the Facility Agent or any Bank, the
office identified with its signature below (or, in the case of a Transferee, at
the end of the Transfer Certificate to which it is a party as Transferee) or
such other office as it may from time to time select or such other office as may
be agreed pursuant to Clause 16;
"FEE LETTERS" means the Facility Agent Fee Letter, the Technical Agents Fee
Letters, the Funding Agent Fee Letter and the Arrangement/Underwriting Fees
Letters;
"FIELD LIFE COVER RATIO" or "FLCR" for any Calculation Date means the value
determined by the Current Banking Case as being the ratio (expressed as the
result of dividing (i) below by (ii) below) of:
(i) the Net Present Value of Forecast Net Cash Flow for the period
(1) commencing (a) prior to the Project Completion Date, on the
date projected to be the Project Completion
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<PAGE> 13
Date in the Current Banking Case and (b) on or after the
Project Completion Date, on such Calculation Date and (2)
ending on the Projected Abandonment Date; to
(ii) the maximum amount which the Current Banking Case estimates
the Loan will be at or any time after such Calculation Date
("PEAK DEBT") less the amount of the Loan then forecast in
such Banking Case to be repaid on the Repayment Date
immediately following such Calculation Date Provided that such
subtraction shall only be made if such Calculation Date falls
on or after 30 June, 1999 and if (a) the Current Banking Case
projects that there will be received into the Proceeds Account
sufficient cash so that on the Repayment Date falling
immediately after such Calculation Date the Borrower will be
able to satisfy its obligations under Clause 10.1 in respect
of such Repayment Date or (b) the then current Net Cash Flow
report prepared pursuant to Clause 18.4 demonstrates that the
Available Cash Flow received by the Borrower during the
Semi-Annual Cash Flow Period to which such report relates
would enable the Borrower to satisfy its obligations under
Clause 10.1 on such Calculation Date as if such Calculation
Date were the immediately following Repayment Date;
"FINAL MATURITY DATE" means 30 September, 2005;
"FINANCE PARTIES" means the Banks and each Hedge Counterparty;
"FINANCING AGREEMENTS" means:
(i) this Agreement;
(ii) the Fee Letters;
(iii) the Security Documents;
(iv) any Hedging Agreement entered into pursuant to the Approved
Hedging Programme; and
(v) the UTPL Agreements;
"FINANCING EXPENSES" in respect of any period means all amounts of interest,
fees, commitment commission, costs or expenses (including the fees and expenses
(together with any VAT thereon) of the Independent Engineers, the Insurance
Adviser, any Independent Expert and any legal counsel appointed by any of the
Beneficiaries which the Borrower is obliged to pay under any of the Financing
Agreements) or other payments (other than payments of principal) falling due and
payable by the Borrower in respect of the Financing Agreements during such
period but so as to exclude any payments which have been classified hereunder as
Hedging Payments;
"FORECAST DEBT SERVICE" in respect of any period means an amount equal to the
aggregate of:
(i) the amount of the Loan projected and estimated in the Current
Banking Case to fall due and payable by the Borrower during
such period; and
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<PAGE> 14
(ii) the amount projected and estimated in the Current Banking Case
to be the Financing Expenses falling due and payable by the
Borrower during such period;
"FORECAST NET CASH FLOW" in respect of any period means an amount (as the same
may be revised pursuant to Clause 19.5) equal to:
(i) the amount projected and estimated in the Current Banking Case
to be the Forecast Project Receipts for such period; less
(ii) the amount projected and estimated in the Current Banking Case
to be the aggregate of the Borrower's Permitted Expenditure
for such period,
Provided that, for the purpose of determining the Forecast Net Cash Flow for
such period no account shall be taken of any portion of:
(a) any Forecast Project Receipts referred to in
paragraphs (v), (vi) (vii) or (ix) in the definition
of "Forecast Project Receipts" set out below unless,
at the time such determination falls to be made, the
Borrower is legally entitled to receive such amount
and to the extent that such receipt is subject to any
conditions, such conditions will with reasonable
certainty be satisfied at the time the Borrower would
receive such amount during such period;
(b) any sale of Petroleum unless at the time the sale is
actually made the Borrower is legally and
unconditionally entitled to receive such amount;
(c) any Forecast Project Receipts which are projected to
be received by the Borrower on or after the Projected
Abandonment Date;
(d) any Permitted Expenditure which is projected to be
paid by the Borrower on or after the Projected
Abandonment Date; or
(e) (1) the amount of any Insurance Proceeds which
would be part of Forecast Project Receipts
for such period pursuant to paragraph (v) of
the definition thereof up to an amount equal
to the total expenditure incurred (or
estimated to be incurred) in replacing,
rectifying or repairing the asset lost or
damaged in respect of which such Insurance
Proceeds are payable; or
(2) the amount of such total expenditure where
the Insurance Proceeds payable in respect
thereof are not included within Forecast Net
Cash Flow pursuant to (1) above;
"FORECAST PROJECT RECEIPTS" in respect of any period means the aggregate
(without double-counting) of:
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<PAGE> 15
(i) the revenues receivable by the Borrower during such period in
respect of the sale or other disposal of Britannia Petroleum
under the Gas Sales Agreements;
(ii) the revenues receivable by the Borrower during such period in
respect of any tariff receipts or payments receivable by the
Borrower in respect of the use of any of the Britannia Field
Facilities;
(iii) the revenues receivable by the Borrower during such period in
respect of sales of NGLs or Condensates;
(iv) the revenues receivable by the Borrower during such period in
respect of sales of Gas under contracts with a term of less
than one year and which an Instructing Group has agreed may be
included in this definition of Forecast Project Receipts;
(v) any and all Insurance Proceeds receivable by the Borrower and
payable into the Insurance Account pursuant to Clause 34.6
(ii) during such period in respect of the whole or any part of
the Project Interest;
(vi) any amounts which are receivable by the Borrower during such
period as a result of the sale or other disposal by the
Borrower of all or any part of the assets or revenues
comprising all or part of the Project Interest (other than
Petroleum) in accordance with the Financing Agreements;
(vii) any amounts which are receivable by the Borrower during such
period from the Operator by way of refunds under the Unit
Operating Agreement;
(viii) any interest receivable on the balance of any Project Account
and any income of any kind receivable by the Borrower in
respect of an Authorised Investment;
(ix) any amounts (excluding Insurance Proceeds) which are
receivable by the Borrower during such period by way of any
damages or compensation for the loss of any of the foregoing;
(x) any amounts payable to the Borrower as consideration for the
underlifting of Petroleum pursuant to Exhibit G of the Unit
Operating Agreement or pursuant to Exhibit L of the Unit
Operating Agreement; and
(xi) any other sums of whatever nature not expressly excluded from
paragraphs (i) to (x) above and receivable by the Borrower
during such period which are (a) attributable to the Project
Interest and which an Instructing Group and the Borrower have
agreed may be taken into account in calculating the Forecast
Project Receipts for such period or (b) receivable by the
Borrower during such period pursuant to any Hedging Agreement;
"FUNDING AGENT FEE LETTER" means the letter of even date herewith from National
Westminster Bank Plc to the Borrower;
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<PAGE> 16
"GAS" means all hydrocarbons which at standard atmospheric conditions of
pressure and temperature are in a gaseous state, including, without limitation,
NGLs and non-hydrocarbon gas which is produced in association with such gaseous
hydrocarbons;
"GAS SALES AGREEMENTS" means each of the agreements brief particulars of which
are set out at paragraphs 8, 11, 13, 15 and 19 of the Sixth Schedule together
with any other agreement entered into by the Borrower for the sale of Gas which
is expressly permitted by Clause 24(xv);
"GOVERNMENT CONSENT AGREEMENT" means the consent agreement with the Secretary of
State brief particulars of which are set out in paragraph (v) of Part 2 of the
Third Schedule;
"GROUP INSURANCES" is defined in Clause 26.2(ii);
"GSA REFUNDS" in respect of any period means any amount due and payable by the
Borrower under a Gas Sales Agreement;
"HEDGING AGREEMENT" means any hedging agreement between the Borrower and any
Hedge Counterparty (or any other counterparty approved pursuant to Clause
23(viii)) pursuant to and in accordance with the Approved Hedging Programme and
Clause 23(viii);
"HEDGING PAYMENTS" means amounts falling due from time to time for payment by
the Borrower under or pursuant to any Hedging Agreement;
"INDEPENDENT ENGINEERS" at any time means DeGolyer and McNaughton or such other
independent engineering firm appointed in accordance with Clause 20.4;
"INDEPENDENT EXPERT" means such independent expert selected by the Borrower from
a list of not fewer than five alternatives suggested by the Technical Agents
each of which shall have appropriate experience in the context of limited
recourse North Sea Petroleum financings to be able to determine any dispute
referred to him in accordance with Clause 19.9 or, as the case may be, Clause
21.3 without having any interest in the outcome of such dispute;
"INFORMATION MEMORANDUM" means the document dated March 1995 concerning the
Project, the Borrower and the Sponsor which, at the Borrower's request and on
its behalf, was prepared in relation to this transaction and distributed by the
Arranger and the Co-Arrangers to selected banks during March 1995;
"INITIAL DEVELOPMENT BUDGET" means the budget approved by the Britannia
Coventurers pursuant to clause 11.1 of the Unit Operating Agreement;
"INITIAL ENGINEERING REPORT" means the engineering report brief particulars of
which are set out at paragraph 12 of Part 1 of the Third Schedule;
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<PAGE> 17
"INSTRUCTING GROUP" means:
(i) before any Advances have been made hereunder, a Bank or group
of Banks whose Available Commitments amount in aggregate to
sixty-six and two-thirds per cent. or more of the Available
Facility; and
(ii) thereafter, a Bank or group of Banks to which in aggregate
sixty-six and two-thirds per cent. or more of the Loan is (or,
immediately prior to its repayment, was then) owed;
"INSURANCE ACCOUNT" means the account of the Borrower with the Account Bank
(including sub-accounts into which such account may be divided) to be designated
the "UNION TEXAS BRITANNIA LIMITED - INSURANCE ACCOUNT" as described in Clause
34.1 and any account (and sub-accounts) opened by any successor to the Account
Bank in relation thereto pursuant to Clause 34.1(iii) as any such account may be
renewed, redesignated or renumbered from time to time;
"INSURANCE ADVISER" at any time means Glen Goodman or such other insurance
advisers appointed by the Facility Agent acting in accordance with the
instructions of an Instructing Group and after consultation with the Borrower;
"INSURANCE COSTS" in respect of any period means all premia, contributions or
other sums payable by (i) the Borrower (ii) the Operator on the Borrower's
behalf or (iii) the Sponsor but reasonably allocated to the Borrower in the case
of any insurance required pursuant to Clause 26 and which is a Group Insurance
during such period in insuring all or any part of the Project Interest
(including the fees, costs and expenses of insurance brokers appointed for such
purpose);
"INSURANCE PROCEEDS" means the proceeds of any insurances required to be
maintained pursuant to Clause 26 together with any amount paid by the Sponsor
pursuant to Clause 5.5 of the Sponsor Support Agreement;
"INTEREST PERIOD" means, save as otherwise provided herein, any of those periods
calculated in accordance with Clause 7;
"ISDA MASTER AGREEMENT" means an Interest Rate and Currency Exchange Agreement
as published by the International Swap Dealers Association in 1987 or 1992;
"LIBOR" means, in relation to any Advance or unpaid sum and any specified period
the rate per annum determined by the Funding Agent to be equal to the arithmetic
mean (rounded, if not already such a multiple, to the nearest whole multiple of
one-sixteenth of one per cent. save that if the arithmetic mean is exactly
midway between two such whole multiples then it shall be rounded upwards) of the
rates (as notified to the Funding Agent) at which each of the Reference Banks
was offering to prime banks in the London Interbank Market deposits in sterling
and for such specified period (or for a period comparable thereto) at or about
11.00 a.m. on the Quotation Date for such specified period and, for the purposes
of this definition, "SPECIFIED PERIOD" means the Interest Period of such Advance
or, as the case may be, the period in respect of which LIBOR falls to be
determined in relation to such unpaid sum;
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<PAGE> 18
"LICENCES" means the United Kingdom petroleum production licence P213 and the
United Kingdom petroleum production licence P345;
"LOAN" means the aggregate principal amount for the time being outstanding
hereunder;
"MATERIAL ADVERSE EFFECT" means a material adverse effect on any of:
(i) the Borrower's ability to perform and comply with any of its
obligations under the Financing Agreements or under any of (or
any replacement of any of the following agreements) the Unit
Operating Agreement, the Transportation Agreement, any Licence
or any Gas Sales Agreement;
(ii) the legality, binding nature, validity or enforceability of
any of the Financing Agreements or any of (or any replacement
of any of the following agreements) the Unit Operating
Agreement, the Transportation Agreement, any Licence or any
Gas Sales Agreement or on the legality, validity,
enforceability or ranking of any encumbrance created or
arising under or pursuant thereto; or
(iii) the Project, any category of items listed at paragraphs (i) to
(vi) of the definition of Britannia Field Facilities (such
determination to be made with respect to such category as a
whole) or any of the insurances required to be maintained
pursuant to Clause 26 or on the production, processing,
transportation or marketing of Petroleum won and saved from
the Britannia Field;
"MINIMUM BILL QUANTITY" means the sum of (i) the "MINIMUM BILL QUANTITIES" as
defined and determined in accordance with the Gas Sales Agreements in effect on
the date hereof, and (ii) with respect to any Gas Sales Agreement entered into
after the date hereof, the annual minimum quantity of Gas which the buyer is
required to pay for (regardless of whether such quantity is actually taken by
such buyer);
"MINIMUM VOLUME" means, at any time in any year, the volume of Gas set out for
such year in the Eleventh Schedule;
"MODEL CLAUSE" means a clause of the model clauses for production licences in
seaward areas set out in Schedule 2 of the Petroleum and Submarine Pipelines Act
1975 and Schedule 5 of the Petroleum (Production) Regulations 1976;
"NET CASH FLOW" in respect of any period means an amount equal to:
(i) the Project Receipts for such period; less
(ii) the aggregate of the amounts paid out by the Borrower during
such period in respect of Permitted Expenditure,
Provided that, for the purposes of determining Net Cash Flow for any period:
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<PAGE> 19
(a) any amount paid out or received by the Borrower in a
currency other than sterling shall be taken into
account in accordance with accounting principles
generally accepted in the United Kingdom and
consistently applied; and
(b) no account shall be taken of the amount of:
(1) any Insurance Proceeds which would be a part
of Project Receipts for such period pursuant
to paragraph (iv) of the definition thereof
up to an amount equal to the total
expenditure incurred (or estimated to be
incurred) in replacing, rectifying or
repairing the asset lost or damaged in
respect of which such Insurance Proceeds
were paid; or
(2) such total expenditure where the Insurance
Proceeds payable in respect thereof are not
included within Net Cash Flow pursuant to
(1) above;
"NET PRESENT VALUE" means in relation to the Forecast Net Cash Flow projected
and estimated in any Banking Case for any period falling after any date (the
"CALCULATION DATE") an amount equal to such Forecast Net Cash Flow for such
period discounted back to such calculation date on a semi-annual basis assuming
mid period cash flows at the Discount Rate;
"NGL" means all hydrocarbon products (including, without limitation, ethane,
propane, normal butane, isobutane and natural gasoline) which are produced with
or as part of Gas other than Condensate;
"NOTICE OF DRAWDOWN" means a notice substantially in the form set out in the
Fourth Schedule;
"OPERATING AND FINANCING COSTS RESERVE" means a reserve on the books of the
Borrower of the same name and which will be "FULLY FUNDED" from time to time if
there is credited to such reserve an amount equal to the aggregate of Operating
Costs and Financing Expenses, in each case, projected and estimated in the then
Current Banking Case to fall due for payment during the period beginning on the
most recent Calculation Date to have occurred prior to the delivery of the draft
banking case which, when approved pursuant to Clause 19.6 or revised pursuant to
Clause 19.10, became such Current Banking Case and ending on the next
Calculation Date to occur after that first mentioned Calculation Date;
"OPERATING COSTS" in respect of any period means all direct and indirect costs
and expenses of an operating but not a capital nature incurred by the Borrower
pursuant to the Project Agreements during such period in connection with the
operation of the Britannia Field and Britannia Field Facilities to the extent
attributable to the Borrower's interest therein including general and
administrative costs of the Operator under the Unit Operating Agreement and
costs of maintenance and repair (including any amount payable to a buyer of
Petroleum in settlement of any obligation of the Borrower under any agreement
for the sale thereof) but so as to exclude any costs or expenses which have been
classified hereunder as Abandonment Costs, Capital Expenditure, GSA Refunds,
Financing Expenses, Hedging Payments, Insurance Costs, Overlifting Costs,
Project Taxes, Royalties, Transportation Costs, Trust Fund Costs, any amounts
payable by the Borrower in respect of its indebtedness for borrowed money (other
than any indebtedness for borrowed money permitted by Clause 24 (x) (c) but
without double counting such
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<PAGE> 20
indebtedness for borrowed money with the expenditure which such indebtedness for
borrowed money is financing) and any amounts payable to the Sponsor under the
Administrative Services Agreement;
"OPERATOR" means Britannia Operator Limited as the person so designated or
appointed from time to time as the operator of the Britannia Field pursuant to
the Unit Operating Agreement or any successor thereto in such capacity;
"OPERATOR MAINTAINED INSURANCES" is defined in Clause 26.2(i);
"OPERATOR'S CURRENT FORECAST" means each report and forecast (if any) prepared
by the Operator for each calendar month and delivered to each of the Britannia
Coventurers setting out the Operator's statement of all expenditure incurred in
respect of the project and its forecast of all future expenditure required to
complete the Project and otherwise required in relation to the Project;
"ORIGINAL BANKING CASE" means the banking case of the Borrower set out as the
Tenth Schedule;
"ORIGINAL FINANCIAL STATEMENTS" means in relation to:
(i) the Borrower, its unaudited financial statements for its
financial year ended 31 December 1994;
(ii) the Sponsor, its audited financial statements for the
financial year ended 31 December 1994; and
(iii) UTPH, its audited financial statements for the financial year
ended 31 December 1994;
"OVERLIFTING COSTS" means in respect of any period any amount due and payable by
the Borrower (i) as consideration for the overlifting of Petroleum pursuant to
Exhibit G of the Unit Operating Agreement or (ii) as consideration for the
overlifting of Petroleum pursuant to Exhibit L of the Unit Operating Agreement
but so as to exclude any amounts classified hereunder as Operating Costs,
Project Taxes, Royalties and Transportation Costs;
"PERMITTED EXPENDITURE" in respect of any period means expenditure by the
Borrower during such period in respect of Abandonment Costs, Capital
Expenditure, GSA Refunds, Hedging Payments, Insurance Costs, Operating Costs,
Overlifting Costs, Project Taxes, Royalties, Transportation Costs and Trust Fund
Costs;
"PETROLEUM" has the meaning specified in the Unit Operating Agreement;
"POTENTIAL EVENT OF DEFAULT" means any event which would become (with the
passage of time, the giving of notice, the making of any determination hereunder
or any combination thereof) an Event of Default;
"PRE-COMPLETION AVAILABLE FUNDING" at any time means the aggregate of (without
double counting):
(i) the Available Facility;
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<PAGE> 21
(ii) the balance then standing to the credit of the Projects
Accounts and available for release to the Borrower pursuant to
Clause 34.7; and
(iii) the Sponsor's unfunded commitment under Clause 2.1 of the
Sponsor Support Agreement (assuming no Event of Default
mentioned in Clause 28.1(vi), (vii), (viii) or (ix) has
occurred in relation to the Sponsor and is continuing); and
(iv) any other amount which the Borrower has demonstrated to the
satisfaction of an Instructing Group is then unconditionally
available for disbursement to the Borrower on or prior to the
Project Completion Date by way of contribution to the
Borrower's share capital or drawings under a lending facility
which will give rise to Subordinated Debt;
"PRE-COMPLETION EXPENDITURE" means at any time the aggregate of (without double
counting and only to the extent not previously paid):
(i) Permitted Expenditure (but, for the purposes of this paragraph
(i) the amount of Project Taxes included within such Permitted
Expenditure shall be the higher of (i) and (ii) as set out in
the definition of Project Taxes in this Clause 1.1) projected
and estimated in the Current Banking Case as falling due for
payment on or prior to the Project Completion Date;
(ii) Forecast Debt Service projected and estimated in the Current
Banking Case as falling due for payment on or prior to the
Project Completion Date;
(iii) fees and disbursements of professional advisers properly
incurred by the Borrower in connection with the Financing
Agreements; and
(iv) any other financial obligations of the Borrower in respect of
the Project Agreements or otherwise in respect of the Project
Interest projected and estimated in the Current Banking Case
as falling due for payment on or prior to the Project
Completion Date;
"PRIMARY ECONOMIC ASSUMPTIONS" means those assumptions referred to in paragraphs
(i) to (viii) in the definition of "Economic Assumptions" in this Clause 1.1;
"PROCEEDS ACCOUNT" means the account of the Borrower with the Account Bank
(including sub-accounts into which such account may be divided) designated
"UNION TEXAS BRITANNIA LIMITED - PROCEEDS ACCOUNT" and described in Clause 34.1
and any account (and subaccounts) opened by any successor to the Account Bank in
relation thereto pursuant to Clause 34.1(iii) as any such account may be
renewed, redesignated or renumbered from time to time;
"PROJECT" means the development and operation of the Britannia Field (including,
without limitation, the sale or other distribution of Britannia Petroleum) and
the development, construction and operation of the Britannia Field Facilities in
accordance with the Licences, the Project Agreements and the Development Plan
relating thereto;
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<PAGE> 22
"PROJECT ACCOUNTS" means the Proceeds Account, the Insurance Account and the VAT
Account;
"PROJECT AGREEMENTS" means:
(i) the Licences and each of the deeds and other agreements, brief
particulars of which are set out in the Sixth Schedule;
(ii) each of the agreements (a) required for the development and
operation of the Britannia Field and the Britannia Field
Facilities or (b) relating to the joint venture arrangements
concerning the Project, in each case to which the Borrower is,
or hereafter becomes, a party or (where the Borrower is not a
party) under which the Borrower has, or hereafter acquires
and/or assumes rights and/or obligations but, in each case,
only if such agreement is material to the Project or the
interests of the Beneficiaries;
(iii) each of the agreements required for the transportation or
relating to the disposal of Petroleum or other products of the
Project to which the Borrower is, or hereafter becomes, a
party or (where the Borrower is not a party) under which the
Borrower has, or hereafter acquires benefits but, in each
case, only if such agreement is material to the Project or the
interests of the Beneficiaries (in each case) where the
amounts received or receivable, or paid or payable, by the
Borrower thereunder or pursuant thereto (whether in respect of
the transportation or disposal of Petroleum or otherwise) are
or are proposed to be taken into account in any material
respect for the purpose of calculating the Forecast Net Cash
Flow or the Net Cash Flow for any period; and
(iv) such other agreements as may be designated Project Agreements
by the Borrower and the Facility Agent, as any such agreement
may be amended, varied or replaced with the approval of an
Instructing Group in accordance with Clause 24(i);
"PROJECT COMPLETION DATE" means either of the dates referred to in Clause 21.2
or Clause 21.4, whichever actually occurs;
"PROJECT COMPLETION TESTS" means those tests set out in the Seventh Schedule;
"PROJECT INTEREST" means all the Borrower's rights, title and interest from time
to time in and to each of the following:
(i) the Project Agreements;
(ii) the Britannia Field Facilities;
(iii) all Britannia Petroleum;
(iv) every contract for the sale or other disposal of Britannia
Petroleum and the proceeds of all such sales or other
disposals;
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<PAGE> 23
(v) every contract (not falling within (i) above) for the use by
any third party of any of the Britannia Field Facilities; and
(vi) any and all other contracts or agreements entered into by the
Borrower, insurance policies required to be maintained
pursuant to Clause 26, permits, leases, licences, consents,
easements, way leaves and other rights now or hereafter
existing which relate to the development, construction,
maintenance or use of any of the Britannia Field Facilities,
the development and operation of the Britannia Field or the
production, transportation, storage, processing or marketing
of Britannia Petroleum or which otherwise relate to any of the
Project Agreements;
"PROJECT RECEIPTS" in respect of any period means the aggregate (without double
counting) of:
(i) the revenues received by the Borrower during such period in
respect of the sale or other disposal of Britannia Petroleum
whether under the Gas Sales Agreements or otherwise
(excluding, for the avoidance of doubt, any VAT Receipts in
respect of such sale or other disposal);
(ii) the revenues received by the Borrower during such period in
respect of any tariff receipts or payments received by the
Borrower in respect of the use of any of the Britannia Field
Facilities (excluding, for the avoidance of doubt, any VAT
Receipts in respect of the grant of such use);
(iii) all compensation or other consideration received by the
Borrower during such period from any entity on account of
partial or total nationalisation, expropriation or requisition
of the Project Interest;
(iv) any and all Insurance Proceeds which are received by the
Borrower and payable into the Insurance Account pursuant to
Clause 34.6 (ii) during such period in respect of the whole or
any part of the Project Interest;
(v) any amounts which are received by the Borrower during such
period as a result of the sale or other disposal by the
Borrower of all or any part of the assets or revenues
comprising all or part of the Project Interest (other than
Petroleum) in accordance with the Financing Agreements
(excluding, for the avoidance of doubt, any VAT Receipts in
respect of such sale or other disposal);
(vi) any amounts which are received by the Borrower during such
period from the Operator by way of refunds under the Unit
Operating Agreement;
(vii) any interest on any amount credited to any Project Account and
any income of any kind received by the Borrower in respect of
any Authorised Investment;
(viii) any amount paid to the Borrower as a refund of tax or any
payment on account of the same;
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<PAGE> 24
(ix) any amounts (excluding Insurance Proceeds) which are received
by the Borrower during such period by way of any damages or
compensation for the loss of any of the foregoing;
(x) any amounts paid to the Borrower as consideration for the
underlifting of Petroleum pursuant to Exhibit G of the Unit
Operating Agreement or pursuant to Exhibit L of the Unit
Operating Agreement; and
(xi) any other sums of whatever nature not expressly excluded from
paragraphs (i) to (x) above and received by the Borrower
during such period which are attributable to the Project
Interest or arise pursuant to any Hedging Agreement
(excluding, for the avoidance of doubt, any VAT Receipts in
respect of such sums);
"PROJECT TAXES" in respect of any period means the lesser of (i) the aggregate
amount of any tax liabilities (excluding any Royalties) paid by the Borrower
during such period taking into account all tax reliefs utilised, and all tax
credits received, by the Borrower during such period and (ii) the aggregate
amount of any tax liabilities (excluding any Royalties) which would have been
paid by the Borrower during such period but for the surrender of Group Relief
(as defined in the Sponsor Support Agreement) to the Sponsor pursuant to Clause
4 of the Sponsor Support Agreement;
"PROJECTED ABANDONMENT DATE" means at any time the date projected in the Current
Banking Case as at such time as being the date on which the Britannia Field
Facilities and the Britannia Field will be abandoned in accordance with the
terms of the Unit Operating Agreement and all applicable laws, rules and
regulations and based on the Independent Engineers' then current analysis of the
Estimated Ultimate Recoverable Reserves;
"PROVED RESERVES" at any time means those quantities of Britannia Petroleum
which, based on analysis of geological and engineering data provided by the
Independent Engineers in the then most recent Engineering Report are
demonstrated with a high degree of certainty to be recoverable in future years
(under economic and operating conditions prevailing at such time) from known
reservoirs in the Britannia Field, assuming the continuation of the then current
regulatory practices using conventional production methods and equipment;
"PROVED RESERVES AND PRODUCTION PROFILES FIGURES" is defined in Clause 19.4(ix);
"QUOTATION DATE" means, in relation to any period for which an interest rate is
to be determined hereunder, the first day of such period, Provided that, if such
day is not the day on which quotations would ordinarily be given by prime banks
in the London Interbank Market for deposits in sterling for delivery on the
first day of such period, then it means the day on which such quotations would
ordinarily be given;
"REFERENCE BANKS" means the principal London offices of Chemical Bank,
NationsBank, N.A. (Carolinas) and National Westminster Bank Plc or such other
bank or banks as may from time to time be agreed between the Borrower and an
Instructing Group;
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<PAGE> 25
"RELEVANT INTEREST AMOUNT" in relation to any Beneficiary at any time means the
aggregate of all interest, fees, commitment commission or other payments of a
revenue nature then due and payable to such Beneficiary under or pursuant to any
Financing Agreement;
"RELEVANT PRINCIPAL AMOUNT" in relation to any Beneficiary at any time means the
aggregate of all principal amounts (including, without limitation, amounts
arising in respect of costs and expenses or pursuant to Clause 12 or Clause 14
or otherwise not falling within the definition of Relevant Interest Amount) due
and payable to such Beneficiary under or pursuant to any Financing Agreement
and, in the case of any such amount arising under any Hedging Agreement such
amount shall be determined by reference to the marking to market of such Hedging
Agreement in accordance with the relevant Hedging Agreement;
"REPAYMENT DATE" means the last business day in each of the calendar months
appearing in Column A of the Fifth Schedule;
"RESERVE TAIL COVER RATIO" or "RTCR" for any Calculation Date means the value
determined by the Current Banking Case as being the ratio (expressed as the
result of dividing (i) below by (ii) below) of:
(i) the Net Present Value of Forecast Net Cash Flow for the period
(1) commencing (a) prior to the Project Completion Date, on
the date projected to be the Project Completion Date in the
Current Banking Case and (b) on or after the Project
Completion Date, on such Calculation Date and (2) ending on
the Reserve Tail Date; to
(ii) the maximum amount which the Current Banking Case estimates
the Loan will be at or any time after such Calculation Date
("PEAK DEBT") less the amount of the Loan then forecast in
such Banking Case to be repaid on the Repayment Date
immediately following such Calculation Date Provided that such
subtraction shall only be made if such Calculation Date falls
on or after 30 June, 1999 and if (a) the Current Banking Case
projects that there will be received into the Proceeds Account
sufficient cash so that on the Repayment Date falling
immediately after such Calculation Date the Borrower will be
able to satisfy its obligations under Clause 10.1 in respect
of such Repayment Date or (b) the then current Net Cash Flow
report prepared pursuant to Clause 18.4 demonstrates that the
Available Cash Flow received by the Borrower during the
Semi-Annual Cash Flow Period to which such report relates
would enable the Borrower to satisfy its obligations under
Clause 10.1 on such Calculation Date as if such Calculation
Date were the immediately following Repayment Date;
"RESERVE TAIL DATE" means, in respect of any Banking Case, the Calculation Date
which falls nearest to the date (the "RELEVANT DATE") on which the volume of
Petroleum recoverable from the Britannia Field under economic and operating
conditions prevailing at the relevant date is projected, by the Independent
Engineers in the most recent Engineering Report to be less than thirty per cent
of Estimated Ultimate Recoverable Reserves;
"ROYALTIES" in respect of any period means the actual amount in cash of
royalties paid by the Borrower during such period under the Licences in respect
of Britannia Petroleum Provided that if such royalty
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<PAGE> 26
is payable as Britannia Petroleum then it shall not be taken into account for
the purposes of calculating the Net Cash Flow or Forecast Net Cash Flow for such
period;
"SCOTTISH ASSIGNATION" means the Scottish assignation brief particulars of which
are set out at paragraph (iv) of Part 2 of the Third Schedule;
"SECRETARY OF STATE" means the United Kingdom Secretary of State for Trade and
Industry from time to time or his successor for the time being holding office
under the Crown and exercising the powers, duties and functions thereof under
the Petroleum (Production) Act 1934, the Pipe-lines Act 1962, the Continental
Shelf Act 1964, the Petroleum and Submarine Pipe-lines Act 1975, the Oil and Gas
(Enterprise) Act 1982, the Petroleum Act 1987 and under any regulations made
pursuant thereto;
"SECTION 349 BANK" is defined in Clause 12.4;
"SECURITY DOCUMENTS" means each of the documents listed in Part 2 of the Third
Schedule and any other agreement, deed or document from time to time executed in
favour of the Beneficiaries (or the Facility Agent as trustee for the
Beneficiaries) for the purpose of securing all or any of the Borrower's
obligations under the Financing Agreements or any of them together with all
amendments and variations of, and supplements to, any of the foregoing and
"SECURITY DOCUMENT" shall be construed accordingly;
"SEMI-ANNUAL CASH FLOW PERIOD" means:
(i) the period from the date on which Petroleum revenues are first
received by the Borrower to 30 June 1999; and
(ii) thereafter a period of six calendar months commencing on the
first day after a Calculation Date;
"SPONSOR" means Union Texas Petroleum Limited, a company registered in England
and Wales with company registration number 708552;
"SPONSOR DIRECT AGREEMENT" means the agreement of even date herewith between the
Sponsor, the Borrower and the Facility Agent on behalf of the Beneficiaries;
"SPONSOR SUPPORT AGREEMENT" means the agreement of even date herewith made
between the Borrower and the Sponsor providing for certain support to be given
by the Sponsor in relation to the Facility;
"STANDBY LETTER OF CREDIT" means an irrevocable, fully revolving, standby letter
of credit issued by a bank whose long term debt securities are for the time
being rated at least A by Standard & Poor's Corporation and at least A2 by
Moody's Investors' Service, Inc. in favour of the Facility Agent as trustee for
the Beneficiaries;
"SUBORDINATED DEBT" means any indebtedness for borrowed money of the Borrower
owed to the Sponsor (whether arising under any UTPL Agreement or otherwise) and
includes any interest and any other amounts payable by the Borrower to the
Sponsor in respect thereof;
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<PAGE> 27
"TAX DIFFERENTIAL AMOUNT" has the meaning given thereto in the Sponsor Support
Agreement;
"TECHNICAL AGENTS FEE LETTERS" means the letters dated 17 February 1995 from
NationsBank, N.A. (Carolinas) and dated 22 February 1995 from Chemical Bank to
the Borrower;
"TECHNICAL ASSUMPTIONS" means all assumptions, other than Economic Assumptions,
used in the preparation of a Banking Case and includes assumptions as to the
occurrence of the Abandonment Date and (before the Project Completion Date has
occurred) the Project Completion Date;
"TERMINATION DATE" means the earlier of:
(i) the date which is six months after the day on which the
Project Completion Date occurs;
(ii) 31st December 1999; and
(iii) the first business day on which the Available Commitment of
each of the Banks is zero;
"THIRD PARTY INSURANCE" means each of the insurances specified in paragraphs 1
(but only seepage and pollution liability) 2, 3, (but only to the extent of
third party liability) 4 and 5 of Part 1 of the Eighth Schedule;
"TRANSFER CERTIFICATE" means a certificate substantially in the form set out in
the Second Schedule signed by a Bank and a Transferee whereby:
(i) such Bank seeks to procure the transfer to such Transferee of
all or a part of such Bank's rights and obligations hereunder
upon and subject to the terms and conditions set out in Clause
45; and
(ii) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the
Facility Agent as is contemplated in Clause 45.3;
"TRANSFER DATE" means, in relation to any Transfer Certificate, the date for the
making of the transfer as specified in the schedule to such Transfer
Certificate;
"TRANSFEREE" means a bank or other financial institution to which a Bank seeks
to transfer all or part of such Bank's rights and obligations hereunder;
"TRANSPORTATION AGREEMENT" means the agreements brief particulars of which are
set out in paragraph 25 of the Sixth Schedule;
"TRANSPORTATION COSTS" in respect of any period means the aggregate of all
direct or indirect costs and expenses incurred, or to be incurred, by the
Borrower during such period in connection with the transportation of any
Britannia Petroleum to the extent attributable to the Borrower's interest
therein but so as to exclude any Royalties and any amounts payable by the
Borrower in respect of its indebtedness for borrowed money;
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<PAGE> 28
"TRUST FUND" means the trust fund established or to be established by the
Borrower in accordance with Clause 4.1 of the Abandonment Costs Agreement;
"TRUST FUND COSTS" in respect of any period means all amounts payable by the
Borrower during such period into the Trust Fund pursuant to Clauses 4.3 or 7.1
of the Abandonment Costs Agreement;
"UNIT OPERATING AGREEMENT" means the agreement brief particulars of which are
set out at paragraph 1 of the Sixth Schedule;
"UTPH" means Union Texas Petroleum Holdings, Inc., a company organised under the
laws of the State of Delaware;
"UTPL AGREEMENTS" means the Administrative Services Agreement, the Sponsor
Direct Agreement and the Sponsor Support Agreement;
"UTPL CREDIT TEST" means the tests on the financial standing of the Sponsor
specified in Clause 36.1;
"VAT ACCOUNT" means the account of the Borrower with the Account Bank (including
sub-accounts into which such accounts may be divided) designated the "UNION
TEXAS BRITANNIA LIMITED - VAT ACCOUNT" and described in Clause 34.1 and any
account (and sub-accounts) opened by any successor to the Account Bank in
relation thereto pursuant to Clause 34.1(iii) as any such account may be
renewed, redesignated or renumbered from time to time; and
"VAT RECEIPTS" is defined in Clause 34.6.
1.2 Any reference in this Agreement to:
the "ACCOUNT BANK", the "FACILITY AGENT", the "FUNDING AGENT", any "TECHNICAL
AGENT" or any "BANK" or "BENEFICIARY" shall be construed so as to include its
and any subsequent successors, permitted Transferees and assigns in accordance
with their respective interests;
the "AGREED FORM" in relation to any document means a form agreed between the
Borrower and the Facility Agent and initialled by the Borrower and the Facility
Agent for the purposes of identification;
a "BUSINESS DAY" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks generally are open for business in London;
a "CLAUSE" shall, subject to any contrary indication, be construed as a
reference to a clause hereof;
an "ENCUMBRANCE" shall be construed as a reference to a mortgage, charge,
pledge, lien, assignation, or other encumbrance securing any obligation of any
person or any other type of preferential arrangement (including, without
limitation, title transfer and retention arrangements) having a similar effect;
the "EQUIVALENT" at any time in one currency (the "FIRST CURRENCY") of an amount
denominated in another currency (the "SECOND CURRENCY") is a reference to the
amount of the first currency which could be
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<PAGE> 29
purchased with the amount of the second currency at the spot rate of exchange
quoted by the Facility Agent at such time for the purchase of the first currency
with the second currency;
a "HOLDING COMPANY" of a person shall be construed as a reference to any person
of which the first-mentioned person is a subsidiary;
"INDEBTEDNESS" shall be construed so as to include any obligation (whether
incurred as principal or as surety) for the payment or repayment of money,
whether present or future, actual or contingent;
"INDEBTEDNESS FOR BORROWED MONEY" shall be construed so as to include, without
limitation, any indebtedness of any person for or in respect of:
(i) moneys borrowed (whether or not for cash consideration) by
whatever means;
(ii) amounts raised by acceptance under any acceptance credit
facility;
(iii) amounts raised under any note purchase facility;
(iv) the amounts of any liability in respect of leases or hire
purchase contracts which would, in accordance with generally
accepted accounting standards in England (and, after the
delivery of the first thereof, as used in the most recent
audited financial statements of the Borrower delivered
pursuant to Clause 17.1), be treated as finance or capital
leases;
(v) the amount of any liability in respect of any purchase price
for assets or services (other than any trade accounts payable
by the Borrower in the ordinary course of its business on
customary trade terms) the payment of which is deferred for a
period in excess of ninety days;
(vi) redeemable preference shares; and
(vii) amounts raised under any other transaction (including, without
limitation, any forward sale or purchase agreement) having the
commercial effect of a borrowing,
and so as to exclude any liability of the Borrower arising in respect of a cash
call made by the Operator under the Unit Operating Agreement and any
retrospective adjustment thereto;
a "MONTH" is a reference to a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next succeeding calendar
month save that, where any such period would otherwise end on a day which is not
a business day, it shall end on the next succeeding business day, unless that
day falls in the calendar month succeeding that in which it would otherwise have
ended, in which case it shall end on the immediately preceding business day
Provided that, if a period starts on the last business day in a calendar month
or if there is no numerically corresponding day in the month in which that
period ends, that period shall end on the last business day in that later month
(and references to "MONTHS" shall be construed accordingly);
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<PAGE> 30
a "PART" shall, subject to any contrary indication, be construed as a reference
to a part hereof;
a "PERSON" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or more of
the foregoing;
"REPAY" (or any derivative form thereof) shall, subject to any contrary
indication, be construed to include "PREPAY" (or, as the case may be, the
corresponding derivative form thereof);
a "SCHEDULE" shall, subject to any contrary indication, be construed as a
reference to a schedule hereto;
a "SUBSIDIARY" of a company or corporation shall be construed as a reference to
any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(iii) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation,
and, for these purposes, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct its
affairs and/or to control the composition of its board of directors or
equivalent body;
"TAX" shall be construed so as to include any tax, levy, impost, duty or other
charge of a similar nature (including, without limitation, any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same);
"VAT" shall be construed as a reference to value added tax including any similar
tax which may be imposed in place thereof from time to time; and
the "WINDING-UP", "DISSOLUTION" or "ADMINISTRATION" of a company or corporation
shall be construed so as to include any equivalent or analogous proceedings
under the law of the jurisdiction in which such company or corporation is
incorporated or any jurisdiction in which such company or corporation carries on
business including the seeking of liquidation, winding-up, reorganisation,
dissolution, administration, arrangement, adjustment, protection or relief of
debtors.
1.3 "POUND STERLING" and "STERLING" denote lawful currency of the
United Kingdom and "$" and "DOLLARS" denote lawful currency of the
United States of America.
1.4 Save where the contrary is indicated, any reference in this Agreement
to:
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<PAGE> 31
(i) this Agreement, a Project Agreement, a Financing Agreement,
licence, permission, model clause or any other agreement or
document shall be construed as a reference to this Agreement
or, as the case may be, such Project Agreement, Financing
Agreement, licence, permission, model clause or other
agreement or document as the same may have been, or may from
time to time be, amended, varied, novated or supplemented;
(ii) a statute shall be construed as a reference to such statute as
the same may have been, or may from time to time be, amended
or re-enacted; and
(iii) a time of day shall be construed as a reference to London
time.
1.5 Clause, Part and Schedule headings are for ease of reference only.
1.6 The definitions of Abandonment Costs, Capital Expenditure, Field Life
Cover Ratio, Forecast Net Cash Flow, Forecast Project Receipts, GSA Refunds,
Insurance Costs, Financing Expenses, Net Cash Flow, Operating Costs, Overlifting
Costs, Permitted Expenditure, Project Receipts, Project Taxes, Reserve Tail
Cover Ratio, Royalties and Transportation Costs and Trust Fund Costs contained
in Clause 1.1 and any reference to tax or taxes herein shall, save as otherwise
provided herein, be construed in accordance with accounting principles generally
accepted in the United Kingdom and consistently applied and all calculations to
be made thereunder shall be made in sterling and, if for the purposes of any
such calculation any amount denominated in a currency other than sterling has to
be converted into sterling then, save as provided in Clause 19.4(vii) in respect
of projections and forecasts, the amount of sterling to be taken into account in
such calculation shall be calculated in accordance with accounting principles
generally accepted in the United Kingdom and consistently applied.
1.7 Terms and expressions used in the Eighth Schedule shall, unless
otherwise defined in this Agreement, be construed in accordance with the
respective meanings given thereto by normal market practice in the London
insurance market.
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<PAGE> 32
PART 2
THE FACILITY
2. THE FACILITY
2.1 The Banks grant to the Borrower, upon the terms and subject to the
conditions hereof, a sterling loan facility in an aggregate amount of the
Facility Amount.
2.2 If the Borrower is required to deliver a draft banking case pursuant to
Clause 19.1(viii) then such banking case shall contain the same information as
was used in the then Current Banking Case but with such changes as shall reflect
such revisions to Capital Expenditure, Insurance Costs, Operating Costs, Project
Taxes, Royalties, taxes and any other costs and any new tariff charges for the
transportation and processing of Gas which will not then be transported through
the Britannia Trunkline or processed at the Britannia Gas Terminal all such
revisions and new charges being amounts therefor projected by the Operator.
2.3 The Facility Agent shall thereupon calculate an amount being such
amount as the banking case delivered pursuant to Clause 19.1(viii) discloses
would be equal to (i) the Net Present Value of Forecast Net Cash Flow commencing
on the date projected in such banking case to be the Project Completion Date and
ending on the Reserve Tail Date divided by (ii) 1.45.
2.4 The Facility Agent shall promptly thereafter notify the Borrower and
all the Banks and the other Agents of the amount determined in accordance with
Clause 2.3. Upon the date of such notification:
(i) the Facility Amount, for all purposes of the Financing
Agreements, shall become the greater of the amount determined
in accordance with Clause 2.3 (up to a maximum of
pound sterling 150,000,000) and pound sterling 140,000,000;
(ii) unless the Facility Amount remains at pound sterling
150,000,000, the First Schedule shall be deemed to
be amended so that the amount set opposite each Bank's name
therein shall be reduced pro rata to the reduction of the
Facility Amount from pound sterling 150,000,000 pursuant to
Clause 2.4(i); and
(iii) unless the Facility Amount remains at pound sterling
150,000,000, the Fifth Schedule shall be deemed to
be amended so that each of the amounts set out in Column B
thereof shall be reduced pro rata to the reduction of the
Facility Amount from pound sterling 150,000,000 pursuant to
Clause 2.4(i).
3. PURPOSE
3.1 The Borrower shall apply all amounts advanced to it hereunder on or
before the Project Completion Date in or towards:
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<PAGE> 33
(i) Permitted Expenditure incurred by it or reimbursing the
Sponsor for Permitted Expenditure paid on behalf of the
Borrower and satisfaction of the Borrower's other obligations
arising from time to time under the Project Agreements in
respect of the development and operating costs of the Project
including, without limitation, Permitted Expenditure paid by
it (or the Sponsor on its behalf) on or after 1 January 1995;
(ii) satisfaction of its obligations from time to time in respect
of interest, commitment commission, fees, costs and expenses
or other payments which shall have fallen due under the
Financing Agreements; and
(iii) fees and disbursements of professional advisers properly
incurred by the Borrower in connection with the Financing
Agreements (other than the Administrative Services Agreement).
3.2 The Borrower shall apply all amounts advanced to it hereunder after the
Project Completion Date but on or before the Termination Date either:
(i) for the purposes specified in Clause 3.1 (i), (ii) and (iii);
or
(ii) for general corporate and working capital purposes of the
Borrower (including the payment to the Sponsor of any fees
accrued prior to the Project Completion Date under the
Administrative Services Agreement) and reimbursement of any
amount paid on behalf of the Borrower by the Sponsor prior to
the Project Completion Date which falls within (iii) in the
definition of Insurance Costs in Clause 1.1.
3.3 Notwithstanding any provision to the contrary in Clauses 3.1 or 3.2,
the Borrower shall not apply any amount advanced to it hereunder for any purpose
which is prohibited by Chapter VI of Part V of the Companies Act 1985.
3.4 Without prejudice to the obligations of the Borrower under Clause 3.1,
3.2 or 3.3, none of the Beneficiaries shall be obliged to concern themselves
with the application of amounts raised by the Borrower hereunder.
4. CONDITIONS PRECEDENT
Save as the Banks may otherwise agree, the Borrower may not deliver any
Notice of Drawdown hereunder unless the Facility Agent has confirmed to the
Borrower that it has received all of the documents listed in the Third Schedule
and that each is, in form and substance, satisfactory to the Facility Agent. The
Facility Agent shall deliver to the Funding Agent, promptly after receipt
thereof, a copy of the certificate delivered by the Borrower pursuant to
paragraph 3 of Part 1 of the Third Schedule.
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<PAGE> 34
5. NATURE OF BANKS' OBLIGATIONS
5.1 The obligations of each Bank hereunder are several.
5.2 The failure by a Bank to perform its obligations hereunder shall not
affect the obligations of the Borrower towards any other party hereto nor shall
any other party be liable for the failure by such Bank to perform its
obligations hereunder.
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<PAGE> 35
PART 3
AVAILABILITY OF THE FACILITY
6. AVAILABILITY OF THE FACILITY
6.1 Save as otherwise provided herein and subject to Clause 6.3, an Advance
will be made by the Banks to the Borrower if:
(i) no earlier than 11.00 a.m. on the tenth business day and no
later than 11.00 a.m. on the fifth business day before the
proposed date for the making of such Advance, both the
Facility Agent and the Funding Agent have received from the
Borrower a Notice of Drawdown therefor, receipt of which shall
oblige the Borrower to borrow the amount therein requested on
the date therein stated upon the terms and subject to the
conditions contained herein;
(ii) the proposed date for the making of such Advance is a business
day which is or precedes the Termination Date;
(iii) if the proposed Advance is to be made for the purposes
specified in Clause 3.2, the Project Completion Date has
occurred;
(iv) the proposed date for the making of such Advance is not less
than five business days after the date upon which the previous
Advance (if any) was made hereunder;
(v) the proposed amount of such Advance is:
(a) a minimum amount of pound sterling 3,000,000 and an
integral multiple of pound sterling 1,000,000 which
is less than the amount of the Available Facility; or
(b) equal to the amount of the Available Facility;
(vi) the Borrower has certified in the Notice of Drawdown therefor
that the proceeds of such Advance (rounded upwards solely to
the extent required to comply with Clause 6.1(v)(a)) (a) when
aggregated with the amount then standing to the credit of the
Proceeds Account are required by the Borrower for application
in or towards meeting costs referred to in Clause 3.1 or
Clause 3.2 (i) which have fallen due for payment or which the
Borrower anticipates will fall due for payment during the
thirty day period commencing on the proposed date for the
making of the Advance or (b) will be used for the purposes
referred to in Clause 3.2 (ii);
(vii) there would not, immediately after the making of such Advance,
be more than ten Advances outstanding hereunder;
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<PAGE> 36
(viii) the interest rate applicable to such Advance during its first
Interest Period would not fall to be determined pursuant to
Clause 9.1;
(ix) in the case of an Advance made for the purposes specified in
Clause 3.2, (a) on the proposed date for the making of such
Advance the RTCR would be at least 1.4 after such Advance is
made and (b) the Current Banking Case projects that, in
respect of the first Repayment Date, the amount of the Loan
which the Borrower will repay on such Repayment Date will not
be less than either of the amounts referred to in Clauses
10.1(ii)(a) and (b) for such Repayment Date;
(x) the Borrower has not received a notice from the Facility Agent
pursuant to any of Clauses 19.1(iii), (iv) (but not where the
Instructing Group's opinion that a Material Adverse Effect had
occurred which lead to the notice being given pursuant to
Clause 19.1 (iv) was based on the average spot price of Brent
Crude falling below ten dollars per Barrel as specified in
Clause 19.1(iv)), (v) or (vii) or from the Operator pursuant
to Clause 19.1(vi) or, if it has received any such notice, if
any Banking Case produced following any such notice shows for
any Calculation Date an FLCR of not less than 1.3 or an RTCR
of not less than 1.2;
(xi) the Available Facility is not zero immediately before the
making of the Advance;
(xii) in the case only of any Advance the proceeds of which are to
be applied, in whole or in part, to pay to the Sponsor any
fees accrued under the Administrative Services Agreement or to
fund any intra-group loan to the Sponsor, the Borrower has
delivered to the Facility Agent and the Funding Agent a copy,
certified a true copy by a duly authorised officer of the
Borrower, of a board resolution of it approving, in the case
of the payment of such fees, the specified amount of such fees
and, in the case of such loan, such loan and in each case
stating that the board considers that the payment of such fees
or funding of such loan (as the case may be) will not cause
the Borrower to be in breach of Clause 3.3; and
(xiii) either:
(a) no Event of Default or Potential Event of Default has
occurred which has not been waived or remedied and is
continuing; and
(b) the representations set out in Clauses 22.1 and 22.2
(except Clauses 22.1(ii), 22.2(v), 22.2(vi) and
22.2(viii)) and (in the case of the first Advance
only to be made hereunder) Clause 22.4 are true on
and as of the proposed date for the making of such
Advance,
or each of the Banks agrees (notwithstanding any matter
mentioned at (a) or (b) above) to participate in the making of
such Advance.
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<PAGE> 37
6.2 Notwithstanding any provision to the contrary contained in Clause 6.1,
the Borrower may not deliver any Notice of Drawdown hereunder on or after the
first Repayment Date (or before such date if the Advance requested therein is to
be made on or after such date), and no Bank shall be required to contribute to
any Advance, which would have the effect of making the amount of the Loan
greater than pound sterling 140,000,000 (or, if column B in the Fifth Schedule
has been deemed to have been amended pursuant to Clause 2.4(iii), the amount
then deemed to be set out in column B opposite September 1999 in column A).
6.3 Each Bank will participate through its Facility Office in each Advance
made pursuant to Clause 6.1 in the proportion borne by its Available Commitment
to the Available Facility immediately prior to the making of that Advance.
6.4 If a Bank's Available Commitment is reduced in accordance with the
terms hereof after the Facility Agent and the Funding Agent have received the
Notice of Drawdown for an Advance, then the amount of that Advance shall be
reduced accordingly.
6.5 The Banks acknowledge that the Borrower may, after the date hereof,
seek to introduce funding from the European Investment Bank ("EIB") into the
financing of the Project which will be severally guaranteed by the Banks under
standby letters of credit to be issued by the Facility Agent on their behalf.
The Banks confirm that, subject to the conditions specified below, they will, if
the Borrower so requests, work in good faith with it and the EIB towards
agreeing the basis and documentation upon which funding from the EIB may be
introduced. The conditions of the Banks' confirmation are that:-
(a) all the Banks are satisfied with the terms of the credit
agreement to be entered into by the EIB and the Borrower and
any related documentation;
(b) such amendments are made to this Agreement and any other
Financing Agreements as may be considered necessary or
desirable by all the Banks;
(c) the FLCR and the RTCR are no worse than those which at the
relevant time exist under the financing provided by the
Financing Agreements and would continue to be no worse than
those ratios if the EIB funding were introduced; and
(d) no Event of Default or Potential Event of Default has occurred
or will occur as a result of the introduction of such EIB
funding.
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PART 4
INTEREST
7. INTEREST PERIODS
7.1 The period for which an Advance is outstanding shall be divided into
successive periods each of which (other than the first) shall start on the last
day of the preceding such period.
7.2 The duration of each Interest Period shall, save as otherwise provided
herein, be one, three or six months or, with the consent of all the Banks,
having regard to the provisions of paragraph (i) (b) below, any longer period,
as the Borrower may in each case select by notice to the Funding Agent no later
than 11.00 a.m. on the fifth business day preceding the first day of such
Interest Period (and the Funding Agent shall inform each Bank of the contents of
such notice no later than 11.00 a.m. on the fourth business day preceding the
first day of such Interest Period) Provided that:
(i) if the Borrower selects a duration of more than six months in
relation to an Interest Period, then:
(a) the Borrower may, at the same time, notify the
Funding Agent of its selection of a duration of one,
three or six months to apply should the Borrower's
selection become ineffective pursuant to paragraph
(b) below; and
(b) any Bank may, at any time before 11.00 a.m. on the
third business day preceding the first day of such
Interest Period, notify the Funding Agent of its
objections to the Borrower's selection, whereupon
such selection shall become ineffective;
(ii) if the Borrower fails to give such notice of its selection in
relation to an Interest Period, or if its selection becomes
ineffective under (i)(b) above and the Borrower has failed to
give the Funding Agent any permitted alternative selection
pursuant to (i)(a) above, then the duration of that Interest
Period shall, subject to (iii) and (iv) below, be one month;
(iii) if requested by the Borrower, any Interest Period which begins
during or at the same time as any other Interest Period shall
end at the same time as that other Interest Period;
(iv) any Interest Period which would otherwise end during the month
preceding, or extend beyond, the Final Maturity Date shall be
of such duration that it shall end on the Final Maturity Date;
and
(v) the Borrower shall make its selection of Interest Periods so
that at all times it is able to comply with its obligations
under Clause 10 without incurring any costs under Clause 29.4.
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<PAGE> 39
7.3 If two or more Interest Periods end at the same time, then, on the last
day of those Interest Periods, the Advances to which they relate shall, at the
option of the Borrower, be consolidated into (and thereafter, save as otherwise
provided herein, treated in all respects as) a single Advance.
8. INTEREST
8.1 On the last day of each Interest Period (and, in the case of any
Interest Period of more than six months' duration, on the last day of each
successive period of six months which occurs during such Interest Period) the
Borrower shall pay accrued interest on the Advance to which such Interest Period
relates.
8.2 The rate of interest applicable to an Advance from time to time during
an Interest Period relating thereto shall be the rate per annum which is the sum
of the Applicable Margin at such time, the Associated Costs Rate in respect
thereof at such time and LIBOR on the Quotation Date therefor.
9. ALTERNATIVE INTEREST RATES
9.1 If:
(i) the Funding Agent determines that at or about 11.00 a.m. on
the Quotation Date for an Interest Period in respect of an
Advance none of the Reference Banks was offering to prime
banks in the London Interbank Market deposits in sterling, in
each case, for the proposed duration of such Interest Period;
or
(ii) before the close of business in London on the Quotation Date
for an Interest Period in respect of an Advance, the Funding
Agent has been notified by a Bank or each of a group of Banks
to which in aggregate thirty-five per cent. or more of the
Loan is (or, if an Advance were then made, would be) owed that
the rate at which such deposits were being so offered does not
fairly reflect the cost to it of obtaining such deposits,
then, notwithstanding the provisions of Clauses 7 and 8:
(a) if paragraph (i) above applies, the duration of that Interest
Period shall be one month or, if less, such that it shall end
on the next succeeding Repayment Date; and
(b) if paragraph (i) or (ii) above applies, the rate of interest
applicable to each Bank's portion of such Advance from time to
time during such Interest Period shall be the rate per annum
which is the sum of the Applicable Margin at such time, the
Associated Costs Rate in respect thereof at such time and the
rate per annum notified to the Funding Agent by such Bank
before the last day of such Interest Period to be that which
expresses as a percentage rate per annum the cost to such Bank
of funding from whatever sources it may reasonably select its
portion of such Advance during such Interest Period.
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<PAGE> 40
9.2 If (i) either of those events mentioned at paragraphs (i) and (ii) in
Clause 9.1 occurs or (ii) by reason of circumstances affecting the London
Interbank Market during any period of three consecutive business days none of
the Reference Banks offers deposits in sterling to prime banks in the London
Interbank Market, then:
(a) the Funding Agent shall notify the Borrower and the Banks
promptly of such event; and
(b) if the Funding Agent or the Borrower requires within five days
of such notification, the Funding Agent and the Borrower shall
enter into good faith negotiations with a view to agreeing a
substitute basis (1) for determining the rates of interest
from time to time applicable to the Advances and/or (2) upon
which the Advances may be maintained (whether in sterling or
some other currency) thereafter,
and any such substitute basis that is agreed shall take effect in accordance
with its terms and be binding on each party hereto Provided that the Funding
Agent may not agree any such substitute basis without the prior consent of each
Bank. If no substitute basis is agreed the Borrower may, at its option, prepay
(without premium or penalty but subject to Clause 29.4) all of the Advances on
any business day thereafter.
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<PAGE> 41
PART 5
REPAYMENT, CANCELLATION AND PREPAYMENT
10. REPAYMENT OF THE LOAN
10.1 The Borrower shall make such repayments of the Loan as are required so
that the Loan is reduced on each Repayment Date by an amount equal to the lesser
of:
(i) an amount equal to one hundred per cent. of the Available Cash
Flow, during the Semi-Annual Cash Flow Period immediately
preceding such Repayment Date plus any amount payable under
Clause 3.2 of the Sponsor Support Agreement; and
(ii) an amount equal to the greatest of:
(a) the amount required to ensure that the amount of the
Loan outstanding after such repayment on such
Repayment Date does not exceed the amount set out in
column B of the Fifth Schedule for that Repayment
Date;
(b) the amount by which the Current Banking Case
demonstrates that the Loan is required to be reduced
on such Repayment Date so that the RTCR on each
Calculation Date as determined in the Current Banking
Case will be at least 1.35 after taking account of
such repayment Provided that if the Borrower has
delivered a draft banking case to the Facility Agent
which has not yet become a Banking Case (as defined
in Clause 1.1) then, if the Facility Agent so
determines, references in this Clause 10.1(ii)(b) to
the Current Banking Case shall be replaced by
references to such draft banking case; and
(c) sixty per cent. of Available Cash Flow:
(1) in the case of the first Repayment Date,
arising on or before the Calculation Date
immediately preceding such Repayment Date
and calculated by reference to the latest
Net Cash Flow report delivered by the
Borrower pursuant to Clause 18.4 in respect
thereof; and
(2) in the case of each subsequent Repayment
Date, arising in the Semi-Annual Cash Flow
Period immediately preceding such Repayment
Date and calculated by reference to the
latest Net Cash Flow report delivered by the
Borrower pursuant to Clause 18.4 in respect
thereof.
10.2 If at any time the Current Banking Case projects and estimates that the
FLCR and RTCR in respect of any Calculation Date is or will be less than 1.3 (in
the case of the FLCR) or less than 1.2 (in the case of the RTCR), then within
forty days of that Current Banking Case being delivered to the Facility Agent
the Borrower shall repay such amount of the Loan in accordance with the terms
and conditions hereof (including, without limitation, Clause 29.4) as is
necessary to ensure that after such
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<PAGE> 42
prepayment and at all times thereafter the FLCR is equal to or greater than 1.3
and the RTCR is equal to or greater than 1.2.
10.3 If in respect of any draft banking case:
(i) any dispute in respect thereof has been referred to an
Independent Expert pursuant to Clause 19.9;
(ii) the Independent Expert has not made a determination on the
matter in dispute by any Repayment Date (the "AFFECTED
REPAYMENT DATE"); and
(iii) when the Independent Expert makes a determination the
resultant effect of such determination upon the calculation of
the RTCR in such Banking Case is that, if such Banking Case
had been the Current Banking Case on the Affected Repayment
Date, the Borrower would have been obliged to pay a larger
amount (the "REVISED AMOUNT") on the Affected Repayment Date
than that which it was then obliged to pay,
then the Borrower shall make a further repayment of the Loan on the fifth
business day after the day on which the Borrower is required to deliver a
revised banking case to the Facility Agent pursuant to Clause 19.10 in an amount
equal to the difference between the amount which the Borrower was due to repay
on the Affected Repayment Date and the Revised Amount.
10.4 Notwithstanding anything to the contrary in any Financing Agreement,
all amounts outstanding in respect of the Loan shall have been repaid in full on
or before the Final Maturity Date.
10.5 To the extent that the Sponsor is obliged to pay any amount to the
Borrower pursuant to Clause 3.2 of the Sponsor Support Agreement, the Borrower
will apply such amount immediately upon receipt thereof (and the Account Bank is
hereby authorised, under instructions from the Facility Agent, to make any
application of such amount which is paid into the Proceeds Account) in order to
satisfy its obligations under Clause 10.1 on such date.
11. CANCELLATION AND PREPAYMENT
11.1 Subject as provided in Clause 11.2, the Borrower may, by giving to both
the Facility Agent and the Funding Agent not less than ten days' prior notice to
that effect, cancel (without premium or penalty) the whole or any part (being a
minimum amount of pound sterling 3,000,000 and an integral multiple of pound
sterling 1,000,000) of the Available Facility. Any such cancellation shall
reduce the Available Commitments of the Banks rateably.
11.2 The Borrower shall not be entitled to cancel any part of the Available
Facility under Clause 11.1 (and no Bank's Available Commitment shall be reduced
to zero pursuant to Clause 11.9) at any time prior to the Project Completion
Date unless the Borrower has demonstrated to the reasonable satisfaction of an
Instructing Group that it no longer requires the amount which is to be so
cancelled in order to meet the cost to it of completing the Project by means of
the Project Completion Tests being satisfied or it has raised, or has obtained
unconditional legal commitments entitling it to raise (but only by the raising
of
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<PAGE> 43
any Subordinated Debt or equity) amounts not less than the amounts then required
to finance such obligations, including a reasonable provision in respect of
unforeseen costs, (after taking into account any amounts which have not been so
cancelled and which remain available hereunder) and such amounts are available
for, and are dedicated in a manner satisfactory to an Instructing Group to, the
financing of such requirements and that the Borrower has agreed with the
Facility Agent and all relevant Hedge Counterparties such modifications to the
Approved Hedging Programme and any Hedging Agreement as the Facility Agent shall
determine to be appropriate and the Borrower has demonstrated that it will be
able to meet all additional obligations, if any, arising from such modification
and the implementation thereof.
11.3 The Borrower may, if it has given to the Funding Agent not less than
ten days' prior written notice to that effect, prepay (without premium or
penalty but subject to Clause 29.4) the whole of any Advance or any part of any
Advance (being a minimum amount of pound sterling 3,000,000 and an integral
multiple of pound sterling 1,000,000) on any business day which ends after
the Termination Date.
11.4 The Borrower may, if it has given to the Funding Agent not less than
ten days' prior written notice to that effect, at any time (without penalty or
premium but subject to Clause 29.4):
(i) prepay the Loan in full together with accrued interest thereon
and all other amounts outstanding hereunder;
(ii) cancel in full the Available Facility; and
(iii) satisfy all its other obligations and liabilities under each
other Financing Agreement (including, without limitation, the
making of such payments to Hedge Counterparties as are
required by the relevant Hedging Agreements such that each
shall be released from all obligations and liabilities arising
under or pursuant to the relevant Hedging Agreement).
11.5 Any notice of cancellation or prepayment given by the Borrower pursuant
to Clause 11.1, 11.3 or 11.4 shall be irrevocable, shall specify the date upon
which such cancellation or prepayment is to be made and the amount of such
cancellation or prepayment and, in the case of a notice of prepayment, shall
oblige the Borrower to make such prepayment on such date.
11.6 If any Bank claims indemnification from the Borrower under Clause 12.2
or Clause 14.1 or an amount becomes payable to any Bank pursuant to Clause 12.1
and within thirty days thereafter the Funding Agent receives from the Borrower
notice (which shall be irrevocable) of the Borrower's intention to repay such
Bank's share of the Loan, the Borrower shall repay such Bank's share of the Loan
together with accrued interest thereon but only in accordance with and subject
to Clause 11.7, Clause 11.8 and Clause 29.4.
11.7 If, at any time, the Borrower gives any notice of its intention to pay
any amount pursuant to Clause 11.6 or becomes obliged to pay any amount for the
account of any Bank pursuant to Clause 11.6 or Clause 15(ii) (any such amount
being a "RELEVANT SUM"), then such relevant sum shall be paid by the Borrower in
the manner specified in Clause 11.8 Provided that, without prejudice to the
obligations of
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<PAGE> 44
the Borrower under Clauses 12.1, 12.2, 14.1 or 29, no payments shall be made
pursuant to this Clause 11.7 or Clause 11.8 at any time whilst any Event of
Default or Potential Event of Default has occurred and not been remedied or
waived and unless and until the Borrower has agreed with the Facility Agent and
all relevant Hedge Counterparties (acting reasonably) such modifications to the
Approved Hedging Programme as the Facility Agent shall determine (acting
reasonably) to be appropriate and the Borrower has demonstrated to the
satisfaction of the Facility Agent (acting reasonably) that it will be able to
meet all additional obligations, if any, arising from such modification and the
implementation thereof.
11.8 If on or before the third business day prior to any Repayment Date the
Borrower's intention to repay any relevant sum or sums has been notified
pursuant to Clause 11.6, then on such Repayment Date the Borrower shall pay to
the Funding Agent for the account of the Bank or Banks to which such relevant
sum or sums are owed, amounts equal to the relevant sums (or any unpaid part
thereof) respectively owing to them or, if less, an aggregate amount equal to
the excess of Available Cash Flow for the then immediately preceding Semi-Annual
Cash Flow Period over the aggregate amount to be applied by the Borrower
pursuant to Clause 10 in respect of such Repayment Date.
11.9 Subject to Clause 11.2, in the case of any repayment obligation arising
by reason of any notice given by the Borrower pursuant to Clause 11.6, a Bank
for whose account a repayment is to be made under Clause 11.6, 11.7 and 11.8 or
Clause 15(ii) shall not be obliged to make any advances hereunder on or after
the date upon which the Funding Agent receives the Borrower's notice of its
intention to repay such Bank's share of the Loan, on which date such Bank's
Available Commitment shall be reduced to zero.
11.10 The Borrower shall not repay all or any part of the Loan except at the
times and in the manner expressly provided for in this Agreement and shall not
be entitled to reborrow any amount repaid.
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<PAGE> 45
PART 6
CHANGES IN CIRCUMSTANCES
12. TAXES
12.1 All payments to be made by the Borrower to any person hereunder shall
be made free and clear of and without deduction for or on account of tax unless
the Borrower is required to make such a payment subject to the deduction or
withholding of tax, in which case the sum payable by the Borrower in respect of
which such deduction or withholding is required to be made shall, subject to
Clause 12.4 and 12.5, be increased to the extent necessary to ensure that, after
the making of the required deduction or withholding, such person receives and
retains (free from any liability in respect of any such deduction or
withholding) a net sum equal to the sum which it would have received and so
retained had no such deduction or withholding been made or required to be made.
12.2 Without prejudice to the provisions of Clause 12.1, if any person or
any Agent on its behalf is required to make any payment on account of tax (not
being a tax imposed on its overall net income or on the net income of its
Facility Office by the jurisdiction in which it is incorporated or in which its
Facility Office is located) on or in relation to any sum received or receivable
hereunder by such person or such Agent on its behalf (including, without
limitation, any sum received or receivable under this Clause 12) or any
liability in respect of any such payment is asserted, imposed, levied or
assessed against such person or such Agent on its behalf, the Borrower shall,
within fifteen days of a demand of such Agent but subject to Clauses 12.4 and
12.5, indemnify such person against such payment or liability, together with any
interest, penalties and expenses payable or incurred in connection therewith.
12.3 A Bank intending to make a claim pursuant to Clause 12.2 shall notify
the Facility Agent of the event by reason of which it is entitled to do so,
whereupon the Facility Agent shall notify the Borrower thereof Provided that
nothing herein shall require such Bank to disclose any confidential information
relating to the organisation of its affairs.
12.4 If any Bank whose Facility Office is in the United Kingdom, otherwise
than by reason of any change in law or in the interpretation or administration
thereof or any change in any published extra-statutory or revenue concession:
(i) is not or ceases to be recognised by the United Kingdom Inland
Revenue as a bank carrying on a bona fide banking business in
the United Kingdom for the purposes of Section 349 of the
Income and Corporation Taxes Act 1988 (a "SECTION 349 BANK");
or
(ii) does not take or ceases to take any interest received by it
hereunder into account as a trading receipt of its banking
business in the United Kingdom,
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<PAGE> 46
then the Borrower shall not be liable to pay to such Bank under Clause 12.1 or
12.2 any amount in excess of the amount it would have been obliged to pay if
such Bank was or had not ceased to be so recognised by the Inland Revenue or, as
the case may be, had brought such payments into account as a trading receipt of
its banking business in the United Kingdom.
12.5 If any Bank whose Facility Office is outside the United Kingdom,
otherwise than by reason of any change in law, regulation or treaty or any
change in its interpretation or administration or any change in any
extra-statutory or revenue concession, is not or ceases to be entitled by virtue
of an applicable double tax treaty to receive payments from the Borrower
hereunder without deduction of United Kingdom withholding tax (a Bank whose
Facility Office is outside the United Kingdom and is also so entitled under such
double tax treaty, having made all appropriate claims under such treaty, being a
"DOUBLE TAXATION TREATY BANK"), then the Borrower shall not be liable to pay to
such Bank under Clause 12.1 or 12.2 any amount in excess of the amount it would
have been obliged to pay if such Bank had been so entitled to receive payments
hereunder from the Borrower, and had made all appropriate claims to obtain such
payments, without deduction of United Kingdom withholding tax.
12.6 If:
(i) any Bank whose Facility Office is in the United Kingdom is
not, or ceases to be, a Section 349 Bank or is notified by the
Inland Revenue that it will cease to be a Section 349 Bank
and/or does not bring interest received by it hereunder as a
trading receipt of its banking business in the United Kingdom;
or
(ii) any Bank whose Facility Office is outside the United Kingdom
is not, or ceases to be, a Double Taxation Treaty Bank,
it shall give notice thereof to the Borrower through the Facility Agent promptly
upon its Facility Office becoming aware of the same.
12.7 Each Bank hereby represents to the Borrower that at the date hereof it
is a Section 349 Bank or a Double Taxation Treaty Bank.
13. TAX RECEIPTS
13.1 If, at any time, the Borrower is required by law to make any deduction
or withholding from any sum payable by it hereunder (or if thereafter there is
any change in the rates at which or the manner in which such deductions or
withholdings are calculated), the Borrower shall promptly notify both the
Facility Agent and the Funding Agent.
13.2 If the Borrower makes any payment hereunder in respect of which it is
required to make any deduction or withholding, it shall pay the full amount
required to be deducted or withheld (net of any allowable deductions or other
amounts) to the relevant taxation or other authority within the time allowed for
such payment under applicable law and shall deliver to the Facility Agent for
each Bank, within thirty days after it has made such payment to the applicable
authority, an original receipt (or a certified copy thereof) issued by such
authority evidencing the payment to such authority of all amounts so required to
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<PAGE> 47
be deducted or withheld (and details of any allowed deductions therefrom) in
respect of that Bank's share of such payment.
13.3 If an additional payment is made under Clause 12.1 or 12.2 by the
Borrower for the benefit of any person and such person, in its sole discretion,
determines that it has received a refund or repayment of any tax or been granted
and derived use and benefit from a credit against, a relief or remission for any
tax, then, if and to the extent that such person, in its sole opinion,
determines that such credit, relief, remission, refund or repayment is in
respect of the deduction or withholding giving rise to such additional payment
or, in the case of an additional payment made pursuant to Clause 12.2, with
reference to the liability, expense or loss to which the payment giving rise to
the additional payment relates, such person shall, to the extent that it can do
so without prejudice to the retention of the amount of such credit, relief,
remission, refund or repayment, pay to the Borrower such amount as such person
shall, in its sole opinion, have concluded to be attributable to such deduction
or withholding or, as the case may be, such liability, expense or loss and such
person shall provide to the Borrower a certificate of a duly authorised officer
of it certifying the amount claimed. Any such payment shall be conclusive
evidence (in the absence of manifest error) of the amount due to the Borrower
hereunder and shall be accepted by the Borrower in full and final settlement of
its rights of reimbursement hereunder in respect of such deduction or
withholding.
13.4 Nothing herein contained shall interfere with the right of any person
to arrange its tax affairs in whatever manner it thinks fit nor oblige any
person to disclose any confidential information relating to its tax affairs or
any computations in respect thereof and, in particular, none of the
Beneficiaries shall be under any obligation to claim credit, relief, remission
or repayment from or against its corporate profits or similar tax liability in
respect of the amount of such deduction or withholding in priority to any other
claims, reliefs, credits or deductions available to it.
13.5 If any person makes any payment to the Borrower pursuant to Clause 13.3
and such person subsequently determines, in its sole opinion, that the credit,
relief, remission, refund or repayment in respect of which such payment was made
was not available to it or has been withdrawn from it or that it was unable to
use such credit, relief, remission, refund or repayment in full, such person
shall provide to the Borrower a certificate of a duly authorised officer of it
certifying the amount claimed and the Borrower shall reimburse such person to
the extent such person determines, in its sole opinion acting in good faith, to
be required to place it in the same after-tax position as it would have been in
if such credit, relief, remission, refund or repayment had been obtained and
fully used and retained by such person.
14. INCREASED COSTS
14.1 If, by reason of (i) any change in law or in its interpretation or
administration and/or (ii) compliance with any request from or requirement of
any central bank (other than, save in the case of (e) below, the requirements of
the Bank of England reflected in the Associated Costs Rate) or other fiscal,
monetary or other authority whether or not having the force of law (including,
without limitation, a request or requirement which affects the manner in which a
Bank or any holding company of a Bank allocates capital resources to its
obligations hereunder but excluding the implementation by any authority or
government of any of the matters set out in the Basle Paper in the jurisdiction
in which such Bank or any holding company of such Bank is incorporated, in which
such Bank or any holding company
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<PAGE> 48
of such Bank carries on business or in which such Bank's Facility Office is
located, unless the same arises from any renewal or modification of the Basle
Paper to the extent that the same results in a change in the implementation or
administration of the Basle Paper as implemented at the date hereof):
(a) a Bank or any holding company of such Bank incurs a cost as a
result of such Bank's having entered into and/or performing
its obligations under this Agreement and/or assuming or
maintaining a commitment under this Agreement and/or making
one or more advances hereunder;
(b) a Bank or any holding company of such Bank is unable to obtain
the rate of return on its overall capital (save that, in the
case of such holding company, the relevant rates of return
shall be determined on a consolidated basis) which it would
have been able to obtain but for its having entered into
and/or performing its obligations and/or assuming or
maintaining a commitment under this Agreement and/or making
one or more Advances hereunder;
(c) there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining all or any of
the advances comprised in a class of advances formed by or
including the advances made or to be made by such Bank
hereunder;
(d) a Bank or any holding company of such Bank becomes liable to
make any payment on account of tax or otherwise (not being a
tax imposed on its overall net income or on the net income of
such Bank's Facility Office by the jurisdiction in which it is
incorporated or in which its Facility Office is located) on or
calculated by reference to the amount of the advances made or
to be made by such Bank hereunder and/or to any sum received
or receivable by it hereunder; or
(e) the Associated Costs Rate, as calculated hereunder, does not
represent the cost to any Bank of complying with the
requirements of the Bank of England in relation to its funding
or maintaining advances hereunder,
then the Borrower shall, from time to time on demand of the Facility Agent,
within fifteen days of a demand pay to the Facility Agent for the account of
that Bank amounts sufficient to indemnify that Bank or any such holding company
(except in the case of a holding company, to the extent that such holding
company has been indemnified in respect of the same cost, liability or reduction
in rate of return) against, as the case may be, (1) such cost, (2) such
reduction in such rate of return (or such proportion of such reduction as is, in
the opinion of that Bank, attributable to its obligations hereunder), (3) such
increased cost (or such proportion of such increased cost as is, in the
reasonable opinion of that Bank, attributable to its funding or maintaining
advances hereunder), (4) such liability or (5) such portion of such cost as is
not represented by the Associated Costs Rate.
14.2 A Bank intending to make a claim pursuant to Clause 14.1 shall deliver
to the Borrower, through the Facility Agent, a certificate to that effect
specifying the event by reason of which it is entitled to make such claim and
the amount of such claim Provided that: (i) nothing herein shall require such
Bank to disclose any confidential information relating to the organisation of
its affairs; and (ii) if the event by
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<PAGE> 49
reason of which such Bank claims to be entitled to make a claim falls within any
of paragraphs (a), (b), (c), (d) and (e) of Clause 14.1 and such Bank fails to
deliver such certificate within thirty days of an officer of that Bank with
responsibility for its participation in the Facility becoming aware of such
event and the possible results thereof referred to in Clause 14.1, then such
Bank shall not be entitled to make any claim under Clause 14.1 in respect of
such event for the period falling more than thirty days before the date upon
which it delivers such certificate.
15. ILLEGALITY
If, at any time, it is unlawful for a Bank to make, fund or allow to remain
outstanding all or any of the advances made or to be made by it hereunder, then
that Bank shall, promptly after becoming aware of the same, deliver to the
Borrower through the Facility Agent a certificate to that effect and, unless
such illegality is avoided in accordance with Clause 16:
(i) such Bank shall not thereafter be obliged to make advances
hereunder and the amount of its Available Commitment shall be
immediately reduced to zero; and
(ii) if the Facility Agent on behalf of such Bank so requires, the
Borrower shall repay (without premium or penalty but subject
to Clause 29.4) such Bank's share of any outstanding Advances
together with accrued interest thereon but only in accordance
with and subject to Clauses 11.6, 11.7 and 11.8.
16. MITIGATION
If, in respect of any Bank, circumstances arise which would or would upon the
giving of notice result in:
(i) the reduction of its Available Commitment to zero pursuant to
Clause 15(i) and/or the repayment of its share of outstanding
Advances pursuant to Clause 15(ii);
(ii) an increase in the amount of any payment to be made to it or
for its account pursuant to Clause 12.1; or
(iii) a claim for indemnification pursuant to Clause 12.2 or Clause
14,
then, without in any way limiting, reducing or otherwise qualifying the rights
of such Bank or the obligations of the Borrower under any of the Clauses
referred to in (i), (ii) or (iii) above such Bank shall promptly upon its
Facility Office becoming aware of such circumstances and the possible results
thereof notify the Facility Agent thereof and, in consultation with the Facility
Agent and the Borrower and to the extent that it can do so without prejudice to
its own position, take such steps as such Bank in its bona fide opinion
considers appropriate to mitigate the effects of such circumstances including
the transfer of its Facility Office or the transfer of its rights and
obligations hereunder to another financial institution willing to participate in
the Facility in respect of which the Facility Agent, in consultation with the
Borrower shall provide reasonable assistance (at the cost and expense of the
Borrower) in identifying whether any Bank or financial institution would be so
willing Provided that such Bank shall be under no obligation
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to take any such action if, in the opinion of such Bank (exercised in good
faith), to do so might have an adverse effect upon its business, operations or
financial condition Provided further that, for the avoidance of doubt, the fact
that after any such transfer that Bank will no longer be participating in the
Facility will not of itself be deemed to have an adverse effect upon its
business, operations or financial condition.
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PART 7
INFORMATION AND FORECASTS
17. FINANCIAL INFORMATION
17.1 The Borrower shall:
(i) as soon as the same become available, but in any event within
one hundred and twenty days after the end of each of its
financial years, deliver to the Facility Agent in sufficient
copies for the Banks its audited financial statements for such
financial year;
(ii) as soon as the same become available, but in any event within
one hundred and twenty days after the end of each of the
Sponsor's financial years, deliver to the Facility Agent in
sufficient copies for the Banks the Sponsor's audited
financial statements for such financial year;
(iii) as soon as the same become available, but in any event within
one hundred and twenty days after the end of each of UTPH's
financial years, deliver to the Facility Agent in sufficient
copies for the Banks UTPH's audited financial statements for
such financial year;
(iv) as soon as the same become available, but in any event within
sixty days after the end of the first six months in each of
the Sponsor's financial years, deliver to the Facility Agent
in sufficient copies for the Banks the Sponsor's unaudited
financial statements for such six month period;
(v) as soon as the same become available, but in any event within
sixty days after the end of each of the first three quarters
in each of UTPH's financial years, deliver to the Facility
Agent in sufficient copies for the Banks UTPH's unaudited
financial statements for such quarter; and
(vi) promptly provide the Facility Agent with access to and copies
of such other information concerning its business, operations
and condition (financial or otherwise) and that of the Sponsor
and UTPH as the Facility Agent may from time to time
reasonably require.
17.2 The Borrower shall ensure that:
(i) each set of financial statements delivered by it pursuant to
Clause 17.1 is prepared, in accordance with accounting
principles generally accepted in the United Kingdom (or in
accordance with accounting principles generally accepted in
the United States of America in the case of UTPH) and
consistently applied;
(ii) each set of financial statements delivered by it pursuant to
Clause 17.1 is certified by a duly authorised officer of the
relevant company as giving a true and fair view of its
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<PAGE> 52
financial condition as at the end of the period to which those
financial statements relate and of the results of its
operations during such period; and
(iii) each set of financial statements delivered by it pursuant to
paragraphs (i), (ii) or (iii) of Clause 17.1 has been audited
by Price Waterhouse or an internationally recognised firm of
independent auditors licensed to practise in the United
Kingdom (or the United States of America in the case of UTPH).
18. PROJECT EXPENDITURE AND OTHER REPORTS
18.1 The Borrower shall, within 60 days after (i) each June 30 and December
31 occurring prior to the Termination Date and (ii) the Termination Date (each a
"CALCULATION DATE"), deliver to the Facility Agent (in sufficient copies for the
Banks):
(a) a project expenditure report for the period commencing on the
day after the immediately preceding calculation date (or in
the case of the first such report, the date hereof) and ending
on such calculation date (each, a "RELEVANT PERIOD"), being a
statement of expenditure made by the Borrower during such
relevant period and otherwise prepared in accordance with
Clauses 18.2 and 18.3; and
(b) a summary in reasonable detail of the Operator's Current
Forecasts (if any) provided to the Borrower during each
relevant period.
18.2 Each statement delivered by the Borrower pursuant to Clause 18.1 shall
set out details of:
(i) all expenditure during the relevant period to which such
statement relates falling within the definition of Permitted
Expenditure in Clause 1.1 and shall also include details of
expenditure during such relevant period, if any, in respect of
any other amounts paid out by it and referred to in Clause 3.1
or Clause 3.2 (the "RELEVANT EXPENDITURE"); and
(ii) all relevant currency exchange rates and other information
required to enable the Facility Agent to determine Permitted
Expenditure for the relevant period to which such statement
relates.
18.3 Each statement delivered by the Borrower pursuant to Clause 18.1 shall:
(i) compare: (a)(1) the Permitted Expenditure incurred to date;
plus (2) the amount projected and estimated in the Operator's
Current Forecasts received by the Borrower to be the aggregate
of the Borrower's remaining Permitted Expenditure up to and
including the projected Project Completion Date; with (b) the
Initial Development Budget and the latest Development Budget;
(ii) specify the total of the Relevant Expenditure; and
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<PAGE> 53
(iii) specify the total of the actual expenditure falling within the
definition of Permitted Expenditure in Clause 1.1 that has
been incurred to date.
18.4 The Borrower shall, at the same time at which it is required to deliver
to the Facility Agent a draft banking case pursuant to Clauses 19.1 commencing
with the first such draft banking case delivered after the end of the first
Semi-Annual Cash Flow period, deliver to the Facility Agent (in sufficient
copies for the Banks) a Net Cash Flow report, being a statement of payments and
receipts of the Borrower during the immediately preceding Semi-Annual Cash Flow
Period and setting out:
(i) a calculation of Available Cash Flow for such period and
otherwise prepared in accordance with this Agreement together
with the latest schedule of proposed cash calls under the Unit
Operating Agreement provided by the Operator to the Borrower
(if any); and
(ii) all relevant currency exchange rates and other information
required to enable the Facility Agent to determine Net Cash
Flow for the relevant period to which such statement relates.
19. BANKING CASES
19.1 Subject to the following provisions of this Clause 19 and with a view
to the subsequent preparation of a draft banking case under Clause 19, the
Borrower shall:
(i) on the date on which it delivers to the Facility Agent a
Completion Certificate pursuant to Clause 21.1, deliver to the
Facility Agent a draft banking case;
(ii) not later than the fifty-fourth day after each Calculation
Date which falls after the Project Completion Date, deliver to
the Facility Agent a draft banking case;
(iii) not later than the thirtieth day after the Facility Agent
shall have notified it that an Event of Default has occurred
(unless, in either case, such Event of Default has been
remedied or waived in accordance with the provisions hereof),
deliver to the Facility Agent a draft banking case;
(iv) not later than the thirtieth day (or, if the Borrower is then
required to arrange for a detailed review to be produced by
the Independent Engineers pursuant to Clause 20.3, the
fifty-fourth day) after the Facility Agent shall have notified
it that an Instructing Group together with either of the
Technical Agents is of the opinion (formed on a reasonable
basis) that any event has occurred or state of affairs subsist
which has, or would have, a Material Adverse Effect or which
gives an Instructing Group (together with either of the
Technical Agents) reasonable grounds for belief, at any time
after the Project Completion Date, that the RTCR is less than
1.35 deliver to the Facility Agent a draft banking case
Provided that such opinion must be based on an event or state
of affairs other than an adverse movement in oil prices
Provided further that the previous
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<PAGE> 54
proviso shall not apply if the average spot price of Brent
Crude over any period of thirty days within the previous six
months has fallen below ten dollars per Barrel;
(v) not later than the thirtieth day (or, if the Borrower is then
required to arrange for a detailed review to be produced by
the Independent Engineers pursuant to Clause 20.3, the
fifty-fourth day) after the Facility Agent shall have notified
it that any event has occurred which would become (with the
passage of time, the giving of notice, the making of any
determination hereunder or any combination thereof) an Event
of Default (unless such event has been remedied or waived in
accordance with the provisions hereof), deliver to the
Facility Agent a draft banking case;
(vi) not later than the thirtieth day (or, if the Borrower is then
required to arrange for a detailed review to be produced by
the Independent Engineers pursuant to Clause 20.3, the
fifty-fourth day) after it has received notice from the
Operator that the Operator has projected that the date for the
first entry of Gas into the Britannia Field Facilities will
occur after 31 December 1998, deliver to the Facility Agent a
draft banking case;
(vii) no later than the thirtieth day (or, if the Borrower
is then required to arrange for a detailed review
to be produced by the Independent Engineers pursuant to
Clause 20.3, the fifty-fourth day) after, and the Facility
Agent has so notified it that, any indebtedness for borrowed
money in excess of pound sterling 10,000,000 (or its
equivalent) in the aggregate of the Sponsor has not been paid
when due (or within any applicable grace period granted in
the agreement, if any, evidencing the same), any indebtedness
for borrowed money in excess of pound sterling 10,000,000 (or
its equivalent) in the aggregate of the Sponsor has been
declared to be or otherwise has become due and payable prior
to its specified maturity by reason of the happening of a
default or event of default (howsoever described and whether
or not involving culpability on the part of any person) or
any creditor of the Sponsor has become entitled to declare
any indebtedness for borrowed money in excess of pound
sterling 10,000,000 (or its equivalent) in the aggregate of
the Sponsor due and payable prior to its specified maturity
by reason of the happening of a default or event of default
(howsoever described and whether or not involving culpability
on the part of any person), deliver to the Facility Agent a
draft banking case; and
(viii) no later than the thirtieth day (or, if the Borrower is then
required to arrange for a detailed review to be produced by
the Independent Engineers pursuant to Clause 20.3, the
fifty-fourth day) after the Facility Agent has notified it
that the Operator has determined and has notified the
Borrower, or the Unit Operating Committee (as defined in the
Unit Operating Agreement) has determined, that neither the
Britannia Gas Terminal nor the Britannia Trunkline will be
constructed, deliver to the Facility Agent a draft banking
case,
Provided that the Borrower will not be required to deliver more than seven draft
banking cases pursuant to Clauses 19.1(iii), (iv), (v), (vi) or (vii) during the
term of this Agreement and will only be required to deliver one draft banking
case pursuant to Clause 19.1 (viii) during the term of this Agreement.
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<PAGE> 55
19.2 The Borrower shall deliver to the Facility Agent the draft Primary
Economic Assumptions upon which any draft banking case is to be prepared no
later than:
(i) in the case of a draft banking case to be delivered pursuant
to Clause 19.1(i), the date which is thirty days before the
date on which it delivers to the Facility Agent a Completion
Certificate;
(ii) in the case of a draft banking case to be delivered pursuant
to Clause 19.1(ii), the date which is the relevant Calculation
Date; or
(iii) in the case of a draft banking case to be delivered pursuant
to any of Clauses 19.1(iii), (iv), (v), (vi), (vii) or (viii),
the date which is twenty one days before the last time for
delivery of such banking case.
19.3 The Facility Agent shall promptly deliver such draft Primary Economic
Assumptions to each of the Technical Agents who shall discuss the same with the
Borrower. The Borrower and each of the Technical Agents shall negotiate in good
faith to try to agree such Primary Economic Assumptions between themselves, in
the case of a draft banking case delivered pursuant to Clause 19.1(ii), no later
than the fifteenth day after the relevant Calculation Date. The Borrower shall,
in any case have due regard to the comments made on the draft Primary Economic
Assumptions by the Technical Agents (including, without limitation, any opinion
expressed by the Technical Agents as to the accuracy or otherwise of such
Assumptions). In making their comments under this Clause 19.3 the Technical
Agents shall act reasonably and shall apply such criteria as they usually apply
in transactions of a similar nature to the Facility. In this Clause 19.3 the
obligation of the Borrower to have "due regard" to the comments made by the
Technical Agents shall mean that the Borrower shall reconsider in good faith the
accuracy and/or appropriateness of the Assumptions put forward by it in the
light of the comments made by the Technical Agents, any information put forward
by the Technical Agents in support of such comments and the most recent and
up-to-date data provided by the Operator.
19.4 Each draft banking case prepared by the Borrower and delivered pursuant
to Clause 19.1 shall:
(i) save as may otherwise have been agreed between the Borrower
and the Technical Agents, be in substantially the same form as
the Original Banking Case and contain such additional
information as is required to be included in a banking case
delivered pursuant to this Agreement;
(ii) be based on the application of the Economic Assumptions and
Technical Assumptions (the Primary Economic Assumptions being
as determined in accordance with Clause 19.3);
(iii) assume that:
(a) (save to the extent of other finance accepted by an
Instructing Group to be available to the Borrower as
contemplated by Clause 11.2) the Facility constitutes
the sole source of finance available to the Borrower
(other than any amount
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<PAGE> 56
falling within the definition of Forecast Net Cash
Flow) and that, to the extent available, the Borrower
will draw down amounts under the Facility to meet its
obligations as they fall due; and
(b) (save as specified in the definitions of RTCR and
FLCR in Clause 1.1), no obligation to prepay, repay
or cancel any part of the Facility or obligation to
increase the amount of any payment pursuant to Clause
12.1 or to indemnify any Bank arising pursuant to
Clause 12.2 or Clause 14.1 will arise during the
period the subject of the banking case unless known
to be the case;
(iv) include amounts for Capital Expenditure and Operating Costs
which are provided to the Borrower by the Operator in the most
recent Operator's Current Forecast, if any, received by the
Borrower as revised and adjusted to reflect the difference, if
any, between the Operator's forecasted production and the
production forecasted by the Independent Engineer in the most
recent Engineering Report;
(v) subject to Clause 19.5, set out, in respect of the period
commencing on the most recent Calculation Date to have
occurred prior to delivery of such draft banking case pursuant
to Clause 19.1 and ending on the Abandonment Date projected
therein, the Borrower's projection and estimate of:
(a) the Forecast Project Receipts during such period
giving reasonable details of all production and other
revenues and the sources from which they are derived;
(b) the Borrower's liability in respect of:
(1) Permitted Expenditure during such period
broken down to show projected expenditure in
respect of each of the items referred to in
the definition thereof in Clause 1.1. (to
the extent that the same is, with the
exception of Abandonment Costs, projected
and estimated to be incurred prior to the
Abandonment Date) and, in the case of its
liability in respect of Capital Expenditure,
making provision for cost overruns then
known or considered to be probable;
(2) Financing Expenses during such period; and
(3) taxes during such period;
(c) the Borrower's liability in respect of any other
expenditure which the Borrower is then required to
take into account for the purposes of calculating the
Forecast Net Cash Flow in respect of such period;
(d) the Forecast Net Cash Flow of the Borrower in respect
of such period and all other information required for
the calculation of the FLCR and the RTCR;
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<PAGE> 57
(e) the projected amount of the Operating and Financing
Costs Reserve and the amount by which the Loan is to
be repaid, each as on each Repayment Date falling in
such period;
(f) the FLCR and the RTCR each as at the beginning of
each Semi-Annual Cash Flow Period up to the
Semi-Annual Cash Flow Period in which the Discharge
Date occurs; and
(g) the amount by which the Loan must be repaid on each
future Repayment Date,
and each such projection and estimate being made in relation
to each Semi-Annual Cash Flow Period, or part thereof, which
occurs during the period to which such forecast relates;
(vi) set out the Borrower's projection and estimate of (a) the
Reserve Tail Date, (b) the Abandonment Date and (c) the
Project Completion Date (if delivered prior thereto) together
with any further information used in the calculation or, as
the case may be, the determination of any of such dates;
(vii) be calculated in sterling and, to the extent that any sum
denominated in a currency other than sterling falls to be
taken into account, using such rates of exchange between such
currency and sterling as may be determined on the assumptions
therein disclosed in reasonable detail;
(viii) take into account the anticipated effect of each of the
Hedging Agreements, if any, in respect of each period to which
such banking case relates; and
(ix) include such figures in relation to Proved Reserves and
production profiles relating to the Britannia Field as are set
out in the most recent Engineering Report prepared in
accordance with Clause 20.3 ("PROVED RESERVES AND PRODUCTION
PROFILES FIGURES").
19.5 If at any time a UTPL Credit Test is carried out pursuant to Clause
36.3 and such test is not satisfied then any Banking Case thereafter (until such
time as the UTPL Credit Test shall be satisfied thereafter) shall set out a
revised amount for Forecast Net Cash Flow which assumes that, for the period
from the most recent Calculation Date to have occurred prior to such banking
case being delivered pursuant to Clause 19.1 to the Abandonment Date projected
therein, the Borrower's liability for Project Taxes is the higher of (i) and
(ii) as set out in the definition of Project Taxes in Clause 1.1 and the amount
of such revised Forecast Net Cash Flow shall be the amount used in calculating
the RTCRs and FLCRs pursuant to Clause 19.4(v)(f). Such revised RTCRs and FLCRs
shall be the ratios set out in such banking case accordingly unless a Standby
Letter of Credit has been issued in an amount at least equal to the difference
between (i) the Net Present Value of Forecast Net Cash Flow revised as above and
(ii) the Net Present Value of Forecast Net Cash Flow calculated without such
revisions. Upon the issuance of such a Standby Letter of Credit and for so long
as such Standby Letter of Credit remains available for drawing (or until the
UTPL Credit Test is not satisfied when next tested, whichever is the sooner)
such
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banking case shall not include the revisions as to Forecast Net Cash Flow and
the RTCRs and FLCRs specified above.
19.6 The Facility Agent shall, within five days after receipt by it of any
draft banking case delivered by the Borrower pursuant to Clause 19.1 distribute
to the Technical Agents and the Banks a copy of such draft banking case together
with a statement specifying whether or not the Technical Agents disagree with
any of the Assumptions on which the draft banking case is based or the data
applied in relation to such Assumptions (other than, in either case, the
Technical Assumptions which consist of the Proved Reserves and Production
Profiles Figures), and, if they do not so agree, the reasons therefor and
details of the Assumptions and/or data (as the case may be) upon which the
Technical Agents believe that such draft banking case should be based.
19.7 Each Bank shall, within fourteen days after the delivery to it by the
Facility Agent of any draft banking case pursuant to Clause 19.6, notify the
Facility Agent whether or not it agrees with each of the Assumptions or data on
which such draft banking case is based (other than, in either case, the
Technical Assumptions which consist of the Proved Reserves and Production
Profiles Figures), stating in reasonable detail its grounds for its objections
(if any) to any such Assumption or data. The Facility Agent shall thereupon
notify the Borrower as soon as possible.
19.8 If any Bank fails to notify the Facility Agent that it does object to
any of the Assumptions or data on which a draft banking case is based (other
than, in either case, the Technical Assumptions which consist of the Proved
Reserves and Production Profiles Figures) within the fourteen day period
referred to in Clause 19.7, then such Bank shall be deemed to have approved the
draft banking case submitted to it. If an Instructing Group approves any draft
banking case so submitted, such draft banking case shall become the Current
Banking Case.
19.9 If an Instructing Group (acting reasonably) shall not have approved any
Assumption (or data to be applied in relation thereto) on which any draft
banking case is based (other than, in either case, the Technical Assumptions
which consist of the Proved Reserves and Production Profiles Figures) then:
(i) the Assumption or Assumptions (or data) in dispute shall be
referred by the Facility Agent to, and determined by, an
Independent Expert;
(ii) the Independent Expert shall be appointed on terms that:
(a) he shall act as an expert and not an arbitrator;
(b) he shall be required to make a determination on the
Assumption or Assumptions (or data) in dispute within
thirty days of the same being referred to him or such
longer period as the Technical Agents and the
Borrower may agree is necessary and, without
prejudice to the provisions of paragraph (a) above,
to state, in reasonable detail, his grounds for his
determination; and
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(c) such determination shall be made on the basis of
assumptions which the Independent Expert regards as
reasonable in all the circumstances prevailing at the
time taking into account:
(1) that such Assumption(s) is to be used in the
context of a projection of financial ratios
prepared by lending banks to a limited
recourse financing of a North Sea Petroleum
project; and
(2) (to the extent that the Independent Expert
considers them to be relevant) the
submissions of the Borrower, the Technical
Agents and the Banks and such other
information as he may consider appropriate;
and
(iii) the draft banking case shall thereafter be revised by the
Borrower at the time, in the manner and to the extent required
by Clause 19.10.
19.10 If any dispute relating to the Borrower's draft banking case is
referred to an Independent Expert, then promptly after the determination of all
such disputes by the Independent Expert and the notification thereof to the
Borrower, the Borrower shall prepare and deliver to the Facility Agent in
sufficient copies for the Banks the draft banking case in relation to which the
dispute or disputes arose revised to take into account all changes in the
assumptions relating thereto determined by such Independent Expert and such
draft banking case shall become the Current Banking Case. Any determination made
by an Independent Expert shall, in each case, be conclusive and binding on the
parties hereto, in the absence of manifest error.
19.11 For the avoidance of doubt, if as a result of any revision of any draft
banking case in accordance with Clause 19.9 there is any change in the FLCR,
RTCR or the Forecast Net Cash Flow for any period then such changes shall be
treated as having occurred on the first day of the period to which such draft
banking case relates.
19.12 The Borrower shall ensure that:
(i) each of the reports and other information to be prepared
and/or delivered by it pursuant to this Agreement is compiled
with due care and responsibility and does not contain any
false statement of any material fact or omit to state any
material facts or circumstances actually known to the Borrower
(having made all reasonable enquiries);
(ii) all opinions of the Borrower expressed therein are honestly
held and reasonably arrived at; and
(iii) the arithmetic of all computations in the projections,
forecasts, estimates and opinions prepared by it pursuant to
this Agreement is accurate in all respects and the assumptions
upon which any such computations are based are disclosed
therein and are reasonable.
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<PAGE> 60
19.13 The Borrower shall from time to time, on request of the Technical
Agents, supply each of them with a copy of any computer disk which contains the
computer model used to produce projected cash flows and financial ratios in
respect of the Project.
20. ENGINEERING REPORTS
20.1 The Borrower, in consultation with the Technical Agents, shall arrange
for the Independent Engineers to produce a report updating the Initial
Engineering Report by no later than 21 February in each year commencing on the
first 21 February to occur after the Project Completion Date. Each such report
shall set out in reasonable detail up to date estimates and analyses of the
Proved Reserves and production profiles relating to the Britannia Field, the
progress made on the development of, and the results of the operation of, the
Project (including, without limitation, detail as to the quantities of Petroleum
recovered from the Britannia Field) and estimating, on the basis therein
disclosed in reasonable detail, the likely rate of progress in the future
development of, and the likely results of the future operation of, the Project
(estimating suitable provisions in each case, for cost overruns then known or
considered to be probable). The Borrower shall promptly deliver a copy of such
reports (in sufficient numbers for the Banks) to the Technical Agents who shall
promptly deliver such copies to the Banks.
20.2 The Borrower shall from time to time deliver to the Independent
Engineers (promptly upon their request) such information in its possession or
within its ability to obtain about the Project or the production, processing,
transportation or sale of Britannia Petroleum as the Independent Engineers may
reasonably require in order to produce an Engineering Report pursuant to Clause
20.1.
20.3 If the Borrower is required to deliver a draft banking case pursuant to
any of Clauses 19.1(iii), (iv), (v), (vi), (vii) or (viii) the Borrower shall if
requested by the Facility Agent (acting on the instructions of an Instructing
Group), arrange for the Independent Engineers to conduct a detailed review of
the Britannia Field and to deliver to the Technical Agents through the Facility
Agent a report on the same by no later than the second business day before the
latest permitted date for delivery of any such draft banking case. The Borrower
shall use all reasonable endeavours to ensure that the information required by
the Independent Engineers to prepare such a report is made available to them
promptly upon request. The Technical Agents may review any Independent
Engineers' report delivered to them pursuant hereto. Promptly after receipt of
the Independent Engineers' report (or, if the Technical Agents are reviewing the
same, as soon as practicable thereafter but no longer than thirty days after
such receipt), the Facility Agent shall request the Independent Engineers to
deliver such copies of such report (as supplemented or amended as agreed as a
result of such review) as are sufficient for the Borrower and the Banks,
whereupon the Facility Agent shall deliver copies of the same to the Borrower
and the Banks.
20.4 It is agreed that the initial Independent Engineers shall be DeGolyer
and McNaughton. If at any time the Borrower wishes to replace such Independent
Engineers then the Borrower shall select another firm of independent engineers
which are acceptable to an Instructing Group. If after 30 days of such
alternative selection, the Borrower and an Instructing Group have not reached
agreement then the Independent Engineers will be such firm as an Instructing
Group may select, acting reasonably.
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21. COMPLETION CERTIFICATES
21.1 The Borrower may deliver to the Facility Agent for review by the
Technical Agents a Completion Certificate and the Borrower agrees that it will,
promptly upon a request to that effect, furnish either of the Technical Agents
with such information as either of them may reasonably require to be delivered
to it together with any such certificate. Each of the Technical Agents shall,
within fifteen days after receipt by it of any such certificate notify the
Borrower whether or not such Completion Certificate is in form and substance
reasonably satisfactory to it (including, whether any supporting documentary
evidence of the matters the subject of such certificate is reasonably
satisfactory to it) and, if not, the reasons therefor. The Borrower and the
Technical Agents shall consult together during a period not exceeding fourteen
days with a view to agreeing amendment of, or replacement of, the certificate
(and/or any such supporting documentary evidence).
21.2 If the Technical Agents have approved the Completion Certificate
delivered by the Borrower (or any Completion Certificate delivered in
substitution therefor) then the Technical Agents shall notify the Facility Agent
and the Facility Agent shall promptly notify the Borrower and the Banks of such
fact (the date on which the Facility Agent gives such notice being the "PROJECT
COMPLETION DATE").
21.3 If either of the Technical Agents have not then approved the Completion
Certificate delivered by the Borrower (or any Completion Certificate delivered
in substitution therefor) then:
(i) the matter in dispute may be referred by either of the
Technical Agents or the Borrower to, and determined by, an
Independent Expert;
(ii) the Independent Expert shall be appointed on terms that:
(a) he shall act as an expert and not an arbitrator;
(b) he shall be required to make a determination on the
matter in dispute within thirty days of the same
being referred to him or such longer period as the
Technical Agents and the Borrower may agree is
necessary and, without prejudice to the provisions of
paragraph (a) above, to state, in reasonable detail,
his grounds for his determination; and
(c) such determination shall be made on the basis of
matters and assumptions which the Independent Expert
regards as reasonable in all the circumstances
prevailing at the time taking into account:
(1) that such matters are to be used in the
context of the determination of the
completion, in accordance with the Project
Completion Tests, of a limited recourse
financing of a North Sea Petroleum project;
and
(2) (to the extent that the Independent Expert
considers them to be relevant) the
submissions of the Borrower, the Technical
Agents, the Banks and such other information
as he may consider appropriate.
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21.4 If any dispute as to whether the Project Completion Tests have been
satisfied is referred to an Independent Expert, then, promptly after the
determination of all such disputes by the Independent Expert and the
notification thereof to the Technical Agents, the Technical Agents shall notify
the Facility Agent and the Facility Agent shall promptly notify the Borrower and
the Banks of such determination. If the Independent Expert has determined that
the Project Completion Tests have been satisfied then the date on which the
Facility Agent gives such notice shall be the "PROJECT COMPLETION DATE".
21.5 If an Independent Expert determines that the Project Completion Tests
have not then been satisfied, the Borrower may continue to repeat the procedures
set out above until the Technical Agents or an Independent Expert are satisfied
(on the bases set out above) that the Project Completion Tests have been
satisfied.
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PART 8
REPRESENTATIONS, COVENANTS AND SECURITY
22. REPRESENTATIONS
22.1 The Borrower represents that, save as expressly stated in the
reservations to the legal opinions referred to in paragraphs 15 and 16 of Part 1
to the Third Schedule:
(i) it is a company duly incorporated under the laws of England
with power to enter into (or otherwise accept an assignment,
transfer or novation of) each of the Financing Agreements and
the Project Agreements to which it is expressed to be a party,
and to exercise its rights and perform its obligations
thereunder and under the Development Plan relating to the
Britannia Field and all corporate and other action required to
authorise its execution of each of the Financing Agreements
and the Project Agreements to which it is expressed to be a
party (including such other documents, deeds and agreements
required to be executed in order to effect in its favour an
assignment, transfer or novation thereof) and its performance
of its obligations thereunder and under the Development Plan
relating to the Britannia Field has been duly taken;
(ii) under the laws of England in force at the date hereof, it will
not be required to make any deduction or withholding from any
payment it may make under any of the Financing Agreements;
(iii) under the laws of England and Scotland in force at the date
hereof to the extent not secured by assets of the Borrower,
the claims of each of the Beneficiaries against the Borrower
under the Financing Agreements will rank at least pari passu
with the claims of all its other unsecured creditors save
those whose claims are preferred solely by any bankruptcy,
insolvency, liquidation or other similar laws of general
application;
(iv) (a) save for the registration of the documents mentioned at
paragraph (i) to (iv) of Part 2 of the Third Schedule pursuant
to Part XII of the Companies Act 1985, no further acts,
conditions and things are required to be done, fulfilled and
performed in order (1) to enable it lawfully to enter into (or
otherwise accept an assignment, transfer or novation of),
exercise its rights under and perform and comply with the
obligations expressed to be assumed by it in each of the
Financing Agreements and the Project Agreements to which it is
expressed to be a party, (2) to ensure that the obligations
expressed to be assumed by it in the Financing Agreements and
such Project Agreements are legal, valid and binding or (3) to
make the Financing Agreements and such Project Agreements
admissible in evidence in England and (b) the obligations
expressed to be assumed by it in the Financing Agreements and
the Project Agreements to which it is expressed to be a party
are legal and valid obligations binding on it in accordance
with the terms thereof; and
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<PAGE> 64
(v) to the extent that it is necessary under the laws of England
and Scotland in force at the date hereof that any of the
Financing Agreements or the Project Agreements to which it is
expressed to be a party (or any other document, deed or
agreement required to be executed in order to effect an
assignment, transfer or novation thereof in favour of the
Borrower) be filed, recorded or enrolled with any court or
other authority in England and/or Scotland (as applicable) or
that any stamp, registration or similar tax be paid on or in
relation to any of the Financing Agreements or such Project
Agreements (or any such other document, deed or agreement),
all such filings, recordings and enrolments have been, or will
be, made within any applicable time period prescribed by law
and any such stamp, registration or similar tax has been, or
will be, paid within any applicable time period prescribed by
law.
22.2 The Borrower further represents that:
(i) other than pursuant to the Financing Agreements, the Project
Agreements to which it is expressed to be a party, the
Development Plan relating to the Britannia Field or any
Subordinated Debt or otherwise in respect of the Project
Interest, it has no assets (other than Authorised Investments
or cash with accrued interest in respect of its fully paid up
share capital) or liabilities (whether actual, contingent or
otherwise);
(ii) it has not taken any corporate action nor have any other steps
been taken or legal proceedings been started or (to the best
of the Borrower's knowledge and belief) threatened against it
for its winding-up, dissolution, administration or
re-organisation or for the appointment of a receiver,
administrator, administrative receiver, trustee or similar
officer of it or of any or all of its assets or revenues;
(iii) it is not in breach of or in default under any agreement
(including the Project Agreements) to which it is a party or
which is binding on it or any of its assets to an extent or in
a manner which has or might reasonably be expected to have a
Material Adverse Effect and save, as previously notified to
the Facility Agent in writing, there exists no Event of
Default and it has no actual knowledge or notice of the
existence of a Potential Event of Default;
(iv) no action or administrative proceeding of or before any court
or agency against the Borrower or the Sponsor which has or
might reasonably be expected to have a Material Adverse Effect
has been started or (to the best of the Borrower's knowledge
and belief) threatened;
(v) (save as otherwise disclosed therein) the Original Financial
Statements were prepared in accordance with accounting
principles generally accepted in England (or in accordance
with accounting principles generally accepted in the United
States of America in the case of UTPH) and consistently
applied and give (in conjunction with the notes thereto) a
true and fair view of the financial condition of the Borrower,
the Sponsor or, as the case may be, UTPH at the date as of
which they were prepared and the results of the Borrower's,
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<PAGE> 65
the Sponsor's or, as the case may be, UTPH's operations during
the financial year then ended;
(vi) since publication of the Original Financial Statements of such
person, there has been no change in (a) the business,
prospects or financial condition of the Borrower, the Sponsor
or, as the case may be, UTPH or (b) the Project which has or
might reasonably be expected to have a Material Adverse
Effect;
(vii) as at the date as of which the most recent audited financial
statements delivered pursuant to Clause 17.1 of such person
or, if none, the Original Financial Statements of such person
were prepared neither the Borrower, the Sponsor nor UTPH had
any material liabilities (contingent or otherwise) which were
not disclosed thereby (or by the notes thereto) or reserved
against therein and which should have been so disclosed or
reserved against at such date in accordance with accounting
principles generally accepted in England (or the United States
of America in the case of UTPH) and consistently applied nor
any material unrealised or anticipated losses arising from
commitments entered into by it which were not so disclosed or
reserved against at such date and which should have been so
disclosed or reserved against in accordance with accounting
principles generally accepted in England (or the United States
of America in the case of UTPH) and consistently applied;
(viii) (a) the information contained in the Information
Memorandum which is not stated in the Information
Memorandum to be derived from a source other than the
Borrower, UTPH or any of its subsidiaries and any
information supplied by the Borrower to any of the
Beneficiaries in connection with this Agreement is, as
at the date of the Information Memorandum, true,
complete and accurate in all material respects and no
such information contains any misstatement of material
fact or omits any material fact which makes any of
such information materially inaccurate or misleading
in light of the circumstances under which such
statements were made;
(b) the statements of opinion and estimates contained in
the Information Memorandum and any information
supplied by it to any of the Beneficiaries in
connection with this Agreement are honestly held and
reasonably arrived at (but, for the avoidance of
doubt, it is agreed that nothing in this Clause 22.2
(viii) (b) shall be taken as a representation that
such statements will ultimately prove to be correct);
and
(c) the Borrower is not aware of any material facts or
circumstances that have not been disclosed to the
Beneficiaries and which might, if disclosed,
reasonably be expected to adversely affect the
decision of a person considering whether or not to
provide finance to the Borrower for any of the
purposes specified in Clauses 3.1 or 3.2 on terms
substantially similar to the terms of this Facility;
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<PAGE> 66
(ix) (a) all written information supplied by the Borrower,
UTPH or any subsidiary of UTPH to the insurers of such
company or the Operator's insurers (or otherwise made
available to such insurers) in connection with the
Project is or was true and accurate in all material
respects as at the date thereof and it is not aware of
any facts or circumstances that have not been
disclosed to such insurers and which might reasonably
be expected, if so disclosed, to materially adversely
affect the nature or extent of the cover to be
provided under any insurances required to be
maintained pursuant to Clause 26; and
(b) it is not aware of any facts or circumstances that
have not been disclosed to its or the Operator's
insurers and which might reasonably be expected, if so
disclosed, to materially adversely affect the nature
or extent of the cover to be provided under the
insurances required to be taken out pursuant to Clause
26;
(x) the insurances required to be maintained pursuant to Clause 26
have been taken out and are in full force and effect and (to
the best of the Borrower's knowledge and belief) nothing has
been done, suffered or omitted to be done which might
reasonably be expected to render any of the insurances
unenforceable, suspended or void, in whole or in part and there
are no insurances not disclosed to the Facility Agent which
will reduce the rights of the Borrower under the insurances
required to be maintained pursuant to Clause 26;
(xi) it has good and marketable title to the assets (other than
assets the aggregate book value of which is no more than
pound sterling 200,000) over which an encumbrance is, or is
expressed to be, created pursuant to any Security Document, no
encumbrance exists over the Project Interest or any other of
its present or future revenues or assets save as is permitted
by Clause 24(v) and the security expressed to be given under
each of the Security Documents is (or, on the date of
execution of such Security Document, will be) legal, valid
security ranking ahead of all (if any) other encumbrances and
rights of third parties;
(xii) the execution of each of the Financing Agreements and the
Project Agreements to which the Borrower is expressed to be a
party (including such other documents, deeds and agreements
required to be executed in order to effect an assignment,
transfer or novation thereof in favour of the Borrower) and its
exercise of its rights and performance of its obligations
thereunder or under the Development Plan then relating to the
Britannia Field, will not result in the existence of nor oblige
it to create any encumbrance over the Project Interest or all
or any of its other present or future revenues or assets save
as is then permitted by Clause 24(v);
(xiii) the execution of each of the Financing Agreements and the
Project Agreements to which it is expressed to be a party
(including such other documents, deeds and agreements required
to be executed in order to effect an assignment, transfer or
novation thereof in favour of the Borrower) and its exercise of
its rights and performance of its obligations thereunder or
under the Development Plan then relating to the Britannia Field
do not and will not:
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<PAGE> 67
(a) conflict with any agreement, mortgage, bond or other
instrument to which it is expressed to be a party or
which is binding upon it or any of its revenues or
assets;
(b) conflict with its Memorandum and Articles of
Association; or
(c) conflict with any applicable treaty, law, regulation
or official or judicial order;
(xiv) it is a party to the Licences and the Unit Operating Agreement
with a resultant interest in the Britannia Field of nine point
four two per cent (9.42%) (or such higher or lower percentage
interest as may have resulted from (a) any permitted
redetermination thereof pursuant to the Unit Operating
Agreement or (b) any disposal permitted by an Instructing
Group) and it is entitled to receive its Unit Interest (as
defined in the Unit Operating Agreement) of all Petroleum won
and saved from the Britannia Field in accordance with such
interest;
(xv) (a) except as permitted by Clause 24(i)(a), each of the
Project Agreements and the Annex B Approval is in full force
and effect, and save as disclosed in the Sixth Schedule or as
permitted pursuant to Clause 24(i)(a) (1) there have been no
material amendments or variations thereto and (b) to the best
of its knowledge, there exists no reason why any of the
Licences or the Annex B Approval might be withdrawn,
suspended, cancelled, varied, surrendered or revoked and it
has complied with all of its obligations under each of the
Licences and the Annex B Approval;
(xvi) (a) all material consents, licences, authorisations,
approvals, registrations and permits required for the
Project have been obtained; and
(b) (to the best of the Borrower's knowledge and belief)
there exists no reason why any of such consents,
licences, authorisations, approvals, registrations or
permits (including the Annex B Approval) might be
withdrawn, suspended, cancelled, amended, varied,
surrendered or revoked or not renewed as and when
required;
(xvii) the Sponsor beneficially owns, either directly or indirectly,
one hundred per cent. of the issued share capital of the
Borrower; and
(xviii) (a) the Borrower is not in breach of or default under the
provisions of any of the UTPL Agreements; and
(b) the Sponsor is not in breach of or default under the
provisions of any of the UTPL Agreements.
22.3 The representations contained in Clauses 22.1 and 22.2 (except Clauses
22.1(ii), 22.2(v), 22.2(vi) and 22.2(viii)) shall be deemed to be repeated by
the Borrower on the making of each Advance and on each Calculation Date by
reference to the facts and circumstances then existing.
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<PAGE> 68
22.4 On the date hereof, on the date of execution of each of the Security
Documents, on the date on which the Borrower delivers the Notice of Drawdown for
the first Advance hereunder and on the date of making such Advance the Borrower
represents and shall be deemed to represent that:
(i) it was not insolvent immediately prior to the execution and
delivery of each of the Financing Agreements;
(ii) it is not then insolvent;
(iii) it will not become insolvent in consequence of any
transaction, preference or charge entered into or given, or to
be entered into or given, by it pursuant to any of the
Financing Agreements; and
(iv) there are no other transactions, preferences or charges which
have been, or will be, entered into or given by it in
connection with the Financing Agreements in consequence of
which it will become insolvent.
23. POSITIVE COVENANTS
Save as otherwise agreed in writing by an Instructing Group, the Borrower shall,
at all times up to and including the Discharge Date:
(i) promptly take all such actions as are reasonably required to
protect and maintain its rights, title and interest in and to
the Licences, the other Project Agreements, the Britannia
Field, the Britannia Field Facilities and all revenues, assets
and contributions arising therefrom or pursuant thereto or
otherwise in connection with or pursuant to the Project
Interest and pursue with diligence all material claims and/or
rights of action arising or accruing to it against third
parties in connection therewith;
(ii) (a) duly observe and perform all of its obligations
under each of the Project Agreements to which it is
expressed to be a party to the extent that the same
are material obligations or, without prejudice to the
foregoing, are obligations the non-observance or
non-performance of which has or might reasonably be
expected to have a Material Adverse Effect or (except
as permitted by Clause 24(i)(a)(2)) result in the
withdrawal, suspension, revocation, cancellation or
termination thereof;
(b) exercise such voting rights and other rights as it may
from time to time have under or pursuant to any of the
Project Agreements to procure the due observance and
performance by each other party thereto of such
party's respective obligations under each of the
Project Agreements to the extent that such obligations
are material obligations or are obligations, the
non-observance or non-performance of which has, or
might be reasonably expected to have, a Material
Adverse Effect;
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<PAGE> 69
(c) take all reasonable steps to pursue and enforce its
rights under each of the Project Agreements where
failure to do so has or might reasonably be expected
to have a Material Adverse Effect; and
(d) duly observe and perform all the obligations
expressed to be assumed by it under or pursuant to
the UTPL Agreements;
(iii) take all steps as it reasonably considers appropriate
(including, without limitation, the exercise of such voting
and other rights as it may have under, or by reason of, any of
the Project Agreements but without, for the avoidance of
doubt, being required to undertake any sole risk drilling) to
ensure that:
(a) the Project is at all times developed, completed,
equipped, operated, maintained and (if appropriate
and without limiting any other obligations of the
Borrower hereunder) abandoned in a good and
workmanlike manner and in accordance with (1) good
and prudent oil and gas field practices, (2) the
terms of the Project Agreements and the Development
Plan relating to the Britannia Field and (3) all
applicable laws, rules, regulations, licences and
consents;
(b) all machinery, equipment and facilities of any kind
forming part of the Britannia Field Facilities are
provided as and when required and that all such
machinery, equipment and facilities are maintained in
accordance with good and prudent oil and gas field
practices;
(c) all reasonable safeguards are used and thereafter
maintained, in accordance with good and prudent oil
and gas field practices, to prevent damage to or
pollution of the environment originating from the
development or operation of the Project or any of the
Britannia Field Facilities and to observe and comply
with all applicable Environmental Licences and
Environmental Laws; and
(d) subject to compliance with good and prudent oil and
gas field practices, (1) the maximum quantities of
Britannia Petroleum available to it in accordance
with the Development Plan relating to the Britannia
Field are obtained and (2) all Petroleum which is
required to satisfy the Borrower's obligations under
the Gas Sales Agreements is, as soon as practicable,
made available for sale and transported to the point
of delivery to purchasers of the same in accordance
with the terms of the Gas Sales Agreements;
(iv) promptly upon becoming aware of the same inform the Facility
Agent of the occurrence of any of the following:
(a) an Event of Default or Potential Event of Default
together with (if any) the Borrower's proposals to
remedy the same;
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(b) an event which to the best of the Borrower's
knowledge and belief is likely to result in, or has
resulted in, the revocation, withdrawal,
cancellation, suspension, amendment, modification or
variation in any material respect of the Development
Plan relating to the Britannia Field, any of the
Project Agreements or any licences, consents,
approvals or registrations relating thereto;
(c) the resignation or removal of the Operator or of any
other change in the parties to the Unit Operating
Agreement;
(d) any material default by any party under the Project
Agreements or any material dispute arising under any
provisions thereof which may entitle any party
thereto to terminate any such agreement or document
prior to the stated maturity or term thereof;
(e) any enlargement of, or reduction in, its percentage
interest in the Licences or the Unit Operating
Agreement or its resultant interest in the Britannia
Field (giving details, in each case and as soon as
practicable thereafter, of the percentage interest
resulting therefrom);
(f) the occurrence of any event of force majeure
(howsoever defined or described) under any of the Gas
Sales Agreements, any event which would entitle any
purchaser under any of the Gas Sales Agreements to
purchase Tolerance Gas, Shortfall Gas or Default Gas
(each as defined therein) where the occurrence of
such event of force majeure or such other event would
have, or might reasonably be expected to have, a
Material Adverse Effect; or
(g) the threat or commencement of any action, arbitration
or administrative proceeding before any court or
agency where the amount claimed against the Borrower
is at least pound sterling 5,000,000 and where such
action, arbitration or proceeding is not wholly and
manifestly frivolous or vexatious, and provide to the
Facility Agent details thereof from time to time upon
request,
and, in each case, promptly, upon request to that effect from
the Facility Agent, confirm to the Facility Agent that, save as
previously notified to the Facility Agent or as notified in
such confirmation, none of the circumstances described in
paragraphs (a) to (g) above has occurred;
(v) obtain, comply with the terms of and do all that is necessary
to maintain in full force and effect all authorisations,
approvals, licences, registrations and consents (including the
Annex B Approval) required in or by the laws and regulations of
England or Scotland (a) for the development and operation of
the Britannia Field, the construction, operation and use of the
Britannia Field Facilities and for the production, processing,
transportation and sale of all Petroleum won and saved from the
Britannia Field where any failure so to obtain or comply has or
might reasonably be expected to have a Material Adverse Effect,
(b) to permit it lawfully to enter into (or otherwise accept an
assignment, transfer
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or novation in its favour of), exercise its rights under and
perform and comply with its obligations under each of the
Financing Agreements and the Project Agreements and (c) to
ensure the legality, validity, enforceability or admissibility
in evidence in England and Scotland of each such document or
agreement and, from time to time upon request of the Facility
Agent, supply the Facility Agent with evidence reasonably
satisfactory to the Facility Agent that all such
authorisations, approvals, licences, registrations and
consents have been so obtained and maintained;
(vi) pay its share (as determined under the Unit Operating
Agreement) of all fees required for the development and
operation of the Project and all Royalties when due (or within
any applicable grace period prescribed by law or expressly
granted in the agreement, if any, requiring payment of the
same) Provided that, if the Borrower is in bona fide dispute
with any person (other than the Secretary of State) in respect
of the amount of its share of, as so determined, any such fees
or Royalties, then the Borrower shall be entitled to withhold
payment of its share of, as so determined, such fees or
Royalties pending resolution of any such dispute if and only
if (a) no other person would thereby obtain a right to (1)
suspend, cancel, revoke or otherwise vary the Licences (or the
Britannia Unit Area), (2) interrupt the production, processing
or transportation of Petroleum won and saved from the
Britannia Field or (3) otherwise materially disrupt the work
of the Project and (b) it has made adequate reserves against
such liability;
(vii) claim all material tax credits to which it is entitled
promptly upon becoming so entitled, promptly pay all taxes to
which it is assessed liable as they fall due (or within any
applicable grace period prescribed by law or expressly granted
in the agreement, if any, requiring payment of the same and in
any case before the time after which any penalty or interest
would be incurred) except for those contested in good faith by
proper proceedings and which it may lawfully withhold payment
of pending resolution of such dispute provided that it has
made proper reserves against such liability;
(viii) prior to entering into any Hedging Agreement if the Borrower
elects to enter into a Hedging Agreement, it shall seek
competitive bids from the potential hedge counterparties to
such Hedging Agreement and shall not enter into any Hedging
Agreement unless such Hedging Agreement (a) is entered into
pursuant to the Approved Hedging Programme, (b) is governed by
an ISDA Master Agreement, amended as approved by an
Instructing Group, such approval not to be unreasonably
withheld or delayed, (c) is entered into with a Hedging
Counterparty and (d) is otherwise entered into on terms and
conditions approved by any Instructing Group, such approval
not to be unreasonably withheld or delayed;
(ix) promptly on receipt of the same by it, deliver to the Facility
Agent a copy of any actual or proposed material amendment,
modification or variation of the Licences, the Development
Plan relating to the Britannia Field, any of the other Project
Agreements, the Development Budget, any proposal to abandon
the whole or any material part of the Project or any licences,
consents, approvals or registrations (including the Annex B
Approval) relating thereto (including, any amendment,
modification or variation thereof
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from the form (if any) which the parties thereto previously
have deemed to be effective as between themselves);
(x) ensure that at all times to the extent not secured by or
pursuant to the Security Documents, the claims of the
Beneficiaries against it under each of the Financing
Agreements rank at least pari passu with the claims of all its
other unsecured creditors save those whose claims are
preferred solely by any bankruptcy, insolvency, liquidation or
other similar laws of general application;
(xi) in the event of (a) any material damage to, or the destruction
of, any of the Britannia Field Facilities, (b) a cessation of
production from the Britannia Field for a period of ten
consecutive days (otherwise than by reason solely of any
planned maintenance) or (c) a reduction in the Daily Capacity
in the Britannia Field Facilities (other than the Britannia
Forties Pipeline) in excess of twenty-five per cent.
(otherwise than by reason solely of any planned maintenance),
promptly deliver to the Technical Agents, in sufficient copies
for the Banks, written details of such damage, destruction,
cessation or reduction in capacity which shall be in a form
reasonably acceptable to the Technical Agents and promptly,
upon receipt of a written request to that effect from either
of the Technical Agents, deliver an outline of the procedures
taken and/or its proposals in respect of the procedures to be
taken to restore production and/or transportation;
(xii) subject to the approval of the Operator granted or withheld in
accordance with the Unit Operating Agreement ensure that any
one or more representatives of the Technical Agents
(including, without limitation, the Independent Engineers and
any of either of the Technical Agents' officers, employees,
surveyors or agents) be allowed, upon reasonable notice, to
have access to the Project and, so far as is possible without
disrupting the work thereof, to inspect or observe any of the
Britannia Field Facilities;
(xiii) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence and all
rights arising as a consequence thereof;
(xiv) use all reasonable efforts to sell all Petroleum to which the
Borrower is entitled, and which has been won and saved from
the Britannia Field, on arms length commercial terms and on
the best terms reasonably obtainable for such products at the
time, and from time to time on request of the Facility Agent,
notify the Facility Agent of the terms of any contracts having
a term of more than one year entered into for the sale of such
products; and
(xv) deliver to the Facility Agent (a) notification of any
Scheduled Maintenance Period (as defined in the Gas Sales
Agreements) notified by the Operator as representative of the
Borrower to any buyer under a Gas Sales Agreement and (b) each
agenda for, and minutes of, each meeting of the Unit Operating
Committee (as defined in the Unit Operating Agreement)
promptly upon receipt of each of them.
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24. NEGATIVE COVENANTS
The Borrower shall not at any time on or before the Discharge Date without the
prior written consent of an Instructing Group (save as may be expressly provided
below):
(i) (a) agree to or (save to the extent that if the Borrower
is given the reasonable opportunity to do so it shall
have opposed the same by exercising accordingly such
voting rights and other rights as it may have under,
or by reason of, any of the Project Agreements on
each occasion on which the same fell for
consideration between the parties to the relevant
Project Agreement) permit (1) any amendment,
variation or waiver to or of any of the terms and
conditions of the Project Agreements or the
Development Plan relating to the Britannia Field if
such amendment, variation or waiver has, or might
reasonably be expected to have, a Material Adverse
Effect unless, in the case of an amendment to the
price of Gas to be sold under any Gas Sales
Agreement, the Current Banking Case, revised by the
Technical Agents to take into account such amendment
and any prepayment of the Loan made by the Borrower
within 30 days of such amendment, projects that the
RTCR for each Calculation Date is at least 1.35, (2)
the cancellation, suspension (other than by reason of
force majeure, howsoever defined in such Project
Agreement), termination or revocation of any Project
Agreement (other than the Unit Operating Agreement or
any of the Licences) prior to the stated maturity or
term thereof unless it is simultaneously replaced by
another Project Agreement containing substantially
the same terms, which has been approved by an
Instructing Group (such approval not to be
unreasonably withheld or delayed) and which is
governed by English law or Scottish law or is a Gas
Sales Agreement which may be cancelled, suspended,
terminated or revoked pursuant to (3) below, (3) the
cancellation, suspension (other than by reason of
force majeure, howsoever defined therein),
termination or revocation of any Gas Sales Agreement
prior to the stated term thereof, unless the
aggregate Minimum Bill Quantity under each of the
remaining Gas Sales Agreements is at least equal to
the Minimum Volume or, if it is less than the Minimum
Volume, the Current Banking Case, revised by the
Technical Agents to take account of such
cancellation, suspension, termination or revocation
and any prepayment of the Loan made by the Borrower
within 30 days of such cancellation, suspension,
termination or revocation, projects that the RTCR for
each Calculation Date will be at least 1.35, (4) the
cancellation, suspension, termination or revocation
of the Development Plan relating to the Britannia
Field, (5) any amendment, variation, waiver,
cancellation, suspension, termination or revocation
of any of the authorisations, approvals, licences,
permits and consents (including the Annex B Approval)
required for the development and/or operation of the
Britannia Field or the production, processing and
transportation of Britannia Petroleum which has or
might reasonably be expected to have a Material
Adverse Effect or (6) the cancellation, suspension,
termination or revocation of the Unit Operating
Agreement or any of the Licences; or
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(b) exercise such voting rights and other rights as it
may have under, or by reason of, any of the Project
Agreements in favour of any amendment or variation to
any authorisation for expenditure issued by the
Operator pursuant to the Unit Operating Agreement
which might reasonably be expected (having regard to
all authorisations for expenditure then issued or
anticipated to be issued) to have the effect at any
time prior to the Project Completion Date of causing
Pre-Completion Expenditure to exceed Pre-Completion
Available Funding; or
(c) amend, vary, waive, supplement, novate, cancel,
suspend or terminate any of the UTPL Agreements to
which it is expressed to be a party nor permit the
same; or
(ii) propose or vote in favour of abandonment of the Project, the
Britannia Field or any material part of either of them (unless
the Borrower has (a) given to the Facility Agent not less than
thirty days prior notice of its intention to do so, in each
case, with effect from a specified date (b) within the thirty
days demonstrated to the satisfaction of an Instructing Group
(acting in good faith) that the Forecast Net Cash Flow
(including, for the purposes of this Clause 24 (ii) only, any
amounts projected by the Facility Agent, acting reasonably to
be payable under the Sponsor Support Agreement), which is
projected to be generated during the period from the specified
date up to the Projected Abandonment Date, is, on the basis of
Proved Reserves, negative and would remain negative during
such period notwithstanding any further expenditure on the
Project and (c) received the approval of an Instructing Group
to the Abandonment Costs therefor) or withdraw from the Unit
Operating Agreement; or
(iii) propose or vote in favour of the replacement of the Operator
unless a successor operator which is reasonably acceptable to
the Technical Agents is appointed; or
(iv) voluntarily enter into liquidation or dissolution or
voluntarily enter into a merger or consolidation with any
other person; or
(v) create or permit to subsist any encumbrance over all or any
part of the Project Interest, the Project Accounts, the
Project Receipts or its interest in any of the Financing
Agreements other than:
(a) any encumbrance created by or pursuant to or in
accordance with any of the Financing Agreements;
(b) liens and encumbrances (not securing any indebtedness
for borrowed money of any person) arising solely by
reason of the performance by any party to any
agreement relating to the Project Interest (including
the Project Agreements) of its obligations thereunder
and pursuant to the operation of law;
(c) liens and rights of set-off arising solely by
operation of law (or under an agreement to
substantially similar effect) in the ordinary course
of the Borrower's
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<PAGE> 75
business and securing indebtedness not more than
thirty days overdue for payment;
(d) any encumbrance securing indebtedness which in the
aggregate does not at any time exceed pound sterling
100,000 and where the asset or assets so encumbered
shall not, at any time have an aggregate book value
(as the same appears in the financial statements of
the Borrower) of more than pound sterling 200,000
and which if secured on any assets comprising the
Project Interest is fully subordinated to the
security thereover created by the Security Documents
on terms satisfactory to an Instructing Group; or
(e) any encumbrance over the Trust Fund which the
Borrower is required to create pursuant to the
Abandonment Costs Agreement; or
(vi) sell, lease, rent, transfer, assign or otherwise dispose of
the whole or any part of the Project Interest, the Project
Accounts or the Project Receipts other than:
(a) the sale or other disposal of any Petroleum forming
part of the Project Interest and made pursuant to any
Gas Sales Agreement or otherwise on normal arm's
length commercial terms and on terms then customary
for sales by Petroleum exploration and production
companies having interests in the North Sea;
(b) disposals of equipment which the Operator or the Unit
Operating Committee (as defined in the Unit Operating
Agreement) has determined is either obsolete or worn
out and which are either (1) replaced by other assets
at least equal in quality and in dependability prior
to its obsolescence or (2) no longer required for the
proper operation and maintenance of the Britannia
Field Facilities;
(c) any other disposals of assets within the Britannia
Field Facilities approved pursuant to the Unit
Operating Agreement provided that the Borrower shall
not approve any disposal (not falling within
paragraphs (a) or (b) above) where the book value of
the Borrower's interest in the assets so disposed of
exceeds (or would, when aggregated with the book
value of the Borrower's interest in any other assets
disposed of by the Borrower with the consent of an
Instructing Group pursuant to this paragraph (c),
exceed) pound sterling 5,000,000 in any calendar
year without the prior written consent of an
Instructing Group or in any circumstances where such
disposal has or might reasonably be expected to have
a Material Adverse Effect; or
(d) payments from the Project Accounts which are
permitted pursuant to Clause 34,
Provided that the Borrower shall not be in breach of this
paragraph (vi) by reason only of any disposal made which the
Borrower is unable to prevent through its exercise of such
voting rights and other rights as it may have under, or by
reason of, any of the Project Agreements, and to the extent
that the Borrower is given the reasonable
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opportunity to do so, the Borrower shall have opposed the same
by exercising such rights on each occasion on which such
disposal fell for consideration between the parties to the
relevant Project Agreement; or
(vii) in respect of taxes, agree to surrender or dispose of, nor
surrender nor dispose of, any credit, losses, allowances,
concessions, discharges, or other reliefs available to it
other than in connection with any settlement with the Inland
Revenue or pursuant to the terms of Clause 4 of the Sponsor
Support Agreement; or
(viii) own any assets or conduct or enter into any business or
operation other than such as is connected with the development
and operation of the Project, is provided for under or
pursuant to any Project Agreement, this Agreement or any other
Security Documents or as is required pursuant to the Annex B
Approval or the Unit Operating Agreement; or
(ix) permit or agree to any increase in its percentage interest in
the Licences or the Unit Operating Agreement other than
pursuant to the Unit Operating Agreement; or
(x) incur, or have outstanding, any indebtedness for borrowed
money other than (a) under any of the Financing Agreements,
(b) Subordinated Debt or (c) capitalised lease obligations or
other obligations incurred by the Operator on behalf of the
Borrower arising in connection with the Unit Operating
Agreement up to a maximum aggregate outstanding indebtedness
of pound sterling 5,000,000 (in respect of the Borrower's
percentage interest in the Britannia Field); or
(xi) save as may be specified in this Agreement, Clause 4 of the
Sponsor Support Agreement or the other UTPL Agreements, pay,
make or declare any dividend or other distribution or
otherwise make any payment or distribution (whether in cash or
in kind) to the Sponsor, UTPH or any subsidiary of UTPH unless
wholly funded from a drawing from the Proceeds Account and not
prohibited by Clause 34; or
(xii) have any subsidiary or interest in any other person; or
(xiii) enter into any transaction with UTPH or any of its
subsidiaries save:
(a) with the Sponsor in respect of the UTPL Agreements;
(b) for transactions entered into on arm's length
commercial terms no less favourable to the Borrower
than those which the Borrower could reasonably have
obtained from other sources;
(c) for Subordinated Debt; and
(d) for any other transactions required or permitted
pursuant to this Agreement or any of the Security
Documents; or
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<PAGE> 77
(xiv) make any loans (other than loans to the Sponsor made in
accordance herewith), grant any credit, save for trade credit
granted on customary trade terms in respect of the sale of
Petroleum, or give any guarantees or indemnity to or for the
benefit of any person save for indemnities provided by the
Borrower in the ordinary course of its business on customary
trade terms under agreements required for the development and
construction of the Britannia Field and the Britannia Field
Facilities where the aggregate amount of liabilities
(contingent or otherwise) to which the Borrower could thereby
be exposed does not at any time exceed pound
sterling 10,000,000 (or its equivalent) in aggregate or
otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person
other than as specified in any of the Financing Agreements or
Project Agreements (as in existence at the date hereof); or
(xv) enter into any gas sales agreement with any person which has a
term of more than one year without the prior written consent
of an Instructing Group such consent not to be unreasonably
withheld or delayed, Provided that it shall not be necessary
to obtain the consent of an Instructing Group unless the
entering into by the Borrower of such agreement or its
performance or observance of its obligations thereunder has or
might reasonably be expected to have a Material Adverse Effect
or where the Borrower would be exposed to an aggregate amount
of liabilities, to which it would not be exposed if it had not
entered into such agreement, which equals or exceeds
pound sterling 10,000,000 (or its equivalent).
25. SECURITY
25.1 The Borrower shall, at all times on or before the Discharge Date take
all such action as may be open to it (or, at their request, to assist the
Beneficiaries) in:
(i) perfecting and protecting the security intended to be
conferred on the Beneficiaries (or the Facility Agent as
trustee on behalf of the Beneficiaries) by the Security
Documents;
(ii) (save as otherwise provided herein or therein) maintaining the
security thereby intended to be created;
(iii) creating any further security in favour of the Beneficiaries
(or the Facility Agent as trustee on behalf of the
Beneficiaries) over the whole or any part of the Project
Interest, the Project Accounts, the Project Receipts and any
of the UTPL Agreements which may from time to time be
reasonably requested by an Instructing Group (or the Facility
Agent on its behalf); and
(iv) making all such filings and registrations and taking all such
other action as is from time to time necessary (including,
without limitation, the giving of all requisite notices of
assignment, transfer, assignation or charge to, inter alia,
the Operator and each insurer) in connection with the
creation, perfection or protection of any security which the
Borrower may, or may be required to, create pursuant to the
Financing Agreements,
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<PAGE> 78
Provided that the Borrower shall not be required to give any notice of
assignment of its rights in respect of any contract for the sale of Petroleum if
the term of such contract is less than one year unless an Event of Default or
Potential Event of Default has occurred which has not been remedied or waived.
25.2 The Borrower shall ensure that prior to delivery of the first Notice of
Drawdown hereunder all consents that are or may be necessary under the Project
Agreements in respect of the execution, delivery and performance of the Security
Documents have been properly granted by each party to a Project Agreement which
is required to grant such consent and each such consent remains in full force
and effect.
25.3 The Borrower shall not:
(i) enter into any Project Agreement (other than the agreements
listed in the Sixth Schedule) which requires the parties
thereto (other than the Borrower) to consent to the creation
or subsistence of any encumbrance which is, or is expressed to
be, created by or pursuant to any Security Document unless the
Borrower ensures that such consent is duly obtained prior to,
or simultaneously with, the execution by the Borrower of such
Project Agreement; or
(ii) without the prior written consent of an Instructing Group,
agree to or (save to the extent that if it has the reasonable
opportunity to do so it shall have opposed the same by
exercising accordingly such voting rights and other rights as
it may have under, or by reason of, any of the Project
Agreements on each occasion on which the same fell for
consideration between the parties to the relevant Project
Agreement) permit the registration of any of the Britannia
Field Facilities in the British Registry of Shipping.
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PART 9
INSURANCES
26. INSURANCES
26.1 The Borrower shall, save as provided for herein:
(i) maintain or cause to be maintained (for, inter alia, its
benefit and for the benefit of the Beneficiaries) the
insurances specified in the Eighth Schedule:
(a) the insurances specified in Part 1 of the Eighth
Schedule being required to be maintained from the
date of this Agreement until the Discharge Date;
(b) the insurances specified in Part 2 of the Eighth
Schedule being required to be maintained no later
than 6 months from the date of this Agreement until
the date when production from the Britannia Field
first commences; and
(c) the insurances specified in Part 3 of the Eighth
Schedule being required to be maintained from the
date when production from the Britannia Field first
commences until the Discharge Date; and
(ii) ensure that the insurances referred to in paragraph (i) above:
(a) are effected against the risks and liabilities,
provide the covers and are maintained in the amounts
specified in the relevant Part of the Eighth Schedule
(as varied from time to time as required by sub-
paragraph (c) below);
(b) include only such provisions for self-insurance,
whether by deductible or otherwise, as are specified
in the relevant Part of the Eighth Schedule; and
(c) are otherwise modified from time to time as provided
below:
(1) in the event of a material change in the
risks contemplated to be insured as at the
date of this Agreement, including, but not
limited to, a material change in the nature
or scope of the Project, then such insurance
shall be modified, after due consultation
with the Insurance Adviser and Facility
Agent, so as to ensure as far as reasonably
practicable, that the nature and amounts of
uninsured risks will not materially exceed
the nature and amounts of uninsured risks as
at the date of this Agreement, provided that
(x) such modified insurances shall be in
such amounts and with such deductibles as
would be obtained by a prudent participant
in a North Sea oil and gas project of a
size, and with characteristics, comparable
to the Project which does not self-insure
(except by means of deductibles) (y) in
obtaining such modified insurances, the
Borrower shall have regard
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to all circumstances including the interests
of the Beneficiaries under the Financing
Agreements; or
(2) in the event the insurances specified in the
Eighth Schedule cannot be obtained or
maintained on commercial and economic terms
in the worldwide insurance markets for
energy risks and which would be obtained by
a prudent participant in a North Sea oil and
gas project of a size and with
characteristics similar to the Project which
does not self insure (except by means of
deductibles) then such insurance shall be
modified, after due consultation with the
Insurance Adviser and Facility Agent, so as
to ensure, as far as reasonably practicable,
that the amount of insurance (and with such
deductibles) will be obtained on commercial
and economic terms (as set out above), and
in obtaining such modified insurance the
Borrower shall have regard to all
circumstances including the interests of the
Beneficiaries under the Financing
Agreements.
26.2 It is acknowledged and agreed that the Borrower may and shall, in or
towards satisfaction of its obligations under Clause 26.1 maintain insurance:
(i) in respect of the risks specified in Part 2 of the Eighth
Schedule, through insurances effected and maintained by the
Operator for and on behalf of the Britannia Coventurers (the
"OPERATOR MAINTAINED INSURANCES"); and
(ii) in respect of the risks specified in Parts 1, 2 (to the extent
not covered by Clause 26.2(i)) and 3 of the Eighth Schedule,
through insurances effected and maintained by UTPH for and on
behalf of the Borrower and other subsidiaries of UTPH and
where the Borrower is a named insured in respect thereof (the
"GROUP INSURANCES").
To the extent that such Operator Maintained Insurances (or any part thereof) or,
as the case may be, the Group Insurances (or any part thereof) are insufficient
to meet the obligations of the Borrower under Clause 26.1 to maintain insurance
in respect of the risks referred to in the preceding sentence, then the Borrower
shall maintain or cause to be maintained additional insurance such that the
cumulative insurance maintained by or on behalf of the Borrower in respect of
such risks satisfies in full the obligations of the Borrower under Clause 26.1.
26.3 Without prejudice to the other provisions of this Clause 26, the
Borrower shall, during the period from the date of this Agreement until the
Discharge Date:
(i) from time to time effect and maintain in full force the
insurances which it is required to effect by any applicable
law or by the terms of any Project Agreement to which it is at
any time expressed to be a party; and
(ii) effect and maintain in full force the insurances which it is
required to effect by the terms of any other contract to which
it is at any time expressed to be a party.
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26.4 It is acknowledged and agreed that nothing in this Part 9 or in the
Assignment of Insurances shall require the Borrower to take out, maintain or
have any interest in any business interruption or delay in start up insurances.
If the Borrower shall take out, maintain or have any interest in any such
insurance, such insurance shall be for its benefit alone, and shall not be for
the benefit of, in whole or in part, the Beneficiaries but subject to the rights
of the Beneficiaries under the Debenture.
27. INSURANCE COVENANTS
27.1 The Borrower shall ensure that each policy of insurance taken out
pursuant to Clause 26:
(i) is, except to the extent otherwise required pursuant to Clause
26, placed and maintained through such brokers and
underwriters or insurance companies of the same claims paying
quality (in the case of underwriters or insurance companies
only) and repute as such brokers and reputable underwriters or
insurance companies as of the date of this Agreement but only
if it is reasonably practicable to do so on economic and
commercial terms but in no event of lesser claims paying
quality (in the case of underwriters or insurance companies
only) and repute as would be acceptable to a prudent
participant in a North Sea oil and gas project of a size with
characteristics comparable to the Project which does not self
insure (except by means of deductibles);
(ii) is in form and substance consistent with the obligations of
the Borrower under this Part 9;
(iii) is, other than in the case of any Third Party Insurances, the
subject of a notice of assignment duly given to the brokers,
underwriters and/or insurance companies as contemplated by the
Assignment of Insurances; and
(iv) names the Borrower as a principal insured in respect of the
insurances specified in Part 2 of the Eighth Schedule and
provides that the Borrower is a named insured in respect of
the insurances specified in Parts 1 and 3 of the Eighth
Schedule.
27.2 The Borrower shall:
(i) in respect of each policy of insurance taken out pursuant to
Clause 26, other than in the case of any Third Party
Insurances and the Operator Maintained Insurances procure
that:
(a) the Facility Agent (as trustee for the Beneficiaries)
is joined as an additional insured thereunder at the
time of issue thereof (or, if already issued, as soon
as practicable hereafter) and the interest of the
Facility Agent (as trustee for the Beneficiaries) is
duly noted and endorsed upon such policy;
(b) a loss payee clause in the form agreed by the
Borrower and the Insurance Adviser is inserted in
each such policy at the time of issue thereof (or, if
already issued, as soon as practicable hereafter) and
that such loss payee clause is not cancelled, varied
or amended in any respect; and
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<PAGE> 82
(c) provisions are inserted in each such policy meeting
in all respects all relevant provisions of the
relevant forms of undertaking set out in the Second
Schedule to the Assignment of Insurances; and
(ii) in respect of each policy of insurance taken out pursuant to
Clause 26 in the case of Operator Maintained Insurances the
Borrower shall use reasonable efforts to procure that:
(a) the Facility Agent (as trustee for the Beneficiaries)
is joined as an additional insured thereunder at the
time of issue thereof (or, if already issued, as soon
as practicable hereafter) and the interest of the
Facility Agent (as trustee for the Beneficiaries) is
duly noted and endorsed upon such policy;
(b) a loss payee clause in the form agreed by the
Borrower and the Insurance Adviser is inserted in
each such policy at the time of issue thereof (or, if
already issued, as soon as practicable hereafter) and
that such loss payee clause is not cancelled, varied
or amended in any respect; and
(c) provisions are inserted in each such policy meeting
in all respects all relevant provisions of the
relevant forms of undertaking set out in the Second
Schedule to the Assignment of Insurances.
27.3 The Borrower shall:
(i) pay all premiums and other sums payable under each policy and
any renewals thereof maintained pursuant to Clause 26 as
required by the terms of each such policy or as is reasonably
allocated to the Borrower in the case of the Group Insurances
and shall, upon receipt of a written request from the Facility
Agent (acting reasonably) to that effect, deliver to the
Facility Agent evidence of such payment;
(ii) deliver to the Facility Agent, as soon as reasonably
practicable after such insurance is effected or renewed
Certificates of Insurance or other evidence reasonably
satisfactory to the Facility Agent that all the insurances
required to be effected pursuant to Clause 26 are in force;
(iii) ensure that any broker or agent through whom any insurance
policy required to be effected or renewed under Clause 26 is
effected or renewed (other than any Third Party Insurances and
Operator Maintained Insurances) delivers to the Facility Agent
an undertaking substantially in the form of Part I of the
Second Schedule to the Assignment of Insurances as soon as
reasonably practicable after each such insurance policy is
effected or renewed;
(iv) use reasonable efforts to procure that any broker or agent
through whom Operator Maintained Insurances are effected or
renewed delivers to the Facility Agent an undertaking
substantially in the form of Part 2 of the Second Schedule of
the Assignment
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of Insurances as soon as reasonably practicable after each
such insurance policy is effected or renewed;
(v) upon receipt of a written request from the Facility Agent to
such effect, deliver to the Facility Agent and the Insurance
Adviser such information as to the policies of insurance (or
as to any matter which may be relevant to such insurances)
maintained pursuant to Clause 26 as the Facility Agent may
reasonably request;
(vi) promptly upon becoming aware of the same, notify the Facility
Agent and the Insurance Adviser of any insurance claim
notified to the insurers thereof where the amount of such
claim exceeds pound sterling 250,000 (in respect of the
Borrower's percentage interest in the Britannia Field) (or
its equivalent, on the date on which the claim is made, in
the currency in which such claim is made) or such other
amount as may, from time to time, be agreed between the
Borrower and the Facility Agent (following consultation with
the Insurance Adviser);
(vii) ensure except in accordance with Clause 26.1(ii)(c) that no
reductions in limits or coverage (including those resulting
from extensions) or increases in deductibles, exclusions or
exceptions shall be made to any insurance maintained pursuant
to Clause 26, without the prior consent of the Facility Agent
(following consultation with the Insurance Adviser) such
consent not to be unreasonably withheld or delayed;
(viii) not, at any time, do (or omit to do) or suffer or permit UTPH
or any subsidiary of UTPH which maintains or has any interest
in any Group Insurance (but not, save as provided below, any
other person) to do (or omit to do) anything whereby any of
the insurances maintained pursuant to Clause 26 may be
rendered void, voidable, unenforceable, suspended or impaired
in whole or in part or which may otherwise render any sum paid
out under any such policy repayable in whole or in part; and
(ix) take all actions which may be open to it under the Unit
Operating Agreement, and of which it is aware or ought
reasonably to be aware, to ensure that no insurance maintained
pursuant to Clause 26 is rendered void, voidable,
unenforceable, suspended or impaired in whole or in part or
which may otherwise render any sums paid out under any such
policy repayable in whole or in part by reason of any action
or omission of the Operator or any other Britannia Coventurer.
27.4 If, at any time, and for any reason, any insurance required to be
maintained under this Part 9 shall not be in full force and effect the Facility
Agent shall be entitled (but not bound) on behalf of itself and on behalf of the
Beneficiaries, to take out any such insurance in which case the Borrower shall,
on demand by the Facility Agent, reimburse the Facility Agent in respect of any
premiums or other costs and expenses incurred by the Facility Agent in relation
to any such insurance, Provided that any such premium is on terms which are
commercial and economic in the world wide insurance markets for energy risks and
that such costs and expenses are reasonably incurred.
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27.5 If by virtue of the Assignment of Insurances or the Facility Agent
being named as an insured and loss payee, an underwriter or insurance company
shall require the Facility Agent to execute payment on account forms or other
similar documents in order for such underwriters or insurers to pay or settle
any claim or loss insured under the Third Party Insurance or any claim or loss
not insured by the insurance specified in the Eighth Schedule, the Facility
Agent (as trustee for the Beneficiaries) shall promptly upon request by the
Borrower or the Sponsor execute such document.
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PART 10
DEFAULT
28. EVENTS OF DEFAULT
28.1 If at any time:
(i) the Borrower fails to pay any sum due from it under any
Financing Agreement, the Unit Operating Agreement, the
Transportation Agreement or any Gas Sales Agreement at the
time, in the currency and in the manner specified therein and
such failure is not remedied within five business days of the
due date therefor; or
(ii) any representation or warranty made or deemed to be made by
the Borrower in any of the Financing Agreements or by the
Sponsor in any of the UTPL Agreements is or proves to have
been incorrect or misleading in any material respect when made
or deemed to be made or repeated; or
(iii) (a) the Borrower fails duly to perform or comply with its
obligations in Clauses 24(i)(a)(1), (3) or (6) or
24(iv);
(b) the Borrower fails duly to perform or comply with any
of its obligations in Clauses 23(iv), 23(vi),
23(vii), 34 or 35 and, if capable of remedy, such
failure is not remedied within five business days of
the earlier of the date on which the Facility Agent
gives notice thereof to the Borrower and the date on
which the Borrower knew or received notice of such
failure; or
(c) the Borrower fails duly to perform or comply with any
of its obligations in Clauses 3, 23(xiii) or 24(i)(c)
and, if capable of remedy, such failure is not
remedied within ten days of the earlier of the date
on which the Facility Agent gives notice thereof to
the Borrower and the date on which the Borrower knew
or received notice of such failure; or
(d) the Borrower fails duly to perform or comply with any
of its obligations in Clauses 24(i)(b), 24(ii),
24(iii), 24(v), 24(vi), 25.2, 25.3 or 26.1 of this
Agreement, Clauses 4 or 6 of the Charge over
Accounts, Clauses 5, 8 or 11 of the Debenture or
Clauses 4.1 or 5 of the Assignment of Insurances and,
if capable of remedy, such failure is not remedied
within fifteen days of the earlier of the date on
which the Facility Agent gives notice thereof to the
Borrower and the date on which the Borrower knew or
received notice of such failure; or
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(e) the Borrower fails duly to perform or comply with any
of its obligations in Clauses 19, 20, 23(i), 23(ii),
23(iii), 23(v), 23(viii), 23(ix), 23(x), 23(xi),
23(xii), 23(xiv), 23(xv), 24(i)(a)(2), (4) or (5),
24(vii), 24(viii), 24(ix), 24(x), 24(xi), 24(xii),
24(xiii), 24(xiv), 24(xv) or 25.1 or any of its other
obligations under Part 9 or any of its other
obligations under any of the Security Documents and,
if capable of remedy, such failure is not remedied
within thirty days of the earlier of the date on
which the Facility Agent gives notice thereof to the
Borrower and the date on which the Borrower knew or
received notice of such failure; or
(f) the Borrower fails duly to perform or comply with any
other obligation expressed to be assumed by it in any
of the Financing Agreements and, if capable of
remedy, such failure is not remedied within sixty
days of the earlier of the date on which the Facility
Agent gives notice thereof to the Borrower and the
date on which the Borrower knew or received notice of
such failure; or
(iv) (a) the Sponsor fails to pay any sum due from it under
any of the UTPL Agreements at the time, in the
currency and in the manner specified therein and such
failure is not remedied within thirty business days
of the due date therefor; or
(b) the Sponsor fails duly to perform or comply with any
other material obligation expressed to be assumed by
it in any of the UTPL Agreements and, if capable of
remedy, such failure is not remedied within fifteen
days of the earlier of the date on which the Facility
Agent gives notice thereof to the Sponsor and the
date on which the Sponsor knew or received notice of
such failure; or
(c) the Sponsor fails duly to perform or comply with any
other obligation expressed to be assumed by it in any
of the UTPL Agreements and, if capable of remedy,
such failure is not remedied within sixty days of the
earlier of the date on which the Facility Agent gives
notice thereof to the Sponsor and the date on which
the Sponsor knew or received notice of such failure,
unless, in the case of (b) or (c) above, (1) the Project
Completion Date has occurred and (2) the Current Banking Case
projects and estimates that the RTCR for each Calculation Date
thereafter will be at least 1.35, as such Current Banking Case
may be revised by the Technical Agents to take into account,
for the purpose of calculating Forecast Net Cash Flow and the
RTCRs thereunder, that the Borrower's liability for Project
Taxes is the higher of (i) and (ii) as set out in the
definition of Project Taxes in Clause 1.1; or
(v) any indebtedness for borrowed money of the Borrower is not
paid when due (or within any applicable grace period granted
in the agreement, if any, evidencing the same), any
indebtedness for borrowed money of the Borrower is declared to
be or otherwise becomes due and payable prior to its specified
maturity by reason of the happening of a default or event of
default (howsoever described and whether or not involving
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culpability on the part of any person) or any creditor of the
Borrower becomes entitled to declare any indebtedness for
borrowed money of the Borrower due and payable prior to its
specified maturity by reason of the happening of a default or
event of default (howsoever described and whether or not
involving culpability on the part of any person); or
(vi) any indebtedness for borrowed money of the Sponsor in excess
of pound sterling 10,000,000 (or its equivalent) in the
aggregate which is due, or the applicable grace period for
which expires, on any date before the Project Completion Date
is not paid when due (or within any applicable grace period
granted in the agreement, if any, evidencing the same), any
indebtedness for borrowed money of the Sponsor in excess of
pound sterling 10,000,000 (or its equivalent) in the
aggregate is declared to be or otherwise becomes due and
payable prior to its specified maturity on any date before
the Project Completion Date by reason of the happening of a
default or event of default (howsoever described and whether
or not involving culpability on the part of any person) or
any creditor of the Sponsor becomes entitled on any date
before the Project Completion Date to declare any
indebtedness for borrowed money of the Sponsor in excess of
pound sterling 10,000,000 (or its equivalent) in the
aggregate due and payable prior to its specified maturity by
reason of the happening of a default or event of default
(howsoever described and whether or not involving culpability
on the part of any person); or
(vii) the Borrower or the Sponsor is unable to pay its debts in
general as they fall due, commences negotiations with any one
or more of its creditors with a view to the general
readjustment or rescheduling of all of its indebtedness for
borrowed money or makes a general assignment for the benefit
of or a composition with its creditors; or
(viii) any corporate action or other steps are taken or legal
proceedings are started (or renewed after a stay) for the
winding-up, and in the case of a petition for winding up is
not discharged within 30 days, dissolution, administration or
re-organisation (other than a solvent amalgamation or
reorganisation which is, in the case of the Borrower only, on
terms previously approved in writing by an Instructing Group)
of the Sponsor or the Borrower or for the appointment of a
receiver, administrator, administrative receiver, trustee or
similar officer of the Sponsor or the Borrower or of any or
all of the revenues and assets of the Borrower or all or a
substantial part of the revenues and assets of the Sponsor; or
(ix) any execution, distress, attachment or legal process is
levied, made or taken against, or an encumbrancer takes
possession of, the whole or any part of, the property,
undertaking or assets of the Borrower or the whole or any
substantial part of the assets of the Sponsor and in either
case is not discharged or stayed within 30 days; or
(x) the Sponsor ceases to be the beneficial owner (whether
directly or indirectly) of 100% of the issued share capital of
the Borrower; or
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(xi) any event shall occur which gives reasonable grounds for
belief that any of the Licences or the Unit Operating
Agreement will be suspended, cancelled, revoked, surrendered
or terminated (whether in whole or in part) or any part of the
Britannia Unit Area will be surrendered pursuant to the terms
of any of the Licences; or
(xii) (a) any of the Licences or the Unit Operating Agreement is
suspended, cancelled, revoked, surrendered or terminated
(whether in whole or in part) or any part of the Britannia
Unit Area is surrendered pursuant to the terms of any of the
Licences, (b) any of the Licences, the Annex B Approval or the
Unit Operating Agreement ceases to be in full force and
effect, (c) any other consent, licence, approval,
authorisation, registration or permit required for the
development or operation in accordance with good and prudent
oil and gas field practices of the Project is suspended,
cancelled, revoked, surrendered or terminated or otherwise
ceases to be in full force or effect or is amended or varied
in such a way as to render further construction, development
or operation of the Project in accordance with good and
prudent oil and gas field practices impracticable or which
otherwise has, or might reasonably be expected to have, a
Material Adverse Effect and such state of affairs has
continued unremedied for at least thirty days thereafter, (d)
any of the Project Agreements is varied, amended or waived to
an extent or in a manner which has, or might reasonably be
expected to have, a Material Adverse Effect unless, in the
case of an amendment to the price of Gas to be sold under any
Gas Sales Agreement, the Current Banking Case, revised by the
Technical Agents to take into account such amendment and any
prepayment of the Loan made by the Borrower within thirty days
of such amendment, variation or waiver, demonstrates that the
RTCR for each Calculation Date thereafter will be at least
1.35 or (e) any of the Project Agreements (other than the Unit
Operating Agreement or any Licence) is cancelled, suspended
(other than by reason of force majeure, howsoever defined in
such agreement), terminated or revoked (1) unless it is
replaced within thirty days thereof by another Project
Agreement containing substantially the same terms, which has
been approved by an Instructing Group (such approval not to
have been unreasonably withheld or delayed) and which is
governed by English or Scottish law or (2) in the case of any
Gas Sales Agreement, unless the aggregate Minimum Bill
Quantity under each of the remaining Gas Sales Agreements is
at least equal to the Minimum Volume or, if the same is less
than the Minimum Volume, the Current Banking Case, revised by
the Technical Agents, to take into account such cancellation,
suspension, termination or revocation and any prepayment of
the Loan made by the Borrower within 30 days of such breach or
default, projects that the RTCR for each Calculation Date
thereafter will be at least 1.35; or
(xiii) any of the Security Documents is not, or ceases to be, in full
force and effect or is, or becomes, invalid or the validity or
applicability thereof to any sums expressed to be secured
thereby is denied by or on behalf of the Borrower; or
(xiv) the security constituted by any of the Security Documents
becomes enforceable; or
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(xv) the Project Completion Date does not occur on or before 30th
June, 1999 (unless the Project Completion Date has not then
occurred by reason only of the Project Completion Test
referred to in Part 6 of the Seventh Schedule having not been
satisfied); or
(xvi) the Loan is not repaid in full on or before the Final Maturity
Date; or
(xvii) the Current Banking Case demonstrates that the Borrower will
not be able to pay all Pre-Completion Expenditure as the same
falls due out of Pre-Completion Available Funding and, within
thirty days of that Banking Case being adopted as the Current
Banking Case pursuant to Clause 19, the Borrower has not
arranged for such additional funding in accordance with
paragraph (iv) of the definition of Pre-Completion Available
Funding in Clause 1.1 to be available to it so that it will be
able to pay all such Pre-Completion Expenditure as the same
falls due; or
(xviii) the Sponsor or the Borrower repudiates any of the Financing
Agreements, the Project Agreements or the UTPL Agreements, or
does or causes to be done any act or thing evidencing an
intention to repudiate any of such documents unless (a), in
the case of the repudiation or intended repudiation of any Gas
Sales Agreement, the aggregate Minimum Bill Quantity under
each of the remaining Gas Sales Agreements is at least equal
to the Minimum Volume or, if the same is less than the Minimum
Volume, the Current Banking Case, revised by the Facility
Agent to take into account such repudiation or intended
repudiation and any prepayment of the Loan made by the
Borrower within 30 days of such repudiation or action
evidencing an intended repudiation, projects that the RTCR for
each Calculation Date thereafter will be at least 1.35 or (b)
in the case of any repudiation or intended repudiation by the
Borrower of any Project Agreement (other than the Unit
Operating Agreement or any Licence) which is required for the
construction, repair, or addition to any of the Britannia
Field Facilities, such repudiation or intended repudiation is
solely resultant upon the dissatisfaction of the Borrower
(acting reasonably) with the performance by the counterparty
to such agreement of its obligations thereunder; or
(xix) any breach or default occurs of any of the Project Agreements
or of any consent, licence, approval, authorisation,
registration or permit (including the Annex B Approval)
required for the development or operation in accordance with
good and prudent oil and gas field practice of the Project
which such breach or default has a Material Adverse Effect or
might reasonably be expected to have a Material Adverse Effect
unless (1) in the case of any breach or default under any
Project Agreement (other than the Unit Operating Agreement or
any of the Licences) which has or might reasonably be expected
to have the result of the cancellation, termination,
suspension, or revocation thereof, such agreement has been
replaced within thirty days of such breach or default by
another Project Agreement containing substantially the same
terms, which has been approved by an Instructing Group (such
approval not to be unreasonably withheld or delayed) and which
is governed by English or Scottish law or (2), in the case of
any breach or default by any buyer under any of the Gas Sales
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<PAGE> 90
Agreements, the Current Banking Case, revised by the Facility
Agent to take into account such breach or default and any
prepayment of the Loan made by the Borrower within 30 days of
such breach or default, projects that the RTCR for each
Calculation Date thereafter will be at least 1.35; or
(xx) at any time it is or becomes unlawful for the Sponsor or the
Borrower to perform or comply in any material respects with
any or all of its obligations under any of the Financing
Agreements, the Project Agreements or any of the obligations
of the Sponsor or the Borrower thereunder are not or cease to
be legal, valid and binding except in accordance with its
terms or as otherwise contemplated by this Agreement; or
(xxi) the Project, the Britannia Field Facilities or any substantial
part thereof is abandoned without the prior written consent of
an Instructing Group, the abandonment of which has or might
reasonably be expected to have a Material Adverse Effect; or
(xxii) any action, arbitration or administrative proceeding of or
before any court or agency is started or threatened against
the Borrower or the Sponsor and the same has, or, in the case
of the Borrower, might reasonably be expected to have, or, in
the case of the Sponsor, would have a Material Adverse Effect;
or
(xxiii) by or under the authority of any government, (a) the
management of the Borrower is wholly or partially displaced or
the authority of the Borrower in the conduct of its business
is wholly or partially curtailed, (b) all or a majority of the
issued share capital of the Borrower is seized, nationalised,
expropriated or compulsorily acquired or (c) the whole or any
part of the Project Interest is seized, nationalised,
expropriated or compulsorily acquired or any other event
occurs which has an effect substantially similar thereto; or
(xxiv) the Borrower's interest in the Project, the Licences or the
Unit Operating Agreement is reduced and such reduction has, or
might reasonably be expected to have, a Material Adverse
Effect; or
(xxv) the Borrower ceases to carry on the business it carries on at
the date hereof; or
(xxvi) any act, condition or thing required to be done, fulfilled or
performed at any time in order (a) to permit the Borrower or
the Sponsor lawfully to enter into, exercise its rights under
and perform and comply with the obligations expressed to be
assumed by either of them in any of the Financing Agreements
or the Project Agreements to which either is expressed to be a
party, (b) to ensure that the obligations expressed to be
assumed by the Borrower or the Sponsor in any of the Financing
Agreements or the Project Agreements to which either of them
is expressed to be a party are legal, valid and binding or (c)
to make any of the Financing Agreements or the Project
Agreements admissible in evidence in the United Kingdom is not
done, fulfilled or performed; or
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(xxvii) all or a substantial part of (a) the Project or (b) all or a
substantial part of each of the items listed at paragraphs (i)
to (vi) in the definition of Britannia Field Facilities in
Clause 1.1 is destroyed or damaged in any material respect
unless the Borrower as soon as is reasonably practicable
demonstrates to the satisfaction of an Instructing Group
(acting reasonably) that the relevant part or parts of the
Project or the Britannia Field Facilities will be fully and
promptly reinstated and that the necessary resources
(including any Insurance Proceeds) will be available to
achieve such reinstatement and unless all such works as may be
required for such reinstatement are diligently proceeded with
(but not in such a way which would be contrary to good oil and
gas field practices); or
(xxviii) any further shares of the Borrower are issued (other than to
the Sponsor) or any rights attaching to the Borrower's issued
shares in existence at the date hereof are altered and such
issue or alteration has not been irrevocably cancelled within
thirty days of the earlier of the date on which the Facility
Agent gives notice thereof to the Borrower and the date on
which the Borrower knew or received notice of such issue or
alteration,
then, and in any such case and at any time thereafter the Facility Agent may
(and, if so instructed by an Instructing Group, shall) by written notice to the
Borrower:
(a) declare the Advances to be immediately due and payable
(whereupon the same shall become so payable together with
accrued interest thereon and any other sums then owed by the
Borrower hereunder) or declare the Advances to be due and
payable on demand of the Facility Agent; and/or
(b) declare that any undrawn portion of the Facility shall be
cancelled, whereupon the same shall be cancelled and the
Available Commitment of each Bank shall be reduced to zero,
and the Facility Agent shall be entitled to exercise any and all such rights as
may be available to it under any of the Security Documents.
28.2 If, pursuant to Clause 28.1, the Facility Agent declares the Advances to
be due and payable on demand of the Facility Agent, then, and at any time
thereafter, the Facility Agent may (and, if so instructed by an Instructing
Group, shall) by written notice to the Borrower:
(i) call for repayment of the Advances on such date as it may
specify in such notice (whereupon the same shall become due
and payable on such date together with accrued interest
thereon and any other sums then owed by the Borrower
hereunder) or withdraw its declaration with effect from such
date as it may specify in such notice; and/or
(ii) select as the duration of any Interest Period which begins
whilst such declaration remains in effect a period of six
months or less.
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28.3 Any sum which is received by the Facility Agent after the enforcement
of any of the security created by or pursuant to any of the Security Documents
or by any Receiver (as such term is defined in the Debenture) and is to be
applied in or towards satisfaction of sums due and payable by the Borrower to
any of the Beneficiaries under any of the Financing Agreements shall be applied
by the Facility Agent:
(i) first, in payment of all costs, charges, expenses and
liabilities incurred by the Facility Agent and every Receiver,
attorney, agent, delegate, sub-delegate or other person
appointed by the Facility Agent under any of the Financing
Agreements in the execution of any powers, authorities or
discretions vested in it or him pursuant to the Financing
Agreements;
(ii) secondly, to the Beneficiaries in respect of any amount of
interest (including default interest), fees and commissions
arising under the Financing Agreements, pro rata in accordance
with each Beneficiary's Relevant Interest Amount;
(iii) thirdly, to the Beneficiaries in respect of any amount of
principal or other amount arising under the Financing
Agreements not falling within paragraph (ii) above, pro rata
in accordance with each Beneficiary's Relevant Principal
Amount; and
(iv) fourthly, to the Borrower.
28.4 For the avoidance of doubt, nothing in Clause 10.1 shall be construed
so as to limit the recourse of any of the Beneficiaries to any of the assets or
revenues of the Borrower (including, without limitation, all Project Receipts,
any part of the Project Interest and any amount credited to any Project
Account) by exercising their rights under the Financing Agreements on the terms
and conditions contained therein.
29. DEFAULT INTEREST AND INDEMNITY
29.1 If any sum due and payable by the Borrower hereunder is not paid on the
due date therefor in accordance with the provisions of Clause 31 or if any sum
due and payable by the Borrower under any judgment of any court in connection
herewith is not paid on the date of such judgment, the period beginning on such
due date or, as the case may be, the date of such judgment and ending on the
date upon which the obligation of the Borrower to pay such sum (the balance
thereof for the time being unpaid being herein referred to as an "UNPAID SUM")
is discharged shall be divided into successive periods, each of which (other
than the first) shall start on the last day of the preceding such period and
the duration of each of which shall (except as otherwise provided in this
Clause 29) be selected by the Funding Agent.
29.2 During each such period relating thereto as is mentioned in Clause 29.1
an unpaid sum shall bear interest at the rate per annum which is the sum from
time to time of the Applicable Margin at such time, the Associated Costs Rate
at such time in respect thereof and LIBOR on the Quotation Date therefor
Provided that:
(i) if, for any such period, LIBOR cannot be determined, the rate
of interest applicable to such unpaid sum shall be the sum
from time to time of the Applicable Margin at such time, the
Associated Costs Rate at such time in respect thereof and the
rate per
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annum determined by the Funding Agent to be the arithmetic
mean (rounded upwards, if not already such a multiple, to the
nearest whole multiple of one-sixteenth of one per cent.) of
the rates notified by each Bank to the Funding Agent before
the last day of such period to be those which express as a
percentage rate per annum the cost to it of funding from
whatever sources it may reasonably select its portion of such
unpaid sum for such period; and
(ii) if such unpaid sum is all or part of an Advance which became
due and payable on a day other than the last day of an
Interest Period relating thereto, the first such period
applicable thereto shall be of a duration equal to the
unexpired portion of that Interest Period.
29.3 Any interest which shall have accrued under Clause 29.2 in respect of
an unpaid sum shall be due and payable and shall be paid by the Borrower at the
end of the period by reference to which it is calculated or on such other date
or dates as the Funding Agent may reasonably specify by written notice to the
Borrower.
29.4 If any Bank or the Funding Agent on its behalf receives or recovers all
or any part of such Bank's share of an Advance otherwise than on the last day of
an Interest Period relating to that Advance, the Borrower shall pay to the
Funding Agent on demand for the account of such Bank an amount equal to the
amount (if any) by which (i) the additional interest (but excluding the
Applicable Margin thereon) which would have been payable on the amount so
received or recovered had it been received or recovered on the last day of that
Interest Period exceeds (ii) the amount of interest which in the opinion of the
Funding Agent would have been payable to the Funding Agent on the last day of
that Interest Period in respect of a sterling deposit equal to the amount so
received or recovered placed by it with a prime bank in London for a period
starting on the date of such receipt or recovery (or, if such receipt or
recovery was made after 3.00 p.m. on any day, on the business day following such
the date of such receipt or recovery) and ending on the last day of that
Interest Period.
29.5 The Borrower undertakes to indemnify:
(i) each of the Beneficiaries against any cost, claim, loss,
expense (including, without limitation, (a) at any time, any
legal fees incurred by the Facility Agent and (b) at any time
after any Event of Default has occurred which has not been
remedied or waived (and only after such an Event of Default
has occurred) any legal fees incurred by any other
Beneficiary) or liability together with any VAT thereon, which
any of them may sustain or incur as a consequence of the
occurrence of any Potential Event of Default or Event of
Default or any default by the Borrower in the performance of
any of the obligations expressed to be assumed by it in any of
the Financing Agreements; and
(ii) each Bank against any loss it may suffer as a result of its
funding its portion of an Advance requested by the Borrower
hereunder but not made by reason of the operation of any one
or more of the provisions hereof.
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29.6 Any unpaid sum shall (for the purposes of this Clause 29 and Clause
14.1) be treated as an advance and accordingly in this Clause 29 the term
"Advance" includes any unpaid sum and the term "Interest Period", in relation to
an unpaid sum, includes each such period relating thereto as is mentioned in
Clause 29.1.
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PART 11
PAYMENTS
30. CURRENCY OF ACCOUNT AND PAYMENT
30.1 Sterling is the currency of account and payment for each and every sum
at any time due from the Borrower hereunder Provided that:
(i) each payment in respect of costs and expenses shall be made in
the currency in which the same were incurred; and
(ii) each payment pursuant to Clause 12.2 or Clause 14.1 shall be
made in the currency specified by the party claiming
thereunder.
30.2 If any sum due from the Borrower under this Agreement or any order or
judgment given or made in relation hereto has to be converted from the currency
(the "FIRST CURRENCY") in which the same is payable hereunder or under such
order or judgment into another currency (the "SECOND CURRENCY") for the purpose
of (i) making or filing a claim or proof against the Borrower, (ii) obtaining an
order or judgment in any court or other tribunal or (iii) enforcing any order or
judgment given or made in relation hereto, the Borrower shall indemnify and hold
harmless each of the persons to whom such sum is due from and against any loss
suffered as a result of any discrepancy between (a) the rate of exchange used
for such purpose to convert the sum in question from the first currency into the
second currency and (b) the rate or rates of exchange at which such person may
in the ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or in part,
of any such order, judgment, claim or proof.
31. PAYMENTS
31.1 On each date on which this Agreement requires an amount denominated in
sterling to be paid by the Borrower or any of the Banks hereunder, the Borrower
or, as the case may be, such Bank shall make the same available to the Funding
Agent by payment in sterling and in immediately available, freely transferable
cleared funds to such account of the Funding Agent with such bank in the United
Kingdom as the Funding Agent shall from time to time have specified for this
purpose.
31.2 If, at any time, it shall become impracticable (by reason of any action
of any governmental authority or any change in law, exchange control regulations
or any similar event) for the Borrower to make any payments hereunder in the
manner specified in Clause 31.1, then the Borrower may agree with each or any of
the Banks alternative arrangements for the payment direct to such Bank of
amounts due to such Bank hereunder Provided that, in the absence of any such
agreement with any Bank, the Borrower shall be obliged to make all payments due
to such Bank in the manner specified herein. Upon reaching such agreement the
Borrower and such Bank shall immediately notify the Funding Agent thereof and
shall thereafter promptly notify the Funding Agent of all payments made direct
to such Bank.
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31.3 Save as otherwise provided herein, each payment received by the Funding
Agent for the account of another person pursuant to Clause 31.1 shall:
(i) in the case of a payment received for the account of the
Borrower, be made available by the Funding Agent to the
Borrower:
(a) first, in or towards payment (for value the same day)
of any amount due from the Borrower hereunder to the
person from whom the amount was so received; and
(b) secondly, by transfer in the currency of receipt and
for value the same day to the Account Bank for credit
to the Proceeds Account; or
(ii) in the case of any other payment, be made available by the
Funding Agent, to the person for whose account such payment
was received (in the case of a Bank, for the account of its
Facility Office) for value the same day by transfer to such
account of such person with such bank in London as such person
shall have previously notified to the Funding Agent.
31.4 All payments required to be made by the Borrower hereunder shall be
calculated without reference to any set-off or counterclaim and shall be made
free and clear of and without any deduction for or on account of any set-off or
counterclaim.
31.5 Where a sum is to be paid hereunder to the Funding Agent for account of
another person, the Funding Agent shall not be obliged to make the same
available to that other person until it has been able to establish to its
satisfaction that it has actually received such sum, but if it does so and it
proves to be the case that it had not actually received such sum, then the
person to whom such sum was so made available shall on request refund the same
to the Funding Agent together with an amount sufficient to indemnify the Funding
Agent against any cost or loss it may have suffered or incurred by reason of its
having paid out such sum prior to its having received such sum. Where the
Funding Agent has made any sum available to the Borrower by transfer to the
Proceeds Account in accordance with Clause 31.3(i)(b) and it proves to be the
case that it had not actually received such sum, then, notwithstanding any other
provision hereof, the Funding Agent shall be entitled to require the Account
Bank to pay out of the amount standing to the credit of the Proceeds Account an
amount equal to the sum so transferred together with accrued interest thereon
and require the person to whom the money was paid to indemnify it as above.
31.6 The obligations of the Borrower under Clauses 30 and 31 are separate
and continuing obligations and shall continue in full force and effect
notwithstanding the termination of this Agreement for any reason whatsoever.
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32. SET-OFF
The Borrower authorises each Bank to apply any credit balance to which the
Borrower is entitled on any account of the Borrower with that Bank in
satisfaction of any sum due and payable from the Borrower to such Bank under any
of the Financing Agreements but unpaid; for this purpose, each Bank is
authorised to purchase with the moneys standing to the credit of any such
account such other currencies as may be necessary to effect such application. No
Bank shall be obliged to exercise any right given to it by this Clause 32.
33. REDISTRIBUTION OF PAYMENTS
33.1 If, at any time, the proportion which any Bank (a "RECOVERING BANK")
has received or recovered (whether by payment, the exercise of a right of
set-off or combination of accounts or otherwise) in respect of its portion of
any payment (a "RELEVANT PAYMENT") to be made under this Agreement by the
Borrower for the account of such Recovering Bank and one or more other Banks is
greater (the portion of such receipt or recovery giving rise to such excess
proportion being herein called an "EXCESS AMOUNT") than the proportion thereof
so received or recovered by the Bank or Banks so receiving or recovering the
smallest proportion thereof, then:
(i) such Recovering Bank shall pay to the Funding Agent an amount
equal to such excess amount;
(ii) there shall thereupon fall due from the Borrower to such
Recovering Bank an amount equal to the amount paid out by such
Recovering Bank pursuant to paragraph (i) above, the amount so
due being, for the purposes hereof, treated as if it were an
unpaid part of such Recovering Bank's portion of such relevant
payment; and
(iii) the Funding Agent shall treat the amount received by it from
such Recovering Bank pursuant to paragraph (i) above as if
such amount had been received by it from the Borrower in
respect of such relevant payment and shall pay the same to the
persons entitled thereto (including such Recovering Bank) pro
rata to their respective entitlements thereto.
33.2 If any sum (a "RELEVANT SUM") received or recovered by a Recovering
Bank in respect of any amount owing to it by the Borrower becomes repayable and
is repaid by such Recovering Bank, then:
(i) each Bank which has received a share of such relevant sum by
reason of the implementation of Clause 33.1 shall, upon
request of the Funding Agent, pay to the Funding Agent for the
account of such Recovering Bank an amount equal to its share
of such relevant sum; and
(ii) there shall thereupon fall due from the Borrower to each such
Bank an amount equal to the amount paid out by it pursuant to
paragraph (i) above, the amount so due being, for the purposes
hereof, treated as if it were the sum payable to such Bank
against which such Bank's share of such relevant sum was
applied.
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PART 12
PROJECT ACCOUNTS
34 THE PROJECT ACCOUNTS
34.1 An account, in the name of the Borrower and designated "Union Texas
Britannia Limited - Proceeds Account" and numbered 25661361 has been opened on
the books of the Account Bank at its office in London at 64 Knightsbridge,
London SW1X 7LG. The Facility Agent, the Account Bank and the Borrower agree
that, at such time as the Facility Agent and the Borrower reasonably consider it
to be appropriate, further accounts respectively designated "Union Texas
Britannia Limited - Insurance Account" and "Union Texas Britannia Limited - VAT
Account" shall be opened on the books of the Account Bank at such office in
London. In respect of each of the Project Accounts:
(i) the Account Bank shall (on instructions from the Borrower)
from time to time sub-divide the Project Accounts into such
sub-accounts as may be appropriate for the purposes hereof;
(ii) the Project Accounts shall be maintained at the Account Bank
in accordance with the terms of this Agreement and its usual
practices;
(iii) if at any time the Account Bank retires pursuant hereto, then
there shall be opened on the books of its successor's
principal office in London such accounts and the retiring
Account Bank shall transfer to the credit thereof any amount
standing to the credit of the relevant accounts opened by it
as provided above together with any accrued interest thereon;
and
(iv) save as may be agreed by the Borrower, the Facility Agent and
the Account Bank each account shall be maintained in sterling
Provided that the Proceeds Account shall be sub-divided so
that it has a dollar sub-account.
34.2 It is hereby agreed that, save as otherwise provided in any of the
Security Documents:
(i) the Borrower shall credit, and shall procure that there is
credited, to the Project Accounts all such amounts as are
required pursuant to this Agreement to be so credited and
ensure that such other credits are made thereto as are
required to be made pursuant to any provision of any other
Financing Agreement; and
(ii) the Account Bank shall credit the Project Accounts with such
amounts as are required pursuant to this Agreement to be so
credited and make such other credits thereto as the Account
Bank is required to make pursuant to any provision of any
other Financing Agreement.
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34.3 Each amount from time to time standing to the credit of the Project
Accounts shall bear interest at such rate as may from time to time be agreed
between the Borrower and the Account Bank or, if no such rate is agreed for any
period, at the Account Bank's overnight rate for call deposits from time to
time, such interest to be credited to the relevant Project Account at such time
or times as may be agreed from time to time between the Borrower and the Account
Bank or, failing agreement, in arrears on the last business day of each
successive period of one month and on the date on which the relevant Project
Account is closed.
34.4 The Account Bank hereby agrees that any deposit made with it in any
Project Account shall be subject to the provisions of this Clause 34 and in
addition waives any lien or right of set-off or counterclaim which it may have
from time to time over any Project Account, the amount of such deposit or any
interest accrued thereon from time to time. The Account Bank shall, in relation
to the Project Accounts, act in accordance with the instructions of the Borrower
(subject to Clauses 34.17 and 34.18) Provided that such instructions were given
expressly in accordance herewith or to the extent specified in any of the
Financing Agreements.
34.5 The Borrower agrees that it shall make such payments out of the Project
Accounts as required by and in accordance with this Agreement but subject always
to Clause 34.17. Save as otherwise provided herein, the Borrower shall not make
any payment out of the amount standing to the credit of any of the Project
Accounts.
34.6 The Borrower shall:
(i) use all reasonable endeavours to ensure that all Project
Receipts (other than any Insurance Proceeds) are paid directly
into the Proceeds Account, and shall ensure that all such
amounts which are not paid directly into the Proceeds Account
are paid into the Proceeds Account immediately upon their
receipt by or on behalf of the Borrower;
(ii) use all reasonable endeavours to ensure that all Insurance
Proceeds (excluding the proceeds due to be paid out to a third
party or to the Borrower or the Sponsor as reimbursement for
the amounts which it has paid out against delivery to the
Facility Agent of a copy of the third party claim settled by
it in each case in settlement of claims or expenses related
thereto in respect of any third party liability and excluding
any proceeds properly payable by the insurers directly to the
Operator under the terms of the relevant policy) are paid
directly into the Insurance Account and shall ensure that all
such proceeds not so paid directly are paid into the Insurance
Account immediately upon their receipt by or on behalf of the
Borrower;
(iii) use all reasonable endeavours to ensure that:
(a) any amount payable by any person to the Borrower
which represents VAT chargeable in respect of any
supply made or to be made by the Borrower in
consideration (in whole or in part) for any Project
Receipt; and
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(b) any amount payable (or repayable) by H.M. Customs &
Excise to the Borrower in respect of VAT input tax
incurred by the Borrower,
("VAT RECEIPTS") are paid directly into the Proceeds Account
and shall ensure that all VAT Receipts which are not paid
directly into the Proceeds Account are paid into the Proceeds
Account immediately upon their receipt by or on behalf of the
Borrower and on the last business day of each calendar month
the Borrower shall request the Account Bank to transfer an
amount equal to all VAT Receipts received into the Proceeds
Account during that calendar month into the VAT Account and
the Account Bank shall make such transfer promptly upon such
request;
(iv) ensure that, save where specifically provided to the contrary
in any Financing Agreement, all amounts payable to it under
any UTPL Agreement or in respect of Subordinated Debt are paid
directly into the Proceeds Account;
(v) ensure that all Insurance Proceeds due to be paid out to a
third party in settlement of claims in respect of any third
party liability are, to the extent received by the Borrower,
paid promptly to the third party upon settlement or final
determination of any such claim;
(vi) to the extent that any amount is paid into the Proceeds
Account in dollars it shall be credited to the dollar
sub-account thereof and the Borrower shall, to the extent that
any such amount is (or when aggregated with any other amounts
then standing to the credit of such account is) in excess of
US$500,000 promptly thereafter convert such excess amount into
sterling pursuant to a spot currency exchange transaction,
shall apply any such dollar amount in satisfaction of its
liability under such transaction immediately upon the same
becoming due and payable and shall ensure that the sterling
proceeds of such transaction shall be credited to the Proceeds
Account upon their being paid; and
(vii) to the extent that it is required to satisfy any Permitted
Expenditure then due and payable in dollars, be entitled to
withdraw amounts from the Proceeds Account and convert the
same into dollars pursuant to a spot currency exchange
transaction and shall ensure that the dollar proceeds of such
transaction are paid to the relevant third party immediately
upon their being paid.
34.7 If:
(i) any amounts mentioned in paragraphs (i), (ii), (vi), (vii) or
(x) of the definition of Project Receipts in Clause 1.1 have
been paid into the Proceeds Account prior to the Project
Completion Date then such amounts may, at the Borrower's
option, be released therefrom to meet any Permitted
Expenditure upon the same becoming due and payable by the
Borrower prior to the Project Completion Date; or
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(ii) any amounts are credited to the Proceeds Account which
represent the proceeds of any Advance made hereunder, then
such amounts may be released to meet items and expenditure
specified in Clause 3 and, to the extent that such proceeds
have been drawn for general corporate purposes pursuant to
Clause 3.2(ii), notwithstanding Clause 34.13(i), such proceeds
may be applied on such date to fund intra-group loans to the
Sponsor or to pay to the Sponsor fees accrued under the
Administrative Services Agreement prior to the Project
Completion Date,
Provided that no amount may be released from the Proceeds Account
(notwithstanding (i) or (ii) above) if any Event of Default has occurred or
would occur in consequence of making such release.
34.8 The Borrower may, from time to time, instruct the Account Bank to
release to the Sponsor any amount then standing to the credit of the Proceeds
Account (all amounts released pursuant to this Clause 34.8 being "SPECIAL
SPONSOR PAYMENTS"). Subject to Clauses 34.17 and 34.18, the Account Bank will
make such payment from the Proceeds Account if and only if on the date for
payment thereof the following conditions are satisfied and the Facility Agent
has not notified it to the contrary (which it will do only if any such condition
is not satisfied):
(i) the Banking Case delivered pursuant to Clause 19.1(i) and each
Current Banking Case thereafter projects and estimates that
the RTCR in respect of any Calculation Date is or will be
equal to or greater than 1.35;
(ii) no Event of Default or Potential Event of Default has occurred
or would occur as a result of such payment from the Proceeds
Account;
(iii) the Project Completion Date has occurred;
(iv) all indebtedness for borrowed money of the Sponsor in excess
of pound sterling 10,000,000 (or its equivalent) in the
aggregate has been paid when due (or within any applicable
grace period granted in the agreement, if any, evidencing the
same), no indebtedness for borrowed money of the Sponsor in
excess of pound sterling 10,000,000 (or its equivalent) in
the aggregate has been declared to be or otherwise has become
due and payable prior to its specified maturity by reason of
the happening of a default or event of default (howsoever
described and whether or not involving culpability on the
part of any person) and no creditor of the Sponsor has become
entitled to declare any indebtedness for borrowed money of
the Sponsor in excess of pound sterling 10,000,000 (or its
equivalent) in the aggregate due and payable prior to its
specified maturity by reason of the happening of a default or
event of default (howsoever described and whether or not
involving culpability on the part of any person); and
(v) the most recent UTPL Credit Test to have been carried out
pursuant to Clause 36.3 has been satisfied.
34.9 If, at any time, any of the conditions specified in Clause 34.8(i),
(ii), (iii), (iv) or (v) are not or cease to be satisfied, then the Borrower
shall immediately pay, or ensure that there is immediately paid,
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to the Account Bank for credit to the Proceeds Account an amount equal to the
aggregate of all Special Sponsor Payments at any time paid out by the Account
Bank from the Proceeds Account which Special Sponsor Payments have not been
applied or distributed by the Borrower to pay the types of items specified in
Clause 34.10.
34.10 Subject to Clauses 34.11, 34.17 and 34.18, the Borrower may from time
to time instruct the Account Bank to pay amounts out of the Proceeds Account to
the extent that the same are to be applied or distributed to pay (and in the
case of the payment of obligations, such obligations shall be paid in a timely
manner):
(i) Permitted Expenditure, taxes and any other item of expenditure
specified in Clause 3.1 in each case then due and payable and
not being an amount which might otherwise be satisfied by a
payment out of the Insurance Account as contemplated by Clause
34.15;
(ii) any amounts of principal, interest, fees, commissions, costs
or expenses due and payable under any of the Financing
Agreements; or
(iii) subject to Clause 34.13, any dividend or distribution to its
shareholders or any principal, interest or other amount then
due and payable in respect of Subordinated Debt, payments to
the Sponsor under the Administrative Services Agreement or any
intra group loan to the Sponsor (but excluding, for the
avoidance of doubt, any Special Sponsor Payments) Provided
that after such payment an amount remains credited to the
Proceeds Account which is equal to the amount at which the
Operating and Financing Costs Reserve will then be Fully
Funded,
Provided that the Borrower may not give any instruction to the Account Bank to
release any amount specified in Clause 34.10 (i) if the amount of all such
expenditure already incurred by the Borrower during the then current Semi-Annual
Cash Flow Period exceeds 120% of the amount of such expenditure projected and
estimated in the Current Banking Case to be expended by the Borrower during such
Semi-Annual Cash Flow Period unless the Borrower has delivered to the Facility
Agent a certificate of a duly authorised officer of the Borrower confirming that
the expenditure which the Borrower wishes to pay is properly due and payable and
the Facility Agent has confirmed to the Account Bank that it has approved the
expenditure so certified (such approval not to be unreasonably withheld or
delayed).
34.11 No payment may be made from the Proceeds Account in respect of Clause
34.7 or 34.10 (unless otherwise agreed by an Instructing Group) if:
(i) any Event of Default has occurred or would occur in
consequence of the making of such payment out; or
(ii) the Project Completion Date has not occurred and the
Pre-Completion Available Funding is zero.
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34.12 Notwithstanding any provision to the contrary in any Financing
Agreement, no amount may be released from any Project Account if such release
would result in a debit balance appearing on such Project Account.
34.13 (i) The Borrower shall only pay dividends or other distributions
to its members, pay or repay any interest or other amount in
respect of, or any amount of, Subordinated Debt, pay any
amount to the Sponsor under the Administrative Services
Agreement (but subject to Clause 34.7(ii)) or pay any
intra-group loans to the Sponsor (but subject to Clause
34.7(ii)) on a Repayment Date and only to the extent that
after such payment the Operating and Financing Costs Reserve
will be Fully Funded.
(ii) The Borrower may only declare and pay dividends or
distributions to its members in cash.
34.14 Where two or more payments fall to be made by the Borrower on the same
business day either (i) out of amounts credited to the Proceeds Account or (ii)
out of any other funds then available to the Borrower (other than funds
contained in any other Project Account) and the amount so credited to the
Proceeds Account or, as the case may be, then available to the Borrower is
insufficient to discharge all such payments such amount shall be applied in
satisfying the following payment obligations of the Borrower in the following
order of priority (subject to Clause 34.18):
(i) first, amounts payable in respect of Abandonment Costs,
Capital Expenditure, GSA Refunds, Insurance Costs, Operating
Costs, Overlifting Costs, Royalties, Transportation Costs,
Trust Fund Costs or any tax liability of the Borrower to the
extent that the same has fallen due for payment and (except in
the case of amounts payable to the Sponsor in respect of
Insurance Costs after the Project Completion Date) is payable
to or for the account of a person other than the Sponsor, UTPH
or any subsidiary of the Sponsor or UTPH pari passu with any
transfer to the VAT Account required to be made pursuant to
Clause 34.6(iii);
(ii) secondly, amounts due and payable in respect of costs and
expenses, fees, commissions and interest arising under this
Agreement or any of the Security Documents;
(iii) thirdly, amounts not falling within paragraph (ii) above and
due and payable under any Hedging Agreement Provided that if
an Event of Default has occurred then any amount due and
payable under a Hedging Agreement (other than an amount
payable thereunder which is referred to in paragraph (iv)
below) shall be made pari passu with amounts
payable under paragraph (ii) above;
(iv) fourthly, amounts not falling within paragraphs (ii) or (iii)
above and due and payable to any of the Beneficiaries under
any of the Financing Agreements (which, for the avoidance of
doubt, shall include principal amounts of the Loan falling due
for repayment) pari passu with, but only if an Event of
Default shall have occurred, any amount payable under a
Hedging Agreement pursuant to any close out or termination
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provision thereof and which is based on the marked to market
value of such Hedging Agreement;
(v) fifthly, if on any date the Operating and Financing Costs
Reserve is not Fully Funded, amounts required to be paid so
that such reserve shall be Fully Funded thereafter; and
(vi) sixthly, amounts due and payable to the Sponsor by way of
dividend or distribution, or by way of the repayment or
payment of interest, principal or other amounts in respect of
Subordinated Debt, payments to the Sponsor under the
Administrative Services Agreement or by way of intra-group
loans to the Sponsor or payments to UTPH or any of its
subsidiaries in respect of a transaction permitted by Clause
24(xiii)(b)), in each case as permitted by the terms of the
Financing Agreements.
34.15 Subject to Clause 34.17 and 34.18 and provided that no Event of Default
has occurred or will occur in consequence of making such payment out, the
Borrower may instruct the Account Bank to pay out of the amount standing to the
credit of the Insurance Account amounts to be applied against the following
items in the following circumstances:
(i) in the case of moneys representing the Insurance Proceeds in
respect of loss or damage to any part of the Project Interest
(and to which neither of (ii) or (iii) below apply), in
repair, replacement or rectification of the asset lost or
damaged save where the Current Banking Case, revised by the
Facility Agent to take into account, for the purpose of
calculating Forecast Net Cash Flow, Permitted Expenditure and
the RTCRs thereunder, the expenditure payable in respect of
such loss and any Insurance Proceeds paid in respect of it,
projects and estimates that the RTCR for any Calculation Date
thereafter will be less than 1.35, in which case the Account
Bank shall retain such moneys in the Insurance Account pending
the instructions of the Facility Agent as to their
application;
(ii) in the case of moneys representing Insurance Proceeds where
the Sponsor had, prior to such proceeds being paid by the
insurers, paid (or provided the Borrower with funds to pay)
for the repair, replacement or rectification of that part of
the Project Interest which was lost or damaged, in reimbursing
the Sponsor for any such payment; and
(iii) in the case of moneys representing Insurance Proceeds where
the Banks had advanced amounts hereunder to the Borrower,
prior to such proceeds being paid, and which advances were
applied in repairing, replacing or rectifying any part of the
Project Interest which was lost or damaged, such moneys shall
be retained by the Account Bank in the Insurance Account
pending the instructions of the Facility Agent as to their
application,
Provided that prior to any such payment being made from the Insurance
Account the Account Bank may seek confirmation from the Facility Agent
that the relevant payment falls under paragraphs (i), (ii) or (iii)
above and the Facility Agent shall give such confirmation as soon as is
practicable after such request if such shall be the case.
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34.16 The Borrower may request the Account Bank to release any amount
standing to the credit of the VAT Account at any time Provided that at the time
of such release each of the conditions specified in Clause 34.8 (i), (ii),
(iii), (iv) and (v) are satisfied and the Facility Agent has not notified it to
the contrary (which it will only do if any such condition is not satisfied). If
any such condition ceases to be satisfied the Borrower shall immediately pay, or
ensure that there is immediately paid to the Account Bank for the credit of the
VAT Account an amount equal to all amounts at any time paid out from the VAT
Account which amounts have not been applied by the Borrower in satisfaction of
its VAT Obligations (as defined below) and thereafter the Borrower may only
request the Account Bank to release any amount standing to the credit of the VAT
Account in order to meet obligations of the Borrower to pay VAT (a "VAT
OBLIGATION") (whether to a third party in respect of any supply of goods or
services made to the Borrower in respect of which supply VAT is chargeable at a
positive rate and in respect of which VAT the Borrower has agreed to pay such
third party a sum equal to such VAT in addition to the consideration for the
said supply or to H.M. Customs & Excise) and the Account Bank will release any
amount so requested Provided that the Account Bank has not been notified by the
Facility Agent that an Event of Default has occurred or will occur in
consequence of making such payment out.
34.17 In order for a withdrawal to be made by the Borrower, the Borrower
shall, not later than 10 a.m. on the business day prior to the proposed date of
the withdrawal, give the Account Bank a notice of withdrawal, in such form as
the Account Bank and the Borrower may from time to time agree. The proposed date
for withdrawal stipulated in such notice shall be a business day.
34.18 The Account Bank shall, at any time after the notification to it by the
Facility Agent of the occurrence of an Event of Default and until such time as
it is notified by the Facility Agent that such Event of Default has ceased or
been waived by the Banks:
(i) not be obliged to act on the instructions of the Borrower
pursuant to this Clause 34 in relation to any sums at such
time standing to the credit of the Accounts; and
(ii) (subject to Clause 28.3) be entitled to pay to the Facility
Agent any sums standing to the credit of the Project Accounts
for application by the Facility Agent in or towards the
payment and discharge of any amounts owing to the
Beneficiaries under the Financing Agreements as the Facility
Agent thinks fit.
34.19 Subject as provided in the Charge over Accounts, the Account Bank
shall, at the request of, and against payment of its reasonable costs by, the
Borrower (or any other person or persons entitled thereto) made on or after the
Discharge Date, close the Project Accounts and pay any amount standing to the
credit thereof to the Borrower (or such other person or persons entitled
thereto).
35. AUTHORISED INVESTMENTS
35.1 The Borrower may invest in Authorised Investments from time to time,
subject as provided in this Agreement, by utilising any amounts (and only such
amounts) standing to the credit of the Proceeds Account, in each case as may be
prudent in accordance with the following provisions of this Clause 35.
35.2 All Authorised Investments will be:
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(i) made in the name of the Account Bank; or
(ii) in the name of the Borrower, but only if such Authorised
Investment is with a Finance Party or with any other bank who
has agreed, in a form acceptable to the Facility Agent, that:
(a) such Authorised Investment is held to the order of
the Account Bank (but subject to the terms of the
Debenture) and that, unless the Facility Agent has
notified the relevant bank that an Event of Default
has occurred and has demanded delivery, any payment
in respect of the Authorised Investment shall be
remitted (in full and without any deduction,
withholding or retention of any kind) to the Account
Bank (who shall credit such payment to the relevant
Project Account);
(b) such Authorised Investment is subject to the
encumbrances created by the Security Documents; and
(c) it will not exercise, and will hold the Authorised
Investment free of, any encumbrance, right of
set-off, counterclaim or other interest which it may
have.
Each Finance Party acknowledges that any Authorised Investment made with it is
made on the above terms. Subject to this Clause 35 and the Security Documents,
the Account Bank agrees to act on the instructions of the Borrower in relation
to all its dealings relating to Authorised Investments but without the Account
Bank in any way being, or being deemed to be, the agent of the Borrower.
35.3 The Borrower will procure that a prudent spread of Authorised
Investments is maintained at all times with tenors which coincide with Repayment
Dates in respect of amounts due to be paid on such dates in repayment of the
Loan. The Borrower will match the maturities of the Authorised Investments made
out of moneys standing to the credit of the Proceeds Account, having regard to
the availability of Authorised Investments which are readily marketable, and
shall liquidate (or procure that there are liquidated) Authorised Investments to
the extent necessary, for the purposes of payment of any amount due under the
Financing Agreements and the Project Agreements.
35.4 All documents of title or other documentary evidence of ownership with
respect to Authorised Investments made out of the Proceeds Account will be held
in the custody of the Account Bank and, if any such document or other evidence
comes into the possession or control of the Borrower, it shall procure that the
same is delivered to the Account Bank immediately. The Account Bank shall hold
all of the above subject to the security created or evidenced by the Security
Documents.
35.5 The Borrower shall at all times indemnify and keep indemnified the
Account Bank fully and effectively from and against all liabilities, costs and
expenses which the Account Bank may incur by reason of the proper acquisition,
holding, disposal or realisation of any Authorised Investment including any
liability incurred as a result of any action described in Clause 35.9 except for
any wilful default or gross negligence in its dealings with any Authorised
Investments.
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35.6 Upon the realisation of any investment made under this Clause 35, the
proceeds of realisation shall immediately be credited directly to the Proceeds
Account or immediately invested in another Authorised Investment.
35.7 If any Authorised Investment ceases to be an Authorised Investment, the
Borrower will as soon as reasonably practicable after becoming aware of that
fact (and in no event more than five business days after that time) notify the
Facility Agent of that fact and promptly, if so required by the Facility Agent
after consultation with the Borrower, instruct the Account Bank to immediately
replace the relevant investment by an Authorised Investment or by cash.
35.8 Subject to Clause 35.9, any reference in this Agreement to the balance
standing to the credit of the Proceeds Account will be deemed to include a
reference to the Authorised Investments in which all or part of such balance is
for the time being invested. In the event of any dispute as to the value of any
Authorised Investment for the purpose of determining the amount deemed to be
standing to the credit of the Proceeds Account pursuant to this Clause 35.8,
that value shall be determined by the Facility Agent (acting reasonably). Any
interest or other income paid in respect of any Authorised Investment will be
paid to the Proceeds Account in accordance with Clause 34.
35.9 If the amount standing to the credit of the Proceeds Account (excluding
for this purpose any amount deemed to be included pursuant to Clause 35.8) is
insufficient to make a payment under the Financing Agreements or in respect of
Permitted Expenditure or taxes when due out of the Proceeds Account, the
Facility Agent is hereby authorised, in its discretion and without any liability
for loss or damage incurred by the Borrower as a result of its so doing, to
require the Account Bank or, as the case may be, the Borrower to sell or
otherwise realise or to enter into any exchange transaction with respect to, any
Authorised Investment made out of moneys standing to the credit of the Proceeds
Account to the extent that it appears to the Facility Agent to be necessary for
the payment of any amount due under the Financing Agreements or in respect of
Permitted Expenditure or taxes which could not otherwise be paid out of the cash
balance standing to the credit of the Proceeds Account, all costs and expenses
incurred thereby being for the account of the Borrower.
35.10 Not later than ten business days after the end of each calendar month
beginning with the month in which an Authorised Investment is first made on
behalf of the Borrower, the Borrower will deliver to the Facility Agent a
schedule of the investments made, realised or liquidated during that month in
respect of the Proceeds Account, in such detail as the Facility Agent may
reasonably require. The Facility Agent shall be entitled to require the
liquidation of any investment which is not an Authorised Investment immediately
upon notice to that effect being given by the Facility Agent to the Borrower.
35.11 Not later than ten business days after the end of each financial
quarter, beginning with the first financial quarter ending after the making of
the first Authorised Investment made on behalf of the Borrower, the Facility
Agent will deliver to the Banks a schedule of the Authorised Investments as at
the end of such quarter, in such detail as an Instructing Group may reasonably
request.
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36. UTPL CREDIT TEST
36.1 For any purposes of the Financing Agreements the UTPL Credit Test will
have been satisfied if both the following tests are satisfied as at the date on
which any provision of any Financing Agreement required it to be satisfied but
by reference to the most recent audited annual financial statements of the
Sponsor or, in the case of (i) below only, the most recent unaudited semi-annual
financial statements of the Sponsor, whichever is the most recent:
(i) Consolidated Debt of the Sponsor on the relevant 30 June or 31
December must not exceed 3.75 times the Discretionary Cash
Flow of the Sponsor for the twelve month period ending on the
relevant 30 June or 31 December; and
(ii) the SEC Value of the Sponsor must be at least pound sterling
250,000,000.
36.2 The expressions used in this Clause 36 shall be construed in accordance
with generally accepted accounting principles in the United Kingdom (as used in
the Sponsor's most recent audited annual, or unaudited semi-annual, financial
statements) but so that:
"DISCRETIONARY CASH FLOW" means, in respect of any period, an amount
equal to (i) the "Profit For The Financial Year" of the Sponsor and its
subsidiaries for such period, as defined in the Consolidated Profit and
Loss Account of the Sponsor and its subsidiaries for such period in the
most recent annual or semi-annual consolidated financial statements of
the Sponsor and its subsidiaries, prepared in accordance with generally
accepted accounting principles in the United Kingdom and on
substantially the same basis as the same appears in the Consolidated
Profit and Loss Account of the Sponsor and its subsidiaries for the
year ended 31 December 1994 plus (ii) any depreciation incurred by the
Sponsor or any of its subsidiaries during such period, (iii) any
dismantlement provision made by the Sponsor or any of its subsidiaries
during such period, (iv) any exploration expenses incurred by the
Sponsor or any of its subsidiaries during such period, (v) any deferred
taxes incurred by the Sponsor or any of its subsidiaries during such
period, plus or minus (vi) any loss incurred or gain made
(respectively) on disposals of any tangible assets (as permitted
pursuant to the Financing Agreements), plus or minus (vii) any gain
made or loss incurred from extraordinary items, changes in accounting
policies, or non-cash non-recurring items, but minus (viii) dividends
on preferred stock paid during such period by the Sponsor, or any of
its subsidiaries (each of (ii), (iii), (iv), (v), (vi), (vii) and
(viii) as set out in the Notes in the most recent annual or semi-annual
consolidated financial statements of the Sponsor and its subsidiaries,
prepared in accordance with generally accepted accounting principles in
the United Kingdom and on substantially the same basis as the same
appears in the Consolidated Profit and Loss Account of the Sponsor and
its subsidiaries for the year ended 31 December 1994) and minus (ix)
any amount receivable by the Sponsor in accordance with any of the
Financing Agreements (including any payments to the Sponsor out of the
Proceeds Account);
"CONSOLIDATED DEBT" means the aggregate of all indebtedness for
borrowed money of the Sponsor and all of its subsidiaries (excluding
the Borrower) owed to any person other than indebtedness for borrowed
money owed by the Sponsor to any of its subsidiaries or owed by any of
the Sponsor's subsidiaries to the Sponsor or to any other subsidiary of
the Sponsor; and
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"SEC VALUE" means an amount equal to the "standardized measure of
discounted future net cash flows" for the Sponsor as set forth in the
Form 10-K of UTPH as of 31 December of each year.
36.3 Unless specified otherwise in any Financing Agreement the Sponsor must
have satisfied the UTPL Credit Test on each Calculation Date, it being
understood and agreed that a failure to satisfy such credit test does not by
itself constitute an Event of Default or a breach of this Agreement.
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PART 13
FEES, COSTS AND EXPENSES
37. FEES
37.1 The Borrower shall pay to the Funding Agent for account of each Bank a
commitment commission on the amount of such Bank's Available Commitment from day
to day during the period beginning on the date hereof and ending on the day on
which such Bank's Available Commitment is reduced to zero, such commitment
commission to be calculated at the rate of zero point three five per cent.
(0.35%) per annum and payable in arrear on the last day of each successive
period of three months which ends during such period and on the day on which
such Bank's Available Commitment is reduced to zero.
37.2 The Borrower shall pay to the account of each of Chemical Bank,
NationsBank, N.A. (Carolinas) and National Westminster Bank Plc the arrangement
and underwriting fees specified in the Arrangement/Underwriting Fees Letters at
the times, and in the amounts, specified in such letters.
37.3 The Borrower shall pay to each of the Technical Agents for their own
account the technical agent fees specified in the Technical Agents Fee Letters
at the times, and in the amounts, specified in such letter.
37.4 The Borrower shall pay to the Facility Agent for its own account the
facility agent fees specified in the Facility Agent Fee Letter at the times, and
in the amounts, specified in such letter.
37.5 The Borrower shall pay to the Funding Agent for its own account the
funding agent fees specified in the Funding Agent Fee Letter.
38. COSTS AND EXPENSES
38.1 The Borrower shall, from time to time on demand of the Facility Agent,
reimburse the Facility Agent for all reasonable legal fees together with any VAT
thereon incurred by it before the first Advance is made hereunder in connection
with the review of the Project Agreements, the negotiation, preparation and
execution of the Financing Agreements and the completion of the transactions
therein contemplated, the preparation of the Information Memorandum and the
taking of any new security, or the preservation of existing security, in
accordance with Clause 25.
38.2 The Borrower shall, from time to time on demand of the Facility Agent,
reimburse each of the Account Bank, the Agents, the Arranger and the
Co-Arrangers for all reasonable costs and expenses (excluding legal fees)
together with any VAT thereon incurred by them in connection with the review of
the Project Agreements, the negotiation, preparation and execution of the
Financing Agreements and the completion of the transactions therein
contemplated, the preparation of the Information Memorandum and the taking of
any new security, or the preservation of existing security, in accordance with
Clause 25.
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38.3 The Borrower shall, from time to time on demand of the Facility Agent,
reimburse the Facility Agent for all costs and expenses (including, without
limitation, legal fees) together with any VAT thereon incurred by it in or in
connection with the preservation and/or enforcement of any of the rights, and/or
exercise of any discretions on the part of, any of the Beneficiaries under the
Financing Agreements or any of them.
38.4 The Borrower shall, from time to time on demand of the Facility Agent,
reimburse the Beneficiaries and each of them for all costs and expenses
(including, without limitation, legal fees) together with any VAT thereon
incurred at any time after an Event of Default has occurred, which has not been
remedied or waived, in or in connection with the preservation and/or enforcement
of any of the rights, and/or the exercise of any discretions on the part of, any
of the Beneficiaries under the Financing Agreements or any of them.
38.5 The Borrower shall pay all stamp, registration and other taxes to which
any Financing Agreement or any judgment given in connection therewith is or at
any time may be subject and shall, from time to time on demand of the Facility
Agent, indemnify the Beneficiaries against any liabilities, costs, claims and
expenses resulting from any failure to pay or any delay in paying any such tax.
38.6 The Borrower shall, from time to time on demand of the Facility Agent,
reimburse each Agent for all properly incurred fees, costs and expenses
(together with any VAT thereon) of:
(i) any Independent Engineers appointed hereunder paid out by it
in connection with the obtaining of any of the reports (or any
verification or updates thereof) delivered pursuant to Part 7;
(ii) any Independent Expert appointed hereunder paid out by it; or
(iii) any Insurance Adviser appointed hereunder paid out by it in
connection with Part 9.
38.7 If the Borrower fails to perform any of its obligations under this
Clause 38, each Bank shall, in the proportion borne by its share of the Loan
(or, if no Advances have been made, its Available Commitment) to the amount of
the Loan (or, if no Advances have been made, the Available Facility) for the
time being (or, if the Loan has been repaid in full, immediately prior to the
final repayment thereof), indemnify the relevant Agent and/or the Account Bank,
against any loss incurred by it as a direct result of such failure and the
Borrower shall forthwith reimburse each Bank for any payment made by it pursuant
to this Clause 38.7.
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PART 14
AGENCY PROVISIONS
39. THE AGENTS, THE ARRANGER, THE CO-ARRANGERS AND THE FINANCE PARTIES
39.1 (i) The Arranger, the Co-Arrangers, the Funding Agent, the
Technical Agents, the Account Bank and each Finance Party
hereby appoints the Facility Agent to act as its agent in
connection with the Financing Agreements and authorises the
Facility Agent:
(a) to exercise such rights, powers, authorities and
discretions as are specifically delegated to such
Agent by the terms thereof together with all such
rights, powers, authorities and discretions as are
reasonably incidental thereto; and
(b) to execute on its behalf each of the Security
Documents, the Sponsor Direct Agreement and any other
document required to be entered into by the Facility
Agent on its behalf in connection herewith provided
that such document has been approved in writing by
the relevant Beneficiary.
(ii) The Arranger, the Co-Arrangers, the Facility Agent, the
Technical Agents, the Account Bank and each Finance Party
hereby appoints the Funding Agent to act as its agent in
connection with the Financing Agreements and authorises the
Funding Agent to exercise such rights, powers, authorities and
discretions as are specifically delegated to such Agent by the
terms thereof together with all such rights, powers,
authorities and discretions as are reasonably incidental
thereto.
39.2 Each Agent may:
(i) assume that:
(a) any representation made by the Borrower in connection
with the Financing Agreements is true;
(b) no Event of Default or Potential Event of Default has
occurred;
(c) neither the Sponsor nor Borrower is in breach of or
default under its obligations under any of the
Financing Agreements; and
(d) any right, power, authority or discretion vested
herein upon an Instructing Group, the Finance Parties
or any other person or group of persons has not been
exercised,
unless and until it has, in its capacity as agent under the
Financing Agreements, acquired actual knowledge or received
express notice to the contrary;
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(ii) assume that the Facility Office of each Bank is that
identified with its signature below (or, in the case of a
Transferee, at the end of the Transfer Certificate to which it
is a party as Transferee) until, in the case of the Facility
Agent it has received from such Bank (a copy of which the
Facility Agent shall send to the Borrower and each of the
other Agents) a notice designating some other office of such
Bank to replace its Facility Office and act upon any such
notice until the same is superseded by a further such notice;
(iii) assume that all the conditions for the making of any payment
out of the amount standing to the credit of any Project
Account which are specified in any of the Financing Agreements
have been satisfied, unless it has actual knowledge or actual
notice to the contrary;
(iv) engage and pay for the advice or services of any lawyers,
accountants, engineering consultants or other experts whose
advice or services may to it seem necessary, expedient or
desirable and rely upon any advice so obtained;
(v) rely as to any matters of fact which are or might reasonably
be expected to be within the knowledge of the Borrower upon a
certificate signed by or on behalf of the Borrower;
(vi) rely upon any communication or document believed by it to be
genuine;
(vii) refrain from exercising any right, power or discretion vested
in it as agent hereunder unless and until instructed by an
Instructing Group as to whether or not such right, power or
discretion is to be exercised and, if it is to be exercised,
as to the manner in which it should be exercised; and
(viii) refrain from acting in accordance with any instructions of an
Instructing Group to begin any legal action or proceeding
arising out of or in connection with this Agreement until it
shall have received such security as it may require (whether
by way of payment in advance or otherwise) for all costs,
claims, losses, expenses (including, without limitation, legal
fees) and liabilities together with any VAT thereon which it
will or may expend or incur in complying with such
instructions.
39.3 The Facility Agent shall:
(i) promptly inform each Finance Party of the contents of any
notice or document received by it from the Borrower under any
Financing Agreement in its capacity as agent thereunder;
(ii) promptly notify each Finance Party and the Funding Agent of
the occurrence of any Event of Default or any default by the
Borrower in the due performance of or compliance with its
obligations under any of the Financing Agreements of which
such Agent has actual notice from any other party hereto;
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(iii) save as otherwise provided herein, act as agent under the
Financing Agreements in accordance with any instructions given
to it by an Instructing Group, which instructions shall be
binding on the Arranger, the Co-Arrangers and all of the
Finance Parties; and
(iv) if so instructed by an Instructing Group, refrain from
exercising any right, power or discretion vested in it as
agent under any of the Financing Agreements.
39.4 Notwithstanding anything to the contrary expressed or implied herein,
none of the Agents, the Arranger or the Co-Arrangers shall:
(i) be bound to enquire as to:
(a) whether or not any representation made or deemed
repeated by the Borrower in connection with any of
the Financing Agreements is true;
(b) the occurrence or otherwise of any Event of Default
or Potential Event of Default;
(c) the performance by the Borrower or the Sponsor of its
obligations under any of the Financing Agreements;
(d) any breach of or default by the Borrower or the
Sponsor of or under its respective obligations under
any of the Financing Agreements;
(e) the title of the Borrower to any part of the Project
Interest; or
(f) any information contained in any communication from
the Insurance Adviser or contained in any Engineering
Report is true, complete or accurate;
(ii) be bound to account to any Bank for any sum or the profit
element of any sum received by it for its own account;
(iii) be bound to disclose to any other person any information
relating to the Borrower if such disclosure would or might in
its opinion constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person; or
(iv) be under any obligations other than those for which express
provision is made herein.
39.5 Each Bank shall, from time to time on demand by any Agent, indemnify
such Agent, in the proportion its share of the Loan (or, if no Advances have
been made, its Available Commitment) bears to the amount of the Loan (or, if no
Advances have been made, the Available Facility) at the time of such demand (or,
if the Loan has then been repaid in full, immediately prior to the final
repayment thereof), against any and all costs, claims, losses, expenses
(including, without limitation, legal fees) and liabilities together with any
VAT thereon which such Agent may incur, otherwise than by reason of its own
gross
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negligence or wilful misconduct, in acting in its capacity as agent under
the Financing Agreements or otherwise in performance of its obligations
thereunder.
39.6 None of the Agents, the Arranger or the Co-Arrangers accepts any
responsibility for the accuracy and/or completeness of the Information
Memorandum or any other information supplied by the Borrower, UTPH or any of its
subsidiaries in connection with the Financing Agreements or for the legality,
validity, effectiveness, adequacy or enforceability of any Financing Agreements
or the Project Agreements and none of the Agents, the Arranger or the
Co-Arrangers shall be under any liability as a result of taking or omitting to
take any action in relation to any such agreement or document, save in the case
of gross negligence or wilful misconduct.
39.7 Each of the Finance Parties agrees that it will not assert or seek to
assert against any director, officer or employee of any of the Agents, the
Arranger or the Co-Arrangers any claim it might have against any of them in
respect of the matters referred to in Clause 39.6.
39.8 Each of the Agents, the Arranger and the Co-Arrangers may accept
deposits from, lend money to and generally engage in any kind of banking or
other business with the Borrower or the Sponsor.
39.9 Any Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior written
notice to that effect to each of the other parties hereto Provided that no such
resignation shall be effective until a successor for such Agent is appointed in
accordance with the succeeding provisions of this Clause 39.
39.10 If any Agent gives notice of its resignation pursuant to Clause 39.9,
then any reputable and experienced bank or other financial institution may be
appointed as a successor to such Agent by an Instructing Group during the period
of such notice but, if no such successor is so appointed, such Agent may appoint
such a successor itself Provided that prior to the appointment of any successor
Agent the Borrower shall have given its prior written consent (such consent not
to be unreasonably withheld or delayed) and the Borrower shall be deemed to have
given such consent if the Borrower shall not have responded in the affirmative
or in the negative to any request for such consent made in writing within 10
days of such request being made to it and Provided Further that no such consent
of the Borrower shall be required if an Event of Default shall have occurred.
39.11 If a successor to an Agent is appointed under the provisions of Clause
39.10, then:
(i) if such Agent is also the Account Bank any amounts standing to
the credit of the Project Accounts shall be transferred to the
accounts in the name of the Borrower opened on the books of
the successor Agent at its principal office in London pursuant
to Clause 34.1(iii) of this Agreement;
(ii) such Agent shall cease to be a party hereto as Facility Agent
and shall cease to have any obligation hereunder in such
capacity (but without prejudice to any accrued liabilities
under this Agreement and its obligations under Clause 45) (but
shall remain entitled to the benefit of the provisions of this
Clause 39); and
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(iii) the successor Agent and each of the other parties hereto shall
have the same rights and obligations amongst themselves as
they would have had if such successor Agent had been a party
hereto as such Agent.
39.12 It is understood and agreed by each Finance Party that it has itself
been, and will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition, creditworthiness,
condition, affairs, status and nature of the Borrower and the Sponsor and,
accordingly, each Finance Party warrants to each of the Agents, the Arranger and
the Co-Arrangers that it has not relied on and will not hereafter rely on any of
the Agents, the Arranger or the Co-Arrangers:
(i) to check or enquire on its behalf into the adequacy, accuracy
or completeness of any information provided by the Borrower,
UTPH or any of its subsidiaries in connection with any of the
Financing Agreements or the Project Agreements or the
transactions therein contemplated (whether or not such
information has been or is hereafter circulated to such
Finance Party by any Agent, the Arranger or the Co-Arrangers);
or
(ii) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or
nature of the Borrower, the Sponsor or the Project.
39.13 In acting as agent under the Financing Agreements, the agency division
of each Agent shall be treated as a separate entity from any other divisions of
such Agent and from its subsidiaries, its holding company and its holding
company's other subsidiaries (together, the "AGENT'S AFFILIATES") and, without
detracting from the generality of the foregoing, in the event that any of such
Agent's divisions or any of such Agent's affiliates should act for the Borrower
in any capacity whether as bankers or otherwise in relation to any other matter,
such Agent shall as between itself, the other Agents, the Arranger, the
Co-Arrangers and the Finance Parties not be obliged to disclose any information
given by the Borrower to any of such divisions or to any of such Agent's
affiliates.
40. THE FACILITY AGENT AS TRUSTEE
40.1 The Facility Agent hereby declares that it holds and shall hold (i) all
rights, titles and interests that may now or hereafter be mortgaged, charged,
assigned or otherwise secured in favour of the Facility Agent by or pursuant to
the Financing Agreements, (ii) the benefit of all representations, covenants,
guarantees, indemnities and other contractual provisions given in favour of the
Facility Agent (other than any such benefits given to the Facility Agent solely
for its own benefit) by or pursuant to the Financing Agreements (other than this
Agreement) and (iii) all proceeds of the security referred to in (i) above and
of the enforcement of the benefits referred to in (ii) above on trust for itself
and the other Beneficiaries from time to time. Such declaration shall remain
valid notwithstanding that the Facility Agent may on the date hereof or at any
other time be the sole Beneficiary; for the avoidance of doubt, however, such
declaration shall, in such case, be deemed repeated on each date on which the
Facility Agent ceases to be the sole Beneficiary. Each of the parties hereto
agrees that the obligations, rights and benefits vested or to be vested in the
Facility Agent as trustee as aforesaid by the Financing Agreements or any
document entered into pursuant thereto shall (as well before as after
enforcement) be performed and (as the case may be) exercised by the Facility
Agent in accordance with the provisions of this Part 14.
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40.2 The Facility Agent shall have all the powers and discretions conferred
upon trustees by the Trustee Act 1925 (to the extent not inconsistent herewith)
and by way of supplement it is expressly declared as follows:
(i) the Facility Agent shall be at liberty to place any of the
Financing Agreements and any other instruments, documents or
deeds delivered to it pursuant thereto or in connection
therewith for the time being in its possession in any safe
deposit, safe or receptacle selected by the Facility Agent or
with any bank, any company whose business includes undertaking
the safe custody of documents or any firm of lawyers of good
repute;
(ii) the Facility Agent may, whenever it thinks fit, delegate by
power of attorney or otherwise to any person or persons or
fluctuating body of persons (being, in the opinion of the
Facility Agent, competent and experienced in such matters and,
except in the case of employees of the Facility Agent or any
affiliate of the Facility Agent, approved by an Instructing
Group) all or any of the rights, trusts, powers, authorities
and discretions vested in it by any of the Financing
Agreements and such delegation may be made upon such terms and
subject to such conditions (including the power to
sub-delegate) and subject to such regulations as the Facility
Agent may think fit and the Facility Agent shall not be bound
to supervise, or be in any way responsible for any loss
incurred by reason of any misconduct or default on the part
of, any such delegate (or sub-delegate) Provided that such
delegate shall only be liable for such loss in the case of
gross negligence or wilful misconduct;
(iii) notwithstanding anything else herein contained, the Facility
Agent may refrain from doing anything which would or might in
its opinion be contrary to any law of any jurisdiction or any
directive or regulation of any agency of any state or which
would or might otherwise render it liable to any person and
may do anything which is, in its opinion, necessary to comply
with any such law, directive or regulation;
(iv) save in the case of gross negligence or wilful misconduct, the
Facility Agent and every attorney, agent, delegate,
sub-delegate and any other person appointed by any of them
under any of the Financing Agreements may indemnify itself or
himself out of the security held by the Facility Agent against
all liabilities, costs, fees, charges, losses and expenses
incurred by any of them as permitted by this Agreement in
relation to or arising out of the taking or holding of any of
the security constituted by, or any of the benefits provided
by, any of the Financing Agreements in the exercise or
purported exercise of the rights, trusts, powers and
discretions vested in any of them or in respect of any other
matter or thing done or omitted to be done in any way relating
to any of the Financing Agreements or pursuant to any law or
regulation; and
(v) without prejudice to the provisions of any of the Financing
Agreements, the Facility Agent shall not be under any
obligation to insure any property or to require any other
person to maintain any such insurance and shall not be
responsible for any loss which may be suffered by any person
as a result of the lack of or inadequacy or insufficiency of
any such insurance.
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40.3 The Facility Agent shall not be liable for any failure (save in the
case of gross negligence or wilful default):
(i) to require the deposit with it of any deed or document
certifying, representing or constituting the title of the
Borrower to any of the property mortgaged, charged, assigned
or otherwise encumbered by or pursuant to any of the Financing
Agreements;
(ii) to obtain any licence, consent or other authority for the
execution, delivery, validity, legality, adequacy,
performance, enforceability or admissibility in evidence of
any of the Financing Agreements;
(iii) to register or notify any deed or document mentioned at (i) or
(ii) above in accordance with the provisions of any of the
documents of title of the Borrower;
(iv) to effect or procure registration of or otherwise protect any
of the security created by any of the Financing Agreements by
registering the same under the Land Registration Act 1925 or
any other applicable registration laws in any territory or
otherwise by registering any notice, caution or other entry
prescribed by or pursuant to the provisions of the said Act or
laws;
(v) to take or to require the Borrower to take any steps to render
the security (including, without limitation, any floating
charge) created or purported to be created by or pursuant to
any of the Financing Agreements effective or to secure the
creation of any ancillary charge under the laws of any
jurisdiction; or
(vi) to require any further assurances in relation to any of the
Financing Agreements.
40.4 The Facility Agent may accept without enquiry, requisition or objection
such right and title as the Borrower may have to the property belonging (or
purportedly belonging) to it (or any part thereof) which is the subject matter
of any of the Financing Agreements and shall not be bound or concerned to
investigate or make any enquiry into the right or title of the Borrower to such
property (or any part thereof) or, without prejudice to the foregoing, to
require the Borrower to remedy any defect in the Borrower's right or title as
aforesaid.
40.5 The perpetuity period under the rule against perpetuities if applicable
to the trusts constituted in this Part 14 and the other Financing Agreements
shall be the period of eighty years from the date of this Agreement and, subject
thereto, if the Facility Agent determines that all of the obligations of the
Borrower under any of the Financing Agreements have been fully and
unconditionally discharged, such trusts shall be wound up.
40.6 Notwithstanding any other provisions of this Agreement or any duty or
obligation owed by the Facility Agent (whether as trustee, agent or otherwise)
to any person, the Facility Agent shall act on the directions of an Instructing
Group (and in accordance with such directions) in determining the manner and the
extent of enforcement to be adopted (if any) of the security created by or
pursuant to the Security Documents (or any of them) over any person's right,
title and/or interest therein or arising therefrom and
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shall, if directed so to do by an Instructing Group, discharge all or such part
of such security. The other Finance Parties expressly acknowledge and consent to
the provisions of the immediately preceding sentence.
41. THE ACCOUNT BANK
41.1 It is hereby agreed that the Account Bank is party hereto for the
purpose of performing the functions expressly mentioned in Part 12 and that the
Account Bank is not, and shall not be construed to be, the agent or trustee of
any other party hereto.
41.2 The Account Bank may:
(i) engage and pay for the advice or services of any lawyers,
accountants or other experts whose advice or services may to
it seem necessary, expedient or desirable and rely upon any
advice so obtained;
(ii) rely upon any communication or document believed by it to be
genuine; and
(iii) assume that no Event of Default or Potential Event of Default
has occurred, unless it has actual notice to the contrary.
41.3 Notwithstanding anything to the contrary expressed or implied herein,
the Account Bank shall not:
(i) be bound to enquire as to the occurrence or otherwise of any
Event of Default or Potential Event of Default;
(ii) be bound to exercise any right, power or discretion vested in
the Account Bank under any of the Financing Agreements;
(iii) be bound to account to any other party hereto for any sum or
the profit element of any sum received by it for its own
account;
(iv) be bound to disclose to any other person any information
relating to any person if such disclosure would or might in
its opinion constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person; or
(v) be under any fiduciary duty towards any other party hereto or
under any obligation other than those for which express
provision is made herein.
41.4 Each Bank shall, from time to time on demand by the Facility Agent,
indemnify the Account Bank, in the proportion its share of the Loan (or, if no
Advances have been made, its Available Commitment) bears to the amount of the
Loan (or, if no Advances have been made, the Available Facility) at the time of
such demand (or, if the Loan has then been repaid in full, immediately prior to
the final repayment thereof), against any and all costs, claims, losses,
expenses (including, without
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limitation, legal fees) and liabilities together with any VAT thereon which the
Account Bank may incur, otherwise than by reason of its own gross negligence or
wilful misconduct, in acting in its capacity as Account Bank hereunder or
otherwise in the performance of its obligations hereunder.
41.5 The Account Bank does not accept any responsibility for the accuracy
and/or other completeness of the Information Memorandum or any other information
supplied by the Borrower in connection herewith or the legality, validity,
effectiveness, adequacy or enforceability of any Financing Agreements and the
Account Bank shall not be under any liability as a result of taking or omitting
to take any action in relation to any such agreement or document, save in the
case of gross negligence or wilful misconduct.
41.6 Each of the Finance Parties agrees that it will not assert or seek to
assert against any director, officer or employee of the Account Bank any claim
it might have against the Account Bank in respect of the matters referred to in
Clause 41.5.
41.7 The Account Bank may accept deposits from, lend money to and generally
engage in any kind of banking or other business with the Borrower or the
Sponsor.
41.8 The Account Bank may, after such consultation with the Borrower as is
practicable in the circumstances, notify the Facility Agent and the Borrower in
writing that it wishes to cease to be a party hereto as Account Bank (a
"CESSATION NOTICE"). Upon receipt of a cessation notice the Facility Agent shall
in consultation with an Instructing Group nominate with the consent of the
Borrower (such consent not to be unreasonably withheld or delayed) a Bank as a
successor to the Account Bank (a "SUCCESSOR ACCOUNT BANK"). If no such
nomination is made by an Instructing Group before the date specified in the
cessation notice as being the date on which the Account Bank wishes to cease to
be a party hereto (the "CESSATION DATE") (which such date shall be a business
day falling not less than thirty days after the date of delivery of the
cessation notice to the Facility Agent) then the Account Bank may nominate such
a successor Account Bank itself Provided that prior to the appointment of any
successor Account Bank the Borrower shall have given its prior written consent
(such consent not to be unreasonably withheld or delayed) and such consent shall
be deemed to have been given if the Borrower shall not have responded in the
affirmative or in the negative to any request for such consent made in writing
within 10 days of such request being made to it and Provided Further that no
such consent of the Borrower shall be required if an Event of Default shall have
occurred.
41.9 If a successor Account Bank is nominated under the provisions of Clause
41.8, then on the cessation date:
(i) the amount standing to the credit of the Proceeds Account and
the Insurance Account and the VAT Account together with any
interest attributable thereto shall be transferred to accounts
denominated in sterling (and, in the case of the Proceeds
Account, with a sub-account denominated in dollars) in the
name of the Borrower opened on the books of the successor
Account Bank at its principal office in London designated
(respectively) the Proceeds Account, Insurance Account and VAT
Account;
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(ii) the Account Bank shall cease to be party hereto as Account
Bank and shall cease to have any obligation hereunder in such
capacity (but shall remain entitled to the benefit of the
provisions of this Clause 41); and
(iii) the successor Account Bank and each of the other parties
hereto shall have the same rights and obligations amongst
themselves as they would have had if such successor Account
Bank had been a party hereto as Account Bank.
41.10 It is understood and agreed by each Finance Party that it has itself
been, and will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition, creditworthiness,
condition, affairs, status and nature of the Borrower and the Sponsor and,
accordingly, each Finance Party warrants to the Account Bank that it has not
relied on and will not hereafter rely on the Account Bank:
(i) to check or enquire on its behalf into the adequacy, accuracy
or completeness of any information provided by the Borrower,
UTPH or any of its subsidiaries in connection with any of the
Financing Agreements or the transactions therein contemplated
(whether or not such information has been, or is hereafter,
circulated to such Finance Party by the Account Bank); or
(ii) to assess or keep under review on its behalf the financial
condition, creditworthiness, condition, affairs, status or
nature of the Borrower, the Sponsor or the Project.
42. THE TECHNICAL AGENTS
It is hereby agreed that the Technical Agents are parties hereto for
the purposes of performing the functions expressly mentioned herein and that
neither of the Technical Agents shall, nor shall they be construed to be, the
agent or trustee of any other party hereto.
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<PAGE> 122
PART 15
ASSIGNMENTS AND TRANSFERS
43. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each party
hereto and its or any subsequent successors, Transferees and assigns.
44. ASSIGNMENTS AND TRANSFERS BY THE BORROWER
The Borrower shall not be entitled to assign or transfer all or any of its
rights, benefits and obligations hereunder.
45. ASSIGNMENTS AND TRANSFERS BY BANKS
45.1 Any Bank may, at any time, assign all or any of its rights and benefits
hereunder as a Bank or transfer in accordance with Clause 45.3 all or any of its
rights, benefits and obligations hereunder as a Bank Provided that:
(i) (save in the case of an assignment or transfer of rights and
benefits to (a) any subsidiary or holding company, or to any
subsidiary of any holding company, of such Bank or (b) any
other Bank) no such assignment or transfer may be made without
the prior written consent of the Borrower, such consent not to
be unreasonably withheld or delayed and Provided further that
the requirements of this paragraph (i) shall not be required
to be satisfied in respect of a transfer made at any time
after the Facility Agent has made a declaration pursuant to
Clause 28.1 (a) and/or (b) and the security (or any part
thereof) created by or pursuant to the Security Documents (or
any of them) is being enforced;
(ii) the assignee or transferee is a Section 349 Bank or a Double
Taxation Treaty Bank;
(iii) the aggregate of the Bank's Available Commitment and portion
of the Loan so transferred or assigned must be at least
pound sterling 10,000,000 or, in respect of any assignment or
transfer which is to take effect after the Project Completion
Date, at least pound sterling 5,000,000; and
(iv) the consent of the Secretary of State has been received in
respect of such assignment or transfer pursuant to Clause 3 of
the Government Consent Agreement.
45.2 If any Bank assigns all or any of its rights and benefits hereunder in
accordance with Clause 45.1, then, unless and until the assignee has agreed with
each of the Beneficiaries that it shall be under the same obligations towards
each of them as it would have been under if it had been an original party hereto
as a Bank, each of the Beneficiaries shall not be obliged to recognise such
assignee as having the rights against each of them which it would have had if it
had been such a party hereto.
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<PAGE> 123
45.3 If any Bank wishes to transfer all or any of its rights, benefits
and/or obligations hereunder as permitted by Clause 45.1, then such transfer may
be effected by the delivery to the Facility Agent of a duly completed and duly
executed Transfer Certificate in which event, on the later of the Transfer Date
specified in such Transfer Certificate and the fifth business day after (or such
earlier business day endorsed by the Facility Agent on such Transfer Certificate
falling on or after) the date of delivery of such Transfer Certificate to the
Facility Agent:
(i) to the extent that in such Transfer Certificate the Bank party
thereto seeks to transfer its rights, benefits and obligations
hereunder, the Borrower and such Bank shall be released from
further obligations towards one another hereunder and their
respective rights against one another shall be cancelled (such
rights, benefits and obligations being referred to in this
Clause 45.3 as "DISCHARGED RIGHTS AND OBLIGATIONS");
(ii) the Borrower and the Transferee party thereto shall assume
obligations towards one another and/or acquire rights against
one another which differ from such discharged rights and
obligations only insofar as the Borrower and such Transferee
have assumed and/or acquired the same in place of the Borrower
and such Bank; and
(iii) the Transferee and the other Beneficiaries shall acquire the
same rights and benefits and assume the same obligations
between themselves as they would have acquired and assumed had
such Transferee been an original party hereto as a Bank with
the rights, benefits and/or obligations acquired or assumed by
it as a result of such transfer.
45.4 On the date upon which a transfer takes effect pursuant to Clause 45.3,
the Transferee in respect of such transfer shall pay to the Facility Agent,
jointly for its own account and the account of the Funding Agent, a transfer fee
of pound sterling 1000. If any Transferee fails to pay any transfer fee payable
by it hereunder on the due date therefor, the Facility Agent may at any time
deduct an amount equal to such fee from any moneys from time to time held by
the Facility Agent for account of such Transferee.
46. DISCLOSURE OF INFORMATION
46.1 Any information ("CONFIDENTIAL INFORMATION") disclosed by the Borrower
to any of the Beneficiaries in connection with any of the Financing Agreements
shall be kept confidential by each person to whom such information is disclosed
(each a "RECIPIENT") Provided that:
(i) each recipient shall be entitled to disclose such Confidential
Information:
(a) pursuant to any law or regulation having the force of
law;
(b) to any banking or other regulatory or examining
authorities (whether governmental or otherwise) with
whose instructions the recipient and other banks are
accustomed to comply, upon furnishing a copy of this
Clause 46 to any such authority;
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<PAGE> 124
(c) to any subsidiary, holding company or subsidiary of a
holding company of such recipient or to such
recipient's professional advisors in each case, upon
giving the Borrower advance notice of the proposed
disclosures; or
(d) to the extent that the same has become generally
available to the public, through no act or omission
of the recipient.
46.2 Each recipient acknowledges and agrees that the Confidential
Information shall be held strictly confidential for the period from the date
hereof until 5 years following the date of termination of the Unit Operating
Agreement.
46.3 The provisions of Clause 46.1 and 46.2 shall inure to the benefit of
the Borrower and each other party to any contracts constituting Confidential
Information (including, without limitation, the other Britannia Coventurers, BP
Exploration Operating Company Limited and the buyers under the Gas Sales
Agreements).
46.4 Notwithstanding Clauses 46.1 or 46.2, any Bank may, at any time,
disclose to any actual or potential assignee or transferee or any other person
who may otherwise enter into contractual relations with such Bank in relation to
this Agreement, the Information Memorandum, the Financing Agreements, the
Project Agreements, the Development Plan relating to the Britannia Field, any
notices delivered pursuant hereto or thereto and details of the amounts
outstanding hereunder or any other Confidential Information Provided that such
actual or potential assignee, transferee or such other person has given a
written undertaking to the Borrower in the form, mutatis mutandis of Clauses
46.1, 46.2 and 46.3.
- 119 -
<PAGE> 125
PART 16
MISCELLANEOUS
47. CALCULATIONS AND EVIDENCE OF DEBT
47.1 Interest and commitment commission shall accrue from day to day and
shall be calculated on the basis of a year of 365 days (or, if market practice
differs, in accordance with market practice) and the actual number of days
elapsed.
47.2 If on any occasion a Reference Bank or Bank fails to supply the Funding
Agent with a quotation required of it under the provisions of this Agreement,
the rate for which such quotation was required shall be determined from those
quotations which are supplied to the Funding Agent.
47.3 Each Bank shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it hereunder.
47.4 The Funding Agent shall maintain on its books a control account or
accounts in which shall be recorded (i) the amount of any Advance made or
arising hereunder and each Bank's share therein, (ii) the amount of all
principal, interest and other sums due or to become due from the Borrower to any
of the Banks hereunder and each Bank's share therein and (iii) the amount of any
sum received or recovered by the Funding Agent hereunder and each Bank's share
therein. The Funding Agent shall from time to time promptly upon request of the
Facility Agent provide it with details of such account or accounts.
47.5 In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to Clauses
47.3 and 47.4 (in the absence of manifest error) shall be prima facie evidence
of the existence and amounts of the obligations of the Borrower therein
recorded.
47.6 A certificate of a Bank as to (i) the amount by which a sum payable to
it hereunder is to be increased under Clause 12.1 or (ii) the amount for the
time being required to indemnify it against any such cost, payment or liability
as is mentioned in Clause 12.2 or 14.1 shall, in the absence of manifest error,
be prima facie evidence for the purposes of this Agreement and in any legal
action or proceeding arising out of or in connection with this Agreement.
48. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Beneficiaries or any of them, any right or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right or remedy
prevent any further or other exercise thereof or the exercise of any other right
or remedy. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
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<PAGE> 126
49. PARTIAL INVALIDITY
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
50. AMENDMENTS
50.1 With the prior written consent of an Instructing Group, the Facility
Agent (on behalf of the Beneficiaries and for itself) and the Borrower may from
time to time enter into written amendments, supplements or modifications to the
Financing Agreements (other than any Hedging Agreement) and the Facility Agent
(on behalf of the Beneficiaries and for itself) may execute and deliver to the
Borrower a written instrument waiving prospectively or retrospectively, on such
terms and conditions as may be specified in such instrument, any Potential Event
of Default, Event of Default, breach of any provision or other requirements of
the Financing Agreements (other than any Hedging Agreement) Provided, however,
that:
(i) no such waiver and no such amendment, supplement or
modification shall without the prior consent of all the Banks:
(a) amend or modify the definitions of Event of Default,
Final Maturity Date, Instructing Group, Potential
Event of Default, Repayment Date, encumbrance or
indebtedness or amend the schedule of Repayment
Dates;
(b) amend, modify or waive any provision which requires
the consent or approval of all the Banks or any of
the provisions of this Clause 50;
(c) have the effect of changing the amount of the
Facility or any Bank's Available Commitment or the
principal amount or currency of any Advance or any
Bank's share thereof;
(d) have the effect of decreasing the amount of, or
changing the currency of or extending the date for
any payment of interest, fees or any other amount
payable to all or any of the Beneficiaries hereunder;
or
(e) (save as otherwise provided herein or therein)
release the benefit of any security constituted by or
pursuant to any of the Security Documents; and
(ii) notwithstanding any other provision hereof, none of the
Agents, the Arrangers, the Co-Arrangers or the Account Bank
shall be obliged to agree to any such waiver, amendment,
supplement or modification if the same would:
(a) amend, modify or waive any provision of this Clause
50; or
- 121 -
<PAGE> 127
(b) otherwise amend, modify or waive any of such person's
rights hereunder or subject any such person to any
additional obligations hereunder.
50.2 If the Borrower requests any amendment, supplement, modification or
waiver in accordance with Clause 50.1, then the Borrower shall, from time to
time on demand of the Facility Agent, reimburse the Facility Agent for all
reasonable costs and expenses (including, without limitation, legal fees)
together with any VAT thereon incurred by the Facility Agent in the negotiation,
preparation and execution of any written instrument contemplated by Clause 50.1.
51. NOTICES
51.1 Each communication to be made hereunder shall be made in writing but
unless otherwise stated, may be made in writing by facsimile, telex, Society for
Worldwide Interbank Financial Communications ("SWIFT") (if available) or letter
save in the case of any Notice of Drawdown or any communication by any Bank
regarding the manner in which payments are to be made hereunder which must be
made by telex or facsimile.
51.2 Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless that other person has specified
another address by written notice to the Facility Agent fifteen days prior to
the date of the communication) be made or delivered to that other person at the
address, telex or facsimile number identified with its signature below (or, in
the case of a Transferee, at the end of the Transfer Certificate to which it is
a party as Transferee) and shall be deemed to have been made or delivered (a) if
sent by telex or facsimile at the time of despatch (if despatched between 9.00
a.m. and 5.00 p.m (local time in the place to which it is sent) on a working day
in that place, when sent, or if sent by telex or facsimile at any other time, at
9.00 a.m. (local time in the place to which it is sent) on the next working day
in that place) provided that, in the case of facsimile, the person sending the
facsimile shall have received a transmission receipt and a hard copy of such
facsimile shall be sent on the same day to the party to whom such notice was
sent (but failure to send or receive any such hard copy shall not prejudice any
such deemed making or delivery) and, in the case of telex, the person sending
the telex shall have received the correct answerback at the beginning and end of
the transmission, (b) in the case of communications by SWIFT, when despatched
and an acknowledgement of receipt by SWIFT received, (c) if sent by recorded
delivery, at the recorded time of delivery or (d) in the case of any other
communication made by letter, when left at that address or (as the case may be)
five days after being deposited in the post postage prepaid in an envelope
addressed to it at that address Provided that any communication or document to
be made or delivered to the Facility Agent shall be effective only when received
by the Facility Agent and then only if the same is expressly marked for the
attention of the department or officer identified with the Facility Agent's
signature below (or such other department or officer as the Facility Agent shall
from time to time specify for this purpose).
51.3 Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the English language or
accompanied by a translation thereof into English certified (by an officer of
the person making or delivering the same) as being a true and accurate
translation thereof. In the event of dispute, the English language version shall
prevail.
- 122 -
<PAGE> 128
52. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts each of which, when executed and
delivered, shall constitute an original, but all the counterparts shall together
constitute but one and the same instrument.
- 123 -
<PAGE> 129
PART 17
LAW
53. LAW
This Agreement shall be governed by, and shall be construed in accordance with,
English law.
54. JURISDICTION
54.1 Each of the parties agrees for the benefit of each of the Beneficiaries
that the courts of England shall have jurisdiction to hear and determine any
suit, action or proceeding, and to settle any disputes, which may arise out of
or in connection with this Agreement and, for such purposes, irrevocably submits
to the jurisdiction of such courts.
54.2 Each of the parties irrevocably waives any objection which it might now
or hereafter have to the courts referred to in Clause 54.1 being nominated as
the forum to hear and determine any suit, action or proceeding, and to settle
any disputes, which may arise out of or in connection with this Agreement and
agrees not to claim that any such court is not a convenient or appropriate
forum.
54.3 The submission to the jurisdiction of the courts referred to in Clause
54.1 shall not (and shall not be construed so as to) limit the right of any of
the parties hereto to take proceedings against any other party in any other
court of competent jurisdiction nor shall the taking of proceedings in any one
or more jurisdictions preclude the taking of proceedings in any other
jurisdiction, whether concurrently or not.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
- 124 -
<PAGE> 130
SCHEDULES
The following schedules to the Facility Agreement, included in pages 125 to 157,
have been omitted, but will be furnished upon request:
The First Schedule: List of Banks and Commitments
- ------------------
The Second Schedule: Form of Transfer Certificate
- -------------------
The Third Schedule: List of Condition Precedent Documents
- ------------------
The Fourth Schedule: Form of Notice of Drawdown
- -------------------
The Fifth Schedule: Repayment Schedule
- ------------------
The Sixth Schedule: List of Project Agreements
- ------------------
The Seventh Schedule: List of Project Completion Tests
- --------------------
The Eighth Schedule: Insurance
- -------------------
The Ninth Schedule: Formula for Associated Costs Rate
- ------------------
The Tenth Schedule: The Original Banking Case
- ------------------
The Eleventh Schedule: Schedule of Minimum Volumes
- ---------------------
<PAGE> 131
THE BORROWER
UNION TEXAS BRITANNIA LIMITED
By: R.A. HALSON
Address: 5th Floor
Bowater House
68/114 Knightsbridge
London SW1X 7LR
Attention: The Managing Director
Telex: 22160
Fax: 0171 584 7785
THE ARRANGER
CHEMICAL BANK
By: KAREN SIMON
Address: 125 London Wall
London EC2Y 5AJ
Attention: Karen Simon/Matthew Rigas
Telex: 94060000 CBC G
Fax: 0171-777 4749
THE CO-ARRANGERS
NATIONSBANK, N.A. (CAROLINAS)
By: ASAD ZAFAR
Address: New Broad Street House
35 New Broad Street
London EC2M 1NH
Attention: Patrick Delaney/Asad Zafar
Telex: 883181 NCNB G
Fax: 0171 628 8692
- 158 -
<PAGE> 132
NATIONAL WESTMINSTER BANK PLC
By: D.R. PARKER
Address: 135 Bishopsgate
London EC2M 3UR
Attention: David Walton
Telex: 882121
Fax: 0171 375 5820
THE FACILITY AGENT
NATIONSBANK, N.A. (CAROLINAS)
By: ASAD ZAFAR
Address: New Broad Street House
35 New Broad Street
London EC2M 1NH
Attention: Patrick Delaney/Asad Zafar
Telex: 883181 NCNB G
Fax: 0171 628 8692
THE TECHNICAL AGENTS
NATIONSBANK, N.A. (CAROLINAS)
By: ASAD ZAFAR
Address: New Broad Street House
35 New Broad Street
London EC2M 1NH
Attention: Patrick Delaney/Asad Zafar
Telex: 883181 NCNB G
Fax: 0171 628 8692
- 159 -
<PAGE> 133
CHEMICAL BANK
By: KAREN SIMON
Address: 125 London Wall
London EC2Y 5AJ
Attention: Karen Simon/Matthew Rigas
Telex: 94060000 CBC G
Fax: 0171-777 4749
THE FUNDING AGENT
NATIONAL WESTMINSTER BANK PLC
By: D.R. PARKER
Address: 3rd floor, Juno Court
24 Prescott Street
London E1 8BB
Attention: Neil Burrough
Telex: 922457 Answerback NWMAG G
Fax: 0171 714 6167
THE ACCOUNT BANK
NATIONAL WESTMINSTER BANK PLC
By: D.R. PARKER
Address: 1st floor
180 Brompton Road
London SW3 1HL
Attention: Andrew Norman
Telex: 882121
Fax: 0171 591 4081
- 160 -
<PAGE> 134
THE BANKS
CHEMICAL BANK
By: KAREN SIMON
Address: 125 London Wall
London EC2Y 5AJ
Attention: Karen Simon/Matthew Rigas
Telex: 94060000 CBC G
Fax: 0171-777 4749
NATIONAL WESTMINSTER BANK PLC
By: D.R. PARKER
Address: 135 Bishopsgate
London EC2M 3UR
Attention: David Walton
Telex: 882121
Fax: 0171 375 5820
NATIONSBANK, N.A. (CAROLINAS)
By: ASAD ZAFAR
Address: New Broad Street House
35 New Broad Street
London EC2M 1NH
Attention: Patrick Delaney/Asad Zafar
Telex: 883181 NCNB G
Fax: 0171 628 8692
- 161 -
<PAGE> 135
BANK OF AMERICA NT & SA
By: N.C. STORTON
Address: 1 Alie Street
London E1 8DE
Attention: Pradeep Sharma/Nick Storton
Telex: 888412
Fax: 0171 634 4725
THE BANK OF NOVA SCOTIA
By: RUSSEL C. HAMER
Address: Scotia House
33 Finsbury Square
London EC2A 1BB
Attention: Bill Currie/Russ Hamer
Telex: 885188
Fax: 0171 454 9019
CHRISTIANIA BANK OG, KREDITKASSE, LONDON BRANCH
By: CAROLLA BENEDICTE MOISE
Address: Lloyds Chambers
1 Portsoken Street
London E1 8RU
Attention: Niels Magnussen
Telex: 8812511
Fax: 0171 481 1860
- 162 -
<PAGE> 136
THE LONG-TERM CREDIT BANK OF JAPAN, LTD
By: N.R. SLOAN
Address: 55 Bishopsgate
London EC2N 3AX
Attention: Nick Sloan
Telex: 885305
Fax: 0171 814 9855
SOCIETE GENERALE
By: A.D. JESSOP
Address: Exchange House
Primrose Street
London EC2A 2HT
Attention: Alan Jessop
Telex: 886611
Fax: 0171 638 6504
CITIBANK, N.A.
By: V.M. WILMOT
Address: P.O. Box 199
Cottons Centre
Hays Lane
London SE1 2QT
- 163 -
<PAGE> 137
Attention: Jane Miles
Telex: 896581
Fax: 0171 234 2990
CREDIT LYONNAIS
By: CHRISTINE GALEON
Address: P.O. Box 81
84-94 Queen Victoria Street
London EC4P 4LX
Attention: Christine Galeon
Telex: 885479
Fax: 0171 489 1559
- 164 -
<PAGE> 1
EXHIBIT 10.10
CONFORMED COPY
SPONSOR DIRECT AGREEMENT
between
UNION TEXAS PETROLEUM LIMITED
as sponsor
UNION TEXAS BRITANNIA LIMITED
as borrower
and
NATIONSBANK, N.A. (CAROLINAS)
as facility agent
Clifford Chance
London
<PAGE> 2
CONTENTS
PART 1
INTERPRETATION
<TABLE>
<S> <C>
1. INTERPRETATION .......................................... 2
PART 2
REPRESENTATIONS
2. REPRESENTATIONS ......................................... 3
PART 3
DIRECT OBLIGATIONS
3. BENEFICIAL OWNERSHIP OF THE BORROWER .................... 5
4. UTPL AGREEMENTS ......................................... 5
5. DIVIDENDS, DISTRIBUTIONS AND SUBORDINATED INDEBTEDNESS... 5
6. INSURANCE DISPUTES ...................................... 6
PART 4
SUBORDINATED INDEBTEDNESS
7. SUBORDINATION ........................................... 7
PART 5
MISCELLANEOUS
8. LIMITATION OF LIABILITY ................................. 9
9. TAX .................................................... 9
10. ENFORCEABILITY ......................................... 10
11. PAYMENTS ............................................... 10
12. BENEFIT OF AGREEMENT ................................... 10
13. ASSIGNMENTS AND TRANSFERS BY THE
SPONSOR AND THE BORROWER ................................ 10
14. ASSIGNMENTS AND TRANSFERS BY THE FACILITY AGENT ........ 10
15. REMEDIES AND WAIVERS .................................... 11
16. PARTIAL INVALIDITY ...................................... 11
17. NOTICES ................................................ 11
18. COUNTERPARTS ........................................... 12
</TABLE>
<PAGE> 3
PART 6
LAW
<TABLE>
<S> <C>
19. LAW ................................................... 13
20. JURISDICTION .......................................... 13
</TABLE>
<PAGE> 4
THIS AGREEMENT is made the 26 day of May, 1995
BETWEEN
(1) UNION TEXAS PETROLEUM LIMITED a company incorporated in England and Wales
with company registration number 708552, (the "SPONSOR");
(2) UNION TEXAS BRITANNIA LIMITED a company incorporated in England and Wales
with company registration number 2894635, (the "BORROWER"); and
(3) NATIONSBANK, N.A. (CAROLINAS) (the "FACILITY AGENT").
WHEREAS:
(A) By a facility agreement (the "FACILITY AGREEMENT") of even date herewith
between (1) the Borrower, (2) Chemical Bank as arranger, (3) NationsBank,
N.A. (Carolinas) and National Westminster Bank Plc as co-arrangers, (4)
NationsBank, N.A. (Carolinas) as facility agent, (5) NationsBank, N.A.
(Carolinas) and Chemical Bank as technical agents, (6) National Westminster
Bank Plc as funding agent, (7) National Westminster Bank Plc as account
bank and (8) the financial institutions named therein as banks (the
"BANKS") and as hedge counterparties, the Banks have agreed, upon the terms
and subject to the conditions thereof, to make available to the Borrower a
credit facility up to the maximum principal amount of pound sterling
150,000,000.
(B) By the Facility Agreement, the Facility Agent has agreed, upon the terms
and subject to the conditions thereof, to act as trustee and to hold, inter
alia, the benefit of the obligations undertakings and provisions assumed or
expressed to be assumed and granted by the Sponsor and/or the Borrower by
or pursuant to the terms and conditions of this Agreement on trust for the
Beneficiaries (as defined in the Facility Agreement).
(C) The Sponsor and the Borrower have each agreed to assume the obligations and
undertakings and grant the provisions in favour of the Facility Agent for
the benefit of such Beneficiaries set out herein.
(D) It is a condition to the making of any advance under the Facility Agreement
that the Sponsor and the Borrower enter into this Agreement.
NOW IT IS HEREBY AGREED as follows:
- 1 -
<PAGE> 5
PART I
INTERPRETATION
1. INTERPRETATION
1.1 Terms defined or construed in the Facility Agreement shall, unless
otherwise defined or construed herein, bear the same meaning or construction
herein.
1.2 In this Agreement:
"INDEPENDENT LOSS ADJUSTER" means such independent loss adjuster selected by the
Sponsor from a list of not fewer than three alternatives suggested by the
Facility Agent each of which shall have appropriate experience in the context of
the settlement of claims in respect of physical loss or damage in North Sea
Petroleum developments and shall be able to determine any dispute referred to
him in accordance with Clause 6 without having any interest in the outcome of
such dispute; and
"SUBORDINATED INDEBTEDNESS" means Subordinated Debt and any amount payable to
the Sponsor under the Administrative Services Agreement.
1.3 A reference in this Agreement to a "CLAUSE" or "PART" shall, subject to any
contrary indication, be construed as a reference to a clause, or part, as the
case may be, hereof.
1.4 "POUND" and "STERLING" denote lawful currency of the United Kingdom.
1.5 Save where the contrary is indicated, any reference in this Agreement to:
(i) this Agreement, a Project Agreement, a Financing Agreement, licence,
permission, or any other agreement or document shall be construed as
a reference to this Agreement or, as the case may be, such Project
Agreement, Financing Agreement, licence, permission or other
agreement or document as the same may have been, or may from time to
time be, amended, varied, novated or supplemented;
(ii) a statute shall be construed as a reference to such statute as the
same may have been, or may from time to time be, amended or
re-enacted; and
(iii) a time of day shall be construed as a reference to London time.
1.6 Clause and Part headings are for ease of reference only.
- 2 -
<PAGE> 6
PART 2
REPRESENTATIONS
2. REPRESENTATIONS
2.1 The Sponsor represents that, save as expressly stated in the reservations
to the legal opinion referred to in paragraph 15 of Part 1 of the Third
Schedule to the Facility Agreement:
(i) it is a company duly incorporated under the laws of England with
power to enter into each of the UTPL Agreements and to perform its
obligations thereunder and all corporate and other action required to
authorise its execution of each such UTPL Agreement and its
performance of its obligations thereunder has been duly taken;
(ii) all acts, conditions and things required to be done, fulfilled and
performed in order (a) to enable it lawfully to enter into and
perform and comply with the obligations expressed to be assumed by it
in each of the UTPL Agreements, (b) to ensure that the obligations
expressed to be assumed by it in each such UTPL Agreement to which it
is expressed to be a party are legal, valid and binding and (c) to
make each such UTPL Agreement admissible in evidence in England have
been done, fulfilled and performed;
(iii) under the laws of England in force at the date hereof, the claims of
each of the Beneficiaries against the Sponsor under each of the UTPL
Agreements will rank at least pari passu with the claims of all its
other unsecured creditors save those whose claims are preferred
solely by any bankruptcy, insolvency, liquidation or other similar
laws of general application;
(iv) it is not necessary that any of the UTPL Agreements be filed,
recorded or enrolled with any court or other authority in England or
that any stamp, registration or similar tax be paid on or in relation
to any such agreement; and
(v) the obligations expressed to be assumed by it in each of the UTPL
Agreements are legal and valid obligations binding on it in
accordance with the terms thereof.
2.2 The Sponsor further represents that:
(i) it has not taken any corporate action nor have any other steps been
taken or legal proceedings been started or (to the best of its
knowledge and belief) threatened against the Sponsor for its
winding-up, dissolution, administration or re-organisation (other
than a solvent amalgamation or reorganisation) or for the appointment
of a receiver, administrator, administrative receiver, trustee or
similar officer of it or of any or all of its assets or revenues;
- 3 -
<PAGE> 7
(ii) it is not in breach of or in default under any agreement to which it
is a party or which is binding on it or any of its assets to an
extent or in a manner which has had, or might reasonably be expected
to have, a material adverse effect on the Sponsor's ability to meet
or perform the obligations expressed to be assumed by it pursuant to
any UTPL Agreement;
(iii) no action or administrative proceeding of or before any court or
agency which has had, or might reasonably be expected to have, a
material adverse effect on the Sponsor's ability to meet or perform
the obligations expressed to be assumed by it pursuant to any UTPL
Agreement to which it is expressed to be a party has been started or
(to the best of the Sponsor's knowledge and belief) threatened
against the Sponsor;
(iv) the execution of any of the UTPL Agreements to which it is expressed
to be a party and the performance of its obligations thereunder do
not and will not:
(1) conflict with any agreement, mortgage, bond or other instrument
or treaty to which the Sponsor is a party or which is binding
upon the Sponsor or any of the assets of the Sponsor;
(2) conflict with the Memorandum and Articles of Association of the
Sponsor; or
(3) conflict with any applicable law, regulation or official or
judicial order which judicial order is binding upon the
Sponsor; and
(v) the Sponsor directly or indirectly beneficially owns one hundred per
cent. of the issued share capital of the Borrower.
2.3 The representations contained in this Clause 2 shall be deemed to be
repeated by the Sponsor on the making of each Advance by reference to the facts
and circumstances then existing.
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<PAGE> 8
PART 3
DIRECT OBLIGATIONS
3. BENEFICIAL OWNERSHIP OF THE BORROWER
The Sponsor undertakes and covenants to the Facility Agent for the benefit of
the Beneficiaries that, unless an Instructing Group has otherwise consented in
writing:
(i) the Sponsor will at all times directly or indirectly maintain
beneficial ownership of one hundred per cent. of the equity share
capital of the Borrower; and
(ii) the Sponsor will not create or permit to subsist any encumbrance over
all or any part of its beneficial interest in the equity share
capital of the Borrower and any rights attaching thereto.
4. UTPL AGREEMENTS
4.1 The Sponsor undertakes and covenants to the Facility Agent for the benefit
of the Beneficiaries that unless an Instructing Group has otherwise
consented in writing:
(i) it will duly observe and perform all of the obligations expressed to
be assumed by it in favour of the Borrower under or pursuant to the
UTPL Agreements and if the Sponsor at any time fails to observe or
perform any of its obligations under any of the UTPL Agreements the
Sponsor shall, forthwith upon demand by the Facility Agent, pay to
the Borrower, by crediting the same to the Proceeds Account, by way
of liquidated damages a sum equal to the amount (if any) which the
Borrower would have received from the Sponsor if the Sponsor had not
so failed to comply with any of such obligations; and
(ii) it will not amend, vary, waive, supplement, novate, cancel or
terminate any of the UTPL Agreements nor permit the same.
4.2 The parties hereto agree that the Facility Agent (acting on the
instructions of an Instructing Group) may terminate the appointment of the
Sponsor under the Administrative Services Agreement upon, or at any time after,
the occurrence of any Event of Default (unless such Event of Default has been
waived or remedied and no Events of Default are continuing or outstanding).
4.3 It is hereby agreed that any sum payable pursuant to Clause 4.1(i) is
payable by way of liquidated damages and represents a genuine pre-estimate of
losses and not a penalty.
5. DIVIDENDS, DISTRIBUTIONS AND SUBORDINATED INDEBTEDNESS
The Sponsor agrees with the Facility Agent that unless an Instructing Group has
otherwise consented in writing it will ensure that the Borrower does not pay,
make or declare any dividend or other distribution
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<PAGE> 9
to it (or to UTPH or any subsidiary of UTPH), make any intra-group Loan to the
Sponsor, make any payment under the Administrative Services Agreement or make
any repayment or payment of principal, interest or any other amounts in respect
of Subordinated Debt other than in accordance with, and subject to the terms of,
Clause 34 of the Facility Agreement.
6. INSURANCE DISPUTES
6.1 Promptly after any event occurs in respect of which the Sponsor is obliged
to pay an amount pursuant to Clause 5.5 of the Sponsor Support Agreement, the
Sponsor and the Facility Agent shall negotiate in good faith to try to agree the
amount then payable by the Sponsor under such Clause 5.5. If after 21 days after
the occurrence of such event no agreement has been reached then the matter or
matters in dispute in respect thereof shall be referred by the Facility Agent
to, and determined by, an Independent Loss Adjuster.
6.2 The Independent Loss Adjuster shall be appointed on terms that:
(i) he shall act as an expert and not an arbitrator;
(ii) he shall be required to make a determination on the matter or matters
in dispute within thirty days of the same being referred to him or
such longer period as the Facility Agent and the Sponsor may agree is
necessary and, without prejudice to the provisions of paragraph (i)
above, to state, in reasonable detail, his grounds for his
determination; and
(iii) such determination shall be made taking into account:
(a) that the amount to be determined represents an amount which
would have been payable by underwriters in the worldwide
insurance markets for energy risks in respect of a claim under
a Construction All Risks insurance policy which conforms with
the requirements of Part 9 of the Facility Agreement, Part 2 of
the Eighth Schedule of the Facility Agreement and the
Assignment of Insurances;
(b) that any other terms applicable to such insurance would be
commercial terms customary within the worldwide insurance
markets for energy risks for similar policies to that specified
in Part 2 of the Eighth Schedule to the Facility Agreement; and
(c) (to the extent that the Independent Loss Adjuster considers
them to be relevant) the submissions of the Sponsor, the
Borrower, the Facility Agent and the Banks and such other
information as he may reasonably consider appropriate.
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<PAGE> 10
PART 4
SUBORDINATED INDEBTEDNESS
7. SUBORDINATION
7.1 Subject to Clause 7.5 the Sponsor hereby covenants with the Facility Agent
that, save as an Instructing Group may otherwise agree, the Sponsor shall not
and shall not be entitled to, at any time prior to the Discharge Date:
(i) except as permitted under Clause 34 of the Facility Agreement, demand
or receive any payment in respect of any Subordinated Indebtedness
(whether of principal, interest thereon or otherwise);
(ii) assign, agree to assign or purport to assign any rights which it may
have against the Borrower in respect of any Subordinated Indebtedness
unless the assignee has entered into covenants with the Facility
Agent on the same terms, mutatis mutandis, as are set out in this
Part 4;
(iii) create or permit to subsist any encumbrance in respect of any
Subordinated Indebtedness unless the encumbrancer has entered into
covenants with the Facility Agent on the same terms, mutatis
mutandis, as are set out in this Part 4;
(iv) demand the creation of, or receive the benefit of any encumbrance
over or any guarantee or indemnity in respect of any Subordinated
Indebtedness;
(v) commence any proceedings against the Borrower;
(vi) except as permitted under Clause 34 of the Facility Agreement, take
any action to collect any of the Subordinated Indebtedness
(including, without limitation, the exercise of any right of set-off,
counterclaim or lien);
(vii) take any action or steps with a view to or otherwise in connection
with the winding-up, dissolution, receivership or administration of
the Borrower; or
(viii) otherwise take or omit to take any action whereby the subordination
intended by this Agreement may be impaired.
7.2 Subject to Clause 7.5 the Borrower hereby covenants with the Facility Agent
that, save as an Instructing Group may otherwise agree, it shall not be entitled
to, and shall not, at any time prior to the Discharge Date:
(i) make any payment or repayment of or in respect of any Subordinated
Indebtedness; or
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<PAGE> 11
(ii) otherwise take or omit to take any action whereby the subordination
intended by this Agreement may be impaired.
7.3 The Sponsor hereby covenants with the Facility Agent and the Borrower that,
subject to Clause 7.4:
(i) in the event of it receiving any payment or any other benefit on
account of Subordinated Indebtedness in breach of Clause 7.1 it shall
forthwith notify the Facility Agent of the receipt and forthwith
repay or return any sums or other benefits which shall have been
received by it in consequence of such breach to the Borrower; and
(ii) in the event of any Subordinated Indebtedness being discharged by
set-off in breach of Clause 7.1, it shall forthwith notify the
Facility Agent of the discharge and repay forthwith an amount equal
to the amount of the discharge to the Borrower.
7.4 If,
(i) but for this Clause 7.4, any amount, benefit or distribution would
fall to be repaid or returned to the Borrower pursuant to Clause 7.3
at any time after an Event of Default has occurred; or
(ii) on a winding-up, dissolution, receivership or administration of the
Borrower, a distribution of the Borrower's assets by any liquidator,
receiver or similar officer of the Borrower or any other person
(whether in cash, property or securities) being made to the Sponsor
in respect of its claims in respect of any Subordinated Indebtedness
prior to all amounts owing to the Beneficiaries being paid in full in
accordance with the terms of the Financing Agreements (and for this
purpose any dividends or payments received by any Beneficiary shall
only be taken to discharge the same to the extent of the actual
amount received),
the Sponsor will forthwith notify the Facility Agent of the receipt and
forthwith pay to the Facility Agent any sum so received by it from the Borrower
or, as the case may be, the liquidator, receiver or similar officer of the
Borrower or other person and until such payment the Sponsor will hold such sum
on trust for the Facility Agent, and any such sums so paid to, or held on trust
for, the Facility Agent shall be applied, or pending application held, by the
Facility Agent in accordance with the provisions of the Facility Agreement.
7.5 Notwithstanding the foregoing provisions of this Clause 7, the Borrower
shall be entitled to make, and the Sponsor shall be entitled to receive and
retain payments in reimbursement of or in satisfaction of any indebtedness
incurred by way of Subordinated Indebtedness Provided that such payment is made
in accordance with Clause 34 of the Facility Agreement and Clause 5 of this
Agreement.
7.6 Nothing in this Clause 7 is intended to, nor shall it, constitute or create
an encumbrance over any revenues or assets of the Sponsor or the Borrower.
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<PAGE> 12
PART 5
MISCELLANEOUS
8. LIMITATION OF LIABILITY
8.1 Notwithstanding any provision to the contrary which is contained in any of
the Financing Agreements, neither UTPH nor any of its shareholders,
subsidiaries, officers or directors (other than the Borrower in respect of its
obligations under the Financing Agreements to which it is party, and the Sponsor
in connection with its obligations under the UTPL Agreements) shall be
personally liable to any Beneficiary:
(i) for the payment or repayment of any moneys outstanding under the
Financing Agreements; or
(ii) in any claim for damages or compensation by the Beneficiaries or any
of them on the grounds of an Event of Default, or any other breach or
default of any Financing Agreement, or any representation or warranty
contained in any Financing Agreement not being true and correct.
8.2 The liability of the Sponsor under the UTPL Agreements is limited as
follows:
(i) if the Sponsor breaches any of its obligations or undertakings set
forth in any of the UTPL Agreements, the Sponsor's liability in
respect thereof shall be limited to specific enforcement of such
obligation, recovery of amounts due in respect of any payment
liability or, subject to Clause 4.1(i), recovery of actual, direct
damages resulting therefrom (and expressly excluding any
consequential damages resulting therefrom) by (a) the Borrower in the
case of the Sponsor Support Agreement and the Administrative Services
Agreement (or by the Beneficiaries but only after enforcement of the
security constituted in respect thereof under the Debenture) and (b)
the Beneficiaries in the case of this Agreement; and
(ii) nothing in any of the UTPL Agreements shall be construed as a
guarantee of, or to otherwise oblige the Sponsor to make, any payment
of any principal, interest, fee or other amount owing by the Borrower
under any of the Financing Agreements.
8.3 The obligations and liabilities of the Sponsor, the Borrower and the
Beneficiaries under this Agreement shall cease on the Discharge Date.
9. TAX
9.1 The Borrower and the Sponsor each undertake and covenant to the Facility
Agent for the benefit of the Beneficiaries that the Borrower will not, and the
Sponsor shall ensure that the Borrower will not, without the prior written
consent of the Facility Agent (acting on the instructions of an Instructing
Group) and whether to the Sponsor or to any other person, agree to surrender or
dispose of, nor surrender or
- 9 -
<PAGE> 13
dispose of, any credit, losses, allowances, concessions, discharges or other
relief available to it in respect of tax (being, in this Clause 9.1, a
"SURRENDER OF RELIEF") otherwise than in connection with any settlement with
the Inland Revenue or pursuant to the terms of Clause 4 of the Sponsor Support
Agreement.
9.2 All payments to be made by the Sponsor to the Borrower or the Facility
Agent under or pursuant to this Agreement shall be made free and clear of and
without deduction for or on account of tax unless the Sponsor is required to
make such payment subject to the deduction or withholding of tax, in which case
the sum payable by the Sponsor in respect of which such deduction or withholding
is required to be made shall, subject to Clause 12.4 and 12.5 of the Facility
Agreement, be increased to the extent necessary to ensure that, after the making
of the required deduction or withholding, the Borrower or the Facility Agent, as
the case may be, receives and retains (free from any liability in respect of any
such deduction or withholding) a net sum equal to the sum which it would have
received and so retained had no such deduction or withholding have been made or
required to be made and the Sponsor undertakes and covenants to the Facility
Agent for the benefit of the Beneficiaries to make all such payments.
10. ENFORCEABILITY
Save where expressly stated to the contrary, any representation, undertaking,
covenant or other provision given by the Sponsor or the Borrower hereunder in
favour of the Facility Agent (whether expressed to be in favour of the Agent on
behalf of the Beneficiaries or otherwise) shall be deemed to be given in favour
of the Facility Agent as agent and trustee for the Beneficiaries (as trustee
pursuant to the trusts constituted in Part 14 of the Facility Agreement) and,
subject to the provisions of the Facility Agreement, shall be enforceable by
the Facility Agent or by the Beneficiaries or any of them.
11. PAYMENTS
Save as may be expressly permitted in any UTPL Agreement, all payments required
to be made by either of the Sponsor or the Borrower to any other person under
any of the UTPL Agreements shall be calculated without reference to any set-off
or counterclaim and shall be made free and clear of and without any deduction
for or on account of any set-off or counterclaim.
12. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each party
hereto and its or any subsequent successors, Transferees and assigns.
13. ASSIGNMENTS AND TRANSFERS BY THE SPONSOR AND THE BORROWER
Save for any assignment made by the Borrower by or pursuant to any of the
Security Documents, neither the Sponsor nor the Borrower shall be entitled to
assign or transfer all or any of its rights, benefits and obligations under any
of the UTPL Agreements.
- 10 -
<PAGE> 14
14. ASSIGNMENTS AND TRANSFERS BY THE FACILITY AGENT
The Facility Agent shall be entitled to assign or transfer all or any of its
rights, benefits and obligations hereunder in accordance with Part 14 of the
Facility Agreement.
15. REMEDIES AND WAIVERS
No failure on the part of the Facility Agent or any of the Beneficiaries to
exercise, nor any delay in exercising, any right or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right or remedy prevent any further or other exercise thereof or the exercise
of any other right or remedy. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies provided by law.
16. PARTIAL INVALIDITY
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
17. NOTICES
17.1 Each communication to be made hereunder shall be made in writing but unless
otherwise stated, may be made in writing by facsimile, telex, Society for
Worldwide Interbank Financial Communications ("SWIFT") (if available) or letter.
17.2 Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless that other person has specified
another address by written notice to the Facility Agent fifteen days prior to
the date of the communication) be made or delivered to that other person at the
address, telex or facsimile number identified with its signature set out below
(in the case of the Sponsor) or set out in the signature pages of the Facility
Agreement (in the case of the Facility Agent or the Borrower) and shall be
deemed to have been made or delivered (a) if sent by telex or facsimile at the
time of despatch (if despatched between 9.00 a.m. and 5.00 p.m. (local time in
the place to which it is sent) on a working day in that place, when sent, or if
sent by telex or facsimile at any other time, at 9.00 a.m. (local time in the
place to which it is sent) on the next working day in that place), provided that
in the case of facsimile the person sending the facsimile shall have received a
transmission receipt and a hard copy of such facsimile shall be sent on the same
day to the party to whom such notice was sent (but failure to send or receive
any such hard copy shall not prejudice any such deemed making or delivery), (b)
in the case of communications by SWIFT, when despatched and an acknowledgement
of receipt by SWIFT received, (c) if sent by recorded delivery, at the recorded
time of delivery or (d) in the case of any other communication made by letter,
when left at that address or (as the case may be) five days after being
deposited in the post postage prepaid in an envelope addressed to it at that
address Provided that any communication or document to be made or delivered to
the Facility Agent shall be effective only when received by the Facility Agent
and then only if the same is expressly marked for the attention of the
department or officer identified with the Facility Agent's signature to the
Facility Agreement (or such other department or officer as the Facility Agent
shall from time to time specify for this purpose).
- 11 -
<PAGE> 15
17.3 Each communication and document made or delivered by one party to another
pursuant to this Agreement shall be in the English language or accompanied by a
translation thereof into English certified (by an officer of the person making
or delivering the same) as being a true and accurate translation thereof. In the
event of dispute, the English language version shall prevail.
18. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts each of which, when executed and
delivered, shall constitute an original, but all the counterparts shall
together constitute but one and the same instrument.
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<PAGE> 16
PART 6
LAW
19. LAW
This Agreement shall be governed by, and shall be construed in accordance with,
English law.
20. JURISDICTION
20.1 Each of the parties agrees for the benefit of each of the Beneficiaries
that the courts of England shall have jurisdiction to hear and determine any
suit, action or proceeding, and to settle any disputes, which may arise out of
or in connection with this Agreement and, for such purposes, irrevocably submits
to the jurisdiction of such courts.
20.2 Each of the parties irrevocably waives any objection which it might now or
hereafter have to the courts referred to in Clause 20.1 being nominated as the
forum to hear and determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this Agreement and agrees
not to claim that any such court is not a convenient or appropriate forum.
20.3 The submission to the jurisdiction of the courts referred to in Clause 20.1
shall not (and shall not be construed so as to) limit the right of any of the
parties hereto to take proceedings against the other parties in any other court
of competent jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
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<PAGE> 17
THE SPONSOR
UNION TEXAS PETROLEUM LIMITED
By: R.A. HALSON
Address: 5th Floor
Bowater House
68/114 Knightsbridge
London SW1X 7LR
Telex: 22160
Facsimile: 0171 584 7785
THE BORROWER
UNION TEXAS BRITANNIA LIMITED
By: R.A. HALSON
THE FACILITY AGENT
NATIONSBANK, N.A. (CAROLINAS)
By: ASAD ZAFAR
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<PAGE> 1
EXHIBIT 10.11
CONFORMED COPY
SPONSOR SUPPORT AGREEMENT
between
UNION TEXAS PETROLEUM LIMITED
as sponsor
and
UNION TEXAS BRITANNIA LIMITED
as borrower
Clifford Chance
London
<PAGE> 2
CONTENTS
PART 1
INTERPRETATION
<TABLE>
<S> <C> <C>
1. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PART 2
SUPPORT OBLIGATIONS
2. COST OVERRUNS . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. DIVIDEND CLAWBACK . . . . . . . . . . . . . . . . . . . . . . . . 4
4. TAX SHARING . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. INSURANCE SUPPORT . . . . . . . . . . . . . . . . . . . . . . . . 7
6. REFUNDS OF PAYMENTS OUT OF PROJECT ACCOUNTS . . . . . . . . . . . 8
PART 3
MISCELLANEOUS
7. TAX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
8. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9. BENEFIT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 9
10. ASSIGNMENTS AND TRANSFERS . . . . . . . . . . . . . . . . . . . . 10
11. REMEDIES AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . 10
12. PARTIAL INVALIDITY . . . . . . . . . . . . . . . . . . . . . . . . 10
13. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
14. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PART 4
LAW
15. LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
16. JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 3
THIS AGREEMENT is made the 26 day of May, 1995
BETWEEN
(1) UNION TEXAS PETROLEUM LIMITED a company incorporated in England and
Wales with company registration number 708552, (the "SPONSOR"); and
(2) UNION TEXAS BRITANNIA LIMITED a company incorporated in England and
Wales with company registration number 2894635, (the "BORROWER").
WHEREAS:
(A) By a facility agreement (the "FACILITY AGREEMENT") of even date
herewith between (1) the Borrower, (2) Chemical Bank as arranger, (3)
NationsBank, N.A. (Carolinas) and National Westminster Bank Plc as
co-arrangers, (4) NationsBank, N.A. (Carolinas) as facility agent,
(5) NationsBank, N.A. (Carolinas) and Chemical Bank as technical
agents, (6) National Westminster Bank Plc as funding agent, (7)
National Westminster Bank Plc as account bank and (8) the financial
institutions named therein as banks (the "BANKS") and as hedge
counterparties, the Banks have agreed, upon the terms and subject to
the conditions thereof, to make available to the Borrower a credit
facility up to the maximum principal amount of pound sterling
150,000,000.
(B) It is a condition to the making of any advance under the Facility
Agreement that the Sponsor provide the support to the Borrower on the
terms hereof.
NOW IT IS HEREBY AGREED as follows:
PART 1
INTERPRETATION
1. INTERPRETATION
1.1 Terms defined or construed in the Facility Agreement shall, unless
otherwise defined or construed herein, bear the same meaning or construction
herein.
1.2 In this Agreement:
"ACCOUNTING DATE" shall have the meaning given to it in section 834 of the
Taxes Act;
"ACCOUNTING PERIOD" shall have the meaning given to it in section 834 of the
Taxes Act;
- 1 -
<PAGE> 4
"CAPITAL CONTRIBUTION" means (a) a payment in cash by the Sponsor as
consideration for the issue and allotment to it of ordinary shares at par in
the Borrower or (b) the lending by the Sponsor of an amount to the Borrower by
way of Subordinated Debt;
"COST OVERRUN" means every amount (if any) by which the total amount which the
Borrower is liable to pay in relation to the Project, any part of the Project
Interest or under any Project Agreement and for which the Borrower is entitled
to draw down Advances pursuant to Clause 3.1 of the Facility Agreement
(including, for the avoidance of doubt, Financing Expenses) exceeds the
Facility Amount from time to time;
"DISTRIBUTED AMOUNT" means any amount paid by the Borrower (i) to the Sponsor
or any shareholder of the Borrower in respect of any dividend, distribution or
other amount paid to the Sponsor or any shareholder of the Borrower by the
Borrower in its capacity as shareholder of the Borrower, (ii) in respect of
principal, interest or otherwise in respect of Subordinated Debt or any other
indebtedness of the Borrower to the Sponsor (other than any trade accounts
payable by the Borrower to the Sponsor in the ordinary course of its business
provided that such transactions are entered into on arm's length commercial
terms no less favourable to the Borrower than those which the Borrower could
reasonably have obtained from sources other than the Sponsor), (iii) to the
Sponsor as an intra group loan (excluding any intra group loan funded with the
proceeds of an Advance for general corporate purposes pursuant to Clause
3.2(ii) of the Facility Agreement) or (iv) as fees due to the Sponsor under the
Administrative Services Agreement (other than any fees accrued to the Sponsor
thereunder before the Project Completion Date and paid with the proceeds of an
Advance) Provided that no Sponsor Special Payment shall constitute a
Distributed Amount;
"GROUP RELIEF" means any losses or other amounts eligible for relief from Tax
which may be surrendered by way of group relief in accordance with the
provisions of Chapter IV of Part X of the Taxes Act;
"RELEVANT ACCOUNTING PERIOD" means any Accounting Period of the Borrower during
the period from 1st January 1995 until the Final Discharge Date;
"RELEVANT RELIEF" means every amount of Group Relief which is surrendered by
the Borrower to the Sponsor in any Relevant Accounting Period, which, had it
not been surrendered, would have been available to the Borrower in any
Subsequent Relevant Accounting Period to reduce or eliminate the profits or
income on which it is liable to pay Tax;
"RELEVANT REPAYMENT DATE" is defined in Clause 3.2;
"REPAYMENT EVENT" is defined in Clause 3.2;
"SPONSOR REPAYMENT EVENT MAXIMUM AMOUNT" is defined in Clause 3.2;
"SPONSOR'S PAYMENT" is defined in Clause 3.3;
"SUBSEQUENT RELEVANT ACCOUNTING PERIOD" is defined in Clause 4.3.1;
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<PAGE> 5
"TAX" means corporation tax on income and chargeable gains;
"TAX DIFFERENTIAL AMOUNT" for any Relevant Accounting Period means the amount
of Tax paid or payable by the Borrower during that Relevant Accounting Period
taking into account all tax reliefs utilised and all tax credits received,
which Tax would not have been paid or payable during that Relevant Accounting
Period if Relevant Relief, not previously taken into account in the calculation
of any earlier Tax Differential Amount, had not been surrendered to the
Sponsor; and
"TAXES ACT" means the Income and Corporation Taxes Act 1988.
1.3 A reference in this Agreement to a "CLAUSE" or "PART" shall, subject
to any contrary indication, be construed as a reference to a clause, or part,
as the case may be, hereof.
1.4 "POUND STERLING" and "STERLING" denote lawful currency of the
United Kingdom.
1.5 Save where the contrary is indicated, any reference in this Agreement
to:
(i) this Agreement, a Project Agreement, a Financing Agreement,
licence, permission, or any other agreement or document
shall be construed as a reference to this Agreement or, as
the case may be, such Project Agreement, Financing
Agreement, licence, permission or other agreement or
document as the same may have been, or may from time to time
be, amended, varied, novated or supplemented;
(ii) a statute shall be construed as a reference to such statute
as the same may have been, or may from time to time be,
amended or re-enacted; and
(iii) a time of day shall be construed as a reference to London
time.
1.6 Clause and Part headings are for ease of reference only.
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<PAGE> 6
PART 2
SUPPORT OBLIGATIONS
2. COST OVERRUNS
2.1 The Sponsor agrees with the Borrower that it will make Capital
Contributions to the Borrower from time to time within five business days of
its request to enable it to meet any amount which is a Cost Overrun and which
is due and payable by the Borrower at any time before the Project Completion
Date Provided that:
(i) the Sponsor's maximum aggregate liability under this Clause
2 shall be pound sterling 30,000,000 or, if the Facility
Amount has been reduced pursuant to Clause 2.4 of the
Facility Agreement, such lower amount which is produced by
reducing pound sterling 30,000,000 pro rata to the
reduction in the Facility Amount;
(ii) the Sponsor shall not be obliged to make any payment under
this Clause 2 until such time as the Banks have advanced the
Facility Amount to the Borrower under the Facility
Agreement;
(iii) the Borrower shall apply the amount so paid to it against
any Permitted Expenditure which is a Cost Overrun and is
then due and payable provided that if the tests specified in
Parts 1 through 5 of the Seventh Schedule of the Facility
Agreement (the "TECHNICAL COMPLETION TESTS") have been
satisfied, the Sponsor's obligation to fund Cost Overruns
pursuant to this Clause 2 shall be limited further to any
such Permitted Expenditure described in Part 6 of the
Seventh Schedule to the Facility Agreement that arose, or
relate to events occurring, on or prior to satisfaction of
the Technical Completion Tests; and
(iv) the Sponsor shall not be obliged to make any payment under
this Clause 2 if the Unit Operating Committee has determined
that the Project should be abandoned pursuant to Clause 20.1
of the Unit Operating Agreement.
2.2 Any amount payable by the Sponsor under Clause 2.1 shall be paid
directly to the credit of the Proceeds Account.
3. DIVIDEND CLAWBACK
3.1 If an Event of Default of the type specified in Clause 28.1(i) of the
Facility Agreement has occurred (a "PAYMENT EVENT OF DEFAULT"), the Sponsor
shall immediately pay to the Borrower by crediting the same directly to the
Proceeds Account, an amount equal to all amounts paid by or on behalf of the
Borrower by way of any Distributed Amount (subject to Clause 3.3) on or in
respect of the previous two Repayment Dates to have occurred before the payment
default occurred which became such Payment Event of Default Provided that the
maximum amount payable in respect of such Payment Event
- 4 -
<PAGE> 7
of Default shall be that which would then satisfy the Borrower's then
outstanding obligations to the Beneficiaries.
3.2 If the amount of the Loan to be repaid by the Borrower on any
Repayment Date (the "RELEVANT REPAYMENT DATE") would (but for any payment under
this Clause 3.2) be less than the greatest of the amounts referred to in Clause
10.1(ii)(a), (b) and (c) of the Facility Agreement for the Relevant Repayment
Date (a "REPAYMENT EVENT"), the Sponsor shall immediately pay to the Borrower,
by crediting the same directly to the Proceeds Account, an amount equal to all
amounts paid by or on behalf of the Borrower by way of any Distributed Amount
(subject to Clause 3.3) on or in respect of the previous two Repayment Dates to
have occurred before the Relevant Repayment Date Provided that the maximum
amount payable in respect of such Repayment Event (such maximum amount being
the "SPONSOR REPAYMENT EVENT MAXIMUM AMOUNT") shall be that which would enable
the Borrower to reduce the Loan on the Relevant Repayment Date by an amount
equal to the greatest of the amounts referred to in Clauses 10.1(ii)(a), (b)
and (c) of the Facility Agreement for the Relevant Repayment Date (and, for the
purposes of calculating the amount to be paid pursuant to this Clause 3.2, any
amount referred to in Clause 10.1(i) of the Facility Agreement for the Relevant
Repayment Date shall be deemed to be equal to the greatest of the amounts
referred to in Clause 10.1(ii) thereof).
3.3 If the Sponsor makes any payment under Clause 3.1 or 3.2 (a
"SPONSOR'S PAYMENT"), then the amount of any Distributed Amount paid by the
Borrower and in respect of which such Sponsor's Payment was made shall, for the
purposes of this Clause 3, be deemed to be reduced by the amount of such
Sponsor's Payment Provided that no Distributed Amount paid by the Borrower on
the second of the two previous Repayment Dates before the relevant payment
default or relevant Repayment Event shall be deemed to be reduced hereunder
before the Distributed Amounts paid by the Borrower on the first such previous
Repayment Date have been deemed to have been reduced to zero pursuant hereto.
3.4 Any Sponsor's Payment may be paid as an advance to the Borrower by
way of Subordinated Debt which shall be repayable in accordance with such terms
as may be mutually agreed between the Sponsor and the Borrower subject to
Clause 7 of the Sponsor Direct Agreement.
4. TAX SHARING
4.1 SURRENDER
The Borrower agrees to surrender to the Sponsor by way of Group
Relief, such amount of losses and other amounts eligible for relief from Tax
during a Relevant Accounting Period as the Sponsor may request, up to the
maximum amount so eligible for surrender during such Relevant Accounting
Period. Unless otherwise agreed with the Sponsor, the Borrower will maintain
its Accounting Date as 31 December in each year.
4.2 CONSENT TO SURRENDER
The Borrower will give to the Sponsor the appropriate consents (as
referred to in paragraph 10 to Schedule 17A of the Taxes Act) and otherwise
take such action as the Sponsor shall reasonably request to ensure that Group
Relief can be and is duly surrendered in accordance with relevant statutory
- 5 -
<PAGE> 8
provisions and Inland Revenue practice, in each case promptly and shall notify
such consents to the Inland Revenue as soon as reasonably practicable and, in
any event, in reasonably sufficient time to allow claims or amended claims to be
made by the Sponsor within the applicable time periods.
4.3 PAYMENT
4.3.1 If:
(i) any amount has been surrendered by the Borrower to
the Sponsor by way of Group Relief in any Relevant
Accounting Period; and
(ii) in any subsequent Relevant Accounting Period (the
"SUBSEQUENT RELEVANT ACCOUNTING PERIOD"), the
Borrower becomes liable to pay Tax which it would
not have been liable to pay had such surrender not
been made in any previous Relevant Accounting
Period,
then the Sponsor shall, on the Repayment Date which immediately
precedes the last day on which the Borrower can pay such Tax without
incurring any interest or penalties and occurring in such Subsequent
Relevant Accounting Period , make a group relief payment to the
Borrower, as referred to in section 402(6) of the Taxes Act, of an
amount equal to the Tax Differential Amount for such Subsequent
Relevant Accounting Period.
4.3.2 The Sponsor and the Borrower agree that if on any Repayment Date the
Sponsor is obliged to make any payment under Clause 4.3.1 and the Borrower is
obliged to make any payment to the Sponsor permitted pursuant to Clause
34.14(vi) of the Facility Agreement then such payments shall be netted off
against each other and the Borrower or the Sponsor, as the case may be, shall
pay the resultant balance, as appropriate, but for all purposes of the Financing
Agreements each party hereto shall be deemed to have received the full amount on
such Repayment Date which it would otherwise have received but for this Clause
4.3.2.
4.3.3 To the extent that the Sponsor makes any payment to the Borrower on
any Relevant Repayment Date, such payment shall satisfy the Sponsor's
obligations under Clause 4.3.1 to the fullest extent possible before satisfying
any of its obligations under Clause 3 which may also have arisen on such
Relevant Repayment Date.
4.4 ADJUSTMENTS
4.4.1 If the amount of the Tax liability of the Borrower in any Relevant
Accounting Period is finally determined (in accordance with Clause 4.4.3) (the
"FINAL DETERMINATION") and if such Final Determination is an amount greater than
the amount of the Tax liability of the Borrower by reference to which the Tax
Differential Amount for that Relevant Accounting Period under Clause 4.3 was
calculated, the Sponsor shall pay to the Borrower such amount as ensures that
the total amount paid by the Sponsor under Clause 4.3 and this Clause 4.4 shall
be the amount which is payable in respect of the Tax Differential Amount for
that Relevant Accounting Period as calculated by reference to the Final
Determination.
- 6 -
<PAGE> 9
4.4.2 Any sum payable under this Clause 4.4 shall be paid within 5 business
days after the date on which the Final Determination is made.
4.4.3 For the purposes of this Clause 4.4, the liability to Tax is finally
determined on the date on which the Tax becomes due and recoverable by the tax
authority demanding the same, provided that, if the date on which the Tax can be
recovered is deferred following application to the relevant tax authority, the
date on which the liability to Tax is finally determined shall be such later
date when the amount of Tax is finally and conclusively determined. For this
purpose, an amount of Tax shall be deemed to be finally and conclusively
determined when, in respect of such amount, an agreement under section 54 of the
Taxes Management Act 1970 or any legislative provision corresponding to that
section is made or a decision of a court or tribunal is given from which either
no appeal lies or in respect of which no appeal is made within the prescribed
time limit.
5. INSURANCE SUPPORT
5.1 The Sponsor agrees that if the Borrower (or any other person on its
behalf) has made any claim upon any insurance specified in the sections of the
Eighth Schedule to the Facility Agreement specified in Column A below, the
Sponsor shall, upon such claim being paid by the underwriters, pay the amount
to the Borrower, by crediting the same directly to the Insurance Account, which
is equal to the difference between (i) the amount paid by the underwriters in
respect of such claim and (ii) the amount which would have been paid by the
underwriters in respect of such claim had such insurance been subject to the
deductibles specified opposite such insurances in Column B below (and not those
specified in the relevant section of the Eighth Schedule to the Facility
Agreement), such deductibles being per occurrence and in respect of the
Borrower's percentage interest in the Britannia Field:
<TABLE>
<CAPTION>
COLUMN A COLUMN B
<S> <C>
Control of Well (section 1 of
Part 1 of the Eighth Schedule) US$250,000
Drilling Tools and Equipment
(section 3 of Part 1 of the
Eighth Schedule) US$250,000
Liabilities (section 5 of
Part 1 of the Eighth Schedule) US$1,000,000
</TABLE>
5.2 The Sponsor agrees that if (i) the Borrower (or any other person on
its behalf) makes any claim on any insurance required to be effected pursuant
to Clause 26 of the Facility Agreement and, (ii) the Borrower is required
pursuant to Clause 34.6(ii) of the Facility Agreement to pay the proceeds of
such claim to the Insurance Account, and (iii) any amount paid by the
underwriters in respect of such claim is paid to the Sponsor, UTPH or any other
subsidiary of UTPH (other than the Borrower) then the Sponsor shall ensure that
such amount is promptly paid to the Borrower by crediting the same directly to
the Insurance Account.
- 7 -
<PAGE> 10
5.3 The Sponsor hereby undertakes until the Project Completion Date to
the Borrower to pay or ensure that there is paid all premiums required to be
paid to any insurers in respect of any Group Insurances required to be
maintained pursuant to Clause 26 of the Facility Agreement, such premiums to be
paid promptly and in any event before the renewal date for each such insurance.
5.4 The Borrower undertakes to reimburse the Sponsor for any amounts of
insurance premiums which the Sponsor has paid in respect of Group Insurances
(including those paid pursuant to Clause 5.3) and which are reasonably
allocated to the Borrower in respect of its interest in the Britannia Field.
Such reimbursement shall be made:
(i) with respect to any insurance premiums paid by the
Sponsor on or before the Project Completion Date from
the proceeds of an Advance on or after the Project
Completion Date; and
(ii) with respect to any insurance premiums paid by the
Sponsor after the Project Completion Date promptly
after any payment made by the Sponsor.
5.5 If at any time on or after the date on which the first Advance is
made under the Facility Agreement the Construction All Risk insurance specified
in Part 2 of the Eighth Schedule to the Facility Agreement has not been taken
out by or on behalf of the Borrower, and if at any such time an event occurs
which, had such insurance been in effect, would have entitled a claim to have
been made under such insurance, then the Sponsor shall pay such amount to the
Borrower as would be the amount which underwriters would have paid under such
insurance had such insurance been in full force and effect. Any amount so paid
by the Sponsor shall be paid by crediting the same directly to the Insurance
Account for application in accordance with Clause 34.15 of the Facility
Agreement. The Sponsor shall pay any such amount as soon as reasonably
practicable after such event occurs, or if there is any dispute as to the
amount so payable, promptly after the determination of such dispute by the
Independent Loss Adjuster pursuant to Clause 6.2 of the Sponsor Direct
Agreement.
5.6 To the extent that the Borrower may receive any Insurance Proceeds
where the Sponsor had, prior to such proceeds being paid by the insurers, paid
for (or provided the Borrower with funds to make such payments) the repair,
replacement or rectification of that part of the Project Interest which was
lost or damaged, the Borrower shall reimburse the Sponsor out of and up to the
amount of such Insurance Proceeds so received, as permitted in accordance with
Clause 34.15(ii) of the Facility Agreement.
6. REFUNDS OF PAYMENTS OUT OF PROJECT ACCOUNTS
If at any time the Borrower is required to pay or ensure that there is paid (a)
to the credit of the Proceeds Account any amount pursuant to Clause 34.9 of the
Facility Agreement or (b) to the credit of the VAT Account pursuant to Clause
34.16 of the Facility Agreement by reason of any of the conditions specified in
Clause 34.8(i), (ii), (iii), (iv) or (v) of the Facility Agreement not being or
ceasing to be satisfied, the Sponsor shall immediately pay or ensure that there
is immediately paid, such amount to the credit of the Proceeds Account but only
to the extent that such funds have been released therefrom pursuant to Clause
34.8 of the Facility Agreement and an amount equal to such funds has not been
paid by the Sponsor pursuant to Clause 3.1 or 3.2.
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<PAGE> 11
PART 3
MISCELLANEOUS
7. TAX
7.1 All payments to be made by the Sponsor to the Borrower under or
pursuant to this Agreement shall be made free and clear of and without
deduction for or on account of tax unless the Sponsor is required to make such
payment subject to the deduction or withholding of tax, in which case the sum
payable by the Sponsor in respect of which such deduction or withholding is
required to be made shall be increased to the extent necessary to ensure that,
after the making of the required deduction or withholding, the Borrower
receives and retains (free from any liability in respect of any such deduction
or withholding) a net sum equal to the sum which it would have received and so
retained had no such deduction or withholding have been made or required to be
made.
7.2 If any payment by the Sponsor to the Borrower hereunder will be or
has been subject to tax, the Sponsor shall, on demand from the Borrower, pay
the Borrower a sum which (after taking into account tax payable by the Borrower
in respect of that sum) will ensure that the Borrower receives and retains a
net amount equal to the amount which it would have received and retained had
the payment not been subject to tax.
8. PAYMENTS
8.1 Save as may be expressly permitted hereunder, all payments required
to be made by the Sponsor to the Borrower hereunder shall be calculated without
reference to any set-off or counterclaim and shall be made free and clear of
and without any deduction for or on account of any set-off or counterclaim.
8.2 Any amount payable by the Sponsor hereunder:
(i) shall, save as expressly stated to the contrary, be paid
directly to the Account Bank for crediting to the Proceeds
Account; and
(ii) shall be paid in immediately available, freely transferable
cleared funds and, in the case of any payment made under
Clauses 3.2 and 4.3.1 shall be made so that on the Repayment
Date on which the Borrower is to receive such payment the
Borrower is able to pay such amount to the Funding Agent for
the account of the Banks in repayment of the Loan in
accordance with the Facility Agreement.
9. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each party
hereto and its or any subsequent successors and assigns.
- 9 -
<PAGE> 12
10. ASSIGNMENTS AND TRANSFERS
Save for any assignment made by the Borrower by or pursuant to any of the
Security Documents, neither the Sponsor nor the Borrower shall be entitled to
assign or transfer all or any of its rights, benefits and obligations
hereunder.
11. REMEDIES AND WAIVERS
No failure on the part of the Borrower to exercise, nor any delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right or remedy prevent any
further or other exercise thereof or the exercise of any other right or remedy.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
12. PARTIAL INVALIDITY
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
13. NOTICES
13.1 Each communication to be made hereunder shall be made in writing but
unless otherwise stated, may be made in writing by facsimile, telex or letter.
13.2 Any communication or document to be made or delivered by one person
to another pursuant to this Agreement shall be made or delivered to that other
person at the address, telex or facsimile number identified with its signature,
in the case of the Borrower, in the signature pages of the Facility Agreement
and, in the case of the Sponsor, in the signature pages of the Sponsor Direct
Agreement and shall be deemed to have been made or delivered (i) if sent by
telex or facsimile at the time of despatch (if despatched between 9.00 a.m. and
5.00 p.m. (local time in the place to which it is sent) on a working day in
that place, when sent, or if sent by telex or facsimile at any other time, at
9.00 a.m. (local time in the place to which it is sent) on the next working day
in that place), provided that in the case of facsimile, the person sending the
facsimile shall have received a transmission receipt and a hard copy of such
facsimile or telex shall be sent on the same day to the party to whom such
notice was sent (but failure to send or receive any such hard copy shall not
prejudice any such deemed making or delivery) and, in the case of a telex, the
person sending the telex shall have received the correct answerback at the
beginning and end of the transmission, (ii) if sent by recorded delivery, at
the recorded time of delivery or (iii) in the case of any other communication
made by letter, when left at that address or (as the case may be) five days
after being deposited in the post postage prepaid in an envelope addressed to
it at that address.
13.3 Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the English language or
accompanied by a translation thereof into English certified
- 10 -
<PAGE> 13
(by an officer of the person making or delivering the same) as being a true and
accurate translation thereof. In the event of dispute, the English language
version shall prevail.
14. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts each of which, when executed and
delivered, shall constitute an original, but all the counterparts shall
together constitute but one and the same instrument.
- 11 -
<PAGE> 14
PART 4
LAW
15. LAW
This Agreement shall be governed by, and shall be construed in accordance with,
English law.
16. JURISDICTION
16.1 Each of the parties agrees for the benefit of the other that the
courts of England shall have jurisdiction to hear and determine any suit,
action or proceeding, and to settle any disputes, which may arise out of or in
connection with this Agreement and, for such purposes, irrevocably submits to
the jurisdiction of such courts.
16.2 Each of the parties irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause 16.1 being nominated
as the forum to hear and determine any suit, action or proceeding, and to
settle any disputes, which may arise out of or in connection with this
Agreement and agrees not to claim that any such court is not a convenient or
appropriate forum.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
- 12 -
<PAGE> 15
THE SPONSOR
UNION TEXAS PETROLEUM LIMITED
By: R.A. HALSON
THE BORROWER
UNION TEXAS BRITANNIA LIMITED
By: R.A. HALSON
- 13 -
<PAGE> 1
EXHIBIT 10.12
UNION TEXAS PETROLEUM HOLDINGS, INC.
1994 INCENTIVE PLAN
SECTION 1. PURPOSE OF THE PLAN
The Union Texas Petroleum Holdings, Inc. 1994 Incentive Plan (the "Plan")
is intended to promote the interests of Union Texas Petroleum Holdings, Inc., a
Delaware corporation (the "Company"), by encouraging employees of the Company,
its subsidiaries and affiliated entities, and non-employee directors of the
Company to acquire or increase their equity interest in the Company and to
provide a means whereby employees may develop a sense of proprietorship and
personal involvement in the development and financial success of the Company,
and to encourage them to remain with and devote their best efforts to the
business of the Company thereby advancing the interests of the Company and its
shareholders. The Plan is also contemplated to enhance the ability of the
Company, its subsidiaries and affiliated entities to attract and retain the
services of individuals who are essential for the program, growth and
profitability of the Company.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
"Affiliate" shall mean (i) any entity that, directly or through one or
more intermediaries, is controlled by the Company and (ii) any entity in
which the Company has a significant equity interest, as determined by the
Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Performance Award, Stock Compensation Award, Deferred Shares, Bonus
Shares, Other Stock-Based or Cash Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a participant.
"Board" shall mean the Board of Directors of the Company.
"Bonus Shares" shall mean an award of Shares granted pursuant to
Section 6(e) of the Plan.
"Cash Award" shall mean an award payable in cash granted pursuant to
Section 6(g) of the Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations thereunder.
"Committee" shall mean the Organization and Compensation Committee of
the Board.
"Covered Employees" shall have the meaning specified in Section
162(m)(3) of the Code.
"Deferred Shares" shall mean an Award of the right to receive Shares
issued at the end of a Restricted Period which is granted pursuant to
Section 6(f) of the Plan.
"Disability" shall mean (i) with respect to an Employee of the Company
or of any Affiliate, becoming permanently disabled under the standards of
the Company's disability program as determined by the Committee or (ii)
with respect to a non-employee Director, inability to perform duties and
services as a director of the Company by reason of a medically determinable
physical or mental impairment supported by medical evidence which in the
opinion of the Committee can be expected to result in death or which can be
expected to last for a continuous period of not less than twelve (12)
months.
"Employee" shall mean any employee of the Company or of any Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean the fair market value of the property
or other item being valued, as determined by the Committee. With respect to
Shares, if the Shares are traded on a national stock
1
<PAGE> 2
exchange, the fair market value of a Share on a particular date shall be
equal to the average of the reported high and low sales prices of the Share
on such exchange on that date, or if no prices are reported on that date,
on the last preceding date on which such prices of the Share are so
reported. If the Shares are publicly traded but are not traded on a
national stock exchange at the time a determination of its fair market
value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average between the closing bid and asked price
of the Share on the most recent date the Shares were publicly traded. In
the event the Shares are not publicly traded at the time a determination of
its fair market value is required to be made hereunder, the determination
of fair market value shall be made in good faith by the Committee.
"Incentive Stock Option" or "ISO" shall mean an option granted under
Section 6(a) of the Plan that is intended to qualify as an "incentive stock
option" under Section 422 of the Code or any successor provision thereto.
"non-employee Director" shall mean a director of the Company who is
not (i) otherwise an employee of the Company or any Affiliate or (ii) a
general partner, limited partner or employee of Kohlberg Kravis Roberts &
Co.
"Non-Qualified Stock Option" or "NQO" shall mean an option granted
under Sections 6(a) or 6(h) of the Plan that is not intended to be an
Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
"Other Stock-Based Award" shall mean any right granted under Section
6(g) of the Plan.
"Participant" shall mean any individual granted an Award under the
Plan. Any other provisions hereof to the contrary notwithstanding, no
non-employee Director may receive benefits under this Plan except for
Non-Qualified Stock Options as provided in Section 6(h).
"Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
"Person" shall mean individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.
"Restricted Period" shall mean the period established by the Committee
with respect to an Award during which the Award either remains subject to
forfeiture or is not exercisable by the Participant.
"Restricted Stock" shall mean any Share, prior to the lapse of
restrictions thereon, granted under Section 6(c) of the Plan.
"Retirement" shall mean (i) with respect to an employee of the Company
or one of its Affiliates, retirement as determined by the Committee, and
(ii) with respect to a non-employee Director of the Company, termination of
service as a director or honorary director, after at least five (5) years
of continuous service.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from
time to time.
"SEC" shall mean the Securities and Exchange Commission, or any
successor thereto.
"Shares" or "Common Shares" or "Common Stock" shall mean the common
stock of the Company, $0.05 par value, and such other securities or
property as may become the subject of Awards or become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
"Stock Appreciation Right" or "Right" shall mean any right to receive
the appreciation of Shares granted under Section 6(b) of the Plan.
"Stock Compensation" shall mean any right granted under Section 6(e)
of the Plan.
2
<PAGE> 3
"Substitute Award" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by (i) a company
acquired by the Company or one or more of its Affiliates, or (ii) a company
with which the Company or one or more of its Affiliates combines.
SECTION 3. ADMINISTRATION
The Plan shall be administered by the Committee, which Committee shall
consist of at least two members. Members of the Committee shall be
"disinterested persons" within the meaning of Rule 16b-3 which has been adopted
by the SEC under the Exchange Act as such Rule or its equivalent is then in
effect. A majority of the Committee shall constitute a quorum, and the acts of
the members of the Committee who are present at any meeting thereof at which a
quorum is present, or acts unanimously approved by the members of the Committee
in writing, shall be the acts of the Committee. Subject to the terms of the Plan
and applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Awards to be granted to an eligible Employee; (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award; (v) determine whether, to what extent, and
under what circumstances Awards may be settled or exercised in cash, Shares,
other securities, other Awards or other property, or cancelled, forfeited, or
suspended and the method or methods by which Awards may be settled, exercised,
cancelled, forfeited, or suspended; (vi) determine whether, to what extent, and
under what circumstances cash, Shares, other securities, other Awards, other
property, and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the holder thereof or of the
Committee; (vii) interpret and administer the Plan and any instrument or
agreement relating to, or Award made under, the Plan; (viii) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations, and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive, and binding upon all Persons, including the Company, any
Affiliate, any Participant, any holder or beneficiary of any Award, any
stockholder and any Employee. The provisions of this Section 3 with respect to
decisions made by, and authority of, the Committee shall be subject to the
controlling provisions of Section 6(h).
SECTION 4. SHARES AVAILABLE FOR AWARDS
(a) Shares Available
Subject to Section 4(d) and to adjustment as provided in Section 4(c), the
number of Shares with respect to which Awards may be granted under the Plan
shall be 4,000,000. If, after the effective date of the Plan, any Shares covered
by an Award granted under the Plan, or to which such an Award relates, are
forfeited, or if an Award otherwise terminates or is cancelled without the
delivery of Shares or of other consideration, then the Shares covered by such
Award, or to which such Award relates, or the number of Shares otherwise counted
against the aggregate number of Shares with respect to which Awards may be
granted, to the extent of any such forfeiture, termination or cancellation,
shall again be, or shall become, to the extent permissible under Rule 16b-3,
Shares with respect to which Awards may be granted. In the event that any Option
or other Award granted hereunder is exercised through the delivery of Shares,
the number of Shares available for Awards (other than an Incentive Stock Option)
under the Plan shall be increased by the number of Shares surrendered, to the
extent permissible under Rule 16b-3. Notwithstanding the foregoing, no more than
1,200,000 Shares available for Awards shall be issued as Restricted Stock.
(b) Sources of Shares Deliverable Under Awards
Any Shares delivered pursuant to an Award may consist, in whole or in part,
of authorized and unissued Shares or of treasury Shares.
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(c) Adjustments
In the event that the Committee determines that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or other similar
corporate transaction or event affects the Shares such that an adjustment is
determined by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (i) the number and type of Shares (or other
securities or property) with respect to which Awards may be granted, (ii) the
number and type of Shares (or other securities or property) subject to
outstanding Awards, and (iii) the grant or exercise price with respect to any
Award or, if deemed appropriate, make provision for a cash payment to the holder
of an outstanding Award; provided, in each case, that with respect to Awards of
Incentive Stock Options and Awards intended to qualify as performance based
compensation under Section 162(m)(4)(C) of the Code, no such adjustment shall be
authorized to the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code or would cause such Award to fail to so qualify
under Section 162(m) of the Code, as the case may be, or any successor
provisions thereto; and provided, further, that the number of Shares subject to
any Award denominated in Shares shall always be a whole number.
(d) Substitute Awards
Any Shares underlying Substitute Awards shall not, except in the case of
Shares with respect to which Substitute Awards are granted with respect to
Incentive Stock Options or, if not permissible under Rule 16b-3, to Employees
who are officers or directors of the Company for purposes of Section 16 of the
Exchange Act or any successor section thereto, be counted against the Shares
available for Awards other than Incentive Stock Options under the Plan.
SECTION 5. ELIGIBILITY
Other than Awards granted to non-employee Directors pursuant to Section
6(h) of the Plan, any Employee who is not a member of the Committee, including
any officer or employee-director of the Company or any Affiliate, shall be
eligible to be designated a Participant. All Employees shall be eligible for
Awards under the Plan. However, no Employee under this Plan may receive in any
calendar year Stock Options and/or Rights that, in the aggregate, are with
respect to more than 500,000 Shares (tandem Awards shall be deemed to be one
Award for this purpose).
SECTION 6. AWARDS
(a) Options
Subject to the provisions of the Plan, the Committee shall have authority
to determine the Employees to whom Options shall be granted, the number of
Shares to be covered by each Option, the purchase price therefor and the
conditions and limitations applicable to the exercise of the option including
the following terms and conditions and such additional terms and conditions, as
the Committee shall determine are not inconsistent with the provisions of the
Plan.
(i) Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee at the time each Option is
granted; provided, however, that the purchase price per Share shall not be
less than 100% of the Fair Market Value on the date of grant, except in the
case of Options that are Substitute Awards.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part, and
the method or methods by which, and the form or forms (which may include,
without limitation, cash, Shares, outstanding Awards, Shares that would
otherwise be acquired upon exercise of the Option, other securities or
other property, or any combination thereof,
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having a Fair Market Value on the exercise date equal to the relevant
exercise price) in which payment of the exercise price with respect thereto
may be made or deemed to have been made. Pursuant to Section 7(b) of the
Plan, the Committee may, at its discretion, accelerate the time at which
Options may be exercised and otherwise modify the time or methods of
exercise of the Options.
(iii) Incentive Stock Options. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code, or any successor provision, and any regulations
promulgated thereunder. Incentive Stock Options may be granted only to
Employees of the Company and its "subsidiaries" within the meaning of
Section 424(f) of the Code.
(b) Stock Appreciation Rights
Subject to the provisions of the Plan, the Committee shall have authority
to determine the Employees to whom Stock Appreciation Rights shall be granted,
the number of Shares to be covered by each Stock Appreciation Right Award, the
grant price thereof and the conditions and limitations applicable to the
exercise thereof. A Stock Appreciation Right may be granted in tandem with
another Award, in addition to another Award, or freestanding and unrelated to
another Award. A Stock Appreciation Right granted in tandem with or in addition
to another Award may be granted either at the same time as such other Award or
at a later time.
(i) Grant Price. The grant price of a Stock Appreciation Right shall
be determined by the Committee; provided, however, that the grant price
shall not be less than 100% of the Fair Market Value on the date of grant
or on the date of original grant of any related Award.
(ii) Other Terms and Conditions. Subject to the terms of the Plan and
any applicable Award Agreement, the Committee shall determine, at or after
the grant of a Stock Appreciation Right, the term, methods of exercise,
methods of settlement, and any other terms and conditions of any Stock
Appreciation Right. Any such determination by the Committee may be changed
by the Committee from time to time and may govern the exercise of Stock
Appreciation Rights granted or exercised prior to such determination as
well as Stock Appreciation Rights granted or exercised thereafter. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it shall deem appropriate.
(c) Restricted Stock
Subject to the provisions of the Plan, the Committee shall have authority
to determine the Employees to whom Restricted Stock shall be granted, the number
of Shares of Restricted Stock to be granted to each such Participant, the
duration of the Restricted Period during which, and the conditions under which,
the Restricted Stock may be forfeited to the Company, and the other terms and
conditions of such Awards.
(i) Dividends. Unless otherwise determined by the Committee,
Restricted Stock Awards shall provide for the payment of dividends during
the Restricted Period. Any Restricted Stock Award may require that any or
all dividends or other distributions paid on the Restricted Stock during
the Restricted Period be automatically sequestered and held in a
bookkeeping cash account (with or without interest) or reinvested on an
immediate or deferred basis in additional shares of Common Stock, which
credit or shares may be subject to the same restrictions as the underlying
Award or such other restrictions as the Committee may determine. Dividends
paid on Restricted Stock may be paid directly to the Participant, may be
subject to risk of forfeiture and/or transfer restrictions during any
period established by the Committee, all as determined by the Committee in
its discretion.
(ii) Registration. Any Restricted Stock may be evidenced in such
manner as the Committee shall deem appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect of
Restricted Stock granted under the Plan, such certificate shall be
registered in the name of the Participant and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to
such Restricted Stock.
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(iii) Forfeiture and Restrictions Lapse. Except as otherwise
determined by the Committee or the terms of the Award that granted the
Restricted Stock, upon termination of a Participant's employment (as
determined under criteria established by the Committee, including, without
limitation, in the Committee's discretion, goals described under Section
6(d)(i)) for any reason during the applicable Restricted Period, all
Restricted Stock shall be forfeited by the Participant and re-acquired by
the Company. The Committee may, when it finds that a waiver would be in the
best interests of the Company and not cause such Award, if it is intended
to qualify as performance based compensation under Section 162(m) of the
Code, to fail to so qualify under Section 162(m) of the Code, waive in
whole or in part any or all remaining restrictions with respect to such
Participant's Restricted Stock. Unrestricted Shares, evidenced in such
manner as the Committee shall deem appropriate, shall be issued to the
holder of Restricted Stock promptly after the applicable restrictions have
lapsed or otherwise been satisfied.
(iv) Transfer Restrictions. During the Restricted Period, Restricted
Stock will be subject to the limitations on transfer as provided in Section
6(i)(iii).
(d) Performance Awards
The Committee shall have authority to determine the Employees who shall
receive a Performance Award, which shall (A) consist of a right, denominated or
payable in cash, Shares, Deferred Shares, other securities or other property
(including, without limitation, Restricted Stock, or any combination thereof),
and (B) confer on the holder thereof rights valued as determined by the
Committee and payable to, or exercisable by, such holder, in whole or in part,
upon the achievement of such performance goals during such performance periods
as the Committee shall establish.
(i) Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance
goals to be achieved during any performance period, the length of any
performance period, the amount of any Performance Award and the amount of
any payment or transfer to be made pursuant to any Performance Award.
Without limiting the generality of the foregoing, it is intended that the
Committee may establish performance goals applicable to Performance Awards
granted to Participants who, in the judgment of the Committee, may be
Covered Employees in such a manner as shall permit payments with respect
thereto to qualify as "performance-based compensation" as described in
Section 162(m)(4)(C) of the Code. It is specifically provided that the
material terms of such performance goals for Participants who, in the
judgment of the Committee, may be Covered Employees, shall, until changed
by the Committee with the approval of the stockholders, if such stockholder
approval is required by the Code, be as follows: (x) the business criteria
on which the performance goals shall be based shall be the attainment of
such target levels of either net income, cash flows, reserve additions or
revisions, total capitalization, total shareholder return, assets,
exploration successes, production volumes, finding and development costs,
costs reductions and savings, reportable incidents in safety or
environmental matters, return on sales, profit margin, earnings per share
or personal objectives tied to operational studies, implementing policies
and plans, negotiating transactions and sales, developing long-term
business goals, managerial responsibilities and assessments as may be
specified by the Committee; and (y) the maximum amount of compensation that
may be paid to any one Participant with respect to any one year shall be
$1.5 million under an annual performance bonus Award and $1.5 million under
a long-term Award with a performance period longer than one fiscal year.
(ii) Payment of Performance Awards. Performance Awards may be paid in
a lump sum or in installments following the close of the performance period
or, in accordance with procedures established by the Committee, on a
deferred basis.
(e) Stock Compensation and Bonus Shares
(i) Stock Compensation. The Committee shall have the authority, in its
discretion, to pay in Shares all, or such portion as it shall determine, of
amounts payable (x) under any Award of the Plan, other than Performance Awards
payable in cash as a short term annual incentive or Cash Awards granted in
tandem with Restricted Stock or (y) if requested by an Employee, under any
compensation program of the Company. The
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number and type of Shares to be distributed in lieu of the cash compensation to
which an Employee would otherwise be entitled, as well as the terms and
conditions of any such bonus awards, shall be determined by the Committee.
(ii) Bonus Shares. The Committee may also grant Bonus Shares to eligible
Employees. Each Bonus Share shall constitute a transfer of Common Shares to the
Participant, without other payment therefor, as additional compensation for the
Participant's services to the Company.
(f) Deferred Shares
The Committee may also grant Awards of Deferred Shares to eligible
Employees upon such terms and conditions as the Committee may determine.
(i) Terms and Conditions. Each Deferred Share award shall constitute
an agreement by the Company to issue or transfer a specified number of
Shares to the Participant in the future, subject to the fulfillment during
the Restricted Period of such conditions, including performance objectives
or, as described in Section 6(d)(i), performance goals, if any, as the
Committee may specify at the date of grant. During the Restricted Period,
the Participant shall not have any right to transfer any rights under the
subject Award, shall not have any rights of ownership in the Deferred
Shares and shall not have any right to vote such shares.
(ii) Dividends. Any Deferred Share award may provide that any or all
dividends or other distributions paid on Shares during the Restricted
Period be credited in a cash bookkeeping account (without interest) or that
equivalent additional Deferred Shares be awarded, which account or shares
may be subject to the same restrictions as the underlying Award or such
other restrictions as the Committee may determine.
(g) Other Stock-Based and Cash Awards
(i) Other Stock Based Awards. The Committee is hereby authorized to grant
to eligible Employees an "Other Stock-Based Award," which shall consist of a
right (i) which is not an Award or right described in Section 6(a), (b), (c),
(d), (e) or (f) above and (ii) which is denominated or payable in, valued in
whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares) as are
deemed by the Committee to be consistent with the purposes of the Plan;
provided, that any such rights must comply, to the extent deemed desirable by
the Committee, with Rule 16b-3 and applicable law. Subject to the terms of the
Plan and any applicable Award Agreement, the Committee shall determine the terms
and conditions of any such Other Stock-Based Award.
(ii) Cash Awards. Subject to the provisions of the Plan, the Committee
shall have authority to determine the Employees to whom Cash Awards shall be
granted, the amount, and the terms or conditions, if any, as additional
compensation for the Employee's services to the Company or its Affiliates. A
Cash Award may be granted (simultaneously or subsequently) in tandem with
another Award and may entitle a Participant to receive a specified amount of
cash from the Company upon such other Award becoming taxable to the Participant,
which cash amount may be based on a formula relating to the anticipated taxable
income associated with such other Award and the payment of the Cash Award or
other terms determined by the Committee.
(h) Awards to Non-employee Directors
(i) Initial Granting of Options. Subject to stockholder approval of the
Plan pursuant to Section 10, and to the limitation of the number of shares of
Stock set forth in Section 4(a), each non-employee Director who serves in such
capacity on the date of the approval of the Plan by the Board (the "Current
non-employee Directors") shall receive, as of such date and without the exercise
of the discretion of any person or persons, a Non-Qualified Stock Option
exercisable for 5,000 shares of Stock. Subject to stockholder approval of the
Plan pursuant to Section 10, and to the limitation of the number of shares of
Stock set forth in Section 4(a), each non-employee Director who is elected or
appointed to the Board for the first time after the effective date of the
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Plan (excluding the Current non-employee Directors) shall receive, as of the
date of his or her election or appointment and without the exercise of the
discretion of any person or persons, a Non-Qualified Stock Option exercisable
for 5,000 shares of Stock (subject to adjustment in the same manner as provided
in Section 7 hereof with respect to shares of Stock subject to Options then
outstanding). Any nominee non-employee Director may make an irrevocable election
in advance of election not to receive an option pursuant to this Section
6(h)(i).
(ii) Annual Granting of Options. Subject to stockholder approval of the
Plan pursuant to Section 10, and to the limitation of the number of shares of
Stock set forth in Section 4(a), as of the date of the annual meeting of the
stockholders of the Company in each year that the Plan is in effect as provided
in Section 11 hereof (commencing with the 1995 annual meeting of stockholders),
each non-employee Director who is in office immediately after such meeting and
who is not then entitled to receive an Option pursuant to the preceding
provisions of this Section 6(h) shall receive, without the exercise of the
discretion of any person or persons, a Non-Qualified Stock Option exercisable
for 3,000 shares of Stock (subject to adjustment in the same manner as provided
in Section 7 hereof with respect to shares of Stock subject to Options then
outstanding). Any non-employee Director may make an irrevocable election in
advance not to receive an option pursuant to this Section 6(h)(ii).
(iii) Other Terms and Conditions. The following provisions are applicable
to Options granted pursuant to Sections 6(h)(i) and (ii):
A. Options shall be exercisable on the day following the date of
grant.
B. The purchase price of a Share covered under an Option granted under
this Section 6(h) shall be the Fair Market Value of a Share on the date of
grant.
C. The Option may be exercised in full at one time or in part from
time to time by giving written notice, signed by the optionee exercising
the Option, to the Company, stating the number of Shares with respect to
which the Option is being exercised, accompanied by payment in full for
such Shares, which payment may be in whole or in part in Shares of the
Company already owned by said optionee, valued at Fair Market Value;
provided, however, that (i) no Option shall be exercisable after ten (10)
years from the date on which it was granted, and (ii) there shall be no
such exercise at any one time for fewer than one hundred (100) Shares or
for all of the remaining Shares then purchasable by the optionee exercising
the Option, if fewer than one hundred (100) Shares.
D. Each Option shall expire ten (10) years from the date of grant
thereof, but shall be subject to earlier termination as follows. Options,
to the extent exercisable as of the date a non-employee Director optionee
ceases to serve as a director of the Company, must be exercised within six
months of such date unless such event results from death, Disability or
Retirement, in which case Options may be exercised by the optionee, the
optionee's legal representative, heir or devisee, as the case may be,
within two (2) years from the date of death or Disability and within three
(3) years from the date of Retirement; provided, however, that no such
event shall extend the normal expiration date of such Options.
E. Upon exercise of the Option, subject to paragraph F below, delivery
of a certificate for fully paid and nonassessable Shares shall be made
either at the corporate office of the Company in Houston, Texas to the
optionee exercising the Option at such time during ordinary business hours
after fifteen (15) days but not more than thirty (30) days from the date of
receipt of the notice by the Company as shall be designated in such notice,
or at such time, place and manner as may be agreed upon by the Company and
the optionee exercising the Option.
F. Until the earlier to occur of the following events (i) the
non-employee Director no longer serves as a Director of the Company for any
reason, (ii) a Change in Control, (iii) the approval by the Company's
stockholders of a merger or consolidation or (iv) a tender offer for the
Common Stock of the Company ("Termination of Restriction"), the Shares
received by the non-employee Director upon the exercise of an Option
granted pursuant to Section 6(h)(i) and (ii) shall not be subject to
disposition by the non-employee Director, by sale, transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether
such disposition be voluntary or involuntary or by operation of law by
judgment,
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levy, attachment, garnishment or any other legal or equitable proceeds
(including bankruptcy), and any attempted disposition thereof, shall be
null and void and of no effect; provided, however, that nothing in this
Section 6(h)(iii)F shall prevent transfer by will, the applicable laws of
descent and distribution or pursuant to a qualified domestic relations
order. The certificates evidencing the Shares may bear a legend restricting
or incorporating the restrictions, and the Company may cause the
certificates to be delivered upon issuance to the Secretary of the Company
or such other depositary as may be designated by the Company as a
depositary for safe-keeping until Termination of Restriction. Upon
Termination of Restriction, the Company will cause a new certificate or
certificates to be issued without legend in the name of such former
director.
(iv) Notwithstanding anything in the Plan to the contrary, a non-employee
Director shall be ineligible to receive a grant provided for in Section 6(h) if
as of the date of such grant the Director (i) is an employee of the Company or
any Affiliate or (ii) has been an employee of the Company or any Affiliate for
any part of the calendar year preceding the calendar year in which such a grant
is to be made.
(v) In the event that the number of Shares available for grants under the
Plan is insufficient to make all grants provided for in this Section 6(h) hereby
made on the applicable date, then all non-employee Directors who are entitled to
a grant on such date shall share ratably in the number of Shares then available
for grant under the Plan, and shall have no right to receive a grant with
respect to the deficiencies in the number of available Shares and the grants
under this Section 6(h) shall terminate.
(vi) Except as expressly provided in this Section 6(h) grants made pursuant
to this Section 6(h) shall be subject to the terms and conditions of the Plan;
however, if there is a conflict between the terms and conditions of the Plan and
this Section 6(h) then the terms and conditions of this Section 6(h) shall
control. The Committee may not exercise any discretion with respect to this
Section 6(h) which would be inconsistent with the intent expressed in Section
6(h)(vii).
(vii) It is intended that the Plan meet the requirements of Rule 16b-3 and
that any non-employee Director who is eligible to receive a grant or to whom a
grant is made pursuant to this Section 6 will not for such reason cease to be a
"disinterested person" within the meaning of Rule 16b-3 with respect to the Plan
and other stock related plans of the Company.
(viii) All Options under this Section 6(h) shall be evidenced by Award
Agreements.
(i) General
(i) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with, or in substitution for any other Award granted under the Plan or
any award granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards or awards granted under
any other plan of the Company or any Affiliate may be granted either at the same
time as or at a different time from the grant of such other Awards or awards.
(ii) Forms of Payment by Company Under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be made by
the Company or an Affiliate upon the grant, exercise or payment of an Award may
be made in such form or forms as the Committee shall determine, including,
without limitation, cash, Shares, other securities, other Awards or other
property, or any combination thereof, and may be made in a single payment or
transfer, in installments, or on a deferred basis, in each case in accordance
with rules and procedures established by the Committee. Such rules and
procedures may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments.
(iii) Limits on Transfer of Awards
(A) Each Award, and each right under any Award, shall be exercisable
only by the Participant during the Participant's lifetime, or, if
permissible under applicable law, by the Participant's guardian or
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legal representative or by a transferee receiving such Award pursuant to a
qualified domestic relations order (a "QDRO") as determined by the
Committee.
(B) No Award and no right under any such Award may be assigned,
alienated, pledged, attached, sold or otherwise transferred or encumbered
by a Participant otherwise than by will or by the laws of descent and
distribution (or, in the case of Restricted Stock, to the Company) or
pursuant to a QDRO and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate.
(C) To the extent approved by the Committee and in compliance with
Rule 16b-3 and the Securities Act of 1933, as amended, a Non-Qualified
Stock Option may be transferred to immediate family members.
(iv) Term of Awards. The term of each Award (other than pursuant to Section
6(h)) shall be for such period as may be determined by the Committee; provided,
that in no event shall the term of any Incentive Stock Option Award exceed a
period of ten years from the date of its grant.
(v) Share Certificates. All certificates for Shares or other securities of
the Company or any Affiliate delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the SEC, any stock exchange upon which
such Shares or other securities are then listed, and any applicable Federal or
state laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(vi) Consideration for Grants. Awards may be granted for no cash
consideration or for such consideration as the Committee determines including,
without limitation, such minimal cash consideration as may be required by
applicable law.
(vii) Delivery of Shares or other Securities and Payment by Participant of
Consideration. No Shares or other securities shall be delivered pursuant to any
Award until payment in full of any amount required to be paid pursuant to the
Plan or the applicable Award Agreement is received by the Company. Such payment
may be made by such method or methods and in such form or forms as the Committee
shall determine, including, without limitation, cash, Shares, other securities,
other Awards or other property, withholding of Shares, cashless exercise with
simultaneous sale, or any combination thereof; provided, that the combined
value, as determined by the Committee, of all cash and cash equivalents and the
Fair Market Value of any such Shares or other property so tendered to the
Company, as of the date of such tender, is at least equal to the full amount
required to be paid pursuant to the Plan or the applicable Award Agreement to
the Company.
SECTION 7. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan
The Board may amend, alter, suspend, discontinue, or terminate the Plan
without the consent of any shareholder, Participant, other holder or beneficiary
of an Award, or other Person; provided, however, that the provisions of Section
6(h) may not be amended more than once every six months other than to comport
with changes in the Code, the Employee Retirement Income Security Act of 1974,
as amended, or the rules thereunder and; provided, further, that notwithstanding
any other provision of the Plan or any Award Agreement, without the approval of
the stockholders of the Company no such amendment, alteration, suspension,
discontinuation, or termination shall be made that would:
(i) increase the total number of Shares available for Awards under the
Plan, except as provided in Section 4(c) of the Plan;
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(ii) permit Incentive Stock Options to be granted with per Share
grant, exercise or purchase prices of less than the Fair Market Value of a
Share on the date of grant thereof; or
(iii) result in this Plan no longer satisfying the requirements of
Rule 16b-3.
(b) Amendments to Awards
The Committee may waive any conditions or rights under, amend any terms of,
or alter any Award theretofore granted (other than Awards granted pursuant to
Section 6(h)), provided no change in any Award, other than pursuant to Section
7(c), shall reduce the benefit to Participant without the consent of such
Participant. Notwithstanding the foregoing, with respect to any Award intended
to qualify as performance-based compensation under Section 162(m) of the Code,
no adjustment shall be authorized to the extent such adjustment would cause the
Award to fail to so qualify.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events
The Committee is hereby authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 4(c) of the Plan) affecting the Company, any Affiliate, or the financial
statements of the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan.
Notwithstanding the foregoing, with respect to any Award intended to qualify as
performance-based compensation under Section 162(m) of the Code, no adjustment
shall be authorized to the extent such adjustment would cause the Award to fail
to so qualify.
SECTION 8. CHANGE IN CONTROL
(a) In addition to the Committee's authority set forth in Section 7(c) of
the Plan, in order to maintain the Participants' rights in the event of any
Change in Control, as hereinafter defined, the Committee, as constituted before
such Change in Control, is hereby authorized and directed to provide for the
acceleration of any time periods relating to the exercise or realization of all
Awards so that such Award may be exercised or realized in full, and has sole
discretion, as to any Award, either at the time such Award is made hereunder or
any time thereafter, to take any one or more of the following actions: (i)
provide for the purchase of any such Award, either automatically or upon the
Participant's request, for an amount of cash equal to the amount that could have
been attained upon the exercise of such Award or realization of the
Participant's rights had such Award been currently exercisable or payable; (ii)
make such adjustment to any such Award then outstanding as the Committee deems
appropriate to reflect such Change in Control; or (iii) if equitable and in the
best interests of the Company and its stockholders, cause (x) any such Award
then outstanding to be assumed, or new rights substituted therefor, by the
acquiring or surviving corporation after such Change in Control or (y) the
exercise period for any such Award then outstanding to terminate on a fixed date
following such Change in Control provided the Participant receives written
notice of such event and the fixed date at least twenty days prior to the
effective date of such Change in Control. The Committee may, in its discretion,
include such further provisions and limitations in any Award Agreement as it may
deem equitable and in the best interests of the Company and its stockholders.
(b) A "Change in Control" shall be deemed to occur (i) if any person or
persons or entity or entities (other than Petroleum Associates, L.P., KKR
Partners II, L.P. and any entity controlling, controlled by or under common
control with any such entities, separately or in the aggregate ("KKR")) acquires
75% or more of the assets of the Company or a successor of the Company or such
successor's parent corporation (based upon the then current fair market value
thereof) or 50% or more of the Company's then outstanding voting stock or a
successor's or such successor's parent corporation's then outstanding voting
securities, and, if there shall be more than one class of voting securities
thereof, then of the combined voting power held by all classes of voting
securities of the Company, a successor corporation or its parent corporation
(whether such acquisition of stock or assets occurs pursuant to a single
transaction or several related transactions or series of
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<PAGE> 12
transactions), (ii) upon the approval by the Company's stockholders of a plan of
liquidation or dissolution of the Company or a successor of the Company or such
successor's parent corporation, or (iii) upon the approval by the Company's
stockholders of a merger or consolidation and such transaction was determined to
be a Change in Control, which transaction and determination was approved by a
majority of the Company's Board of Directors in actions taken prior to, and with
respect to such transaction.
SECTION 9. GENERAL PROVISIONS
(a) No Rights to Awards
No Employee, Participant or other Person shall have any claim to be granted
any Award, and there is no obligation for uniformity of treatment of Employees,
Participants, or holders or beneficiaries of Awards. The terms and conditions of
Awards need not be the same with respect to each recipient.
(b) Delegation
Subject to the terms of the Plan and applicable law, the Committee may
delegate to one or more officers or managers of the Company or any Affiliate, or
to a committee of such officers or managers, the authority, subject to such
terms and limitations as the Committee shall determine, to grant Awards to, or
to cancel, modify or waive rights with respect to, or to alter, discontinue,
suspend, or terminate Awards held by, Employees who are not officers or
directors of the Company for purposes of Section 16 of the Exchange Act, or any
successor Section thereto, or who are otherwise not subject to such Section.
(c) Withholding
The Company or any Affiliate is hereby authorized to withhold from any
Award, from any payment due or transfer made under any Award or under the Plan
or from any compensation or other amount owing to a Participant the amount (in
cash, Shares, other securities, Shares that would otherwise be issued pursuant
to such Award (including automatic withholding), other Awards or other property)
of any applicable taxes payable in respect of an Award, its exercise, the lapse
of restrictions thereon, or any payment or transfer under an Award or under the
Plan and to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for the payment of such taxes.
(d) No Limit on Other Compensation Arrangements
Nothing contained in the Plan shall prevent the Company or any Affiliate
from adopting or continuing in effect other compensation arrangements (subject
to shareholder approval of such other arrangement, if such approval is
required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(e) No Right to Employment
The grant of an Award shall not be construed as giving a Participant the
right to be retained in the employ of the Company or any Affiliate. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment,
free from any liability or any claim under the Plan, unless otherwise expressly
provided in the Plan or in any Award Agreement.
(f) Governing Law
The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Delaware and applicable Federal law.
(g) Severability
If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or
Award, or would disqualify the Plan or any Award under any law deemed applicable
by the Committee, such provision shall be construed or deemed amended to
12
<PAGE> 13
conform to the applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Committee, materially altering the intent
of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(h) Other Laws
The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines
that the issuance of transfer or such Shares or such other consideration might
violate any applicable law or regulation or entitle the Company to recover the
same under Section 16(b) of the Exchange Act, and any payment tendered to the
Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant,
holder or beneficiary. It is intended that the Plan and any grant of an Award
made to a person subject to Section 16 of the Exchange Act meet all of the
requirements of Rule 16b-3. If any provision of the Plan or any such Award would
disqualify the Plan or such Award under, or would otherwise not comply with,
Rule 16b-3, such provision or Award shall be construed or deemed amended to
conform to Rule 16b-3.
(i) No Trust or Fund Created
Neither the Plan nor any Award shall create or be construed to create a
trust or separate fund of any kind or a fiduciary relationship between the
Company or any Affiliate and a Participant or any other Person. To the extent
that any Person acquires a right to receive payments from the Company or any
Affiliate pursuant to an Award, such right shall be no greater than the right of
any unsecured general creditor of the Company or any Affiliate.
(j) No Fractional Shares
No fractional Shares shall be issued or delivered pursuant to the Plan or
any Award, and the Committee shall determine whether cash, other securities, or
other property shall be paid or transferred in lieu of any fractional Shares or
whether such fractional Shares or any rights thereto shall be cancelled,
terminated, or otherwise eliminated.
(k) Headings
Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation of the Plan or
any provision thereof.
SECTION 10. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of November 28, 1994, provided the Plan is
subsequently approved by the stockholders of the Company within 12 months
thereafter.
SECTION 11. TERM OF THE PLAN
No Award shall be granted under the Plan after November 27, 2004. However,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award theretofore granted may, and the authority of the Board or
the Committee to amend, alter, adjust, suspend, discontinue, or terminate any
such Award or to waive any conditions or rights under any such Award shall,
extend beyond such date.
13
<PAGE> 1
EXHIBIT 10.13
FIRST AMENDMENT TO
UNION TEXAS PETROLEUM HOLDINGS, INC.
1992 STOCK OPTION PLAN
WHEREAS, UNION TEXAS PETROLEUM HOLDINGS, INC. (the "Company") has
heretofore adopted the UNION TEXAS PETROLEUM HOLDINGS, INC. 1992 STOCK OPTION
PLAN (the "Plan"); and
WHEREAS, the Company desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan shall be amended, subject to stockholder approval,
as follows, effective as of January 26, 1995:
1. Subparagraph (c) of Paragraph X of the Plan shall be deleted and the
following shall be substituted therefor:
"In the event that the Committee determines that any dividend or other
distribution (whether in the form of cash, Stock, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Stock or other securities of the Company,
issuance of warrants or other rights to purchase Stock or other securities
of the Company, or other similar corporate transaction or event affects the
Stock such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and type of shares of Stock (or other securities or
property) with respect to which Options may be granted, (ii) the number and
type of shares of Stock subject to outstanding Options, and (iii) the grant
or exercise price with respect to any Option or, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Option;
provided, in each case, that with respect to Incentive Stock Options and
Options intended to qualify as performance based compensation under Section
162(m)(4)(C) of the Code, no such adjustment shall be authorized to the
extent that such authority would cause the Plan to violate Section
422(b)(1) of the Code or would cause such Option to fail to so qualify
under Section 162(m) of the Code, as the case may be, or any successor
provisions thereto; and provided, further, that the number of shares of
Stock subject to any Option shall always be a whole number. In addition to
the Committee's authority set forth in Paragraph X(b) and (c) of the Plan,
in order to maintain the Optionees' rights in the event of any Change in
Control, as hereinafter defined, the Committee, as constituted before such
Change in Control, is hereby authorized and directed to provide for the
acceleration of any time periods relating to the exercise or realization of
all Options so that such Option may be exercised or realized in full, and
has sole discretion, as to any Option, either at the time such Option is
made hereunder or any time thereafter, to take any one or more of the
following actions: (i) provide for the purchase of any such Option, either
automatically or upon the Optionee's request, for an amount of cash equal
to the amount that could have been attained upon the exercise of such
Option or realization of the Optionee's rights had such Option been
currently exercisable or payable; (ii) make such adjustment to any such
Option then outstanding as the Committee deems appropriate to reflect such
Change in Control; or (iii) if equitable and in the best interests of the
Company and its shareholders, cause any such Option then outstanding to be
assumed, or new rights substituted therefor, by the acquiring or surviving
corporation after such Change in Control. The Committee may, in its
discretion, include such further provisions and limitations in any Option
Agreement as it may deem equitable and in the best interests of the
Company. A "Change in Control" shall be deemed to occur (1) if any person
or persons or entity or entities (other than Petroleum Associates, L.P.,
KKR Partners II, L.P. and any entity controlling, controlled by or under
common control with any such entities, separately or in the aggregate
("KKR")) acquires 75% or more of the assets of the Company or a successor
of the Company or such successor's parent corporation (based upon the then
current fair market value thereof) or 50% or more of the Company's then
outstanding voting stock or a successor's or such successor's parent
corporation's then outstanding voting
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<PAGE> 2
securities, and, if there shall be more than one class of voting securities
thereof, then of the combined voting power held by all classes of voting
securities of the Company, a successor corporation or its parent
corporation (whether such acquisition of stock or assets occurs pursuant to
a single transaction or several related transactions or series of
transactions), (2) upon the approval by the Company's stockholders of a
plan of liquidation or dissolution of the Company or a successor of the
Company or such successor's parent corporation, or (3) upon the approval by
the Company's stockholders of a merger or consolidation and such
transaction was determined to be a Change in Control, which transaction and
determination was approved by a majority of the Company's Board of
Directors in actions taken prior to, and with respect to such transaction."
2. As amended hereby, the Plan is specifically ratified and reaffirmed.
2
<PAGE> 1
EXHIBIT 10.14
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made the 31st day of May, 1995.
BETWEEN:
1. UNION TEXAS PETROLEUM LIMITED, a company incorporated in England whose
registered number is 708552 and whose registered office is 5th Floor,
Bowater House, 68-114 Knightsbridge, London SW1X 7LR ("Buyer");
2. ORYX U.K. ENERGY COMPANY, a corporation organized and existing under
the laws of the State of Delaware whose principal place of business is
Charter Place, Vine Street, Uxbridge, Middlesex, England UB8 1EZ,
("Seller").
WHEREAS:
The Seller wishes to sell and Buyer wishes to purchase Seller's undivided
interest under U.K. Continental Shelf Licence P213 encompassing Area A of Block
16/26 (containing Alba Field) and Area C of Block 16/26, all under the terms of
this Agreement.
NOW THEREFORE IT IS HEREBY AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement, including its recitals and schedules, the
following expressions shall, except where expressly stated
otherwise, have the following respective meanings:
"ACCRUALS BASIS" means that basis of accounting under which
costs and benefits are regarded as applicable to the period in
which the liability for the cost is incurred or the rights to
the benefits arise regardless of when invoiced, paid or
received;
"AFFILIATE" means in relation to any Party, any company or
other entity which controls or is controlled by that Party or
is controlled by a company or other entity which controls that
Party. "Control" means the right to exercise, directly or
indirectly, more than 50% of the voting rights of a company or
other entity;
"ASSET" means Seller's undivided interest in and under the
Licence and the Seller's 15.5% interest in and under the Joint
Operating Agreement and, in particular, the Seller's 15.5%
interest in Block 16/26 Area A and Block
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<PAGE> 2
16/26 Area C, (including, without limitation, all equipment, materials,
Production Facilities and associated records and data and the burden of
all corresponding obligations and liabilities), attaching to such
interests, including the corresponding rights and interests in and
under the Asset Documents;
"ASSET DOCUMENTS" means all the agreements relating to the
Asset as listed in Schedule 1;
"BLOCK 16/26 AREA A" means that area defined in the Joint
Operating Agreement as Area A of Block 16/26 (including,
without limitation, the Alba Field, as defined in the Joint
Operating Agreement and as may be defined by the Secretary of
State from time to time);
"BLOCK 16/26 AREA C" means that area defined in the Joint
Operating Agreement as Area C of Block 16/26;
"BUSINESS DAY" means a day other than Saturday or Sunday on
which banks are or, as the context may require, were generally
open for business in the City of London and New York City;
"COMPLETION" means the completion of the sale and purchase of
the Asset as provided for in Clause 6;
"COMPLETION DATE" means the date on which Completion actually
occurs;
"CO-VENTURERS" means the persons (and their respective
successors and assigns) other than Seller having undivided
interests in the Licence and in all agreements, instruments and
documents related to the Licence, including for the avoidance
of doubt the Joint Operating Agreement;
"DATA" means all accounts, books and data relating to the Asset
including, without prejudice to the generality of the
foregoing, contracts, correspondence, information, data and
reports (including petroleum engineering, reservoir
engineering, drilling, geological, geophysical and all other
kinds of technical data and reports, samples, well-logs and
analyses in whatever form the same are maintained) together
with (i) traded data other than the Traded Data; and (ii) so
far as practical, meaningful extracts relating to the Asset of
the accounts, books and data in the possession of the Seller,
which relate partly to the Asset, but excluding information and
data consisting of analysis prepared by
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Seller for its own internal corporate decision making and/or
review process;
"DATA ROOM DOCUMENTS" means the documents relating to the Asset
and made available for the Buyer's inspection in the data rooms
located at Seller's offices together with such other documents
as Seller may have provided to the Buyer prior to the date
hereof, all as set out in Schedule 6 hereto;
"EFFECTIVE DATE" means 00:01 hours GMT on 1st July, 1995;
"ENCUMBRANCE" means any mortgage, charge (whether fixed or
floating), pledge, lien, equity or encumbrance;
"FURTHER DOCUMENTS" means the Working Interest Assignment and
the other documents listed on Schedule 7 in a form reasonably
satisfactory to Buyer and in accordance with this Agreement, to
be executed in accordance with Clause 6.1.3 and 6.1.4, subject
to such amendments required by the Secretary of State and in
respect of documents set out in part 2 of Schedule 7 any
reasonable amendments required by the Co-Venturers, together
with such other documents as are required to effect Completion;
"DTI" means the Department of Trade and Industry;
"INTERIM PERIOD" means the period of time commencing on the
Effective Date and extending up to and including the Completion
Date;
"JOINT OPERATING AGREEMENT" means the Joint Operating Agreement
dated 10 October 1990 as amended and restated;
"LIBOR" for any period means the rate per annum quoted by
National Westminster Bank plc, 53 Threadneedle Street, London
EL2P 2JN for one (1) month deposits and in amounts of at least
U.S. one (1) million dollars ($1,000,000) to leading banks in
the London Interbank market at or about 11:00 a.m. (GMT) on
Monday of each succeeding one (1) week term for the relevant
period;
"LICENCE" means the United Kingdom Petroleum Production Licence
P. 213 granted under the provisions of the Petroleum
(Production) Act 1934, as applied by the Continental Shelf Act
1964 and any extensions, amendments, variations or renewals of,
or substitutions in respect of the whole or any part of, such
licence in effect at the date hereof or hereafter;
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"OPERATOR" shall mean the Operator, as such term is defined in
the Joint Operating Agreement;
"PARTY" means any party to this Agreement;
"PETROLEUM" has the meaning assigned to it under the Licence;
"PRODUCTION FACILITIES" means the Alba Field platform and
floating storage unit as described on schedule 5, and any other
associated facilities, assets and systems related thereto;
"REFERENCE INTEREST RATE" means LIBOR for the period in
question for the sum due but unpaid on such date for the period
in question plus one (1) percentage point;
"SECRETARY OF STATE" means Her Majesty's Secretary of State for
Trade and Industry;
"SUBSIDIARY" has the meaning assigned to it by Section 736 of
the Companies Act 1985;
"TRADED DATA" means, with respect to the Asset, data which
relates to an area unrelated thereto and which has been
acquired by trade, purchase or otherwise by or on behalf of the
Seller as a party to the Joint Operating Agreement from a third
party or parties where such data cannot be provided to the
Buyer because such transfer is prohibited by the Agreement
under which it was acquired;
"WORKING INTEREST ASSIGNMENT" means the assignment of the Asset
in a form reasonably satisfactory to Buyer and in accordance
with this Agreement.
1.2 All references to clauses, recitals and schedules are, unless
otherwise expressly stated, references to clauses of, and
recitals and schedules to, this Agreement.
1.3 The headings in this Agreement are inserted for convenience
only and shall be ignored in construing this Agreement.
1.4 Any reference to any statute or statutory instrument in this
Agreement shall be a reference to the same as amended,
supplemented or re-enacted from time to time.
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1.5 Unless the context otherwise requires, reference to the
singular shall include a reference to the plural and vice-
versa; and reference to any gender shall include a reference to
all other genders.
1.6 The schedules attached hereto form part of this Agreement. In
the event of any conflict between the provisions of this
Agreement and the schedules hereto, the provisions of this
Agreement shall prevail.
1.7 Documents "in the Agreed Terms" shall mean documents in the
form agreed between the Parties and initialled by the Parties
for identification.
2. TRANSFER OF THE ASSET
2.1 Subject as provided in Clause 3, the Seller as legal and
beneficial owner of the Asset hereby agrees for the
consideration provided for herein to transfer to the Buyer at
Completion and the Buyer hereby agrees to accept at Completion
the Asset free from all Encumbrances, rights of pre-emption,
royalty interests, production payments, carried interests,
deferred obligations or any other third party rights or
security interests whatsoever (except as specified in the
Licence or in the Joint Operating Agreement).
2.2 On Completion, the transfer referred to in Clause 2.1 above
shall, as between the Parties, be deemed for all purposes to be
made with effect from the Effective Date.
3. CONDITIONS OF COMPLETION
3.1 Completion is conditioned on:
3.1.1 the receipt of all necessary written consents and
approvals of the Secretary of State;
3.1.2 the receipt of any necessary written consents and
approvals of each of the Co-Venturers;
3.1.3 the receipt of the confirmation by Buyer from each
of the Co-Venturers that the Further Documents are
in a form and content satisfactory to each of them
and will be executed by each of them without further
material amendment;
3.1.4 the Buyer having made the visit to the Production
Facilities referred to in Clause 5.4 and having
given no notice to Seller, within 48 hours from the
return of its representatives to the U.K.
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mainland that, in its reasonable opinion, the
Production Facilities have not been designed,
fabricated, installed or managed in a good,
workmanlike fashion, or are not in conformance with
industry standards in the U.K. North Sea;
3.2 Completion is also conditioned on:
3.2.1 there not occurring before Completion (a) any
casualty, losses or damages (including in either
case, without limitation, curtailment or loss of
production), (b) any mechanical failure or breakdown
of equipment or (c) any event in relation to the
Asset which gives or may give rise to environmental
or pollution liability, and any of (a), (b) or (c),
individually or in the aggregate, having or being
reasonably expected to have an after-tax impact on
Buyer of a monetary value exceeding U.S.
$20,000,000; provided that if any of the same shall
occur the Buyer shall have the option to terminate
this Agreement and, subject to Clause 18.2 and 18.3,
upon said termination no Party shall have any
liability except for a breach of this Agreement
committed before such termination.
3.3 Seller shall use all reasonable endeavours to procure, with
prompt dispatch, the satisfaction of the conditions set out in
Clause 3.1 and give the appropriate notices of transfer in the
Agreed Terms to the Co-Venturers within five (5) Business Days
of the execution of this Agreement and shall keep the Buyer
informed of progress.
4. CONSIDERATION AND OTHER PAYMENTS
4.1 Consideration
The consideration for the transfer of the Asset to the Buyer
shall be Two Hundred Seventy Million ($270,000,000.00) U.S.
dollars, exclusive of Value Added Tax ("VAT").
4.2 Other Payments
The Buyer shall pay to Seller, or Seller shall pay to the Buyer
(as the case may be) such further sums as may be payable
pursuant to Clauses 4.3, 4.4, 4.5, 8.3, 9.1, 10.8, 10.9, 11.1
and 11.2. Subject to Clause 4.4.4, any
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sums that may become payable pursuant to Clause 4.4 shall be an
adjustment to the consideration and shall be added to or
subtracted from the relevant balance of the asset allocation
pursuant to Clause 8.1.
4.3 Working Capital
4.3.1 The Buyer shall pay to Seller or Seller shall pay to
the Buyer (as the case may be) a sum to reflect the
monetary value of the working capital attributable
to the Asset as set forth in Schedule 4. The said
sum shall be set out in a statement to be prepared
and given by Seller to the Buyer within sixty (60)
days after the Completion Date. Such statement shall
be a statement of working capital and a statement of
adjustments made pursuant to Schedule 4.
4.3.2 Working capital balances used for the purposes of
the statement referred to in Clause 4.3.1 shall be
taken from the individual accounts, statements and
records as of June 30, 1995. A copy of the
individual accounts, statements and records shall be
provided by Seller to the Buyer with such statement.
Verification (including the right of audit) of the
aforesaid statement shall be carried out within
sixty (60) days of receipt of such statement, and
subject to the provisions of Clause 4.3.3,
settlement of the sum detailed in the statement, as
varied by any adjustment agreed between Seller and
Buyer, shall be made within the said sixty (60) day
period.
4.3.3 In the event that Seller and Buyer cannot agree upon
any matter to which the statement referred to in
Clause 4.3 relates, the undisputed amount shall be
paid and the disputed amounts shall be referred for
resolution to an independent chartered accountant
appointed by Seller and Buyer or in the event of
Seller and Buyer differing as to such appointment by
the President for the time being of the Institute of
Chartered Accountants of England and Wales. The
accountant shall be afforded such access to books,
records, accounts and documents in the possession of
each of the Parties as he may reasonably request.
For the purposes of this Agreement, the accountant
so appointed shall be deemed to be acting as an
expert and not as an arbitrator, and the decision of
the accountant so appointed shall, in the absence of
manifest error, be final and binding on Seller and
Buyer and
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settlement of any outstanding amount shall be made within (5) Business
Days of such decision. The costs of the accountant shall be borne
equally by Seller and Buyer.
4.3.4 The Buyer shall pay to Seller or Seller shall pay to
the Buyer (as the case may be) interest on such
further sums as may be payable from the date such
sums are due to be paid to the date the sums are
actually paid (both dates inclusive) at a rate per
annum equal to one (1) percentage point above the
Reference Interest Rate calculated on a daily basis
using simple interest.
4.4 Interim Period Adjustment
4.4.1 Buyer shall pay Seller the amount of all obligations
and liabilities pertaining to the Asset and Licence
paid by Seller in respect of the Interim Period.
4.4.2 Seller shall pay to the Buyer the amount of all
receipts pertaining to the Asset and Licence
received by Seller in respect of the Interim Period.
4.4.3 For the purposes of this Clause, obligations and
liabilities will include, inter alia, cash calls for
operating costs and receipts will include, inter
alia, actual proceeds from the sale of Petroleum
produced after the Effective Date. The Buyer will
refund an amount equal to the Petroleum Revenue Tax
("PRT") and Corporation Tax ("CT") at the assumed
rate of twenty-eight percent (28%) incurred by the
Seller relating to the Asset for the period between
the Effective Date and the Completion Date. For
purposes of clarity, the PRT incurred by the Seller
will be that amount of PRT actually paid or accrued
by the Seller and CT incurred by the Seller will be
a notional calculation based on the assumed rate of
twenty-eight percent (28%) times receipts less
revenue expenditures and PRT paid or accrued but
with no capital allowances on any capital
expenditure during the Interim Period.
4.4.4 If the Seller does not incur liability to PRT and CT
relating to the Asset for the period between the
Effective Date and the Completion Date, which
situation shall arise if the Inland Revenue accepts
the Effective Date as the date of transfer
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for tax purposes, then the sums repaid by the Buyer to the Seller and
by the Seller to the Buyer pursuant to the foregoing provisions of this
Clause 4.4 shall be deemed to have been incurred or received (as the
case may be) directly by the Buyer as if the transfer of the Asset had
taken place on the Effective Date for tax purposes. The Buyer may, at
its own costs and expense with such assistance from the Seller as Buyer
may reasonably request, seek to obtain the consent of the Inland
Revenue to accept the Effective Date as the date of transfer for tax
purposes and if such consent is obtained, the Seller agrees to file its
PRT and CT returns accordingly and notwithstanding Clause 4.2 any sums
that become payable pursuant to this Clause 4.4 shall not be an
adjustment to the consideration.
4.4.5 The amounts set out above shall be set out in a
statement to be prepared and given by Seller to the
Buyer within sixty (60) days after Completion.
Verification, including the right of audit of said
statement, shall be carried out within sixty (60)
days of receipt of such statement and subject to the
provisions of Clause 4.4.6, settlement of the
amounts detailed in the statement as varied by any
adjustment agreed between Seller and Buyer shall be
made within the said sixty (60) day period.
4.4.6 In the event that Seller and the Buyer cannot agree
upon any matter to which the statement referred to
in Clause 4.4.5 relates, the undisputed amounts
shall be paid and the disputed amounts shall be
referred for resolution to an independent chartered
accountant appointed by Seller and Buyer or, in the
event of Seller or Buyer differing as to such
appointment, by the President for the time being of
the Institute of Chartered Accountants of England
and Wales. The accountant shall be afforded such
access to books, records, accounts and documents in
the possession of each of the Parties as he may
reasonably request. For the purposes of this
Agreement, the accountant so appointed shall be
deemed to be acting as an expert and not as an
arbitrator, and the decision of the accountant so
appointed shall, in the absence of manifest error,
be final and binding on Seller and the Buyer and
settlement of
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any outstanding amount shall be made within five (5)
business days of such decision. The costs of the
accountant shall be borne equally by Seller and the
Buyer.
4.5 INTEREST
4.5.1 In the event that Completion occurs after the
Effective Date, the consideration shall be treated
as having become due on the Effective Date and the
Buyer shall pay to the Seller on the Completion
Date, in addition to the consideration, interest on
the consideration at a rate per annum equal to the
Reference Interest Rate calculated on a daily basis
using simple interest for the number of days elapsed
between the Effective Date and the day immediately
preceding the Completion Date (both dates
inclusive).
4.5.2 Interest shall be paid on any payments due under
Clause 4.4.1 and Clause 4.4.2 at a rate per annum
equal to the Reference Interest Rate calculated on a
daily basis using simple interest for the number of
days elapsed between the time receipts are received
and payments are made in accordance with Clause
4.4.1 and Clause 4.4.2.
4.6 Any and all amounts to be paid pursuant to this Agreement shall
be paid in same day funds to the Seller's account as the Seller
shall nominate in writing if owed to the Seller, or if owed to
the Buyer in same day funds to such bank account as the Buyer
shall nominate in writing.
5. CONDUCT OF OPERATIONS PRIOR TO THE COMPLETION DATE
5.1 Subject to any obligations of confidentiality by which Seller
is bound, Seller shall in respect of the Asset from the date of
this Agreement to Completion Date:
5.1.1 provide Buyer with copies of all notices and other
information provided by or to Seller under the Joint
Operating Agreement as the same become available;
5.1.2 provide to Buyer (and its authorized employees,
agents and professional advisers) access to all such
technical, legal and financial information in the
possession of Seller which is or has been made
available to Co-Venturers relating to the Asset as
Buyer may from time to time reasonably require;
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5.1.3 not without prior written consent of Buyer (not to
be unreasonably withheld) agree to amend the
Licence, (or to execute a new joint operating
Agreement in respect of the Licence) any of the
Asset Documents or any other project documents;
5.1.4 keep the Buyer informed of and consult with the
Buyer with regard to the marketing of Petroleum and
on all material proposals affecting the Asset and,
prior to any operating committee meeting or any
material decision relating to the Asset, consult
with the Buyer and (in each case) act or vote in
accordance with the instructions of the Buyer
provided that in the opinion of the Seller,
exercised in good faith, the interests of the Seller
are not thereby materially prejudiced;
5.1.5 continue to meet all expenditures, receive all
income, perform all obligations relating to the
Asset and generally conduct all business in relation
to the Asset in a proper and workmanlike manner and
exercise its voting power to ensure that the Asset
is well maintained and fully safeguarded;
5.1.6 wherever practicable consult with Buyer and give due
consideration to the view of Buyer before exercising
its voting rights in connection with any matter or
proposal to be voted upon by the operating committee
established under the Joint Operating Agreement; and
5.1.7 not sell, charge, transfer, assign, encumber in any
manner whatsoever the Asset or purport to seek to do
any of the same.
5.2 Without prejudice to the foregoing, Seller shall (subject to
any confidentiality obligations by which it is bound) ensure
that pending Completion Buyer is kept fully informed of
developments relating to the Asset including but not limited
to:
(a) the making of any cash calls;
(b) the adoption or proposal of any budget; and
(c) the receipt of any significant geological or other
data.
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5.3. Nothing hereunder shall require Seller to consult or obtain the
consent of Buyer in respect of actions taken by the Operator in
cases of emergency under the Joint Operating Agreement.
5.4 Between the date of this Agreement and Completion Date, the
Buyer shall have the right to visit the Production Facilities,
either by itself or, if the Operator refuses consent for such
visit, through Buyer's selected representatives with Seller.
6. COMPLETION
6.1 Completion shall, subject to the provisions of Clauses 3.2 and
18, take place as soon as possible (but in no event prior to
July 1, 1995) within five (5) business days after the
conditions in 3.1 have been satisfied at such location outside
the territory of the U.K. and at such time as is mutually
agreed by the Parties, when all of the following shall occur:
6.1.1 the Buyer shall pay to Seller by wire transfer in
United States dollars the consideration set out in
Clause 4.1 of this Agreement together with any sums
payable in accordance with Clause 4.5.1;
6.1.2 Buyer shall deliver to Seller:
a copy, certified as a true copy and in full force
and effect by a director and the secretary or an
assistant secretary of the Buyer of a resolution of
the Board of Directors of the Buyer approving the
acquisition of the Asset, on the terms of this
Agreement, by the Buyer, and authorizing the
execution on behalf of the Buyer of all the Further
Documents and all other documents contemplated
hereby;
6.1.3 Seller shall deliver to Buyer:
(a) a copy, certified as a true copy and in full
force and effect by a director and the
secretary or an assistant secretary of the
Seller, of a resolution of the Board of
Directors of the Seller approving the disposal
of the Asset, on the terms of this Agreement,
by the Seller, and authorizing the execution
by the Seller of the Further Documents and all
other documents contemplated hereby; and
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(b) the Further Documents (other than the Working
Interest Assignment) duly executed by the
Seller and, as appropriate, by all of the
Co-Venturers; and
(c) signed originals of the Asset Documents or
copies thereof.
6.1.4 The Parties shall execute the Working Interest
Assignment and comply with its terms.
6.1.5 The Parties shall execute all such other documents
and do all acts and things as may be reasonably
required in order to effect the transfer of the
Asset to the Buyer and otherwise carry out the true
intent of this Agreement.
6.2 Seller will deliver to Buyer the Data and copies of the Data
Room Documents and such other documentation relevant to the
Asset as Buyer may reasonably request as soon as practicable
after the Completion Date.
6.3 Without prejudice to the provisions of Clause 6.1.5 the Parties
agree, notwithstanding Completion, to execute and deliver to
each other all such additional instruments and to do all such
further acts and things as may reasonably be required, or as
may be reasonably requested by any Party, to fully vest in, and
assure each Party of, all rights, powers and privileges
intended to be granted to or conferred upon the Parties under
or pursuant to this Agreement and to otherwise give effect to
the transactions contemplated under this Agreement.
7. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
7.1 Subject to the provisions of Clause 7.3, Seller hereby
represents and warrants to Buyer in the terms set out in
Schedule 2 and such representations and warranties shall be
deemed to be repeated immediately prior to Completion on the
basis that all references to "the date hereof" shall be deemed
to refer to the Completion Date.
7.2 Buyer hereby represents and warrants to the Seller in the terms
set out in Schedule 3 and such representations and warranties
shall be deemed to be repeated immediately prior to Completion
on the basis that all references to "the date hereof" shall be
deemed to refer to the Completion Date.
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7.3 Except with regard to the warranties 1, 2, 3 and 21 in Schedule
2, the Buyer shall not be entitled to claim that any fact or
matter constitutes a breach of the representations and
warranties set out in Schedule 2 hereto to the extent that such
fact or matter is fairly disclosed in the Data Room Documents
relating to the Asset.
7.4 Seller shall ensure that the representations and warranties
referred to in Clause 7.1 are true and accurate on the
Completion Date but if notwithstanding such efforts any matter
or thing occurs of which Seller is aware and which would be
inconsistent with any of such representations and warranties on
the Completion Date Seller shall promptly notify Buyer thereof.
7.5 In the event of any matter or thing materially inconsistent
with any of the representations or warranties given by Seller
in or pursuant to this Agreement being notified by Seller to
Buyer prior to Completion (or Buyer otherwise becoming aware of
such matter or thing) and such matter or thing continuing to be
materially inconsistent at the date agreed for Completion,
Buyer shall not be bound to complete the acquisition of the
Asset and Buyer may by notice in writing to Seller prior to
Completion rescind this Agreement. Such right of rescission
shall be Buyer's only remedy, and there shall be no liability
on the part of Buyer or Seller with respect to such matters or
things whether or not this Agreement is rescinded.
7.6 The maximum aggregate liability of Buyer or Seller as the case
may be, for all claims for breach of any representation or
warranty under Clauses 7.1 or 7.2 arising after Completion
shall in no event exceed the aggregate of the amount of
consideration, interest (if any) paid thereon, and any amounts
paid by Buyer pursuant to Clause 4.2.
7.7 If Buyer receives any claim or becomes aware of any fact which
may result in Buyer having a claim against Seller under this
Clause, Buyer shall promptly notify Seller thereof in writing
and Seller shall be entitled to require Buyer to take any
reasonable action it may request to resist such claim and Buyer
will give Seller all co-operation, access and assistance for
the purposes of considering such claim as they may reasonably
require; provided always that Buyer is indemnified to its
reasonable satisfaction by Seller against all claims, costs,
expenses, damages or losses which may thereby be incurred.
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<PAGE> 15
7.8 Where any statement in Schedule 2 is qualified by the
expression "so far as Seller is aware" or any similar
expression, that statement shall be deemed to include an
additional statement that it has been made after due and
careful enquiry.
7.9 The Seller acknowledges that the Buyer has entered into this
Agreement in reliance upon the warranties and has been induced
by the warranties to enter into this Agreement.
7.10 The benefit of the warranties may be assigned in whole or in
part to any assignee of the Purchaser permitted in accordance
with Clause 17.
7.11 No claim may be made by either Party for a breach of any
representation or warranty made by Seller or Buyer, in the case
of a claim relating to taxes following the seventh anniversary
of the Completion Date and in the case of any other claim
following the second anniversary of the Completion Date, and no
liability shall attach to Seller or Buyer, as the case may be,
in respect of any such claim until the aggregate amount of all
such claims against Seller or Buyer, as the case may be,
exceeds one million (1,000,000 pounds sterling) U.K. pounds
sterling in which event Buyer or Seller, as the case may be,
shall be liable for the whole of such amount and not merely
the excess.
7.12 Any claim for breach of warranty under Schedule 2, including
but not limited to lost production or loss of profits shall be
limited in any recovery to the economic impact on Buyer based
on Buyer's economic assumptions used to develop the
consideration paid for the Asset.
8. TAXATION
8.1 Seller and Buyer acknowledge that:
(a) the consideration represents expenditure incurred by
Buyer in acquiring plant and machinery relating to
the Asset to the extent of the amount of the
Seller's gross expenditure incurred with respect to
the Asset in acquiring plant and machinery less any
relevant disposal proceeds up to but not including
the Completion Date, and the remainder of the
consideration relates to the balance of the Asset
including the Licence. Seller covenants that it
will treat the said allocated expenditures on
plant and machinery as disposal proceeds for the
purposes of Section 24(6) Capital Allowance Act
1990, and Buyer covenants that it will treat
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such amount as capital expenditure incurred for the
purposes of the Capital Allowance Act 1990, and the
Seller will provide details of such amount to the
Buyer as soon as reasonably practicable after
Completion.
(b) subject to Clause 4.4.4 any sums that may become
payable pursuant to Clause 4.4 and shall be added to
or subtracted from the balance of the Asset;
(c) no part of the consideration or other payments
pursuant to Clause 4.2 whether or not attributed to
the balance of the Asset, shall be treated as a
reimbursement of expenditure which the Seller has
incurred whether comprising intangible drilling
expenditure or otherwise; and
(d) they will each present their returns for tax
purposes on the basis stated above and that they
will use all reasonable endeavors to agree with the
Oil Taxation Office the figures so presented.
8.2 The Seller shall prepare and the Seller and the Buyer shall
deliver to the Board of Inland Revenue in a timely fashion a
notice in accordance with paragraph 3 of Schedule 17 to the
Finance Act 1980 and shall not make an application under
paragraph 4 of the said Schedule for the provisions of Parts II
and III of the said Schedule not to apply to the transfer of
the Asset.
8.3 Buyer confirms that it is registered for VAT in the UK and that
it intends to use the assets acquired for its own trade of
exploration/exploitation. Seller and Buyer confirm that neither
of them has elected to waive exemption under section 51 and
paragraphs 2-4 Schedule 10 Value Added Tax Act 1994 in relation
to the Asset and they each intend that the sale shall be
treated as a transfer of part of the business of the Seller as
a going concern within the terms of Section 49 of the Value
Added Tax Act 1994 and of Article 5 Value Added Tax (Special
Provisions) Order 1992, hereinafter referred to as "Article 5".
In the event that Seller is advised in writing by H.M. Customs
and Excise that the transaction is subject to VAT and if called
upon to do so by Seller, Buyer agrees to pay to Seller, on
presentation of a valid VAT invoice, any amounts due in respect
of VAT relating to this transaction set out in such invoice and
within thirty (30) days of demand.
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8.4 It is agreed that:
(a) the Seller shall cooperate with any reasonable
request by the Buyer who may, at its own cost and
expense, send to HM Customs & Excise a letter
seeking a ruling as to whether the sale of the Asset
is to be treated as a transfer of part of the
business of the Seller as a going concern and the
Seller will assist the Buyer with all reasonable
endeavours to obtain such a ruling as soon as
reasonably practicable;
(b) if the sale is to be so treated the Seller shall
send to HM Customs & Excise a letter seeking
confirmation that Seller be permitted to keep and
preserve the records for the period prior to the
date of Completion referred to in Section 49 of the
Value Added Tax Act 1994 relating to the Asset and
if such confirmation is not given, the Seller shall
transfer to the Buyer all such records as relate to
the Asset;
(c) if HM Customs & Excise state in writing that the
sale of the Asset does not fall within the
provisions of Article 5 the Seller shall cooperate
with any reasonable request by the Buyer who may, at
its own cost and expense, seek a ruling from HM
Customs & Excise that the sale is outside the scope
of VAT being a supply of services in relation to
land situated outside the UK and that no VAT will
become due on this transaction;
(d) if HM Customs & Excise state in writing that the
sale of the Asset is taxable, the Seller shall
cooperate with any reasonable request by the Buyer
who may, at its own cost and expense, promptly take
all steps to dispute such statement. In the event
that it is subsequently held or decided that no VAT
is payable in respect of the sale of the Asset and
the Seller receives any repayment or credit in
respect of an amount which had been paid by the
Buyer as VAT to the Seller, the Seller shall
promptly reimburse such amount to the Buyer; and
(e) the Seller and Buyer shall copy each to the other
all relevant correspondence between either of them
and HM Customs and Excise.
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9. AUDIT CLAIMS
9.1 Notwithstanding any other provision of this Agreement, in the
event that any audit in respect of any period prior to the
Effective Date is made under the Joint Operating Agreement
prior to the third anniversary of Completion or any request is
made for an adjustment to any joint account relating to the
Asset under the Joint Operating Agreement the Buyer shall,
subject to it being reimbursed for all its reasonable expenses
in so doing, give the Seller access to the results of such
audit or request to the extent that they relate to periods
prior to the Effective Date; and (a) to the extent that any
payment in respect thereof is made by the Operator such payment
shall be made to Seller and (b) to the extent that any payment
is required to be made in respect thereof to the Operator, such
payment shall be made by Seller to Buyer.
9.2 To the extent that the Seller shall have any information,
records or data in respect of the Asset or the Asset Documents
for periods prior to the Effective Date that it has not made
available to the Buyer on or after Completion and/or to the
extent that the Buyer shall request the assistance of the
Seller in the interpretation and construction of the same and
for any information, records or data that have been delivered
to it by the Seller hereunder, the Seller shall, subject to it
being reimbursed for all its reasonable expenses in so doing,
make the same available to the Buyer promptly after receipt of
said request.
10. INSURANCE
10.1 Neither Buyer nor Seller shall be obligated to arrange for
insurance coverage on the Asset protecting the other party for
any loss, damage, liability or expense for which such party may
have responsibility under this Agreement, except as may be
provided in Clauses 10.4, 10.5, 10.6 and 10.7 herein. Both
Buyer and Seller shall be free to arrange such insurance
coverage on the Asset protecting their respective interests as
each may deem advisable for their own account and at their own
expense and shall cooperate with each other to ensure, as far
as practicable, that the insurance coverage held by either
party is appropriately coordinated and does not conflict.
10.2 Upon execution of this Agreement, Seller shall furnish all such
information as Buyer may reasonably request in order to enable
Buyer to arrange for its own insurance coverage during and
after the Interim Period, including
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information in respect of Seller's insurance coverage on the
Asset.
10.3 Seller shall use reasonable efforts to ensure its policies
providing insurance coverage on the Asset are endorsed such
that the underwriters and/or insurers thereof shall have no
right of contribution from the Buyer's insurance, and Buyer
shall use reasonable efforts to ensure its policies providing
insurance coverage on the Asset are endorsed such that the
underwriters and/or insurers thereof shall have no right of
contribution from the Seller's insurance.
10.4 During the Interim Period, Seller shall maintain or obtain or
cause to be obtained in respect of the Asset all such insurance
coverage as may be necessary to comply with applicable laws,
rules and regulations and as may be required by any Asset
Document. Buyer shall be named as an additional insured and
loss payee on all such insurance wherever possible.
10.5 At the request of the Buyer, Seller shall, as soon as
reasonably practicable following such request, have Buyer
joined wherever possible on any insurance policy effected by
the Seller in respect of the Asset, other than any business
interruption insurance effected by the Seller, as an additional
assured and loss payee during the Interim Period, in respect of
Buyer's rights and interest under this Agreement. Seller shall
provide certification or other documentation evidencing that
the Buyer has been included as an additional insured and loss
payee as soon as reasonably practicable.
10.6 In respect of the Gard Protection and Indemnity Entry on the
Floating Storage Unit and the CRISTAL Entry on the shuttle
tanker(s), Seller and Buyer shall endeavour as soon as
reasonably practicable, at the request of Buyer, to have the
Buyer protected thereunder.
10.7 In respect of any Operator arranged insurance in respect of the
Asset, Seller and Buyer shall endeavor to have the Buyer
protected thereunder.
10.8 In respect of the insurance coverage which may be afforded to
the Buyer pursuant to the terms of Clauses 10.4, 10.5, 10.6,
and 10.7, at the Completion Date or on the 10th Business Day
after their receipt by Seller (whichever occurs later), Seller
shall pay to Buyer the sum of any proceeds of such insurance
coverage received against loss or damage suffered or liability
or expense incurred in relation to the Asset during the Interim
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Period, less any amount which has been applied (or represents
sums which have been applied)
10.8.1 in rectifying or remedying such loss or damage or
meeting such liability or expense; and
10.8.2 in reimbursing Seller for expenditure incurred prior
to the Effective Date for rectifying or remedying
such loss or damage or meeting such liability of
expense.
Seller shall use reasonable endeavours to pursue (or assist and
cooperate with Buyer to pursue, if Buyer is able to do so in
its own name) any claim against insurers for loss or damage,
liability or expense relating to the Asset suffered during the
Interim Period. If the insurers dispute or resist any claim
Seller shall promptly notify Buyer who shall be entitled to
require Seller to pursue (or assist and cooperate with Buyer to
pursue, if Buyer is able to do so in its own name) the claim
provided that it shall indemnify Seller against any reasonable
and verifiable costs and expenses Seller may thereby incur in
pursuing such claim.
10.9 In respect of the insurance coverage which may be afforded to
the Buyer pursuant to the terms of Clauses 10.4, 10.5, 10.6,
and 10.7, Buyer shall pay to Seller the insurance premiums
relative to such insurance during the Interim Period, at the
time of the interim period adjustment as provided in Clause
4.4. Any premiums due to Seller hereunder shall not exceed
reasonable commercial market rates.
11. INDEMNITY
11.1 Seller shall be liable for all costs, charges, expenses,
liabilities and obligations in respect of the Asset which
accrue or relate to any period before the Effective Date.
Seller shall reimburse and indemnify Buyer against any such
costs, charges, expenses, liabilities and obligations which are
paid by Buyer and have not been reimbursed to Buyer pursuant to
the other provisions of this Agreement, including Clauses 4.3
and 4.4.
11.2 Buyer shall be liable for all costs, charges, expenses,
liabilities and obligations in respect of the Asset which
accrue or relate to any period on and after the Effective Date.
Buyer shall reimburse and indemnify Seller against any such
costs, charges, expenses, liabilities and obligations which are
paid by Seller and have not been reimbursed to Seller pursuant
to the other provisions of
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this Agreement, including Clauses 4.3 and 4.4. Without
prejudice to the generality of the foregoing Buyer shall
indemnify and hold Seller harmless against any costs, charges,
expenses, liabilities and obligations incurred in abandoning
any field property (including but not limited to wells) or
facilities acquired pursuant to this Agreement or held or
brought into being with respect to the Asset to the extent
that such costs, charges, expenses, liabilities and
obligations are attributable to the Asset and accrue and
relate to any period on or after the Effective Date.
11.3 Notwithstanding any other provision of this Agreement Seller
shall not under any circumstances be liable to Buyer and Buyer
shall not under any circumstances be liable to Seller under,
arising out of or in any way connected with this Agreement or
the Further Documents for any punitive loss or damages however
imposed.
11.4 No claim may be made by either Party under Clause 11.1 or 11.2
by the Buyer or Seller as the case may be, until the aggregate
amount of all such claims against Seller or Buyer, as the case
may be, exceeds Fifty Thousand (pound sterling 50,000) U.K.
pounds sterling, in which event Buyer or Seller, as the case
may be, shall be liable for the whole of such amount and not
merely the excess.
12. ANNOUNCEMENTS
12.1 Any Party shall be entitled to make a public announcement or
statement regarding the Asset except that the prior approval of
all other Parties shall be required where such announcement or
statement relates to:
a. the negotiation and/or execution of this Agreement
or the Further Documents or Completion;
b. subject to Clause 15 hereof, the terms of this
Agreement.
12.2 Each party shall submit any proposed releases referred to in
Clause 12(a) and 12(b) above to the other for comment and will
give due consideration to any comments received.
12.3 Nothwithstanding the foregoing, neither Party shall be
precluded from making any public announcement or release
regarding the Asset or the transaction hereunder if the same is
required by applicable law, the U.S. Securities and Exchange
Commission or any recognized stock exchange on which the shares
of the Parties or their respective Affiliates are traded.
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13. NOTICES
13.1 Any notice pursuant to this Agreement may be given by telex,
facsimile transmission or letter to the Party to be served at
the address stated in Clause 13.3 or such other address as may
be given for the purposes of this Agreement by written notice
to the other Parties.
13.2 A notice given by telex or facsimile transmission shall be
deemed to be served on the first Business Day following the
date of dispatch, but a notice sent by post or delivered
personally shall not be deemed to be delivered until received.
13.3 The respective addresses for service are:
Seller: Oryx U.K. Energy Company
Charter Place, Vine Street, Uxbridge,
Middlesex, England UB8 1EZ
Facsimile No.: 01 895-270-208
With copy to:
Oryx Energy Company
13155 Noel Road
Dallas, Texas 75240-5067
Attention: Director Commercial
Transactions
Buyer: Union Texas Petroleum Limited
Bowater House, 5th Floor
68/114 Knightsbridge
London, SW1X 7LR
Facsimile: 01-44-171-584-7785
Attention: Ms. Carol Boyd
With copy to:
Union Texas Petroleum Holdings, Inc.
1330 Post Oak Blvd.
Houston, Texas 77056
Facsimile: (713) 968-2725
Attention: General Counsel
14. COSTS AND EXPENSES
14.1 The Parties shall each pay their own costs and expenses in
relation to the preparation and execution of this Agreement and
the documents contemplated hereby or executed pursuant hereto.
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14.2 Buyer shall be responsible for payment in a timely fashion of
any and all United Kingdom stamp duties and any other charges
payable on or in respect of this Agreement, the Further
Documents and all transfers and/or documents contemplated
hereby or executed pursuant hereto.
15. CONFIDENTIALITY
The terms of this Agreement shall be held confidential by the Parties
and shall not be divulged in any way to any third party by either Party
provided that either Party may, without such approval, disclose such
terms to:
15.1 any outside professional consultants, upon obtaining a similar
undertaking of confidentiality (but excluding this proviso)
from such consultants; or
15.2 any bank or financial institution from whom such Party is
seeking or obtaining finance, upon obtaining a similar
undertaking of confidentiality (but excluding this proviso)
from such bank or institution; or
15.3 the extent required by any applicable laws, the Licence, or the
requirements of any recognized stock exchange in compliance
with its rules and regulations; or
15.4 any government agency lawfully requesting such information; or
15.5 any court of competent jurisdiction acting in pursuance of its
powers; or
15.6 any Affiliate upon obtaining a similar undertaking of
confidentiality.
16. VARIANCE
The terms and conditions of this Agreement shall only be varied by an
agreement in writing signed by each of the Parties and specifically
referring to this Agreement.
17. ASSIGNMENT
None of the rights, liabilities or obligations of either of the Parties
under this Agreement are assignable except with the prior written
consent of the other Party, such consent not to be unreasonably
withheld; provided, however, that Buyer shall be free to assign its
rights under this Agreement to any Affiliate but only on terms that all
such rights should ipso facto lapse if for any reason whatsoever any
such assignee
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ceases to be an Affiliate unless said Assignee shall, before ceasing to
be an Affiliate, reassign said rights to Buyer.
18. TERMINATION
18.1 Subject to Clause 18.2, this Agreement shall terminate if
Completion does not occur due to failure to fulfill the
conditions set out in Clause 3.1 on or before 30 November 1995.
Upon such termination, no Party shall have any liability
hereunder except for a breach of this Agreement committed
before such termination.
18.2 Notwithstanding termination of this Agreement pursuant to
Clause 18.1, the provisions of Clause 15 shall continue to
apply for a period of two years from the date hereof.
18.3 Termination of this Agreement pursuant to Clause 18.1 shall be
without cost to any Party except where a Party has failed to
use all reasonable endeavours to effect Completion in
accordance with its obligations hereunder in which event the
other Party shall be entitled to all costs and expenses
reasonably incurred in seeking to effect such Completion in
accordance with the provisions hereof.
19. GENERAL
19.1 This Agreement constitutes the entire agreement between the
Parties and supersedes all warranties and representations
previously made and all previous agreements, arrangements or
understandings between the Parties relating to the matters
contained herein whether oral or in writing made or dated prior
to the date hereof. Buyer hereby confirms to Seller that they
have not relied on any representation save those referred to in
this Agreement.
19.2 No waiver by any Party of any breach of a provision of this
Agreement shall be binding unless made expressly in writing.
Further, any such waiver shall relate only to the breach to
which it expressly relates and shall not apply to any
subsequent or other breach.
19.3 Time shall be of the essence of this Agreement.
19.4 This Agreement shall enure to the benefit of and be binding
upon the respective successors and permitted assigns of the
Parties.
-24-
<PAGE> 25
20. GOVERNING LAW JURISDICTION
The construction, validity and performance of this Agreement shall be
governed by English Law and the Parties hereby submit to the
jurisdiction of the High Court in London.
21. COUNTERPARTS
This Agreement may be executed in counterparts by the parties hereto on
separate counterparts, each of which when so executed and delivered
shall be an original, but all of which shall together constitute one
and the same instrument.
IN WITNESS WHEREOF, the Parties have caused their duly authorized signatories to
execute and deliver this Agreement on the day and year first above written.
UNION TEXAS PETROLEUM LIMITED )
)
By:/s/ W.M. Krips )
--------------------------- )
)
Name: W.M. Krips )
------------------------- )
)
Title: Director )
----------------------- )
)
in the presence of: )
/s/ Luis H. Derrota )
--------------------------- )
)
Name: Luis H. Derrota )
------------------------- )
ORYX U.K. ENERGY COMPANY )
)
By:/s/ Andrew B. Derman )
--------------------------- )
)
Name: Andrew B. Derman )
------------------------- )
)
Title: Authorized Signatory )
------------------------ )
)
in the presence of: )
/s/ William C. Lemmer )
---------------------------- )
)
Name: William C. Lemmer )
------------------------ )
-25-
<PAGE> 26
SCHEDULES
The following schedules to the Sale and Purchase Agreement have been omitted,
but will be furnished upon request:
Schedule 1: List of Asset Documents
- ----------
Schedule 2: Representations and Warranties of the Seller
- ----------
Schedule 3: Representations and Warranties of the Buyer
- ----------
Schedule 4: Working Capital
- ----------
Schedule 5: Description of Alba Field Platform and Floating Storage Unit
- ----------
Schedule 6: List of Data Room Documents
- ----------
Schedule 7: List of Further Documents
- ----------
<PAGE> 1
Exhibit 15
INDEPENDENT ACCOUNTANTS' AWARENESS LETTER
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that Union Texas Petroleum Holdings, Inc. has included our report
dated July 25, 1995 (issued pursuant to the provisions of Statement on Auditing
Standards No. 71) in the following registration statements:
Registration Statement on Form S-8 (No. 33-26105) filed on December 21, 1988
Registration Statement on Form S-8 (No. 33-13575) filed on April 29, 1991
Registration Statement on Form S-8 (No. 33-21684) filed on April 29, 1991
Registration Statement on Form S-8 (No. 33-44045) filed on November 19, 1991
Registration Statement on Form S-8 (No. 33-64928) filed on June 24, 1993
Registration Statement on Form S-8 (No. 33-59213) filed on May 10, 1995
We are also aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
Price Waterhouse LLP
Houston, Texas
July 25, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S SEC FORM 10-Q FOR THE PERIOD ENDING JUNE 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 14,687
<SECURITIES> 0
<RECEIVABLES> 73,263
<ALLOWANCES> 1
<INVENTORY> 40,252
<CURRENT-ASSETS> 173,638
<PP&E> 2,497,852
<DEPRECIATION> 1,215,676
<TOTAL-ASSETS> 1,577,553
<CURRENT-LIABILITIES> 252,268
<BONDS> 430,362
<COMMON> 4,391
0
0
<OTHER-SE> 412,049
<TOTAL-LIABILITY-AND-EQUITY> 1,577,553
<SALES> 439,982
<TOTAL-REVENUES> 451,253
<CGS> 153,563
<TOTAL-COSTS> 250,491
<OTHER-EXPENSES> 37,649
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,510
<INCOME-PRETAX> 152,603
<INCOME-TAX> 85,825
<INCOME-CONTINUING> 66,778
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,778
<EPS-PRIMARY> .76
<EPS-DILUTED> 0
</TABLE>
