<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 SEPTEMBER 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 October 20, 1995, there were 87,611,428 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>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------ ------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,653 $ 8,389
Accounts and notes receivable, less allowance for doubtful accounts . . . . . 61,557 54,773
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,850 43,228
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . 45,372 30,675
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 169,432 137,065
Equity investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,533 114,505
Property, plant and equipment, at cost, less accumulated
depreciation, depletion and amortization* . . . . . . . . . . . . . . . . . . 1,588,759 1,286,278
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,919 6,786
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,880,643 $1,544,634
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . $ 2,292 $ 2,292
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,336 106,032
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96,720 89,281
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,883 48,069
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 37,063 41,862
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 315,294 287,536
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614,055 430,085
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415,227 365,777
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115,261 111,737
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,459,837 1,195,135
---------- ----------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,391 4,391
Paid in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,418 19,889
Cumulative foreign exchange translation adjustment and other . . . . . . . . (61,194) (65,476)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 460,152 394,806
Common stock held in treasury, at cost:
104,155 shares at September 30, 1995 and 221,565 shares at
December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,961) (4,111)
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 420,806 349,499
---------- ----------
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . $1,880,643 $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.
1
<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 NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Sales and operating revenues . . . . . . . . . . . . . $197,255 $193,707 $637,237 $533,412
Interest income and other revenues . . . . . . . . . . 82 796 412 919
Net earnings of equity investee . . . . . . . . . . . 6,387 5,253 17,328 15,432
-------- -------- -------- --------
203,724 199,756 654,977 549,763
Costs and other deductions:
Product costs and operating expenses . . . . . . . . . 71,111 71,763 224,674 205,708
Exploration expenses . . . . . . . . . . . . . . . . . 22,256 15,375 59,905 39,702
Depreciation, depletion and amortization . . . . . . . 51,998 48,494 136,645 123,536
Selling, general and administrative expenses . . . . . 5,362 6,135 17,643 18,039
Interest expense . . . . . . . . . . . . . . . . . . . 9,106 3,415 19,616 7,953
-------- -------- -------- --------
Income before income taxes . . . . . . . . . . . . . . . . 43,891 54,574 196,494 154,825
Income taxes . . . . . . . . . . . . . . . . . . . . . . . 32,168 39,933 117,993 105,273
-------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 11,723 $ 14,641 $ 78,501 $ 49,552
======== ======== ======== ========
Earnings per share of common stock . . . . . . . . . . . . $ .13 $ .17 $ .89 $ .57
======== ======== ======== ========
Dividends per share of common stock . . . . . . . . . . . . $ .05 $ .05 $ .15 $ .15
======== ======== ======== ========
Weighted average number of shares outstanding (000s) . . . 87,763 87,577 87,712 87,656
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
2
<PAGE> 4
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,501 $ 49,552
Adjustment to reconcile net income to net cash provided by operating
activities:
Depreciation, depletion and amortization . . . . . . . . . . . . . . . . 136,645 123,536
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . (7,234) (6,473)
Net income of equity investee . . . . . . . . . . . . . . . . . . . . . . (17,328) (15,432)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,431 2,873
-------- ---------
Net cash provided by operating activities before changes in other
assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . 194,015 154,056
(Increase) decrease in accounts and notes receivable . . . . . . . . . . (7,106) 4,254
(Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . 3,666 (110)
(Increase) decrease in prepaid expenses and other assets . . . . . . . . (16,225) 1,372
Increase in accounts payable and other liabilities . . . . . . . . . . . 748 134
Decrease in income taxes payable . . . . . . . . . . . . . . . . . . . . (11,551) (13,503)
-------- ---------
Net cash provided by operating activities . . . . . . . . . . . . . . 163,547 146,203
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment . . . . . . . . . . . . . . . . . (369,436) (101,089)
Cash provided by equity investee . . . . . . . . . . . . . . . . . . . . . 19,300 50
Net cash required by sale of businesses . . . . . . . . . . . . . . . . . . (798) (1,144)
-------- ---------
Net cash required by investing activities . . . . . . . . . . . . . . . . (350,934) (102,183)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . 218,406
Payments to settle long-term debt . . . . . . . . . . . . . . . . . . . . . (1,146) (36,146)
Net payments under credit facilities . . . . . . . . . . . . . . . . . . . . (35,503) (15,000)
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13,155) (13,151)
Proceeds from issuance of common stock . . . . . . . . . . . . . . . . . . . 311
Proceeds from issuance of treasury stock . . . . . . . . . . . . . . . . . . 1,035
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . (498) (4,877)
Net proceeds from short-term borrowings . . . . . . . . . . . . . . . . . . 31,512 17,025
-------- ---------
Net cash (required) provided by financing activities . . . . . . . . . . 200,651 (51,838)
-------- ---------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . 13,264 (7,818)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . 8,389 18,143
-------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . $ 21,653 $ 10,325
======== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . . . . . . . . . . $ 19,048 $ 6,632
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136,435 118,029
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<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. ("UTPH") and its consolidated subsidiaries (referred
to herein individually and collectively as the "Company") at September 30,
1995, and the results of operations and cash flows for the three and nine
months ended September 30, 1995 and 1994. The results of operations for the
nine months ended September 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 $270 million for the interest, subject to certain closing adjustments.
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. The Company increased plant, property and equipment by $328
million, the sum of the purchase price of $270 million and a deferred tax
payable of $58 million arising from the purchase.
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. KKR currently owns 21.8 million shares of the Company's
common stock.
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 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 is 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 the pronouncement will have no material impact on the Company.
4
<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.
NOTE 8 - SUPPLEMENTAL GUARANTOR INFORMATION - In connection with the sale of
the Company's 8-3/8% Senior Notes, 8-1/2% Senior Notes and $100 million
principal amount of 8.25% Senior Notes due 1999 (collectively referred to
herein as the "Senior Notes"), the following wholly owned direct or indirect
subsidiaries of UTPH (collectively, the "Guarantors") unconditionally and fully
guaranteed on a joint and several basis UTPH's obligations to pay principal,
premium, if any, and interest with respect to the Senior Notes: Union Texas
East Kalimantan Limited ("Kalimantan"), Union Texas Petroleum Energy
Corporation ("Energy"), Union Texas International Corporation
("International"), Union Texas Products Corporation ("Products") and Unistar,
Inc. ("Unistar"). The Guarantors are also guarantors under the Company's Credit
Facilities. Each of the Guarantors is a Delaware corporation, except that
Kalimantan is incorporated under the laws of the Bahamas, although, the
applicable laws of the Bahamas are similar to the laws of Delaware with respect
to the availability of assets to satisfy the obligations to the holders of the
Senior Notes. Kalimantan and Unistar together own a 37.81% interest in a joint
venture that represents the Company's operations in Indonesia. Products
conducts the Company's domestic hydrocarbon products businesses.
International, a subsidiary of Energy, is a holding company for subsidiaries
that conduct the Company's principal international operations, which include
operations in Indonesia by Kalimantan, a Guarantor, and in the United Kingdom
and Pakistan by two non-Guarantor subsidiaries. Separate financial statements
of the Guarantors of the Senior Notes are not considered to be material to the
holders of the Senior Notes. See Notes 14 and 19 of Notes to Consolidated
Financial Statements in the Company's 1994 annual report on Form 10-K for
information describing the Company's operations through the two Guarantor
subsidiaries in Indonesia relating to a production sharing contract as well as
through the non-Guarantor subsidiaries in the United Kingdom, Pakistan and
other international locations.
Investments in subsidiaries are accounted for by the Company on the equity
basis for purposes of the supplemental information. In 1995, the Company
changed its basis of presentation for investments in subsidiaries from the cost
to the equity method for purposes of the supplemental guarantor information.
Accordingly, prior year information has been restated.
Certain reclassifications were made to conform all of the financial information
to the financial presentation on a consolidated basis. The principal
eliminating entries eliminate investments in subsidiaries, intercompany
balances and intercompany dividends.
5
<PAGE> 7
SUPPLEMENTAL COMBINING BALANCE SHEET
SEPTEMBER 30, 1995
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
UTPH SUBSIDIARIES SUBSIDIARIES ENTRIES UTPH
---- ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . $ 905 $ 3,116 $ 17,632 $ 21,653
Accounts and notes receivable, less
allowance for doubtful accounts . . . 52 33,960 27,545 61,557
Inventories . . . . . . . . . . . . . . 19,011 21,839 40,850
Prepaid expenses and other current assets 1,557 6,575 37,240 45,372
Intercompany notes receivable . . . . . 665,646 $ (665,646)
-------- ---------- ---------- ----------- ----------
Total current assets . . . . . . . . . 2,514 62,662 769,902 (665,646) 169,432
Intercompany investments . . . . . . . . 622,017 351,627 (973,644)
Equity investment . . . . . . . . . . . . 112,533 112,533
Property, plant and equipment, at cost,
less accumulated depreciation,
depletion and amortization* . . . . . . 93,128 390,525 1,105,106 1,588,759
Other assets . . . . . . . . . . . . . . 5,569 4,350 9,919
-------- ---------- ---------- ----------- ----------
Total assets . . . . . . . . . . . . . $723,228 $ 917,347 $1,879,358 $(1,639,290) $1,880,643
======== ========== ========== ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . $ 2,292 $ 2,292
Short-term debt . . . . . . . . . . . . $ 75,000 63,336 138,336
Accounts payable . . . . . . . . . . . . 1,380 $ 16,855 78,485 96,720
Taxes payable . . . . . . . . . . . . . 26,348 22,837 (8,302) 40,883
Other current liabilities . . . . . . . 10,703 2,991 23,369 37,063
Intercompany notes payable . . . . . . . 12,960 652,686 $ (665,646)
-------- ---------- ---------- ----------- ----------
Total current liabilities . . . . . . . 113,431 55,643 811,866 (665,646) 315,294
Long-term debt . . . . . . . . . . . . . 590,000 24,055 614,055
Deferred income taxes . . . . . . . . . . 2,003 105,216 308,008 415,227
Other liabilities . . . . . . . . . . . . 1,445 4,837 108,979 115,261
Intercompany clearing account . . . . . . (443,694) (289,568) 154,273 578,989
-------- ---------- ---------- ----------- ----------
Total liabilities . . . . . . . . . . . 263,185 (123,872) 1,407,181 (86,657) 1,459,837
-------- ---------- ---------- ----------- ----------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . 4,391 19 121,082 (121,101) 4,391
Paid in capital . . . . . . . . . . . . 19,418 1,689,426 557,898 (2,247,324) 19,418
Cumulative foreign exchange
translation adjustment and other . . . (21,957) (39,237) (61,194)
Retained earnings (deficit) . . . . . . 460,152 (648,226) (167,566) 815,792 460,152
Common stock held in treasury, at cost . (1,961) (1,961)
-------- ---------- ---------- ----------- ----------
Total stockholders' equity . . . . . . 460,043 1,041,219 472,177 (1,552,633) 420,806
-------- ---------- ---------- ----------- ----------
Total liabilities and stockholders'
equity . . . . . . . . . . . . . . . $723,228 $ 917,347 $1,879,358 $(1,639,290) $1,880,643
- --------------- ======== ========== ========== ============ ==========
</TABLE>
* The Company follows the successful efforts method of accounting for oil and
gas activities.
6
<PAGE> 8
SUPPLEMENTAL COMBINING BALANCE SHEET
DECEMBER 31, 1994
ASSETS
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
UTPH SUBSIDIARIES SUBSIDIARIES ENTRIES UTPH
---- ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . $ 528 $ 5,299 $ 2,562 $ 8,389
Accounts and notes receivable, less
allowance for doubtful accounts . . . 273 31,302 23,198 54,773
Inventories . . . . . . . . . . . . . . 23,764 19,464 43,228
Prepaid expenses and other current
assets . . . . . . . . . . . . . . . . 1,457 5,074 24,144 30,675
Intercompany notes receivable . . . . . 105,502 243,504 (349,006)
-------- --------- ---------- ----------- ----------
Total current assets . . . . . . . . . 2,258 170,941 312,872 (349,006) 137,065
Intercompany investments . . . . . . . . 511,122 100,521 (611,643)
Equity investment . . . . . . . . . . . . 114,505 114,505
Property, plant and equipment, at cost,
less accumulated depreciation,
depletion and amortization* . . . . . . 88,951 394,745 802,582 1,286,278
Other assets . . . . . . . . . . . . . . 3,920 2,866 6,786
-------- --------- ---------- ----------- ----------
Total assets . . . . . . . . . . . . . $606,251 $ 780,712 $1,118,320 $ (960,649) $1,544,634
======== ========= ========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . $ 2,292 $ 2,292
Short-term debt . . . . . . . . . . . . $ 40,000 66,032 106,032
Accounts payable . . . . . . . . . . . . 295 $ 23,727 65,259 89,281
Taxes payable . . . . . . . . . . . . . 21,904 26,746 (581) 48,069
Other current liabilities . . . . . . . 5,360 10,922 25,580 41,862
Intercompany notes payable . . . . . . . 8,395 340,611 $ (349,006)
-------- --------- ---------- ----------- ----------
Total current liabilities . . . . . . . 67,559 69,790 499,193 (349,006) 287,536
Long-term debt . . . . . . . . . . . . . 425,504 4,581 430,085
Deferred income taxes . . . . . . . . . . 2,003 107,707 256,067 365,777
Other liabilities . . . . . . . . . . . . 2,478 4,300 104,959 111,737
Intercompany clearing account . . . . . . (284,114) (363,270) 36,909 610,475
-------- --------- ---------- ----------- ----------
Total liabilities . . . . . . . . . . . 213,430 (181,473) 901,709 261,469 1,195,135
-------- --------- ---------- ----------- ----------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . 4,391 19 121,080 (121,099) 4,391
Paid in capital . . . . . . . . . . . . 19,888 1,721,287 272,441 (1,993,727) 19,889
Cumulative foreign exchange
translation adjustment and other . . . (22,153) (43,323) (65,476)
Retained earnings (deficit) . . . . . . 394,806 (759,121) (133,587) 892,708 394,806
Common stock held in treasury, at cost . (4,111) (4,111)
-------- --------- ---------- ----------- ----------
Total stockholders' equity . . . . . . 392,821 962,185 216,611 (1,222,118) 349,499
-------- --------- ---------- ----------- ----------
Total liabilities and stockholders'
equity . . . . . . . . . . . . . . . $606,251 $ 780,712 $1,118,320 $ (960,649) $1,544,634
- --------------- ======== ========= ========== =========== ==========
</TABLE>
* The Company follows the successful efforts method of accounting for oil and
gas activities.
7
<PAGE> 9
SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
UTPH SUBSIDIARIES SUBSIDIARIES ENTRIES UTPH
---- ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C>
Revenues:
Sales and operating revenues . . . . . $108,657 $ 89,866 $ (1,268) $197,255
Interest income and other revenues . . $ 3,584 (1,609) 10,962 (12,855) 82
Net earnings (losses) of
intercompany investees . . . . . . . 21,781 (14,748) (7,033)
Net income of equity investee . . . . 6,387 6,387
-------- -------- --------- -------- --------
25,365 98,687 100,828 (21,156) 203,724
Costs and other deductions:
Product cost and operating expenses . (557) 41,854 31,082 (1,268) 71,111
Exploration expenses . . . . . . . . . 479 21,777 22,256
Depreciation, depletion and
amortization . . . . . . . . . . . . 4,939 9,229 37,830 51,998
Selling, general and administrative
expenses . . . . . . . . . . . . . . (349) 1,706 4,005 5,362
Interest expense . . . . . . . . . . . 6,564 1,048 14,349 (12,855) 9,106
-------- -------- --------- -------- --------
Income before income taxes . . . . . . 14,768 44,371 (8,215) (7,033) 43,891
Income taxes . . . . . . . . . . . . . 3,045 22,590 6,533 32,168
-------- -------- --------- -------- --------
Net income . . . . . . . . . . . . . . $ 11,723 $ 21,781 $ (14,748) $ (7,033) $ 11,723
======== ======== ========= ========= ========
</TABLE>
8
<PAGE> 10
SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS
FOR THREE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
UTPH SUBSIDIARIES SUBSIDIARIES ENTRIES UTPH
---- ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C>
Revenues:
Sales and operating revenues . . . . . $121,893 $ 73,214 $ (1,400) $193,707
Interest income and other revenues . . $ 843 2,832 1,658 (4,537) 796
Net earnings (losses) of
intercompany investees . . . . . . . 22,507 (4,831) (17,676)
Net income of equity investee . . . . 5,253 5,253
-------- -------- --------- -------- --------
23,350 125,147 74,872 (23,613) 199,756
Costs and other deductions:
Product cost and operating expenses . 1 50,914 22,248 (1,400) 71,763
Exploration expenses . . . . . . . . . 3,639 11,736 15,375
Depreciation, depletion and
amortization . . . . . . . . . . . . 4,912 10,933 32,649 48,494
Selling, general and administrative
expenses . . . . . . . . . . . . . . 532 2,069 3,534 6,135
Interest expense . . . . . . . . . . . 3,086 1,239 3,627 (4,537) 3,415
-------- -------- --------- -------- --------
Income before income taxes . . . . . . 14,819 56,353 1,078 (17,676) 54,574
Income taxes . . . . . . . . . . . . . 178 29,789 9,966 39,933
-------- -------- --------- -------- --------
Net income . . . . . . . . . . . . . . $ 14,641 $ 26,564 $ (8,888) $(17,676) $ 14,641
======== ======== ========= ======== ========
</TABLE>
9
<PAGE> 11
SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
UTPH SUBSIDIARIES SUBSIDIARIES ENTRIES UTPH
---- ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C>
Revenues:
Sales and operating revenues . . . . . $366,936 $ 274,200 $ (3,899) $637,237
Interest income and other revenues . . $ 3,973 3,793 19,828 (27,182) 412
Net earnings (losses) of intercompany
investees . . . . . . . . . . . . . 110,895 (20,917) (89,978)
Net income of equity investee . . . . 17,328 17,328
-------- -------- --------- -------- --------
114,868 367,140 294,028 (121,059) 654,977
Costs and other deductions:
Product cost and operating expenses . 944 135,689 91,940 (3,899) 224,674
Exploration expenses . . . . . . . . . 2,368 57,537 59,905
Depreciation, depletion and
amortization . . . . . . . . . . . . 13,396 29,091 94,158 136,645
Selling, general and administrative
expenses . . . . . . . . . . . . . . 397 5,604 11,642 17,643
Interest expense . . . . . . . . . . . 13,846 3,107 29,845 (27,182) 19,616
-------- -------- --------- -------- --------
Income before income taxes . . . . . . 86,285 191,281 8,906 (89,978) 196,494
Income taxes . . . . . . . . . . . . . 7,784 80,386 29,823 117,993
-------- -------- --------- -------- --------
Net income . . . . . . . . . . . . . . $ 78,501 $110,895 $ (20,917) $(89,978) $ 78,501
======== ======== ========== ========= ========
</TABLE>
10
<PAGE> 12
SUPPLEMENTAL COMBINING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
UTPH SUBSIDIARIES SUBSIDIARIES ENTRIES UTPH
---- ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C>
Revenues:
Sales and operating revenues . . . . . $319,691 $ 216,715 $ (2,994) $533,412
Interest income and other revenues . . $ 3,004 8,933 2,137 (13,155) 919
Net earnings (losses) of intercompany
investees . . . . . . . . . . . . . 71,232 (3,782) (67,450)
Net earnings of equity investee . . . 15,432 15,432
-------- -------- --------- -------- --------
74,236 340,274 218,852 (83,599) 549,763
Costs and other deductions:
Product cost and operating expenses . (353) 139,995 69,060 (2,994) 205,708
Exploration expenses . . . . . . . . . 230 4,817 34,655 39,702
Depreciation, depletion and
amortization . . . . . . . . . . . . 12,059 31,869 79,608 123,536
Selling, general and administrative
expenses . . . . . . . . . . . . . . 423 5,907 11,709 18,039
Interest expense . . . . . . . . . . . 7,219 3,596 10,293 (13,155) 7,953
-------- -------- --------- -------- --------
Income before income taxes . . . . . . 54,658 154,090 13,527 (67,450) 154,825
Income taxes . . . . . . . . . . . . . 5,106 78,241 21,926 105,273
-------- -------- --------- -------- --------
Net income . . . . . . . . . . . . . . $ 49,552 $ 75,849 $ (8,399) $(67,450) $ 49,552
======== ======== ========== ========= ========
</TABLE>
11
<PAGE> 13
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
UTPH SUBSIDIARIES SUBSIDIARIES ENTRIES UTPH
---- ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . $ 78,501 $110,895 $ (20,917) $(89,978) $ 78,501
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization . . 13,396 29,091 94,158 136,645
Deferred income taxes . . . . . . . . . . . (2,189) (5,045) (7,234)
Income (losses) of equity investees . . . . (110,895) 3,589 89,978 (17,328)
Intercompany dividends received . . . . . . 80,563 (80,563)
Other . . . . . . . . . . . . . . . . . . . 1,894 1,537 3,431
(Increase) decrease in working capital
and other assets and liabilities . . . . . 9,150 (14,451) (25,167) (30,468)
-------- -------- --------- -------- --------
Net cash provided (required) by
operating activities . . . . . . . . . . (7,954) 207,498 44,566 (80,563) 163,547
-------- -------- --------- -------- --------
Cash flows from investing activities:
Additions to property, plant and equipment . (16,680) (28,304) (324,452) (369,436)
Cash provided by equity investee . . . . . . 19,300 19,300
Net cash required by sales of businesses . . (798) (798)
-------- -------- --------- -------- --------
Net cash required by investing
activities . . . . . . . . . . . . . . (16,680) (9,004) (325,250) (350,934)
-------- -------- --------- -------- --------
Cash flows from financing activities:
Net proceeds from long-term debt . . . . . . 197,713 20,693 218,406
Payments to settle long-term debt . . . . . (1,146) (1,146)
Net payments under credit facilities . . . . (35,503) (35,503)
Purchase of treasury stock . . . . . . . . . (498) (498)
Proceeds from issuance of treasury stock . . 1,035 1,035
Common stock dividends . . . . . . . . . . (13,155) (13,155)
Intercompany dividends . . . . . . . . . . . (67,500) (13,063) 80,563
Net proceeds from short-term borrowings . . 35,000 (3,488) 31,512
(Decrease) increase in net payable
to parent . . . . . . . . . . . . . . . . (159,581) (133,177) 292,758
-------- -------- --------- -------- --------
Net cash provided (required) by
financing activities . . . . . . . . . . 25,011 (200,677) 295,754 80,563 200,651
-------- -------- --------- -------- --------
Net increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . . 377 (2,183) 15,070 13,264
Cash and cash equivalents at beginning
of year . . . . . . . . . . . . . . . . . . 528 5,299 2,562 8,389
-------- -------- --------- -------- --------
Cash and cash equivalents at end of year . . $ 905 $ 3,116 $ 17,632 $ 21,653
======== ======== ========= ======== ========
</TABLE>
12
<PAGE> 14
SUPPLEMENTAL COMBINING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
UNCONSOLIDATED
-----------------------------------
NON-
GUARANTOR GUARANTOR ELIMINATING CONSOLIDATED
UTPH SUBSIDIARIES SUBSIDIARIES ENTRIES UTPH
---- ------------ ------------ ------- ----
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . $49,552 $75,849 $(8,399) $(67,450) $49,552
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization . . 12,059 31,869 79,608 123,536
Deferred income taxes . . . . . . . . . . . (2,974) (3,499) (6,473)
Income of equity investees . . . . . . . . . (71,232) (11,650) 67,450 (15,432)
Intercompany dividends received . . . . . . . 107,959 (107,959)
Other . . . . . . . . . . . . . . . . . . . 2,484 31,891 (31,502) 2,873
(Increase) decrease in working capital and
other assets and liabilities . . . . . . . 4,590 841 (13,284) (7,853)
-------- -------- --------- -------- --------
Net cash provided (required) by
operating activities . . . . . . . . . . (2,547) 233,785 22,924 (107,959) 146,203
-------- -------- --------- -------- --------
Cash flows from investing activities:
Additions to property, plant and
equipment . . . . . . . . . . . . . . . . . (13,266) (24,899) (62,924) (101,089)
Cash provided by equity investee . . . . . . 50 50
Net required by sales of businesses . . . . (1,144) (1,144)
-------- -------- --------- -------- --------
Net cash required by investing activities . (13,266) (24,849) (64,068) (102,183)
-------- -------- --------- -------- --------
Cash flows from financing activities:
Net payments under credit facilities . . . . (15,000) (15,000)
Payments to settle long-term debt . . . . . (35,000) (1,146) (36,146)
Net proceeds from short-term borrowings . . 17,025 17,025
Purchase of treasury stock . . . . . . . . . (4,877) (4,877)
Proceeds from issuance of common stock . . . 311 311
Dividends paid . . . . . . . . . . . . . . . (13,151) (13,151)
Intercompany dividends . . . . . . . . . . . (65,000) (42,959) 107,959
Increase (decrease) in net payable
to parent . . . . . . . . . . . . . . . . 66,336 (147,624) 81,288
-------- -------- --------- -------- --------
Net cash provided (required) by
financing activities . . . . . . . . . . 15,644 (212,624) 37,183 107,959 (51,838)
-------- -------- --------- -------- --------
Net decrease in cash and cash
equivalents . . . . . . . . . . . . . . . . (169) (3,688) (3,961) (7,818)
Cash and cash equivalents at beginning
of year . . . . . . . . . . . . . . . . . . 68 7,957 10,118 18,143
-------- -------- --------- -------- --------
Cash and cash equivalents at end of year . . $ (101) $ 4,269 $ 6,157 $ 10,325
========= ======== ========= ======== ========
</TABLE>
13
<PAGE> 15
UNION TEXAS PETROLEUM HOLDINGS, INC.
With respect to the unaudited consolidated financial information of Union Texas
Petroleum Holdings, Inc. for the three and nine month periods ended September
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 October 24, 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 September 30, 1995
and the related consolidated statements of operations for the three and nine
month periods ended September 30, 1995 and 1994 and of cash flows for the nine
month periods ended September 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
October 24, 1995
14
<PAGE> 16
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 SEPTEMBER 30, 1995 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1994
Net income for the three months ended September 30, 1995, was $12 million, or
$.13 per share as compared to net income of $15 million, or $.17 per share
reported for the same period in 1994. Earnings per share for the current
period were unfavorably impacted primarily by higher exploration expenses,
higher interest expense, lower LNG sales volumes and prices, partially offset
by higher U.S. ethylene margins and higher volumes in the U.K. North Sea.
Sales and operating revenues for the three months ended September 30, 1995,
were $197 million, $4 million higher than the third quarter of 1994.
International revenues totaled $149 million as compared to $147 million for the
third quarter of 1994. In the U.K., sales and operating revenues increased by
$14 million due to increased sales volumes, primarily as a result of the July
acquisition of the Alba field, and due to higher natural gas prices and
volumes. In Indonesia, sales decreased $15 million due to lower LNG and oil
volumes and lower sales prices for LNG and crude oil. 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 $3 million above 1994 primarily due
to higher volumes and gas prices partially offset by lower crude prices.
Average prices received and volumes sold by the Company's major operations
during the third 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. $15.16 $15.69 47 36
Pakistan 13.77 14.40 6 5
Indonesia 16.39 17.41 5 6
Indonesian LNG (Mcf) 2.92 3.06 191 234
Pakistan natural gas (Mcf) 1.37 1.04 45 40
U.K. natural gas (Mcf) 2.74 1.12 18 13
U.S. ethylene (pounds) .25 .21 1,180 1,280
</TABLE>
Petrochemical revenues totaled $48 million for the current period, essentially
level with 1994, while operating profit was $17 million as compared to $7
million in the prior period. The increase was primarily due to higher ethylene
sales prices, which offset lower sales volumes, and lower product cost, which
resulted in an increase in ethylene margins to 14 cents per pound in 1995 vs. 7
cents per pound in 1994.
Exploration expenses increased by $7 million primarily due to drilling
expenditures in Tunisia, Eastern Indonesia and Vietnam. Interest expense
increased by $6 million during the period due to higher levels of debt and
higher interest rates.
15
<PAGE> 17
NINE MONTHS ENDED SEPTEMBER 30, 1995 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1994
Net income for the nine months ended September 30, 1995, was $79 million, or
$.89 per share as compared to net income of $50 million, or $.57 per share
reported for the same period in 1994. The current period was favorably
impacted by higher U.S. ethylene margins and sales volumes, higher volumes in
the U.K. and Pakistan and higher oil and gas prices, partially offset by higher
exploration expenses and lower Indonesian LNG volumes.
Sales and operating revenues for the nine months ended September 30, 1995, were
$637 million, up from $533 million in the prior year. International revenues
totaled $478 million as compared to $418 million for the first nine months of
1994. In the U.K., sales and operating revenues increased by $49 million due
to higher prices and increased sales volumes. In Indonesia, sales increased $3
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 $8 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 nine 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. $16.22 $14.53 37 32
Pakistan 14.41 13.57 6 5
Indonesia 17.19 15.72 6 6
Indonesian LNG (Mcf) 3.06 2.82 212 228
Pakistan natural gas (Mcf) 1.32 1.08 45 44
U.K. natural gas (Mcf) 2.91 2.37 29 20
U.S. ethylene (pounds) .27 .18 1,271 1,145
</TABLE>
Petrochemical revenues totaled $158 million as compared to $114 million in the
first nine months of 1994, while operating profit was $55 million as compared
to $10 million in the prior period. The increase was primarily due to higher
ethylene sales prices and lower product cost, which resulted in an increase in
ethylene margins to 16 cents per pound in 1995 vs. 4 cents per pound in 1994,
and due to higher volumes.
Exploration expenses increased by $20 million primarily due to drilling
expenditures in Argentina, Ireland, Tunisia, Vietnam and Eastern Indonesia.
Interest expense increased by $12 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.
16
<PAGE> 18
FINANCIAL CONDITION
Cash flow from operations: Net cash provided by operating activities was $164
million in the first nine months of 1995, an increase of $17 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 higher exploration costs and lower Indonesian
volumes.
Ethylene margins have averaged approximately 16 cents per pound in the first
nine months of 1995, as compared to 4 cents per pound for the first nine months
of 1994 and have averaged approximately 14 cents per pound during the third
quarter of 1995 and 13 cents per pound for the month of September 1995. During
the last six months of 1994, ethylene margins improved significantly from the
first six months of 1994. The Company expects ethylene margins for the fourth
quarter of 1995 to be less than the fourth quarter of 1994, which averaged 12
cents per pound. Ethylene volumes were down about 8% in 1995's third quarter
compared to a year ago. The ethylene business is cyclical and the Company
cannot predict the duration of any trends in the business. 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 nine months of 1995 were
$144 million including capitalized interest of $17 million. Capital
expenditures for the first nine months of 1994 were $95 million including
capitalized interest of $14 million. The increase is principally due to
development costs for the Britannia field and increased exploration spending.
The Company expects that capital expenditures for 1995 will be approximately
$175 million excluding capitalized interest.
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 $270 million for the interest, subject
to certain closing adjustments. 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 recorded approximately 45 million barrels of oil as
proved reserves, of which approximately 30 million barrels are classified as
proved undeveloped. The Company expects to spend about $30 million net over
the next five years for future development expenditures related to those
reserves. The Alba field commenced production in January 1994 and 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 holding 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 (as defined below). 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. Based on current conditions, the Company expects to pay
17
<PAGE> 19
dividends without restriction under the Credit Facilities. At September 30,
1995, $290 million was outstanding under the Credit Facilities bearing interest
at a weighted average rate of 6.21% per annum.
At September 30, 1995, $138 million was outstanding under the Company's
uncommitted and unsecured lines of credit. These amounts outstanding bear
interest at a weighted average rate of 6.68% 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 is 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 September 30, 1995, 13 million pounds
sterling ($21 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. KKR currently owns
21.8 million shares of the Company's common stock.
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 329,536 shares as of December 31, 1994. The
repurchased stock will be used for general corporate purposes, including
fulfilling employee benefit program obligations. The Company has repurchased
54,900 shares during 1995 and at September 30, 1995, 104,155 shares of common
stock were held, at cost, as treasury shares.
Financial condition: In the first, second and third quarters of 1995, the
Company declared and paid a dividend of approximately $4.4 million on its
common stock. On October 20, 1995, the Company announced a dividend on its
common stock of $.05 per share to stockholders of record as of October 31,
1995, payable on November 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 the pronouncement will have no
material impact on the Company.
18
<PAGE> 20
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 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
10.1 Bontang V Loan Agreement, dated as of July
1, 1995, among BankAmerica International,
as Trustee under the Bontang V Trustee and
Paying Agent Agreement, as Borrower,
Bontang Train-G Project Finance Co., Ltd.
("Tranche A Lender"), the Banks named
therein as Tranche B Lenders, The Long-Term
Credit Bank of Japan, Limited, New York
Branch ("Facility Agent"), The Fuji Bank,
Limited ("Intercreditor Agent"), Credit
Lyonnais ("Technical Agent"), and Credit
Lyonnais, The Fuji Bank, Limited and The
Long-Term Credit Bank of Japan, Limited
(collectively, the "Arrangers").
10.2 Bontang V Producers Agreement, dated as of
July 1, 1995, by Perusahaan Pertambangan
Minyuak Dan Gas Bumi Negara, Virginia
Indonesia Company, OPICOIL Houston, Inc.,
Virginia International Company, LASMO Sanga
Sanga Limited, Union Texas East Kalimantan
Limited, Universe Gas & Oil Company, Inc.,
Total Indonesie, Unocal Indonesia Company
and Indonesia Petroleum, Ltd.
(collectively, the "Producers"), in favor
of the Tranche A Lender, Facility Agent,
Intercreditor Agent, Technical Agent and
Arrangers.
10.3 Bontang V Trustee and Paying Agent
Agreement, dated as of July 1, 1995, among
the Producers and BankAmerica
International, as Trustee and Paying Agent.
10.4 Amendment No. 1 to Amended and Restated
Badak Trustee and Paying Agent Agreement,
dated as of July 1, 1995, among Continental
Bank International, as Trustee, and the
Producers.
10.5 Amendment No. 1 to Amended and Restated
Bontang Excess Sales Trustee and Paying
Agent Agreement, dated as of July 1, 1995,
among Continental Bank International, as
Trustee, and the Producers.
19
<PAGE> 21
10.6 Amendment No. 1 to Bontang III Loan
Agreement, dated as of July 1, 1995, among
Continental Bank International, as Trustee
under the Bontang III Trustee and Paying
Agent Agreement, Train-E Finance Co., Ltd.,
as Tranche A Lender, and The Industrial
Bank of Japan Trust Company, as Agent on
behalf of the Majority Tranche B Lenders.
10.7 Second Amended and Restated 1973 LNG Sales
Contract, dated as of August 3, 1995,
between Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara ("Pertamina"), as Seller,
and Chubu Electric Power Co., Inc., The
Kansai Electric Power Co., Inc., Kyushu
Electric Power Co., Inc., Nippon Steel
Corporation, Osaka Gas Co., Ltd. and Toho
Gas Co., Ltd., as the Buyers, with related
letter agreement, dated August 3, 1995,
between Seller and Buyers.
10.8 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
and Oil Company, Inc. and Virginia
International Company.
10.9 First Amendment to Union Texas Petroleum
Savings Plan for Salaried Employees.
15 Independent Accountants' Awareness Letter.
27.1 Financial Data Schedule for the nine-month
period ended September 30, 1995.
(b) Reports on Form 8-K
The Company filed a Form 8-K dated July 14, 1995 to disclose
completion of financing on Train G in Indonesia and an update to
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.
The Company filed a Form 8-K dated July 28, 1995 to report the
completion of the acquisition of an interest in the Alba Field.
The Company filed a Form 8-K dated August 18, 1995 to disclose an
update of the Company's drilling results on the Kai-Tanimbar-Rebi
blocks in Eastern Indonesia and to attach a press release
announcing natural gas discoveries in Pakistan.
The Company filed a Form 8-K dated September 25, 1995 to attach
press releases announcing the participation in an exploration
concession in Italy, the results of an offshore Tunisia exploration
well and the results of an offshore Vietnamese exploration well.
The Company filed a Form 8-K/A dated October 2, 1995 to include
certain historical and pro forma information for the Alba
acquisition.
20
<PAGE> 22
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: October 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)
21
<PAGE> 23
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.1 Bontang V Loan Agreement, dated as of July 1, 1995, among
BankAmerica International, as Trustee under the Bontang V
Trustee and Paying Agent Agreement, as Borrower, Bontang
Train-G Project Finance Co., Ltd. ("Tranche A Lender"), the
Banks named therein as Tranche B Lenders, The Long-Term Credit
Bank of Japan, Limited, New York Branch ("Facility Agent"),
The Fuji Bank, Limited ("Intercreditor Agent"), Credit
Lyonnais ("Technical Agent"), and Credit Lyonnais, The Fuji
Bank, Limited and The Long-Term Credit Bank of Japan, Limited
(collectively, the "Arrangers").
10.2 Bontang V Producers Agreement, dated as of July 1, 1995, by
Perusahaan Pertambangan Minyuak Dan Gas Bumi Negara, Virginia
Indonesia Company, OPICOIL Houston, Inc., Virginia
International Company, LASMO Sanga Sanga Limited, Union Texas
East Kalimantan Limited, Universe Gas & Oil Company, Inc.,
Total Indonesie, Unocal Indonesia Company and Indonesia
Petroleum, Ltd. (collectively, the "Producers"), in favor of
the Tranche A Lender, Facility Agent, Intercreditor Agent,
Technical Agent and Arrangers.
10.3 Bontang V Trustee and Paying Agent Agreement, dated as of July
1, 1995, among the Producers and BankAmerica International, as
Trustee and Paying Agent.
10.4 Amendment No. 1 to Amended and Restated Badak Trustee and
Paying Agent Agreement, dated as of July 1, 1995, among
Continental Bank International, as Trustee, and the Producers.
10.5 Amendment No. 1 to Amended and Restated Bontang Excess Sales
Trustee and Paying Agent Agreement, dated as of July 1, 1995,
among Continental Bank International, as Trustee, and the
Producers.
10.6 Amendment No. 1 to Bontang III Loan Agreement, dated as of
July 1, 1995, among Continental Bank International, as Trustee
under the Bontang III Trustee and Paying Agent Agreement,
Train-E Finance Co., Ltd., as Tranche A Lender, and The
Industrial Bank of Japan Trust Company, as Agent on behalf of
the Majority Tranche B Lenders.
<PAGE> 24
10.7 Second Amended and Restated 1973 LNG Sales Contract, dated as
of August 3, 1995, between Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara ("Pertamina"), as Seller, and Chubu Electric
Power Co., Inc., The Kansai Electric Power Co., Inc., Kyushu
Electric Power Co., Inc., Nippon Steel Corporation, Osaka Gas
Co., Ltd. and Toho Gas Co., Ltd., as the Buyers, with related
letter agreement, dated August 3, 1995, between Seller and
Buyers.
10.8 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 and
Oil Company, Inc. and Virginia International Company.
10.9 First Amendment to Union Texas Petroleum Savings Plan for
Salaried Employees.
15 Independent Accountants' Awareness Letter.
27.1 Financial Data Schedule for the nine-month period ended
September 30, 1995.
<PAGE> 1
BONTANG V LOAN AGREEMENT
__________________________
US$969,500,000.00
BANKAMERICA INTERNATIONAL
as Trustee
under the Bontang V Trustee and Paying Agent Agreement
as Borrower,
BONTANG TRAIN-G PROJECT FINANCE CO., LTD.
as Tranche A Lender,
THE BANKS named herein as Tranche B Lenders
and
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
NEW YORK BRANCH
as Facility Agent
THE FUJI BANK, LIMITED
as Intercreditor Agent
CREDIT LYONNAIS
as Technical Agent
Tranche B Arranged By
CREDIT LYONNAIS
THE FUJI BANK, LIMITED
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
__________________________
Dated as of July 1, 1995
<PAGE> 2
TABLE OF CONTENTS*/
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1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.1 The Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.2 Purpose and Manner of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.4 Election of Interest Periods for Tranche B. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.5 Determination of Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.6 Alternative Interest Rates; Voluntary Prepayment . . . . . . . . . . . . . . . . . . . . . . . . 27
2.7 Interest Rate on Overdue Amounts; Other Indemnities . . . . . . . . . . . . . . . . . . . . . . 29
2.8 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2.9 The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.10 Repayment on Maturity Dates; Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.11 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.1 Allocation of Amounts; Substitute Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.2 Funds of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.3 Set-Off, Counterclaim and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.4 Change of Law; Certain Mandatory and Voluntary Prepayments; Additional Amounts . . . . . . . . . 38
3.5 Prepayments in Connection with Completion of Train G; Debt Coverage Reserve Mandatory
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.6 Notice of Certain Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.7 Other Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.8 Cancellation of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.9 No Reborrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.10 Payments to be Made at End of Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . 42
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.1 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.2 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.3 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.4 Registration and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.5 Agreement Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.6 Ranking of Advances; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
</TABLE>
__________________________________
* The Table of Contents is not a substantive part of this Agreement.
(i)
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4.8 Compliance with Other Instruments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.9 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.10 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.1 Conditions Precedent to the Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.2 Conditions Precedent to Certain Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.3 Conditions Precedent to the Initial and Subsequent Advances . . . . . . . . . . . . . . . . . . 50
5.4 Conditions Precedent to Advances to Fund Reserve Account . . . . . . . . . . . . . . . . . . . . 51
5.5 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.3 No Consent to Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.4 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.5 Notice at End of Availability Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.6 Selection of Qualified Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
8. AGENT, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
8.1 Appointment and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.2 Agent May Rely on Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.3 No Amendment to Duties of Agent Without Consent . . . . . . . . . . . . . . . . . . . . . . . . 60
8.4 Responsibilities of Agent and Arrangers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.5 Funding Costs of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.6 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.7 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.8 Arrangers, Intercreditor Agent, Technical Agent, Tranche A Lender . . . . . . . . . . . . . . . 62
8.9 Change of Administrative Office of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
8.10 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9. SOURCE OF DEBT SERVICE; NO RECOURSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.1 Accumulation for Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.2 Accumulation in Regular Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.3 Deposit in Debt Coverage Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.4 Payments Made from Debt Service Account and Reserve Account . . . . . . . . . . . . . . . . . . 64
9.5 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.6 Not to Limit Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
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10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
10.2 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.3 Use of English Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.4 Assignment; Successors and Assigns;
Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.6 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.7 Sharing of Set-Off and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.9 Table of Contents and Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.12 Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
(iii)
<PAGE> 5
EXHIBIT A FORM OF NOTICE OF BORROWING
EXHIBIT B-1 FORM OF NOTICE OF DEFERRAL
EXHIBIT B-2 FORM OF NOTICE OF INTEREST PERIOD
EXHIBIT B-3 FORM OF NOTICE OF COMPLETION
EXHIBIT C-1 FORM OF TRANCHE A NOTE
EXHIBIT C-2 FORM OF TRANCHE B NOTE
EXHIBIT C-3 FORM OF TRANSFER CERTIFICATE
EXHIBIT D-1 FORM OF LEGAL OPINION OF KELLEY, DRYE & WARREN,
COUNSEL FOR THE BORROWER
EXHIBIT D-2 FORM OF LEGAL OPINION OF ROBERT RYWKIN, COUNSEL TO
THE BORROWER
EXHIBIT E-1 FORM OF LEGAL OPINION OF BUDHY RUKIAT, LEGAL COUNSEL
TO PERTAMINA
EXHIBIT E-2 FORM OF LEGAL OPINION OF ANDREWS & KURTH, L.L.P.,
SPECIAL COUNSEL TO THE PRODUCERS (OTHER THAN
PERTAMINA)
EXHIBIT E-3 FORM OF LEGAL OPINION OF COUNSEL TO EACH PRODUCER
(OTHER THAN PERTAMINA)
EXHIBIT E-4 FORM OF LEGAL OPINION OF WHITE & CASE, SPECIAL NEW
YORK COUNSEL TO PERTAMINA
EXHIBIT F-1 FORM OF LEGAL OPINION OF PAUL, WEISS, RIFKIND,
WHARTON & GARRISON, SPECIAL COUNSEL TO THE TRANCHE A
LENDER, THE AGENT AND THE TRANCHE B LENDERS
EXHIBIT F-2 FORM OF LEGAL OPINION OF SPECIAL KOREAN AND TAIWANESE
COUNSEL TO THE TRANCHE A LENDER, THE AGENT AND THE
TRANCHE B LENDERS
EXHIBIT G-1 FORM OF LEGAL OPINION OF LEGAL COUNSEL TO PERTAMINA
EXHIBIT G-2 FORM OF LEGAL OPINION OF WHITE & CASE, SPECIAL NEW
YORK COUNSEL TO PERTAMINA
EXHIBIT G-3 FORM OF LEGAL OPINION OF SPECIAL JAPANESE COUNSEL TO
THE TRANCHE A LENDER, THE AGENT AND THE TRANCHE B
LENDERS
EXHIBIT G-4 CERTIFICATE OF PERTAMINA
(iv)
<PAGE> 6
SCHEDULE 1 BASIC AGREEMENTS
SCHEDULE 2 DRAWDOWN SCHEDULE
SCHEDULE 3 ASSUMED INTEREST RATE AND OTHER ASSUMPTIONS
SCHEDULE 4 QUALIFIED BANKS
(v)
<PAGE> 7
LOAN AGREEMENT
AGREEMENT dated as of July 1, 1995 among
(i) BANKAMERICA INTERNATIONAL, not in its individual capacity but
solely as Trustee under the Bontang V Trustee and Paying Agent Agreement among
it and PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA, VIRGINIA INDONESIA
COMPANY, OPICOIL HOUSTON, INC., VIRGINIA INTERNATIONAL COMPANY, LASMO SANGA
SANGA LIMITED, UNION TEXAS EAST KALIMANTAN LIMITED, UNIVERSE GAS & OIL COMPANY,
INC., TOTAL INDONESIE, INDONESIA PETROLEUM, LTD. and UNOCAL INDONESIA COMPANY,
dated as of the date hereof;
(ii) BONTANG TRAIN-G PROJECT FINANCE CO., LTD., as Tranche A
Lender;
(iii) CREDIT LYONNAIS, THE FUJI BANK, LIMITED and THE LONG-TERM
CREDIT BANK OF JAPAN, LIMITED, as Arrangers;
(iv) The Long-Term Credit Bank of Japan, Limited, New York Branch,
as "Facility Agent" (hereinafter defined as "Agent"), The Fuji Bank, Limited,
as "Intercreditor Agent," and Credit Lyonnais, as "Technical Agent"; and
(v) the banks and other financial institutions named under the
caption "Tranche B Lenders" on the signature pages hereof.
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Tranche A Lender and the
Tranche B Lenders to make advances to the Borrower upon the terms and subject
to the conditions of this Agreement in an aggregate principal amount of
$678,650,000.00 for Tranche A, which amount shall be indirectly financed by The
Export-Import Bank of Japan, and $290,850,000.00 for Tranche B, respectively,
for the purpose of paying (i) the costs incurred or to be incurred in
connection with or otherwise relating to the design, engineering, procurement
and construction of or otherwise relating to Train G, (ii) interest, fees,
expenses, taxes and other amounts payable by the Borrower pursuant to Sections
2.3, 2.7, 2.8, 3.3, 3.4(b), 6.6 and 10.6 hereof and (iii) certain amounts to be
paid to the Reserve Account pursuant to Section 2.2(b)(ii) hereof and used as
provided therein;
<PAGE> 8
2
WHEREAS, the Tranche A and Tranche B Lenders are prepared,
severally, and not jointly or jointly and severally, to make such advances to
the Borrower on a pro rata basis upon the terms and subject to the conditions
of this Agreement; and
WHEREAS, no recourse shall be had for any amount due under this
Agreement against BankAmerica International in its individual capacity, with
certain proceeds from the sale of liquefied natural gas being the sole source
of repayment hereunder of all such amounts, except as specifically provided
herein.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized expressions
shall have the following respective meanings, such meanings to be applicable to
both the singular and the plural forms of such expressions:
"Additional Plant" means the additional gas liquefaction and
processing facility and facilities (other than the Support Facilities and the
Loading Facilities) related to or used in connection therewith, all to be
located at the Bontang Plant, in each case as described in and consistent with
the Development Plan.
"Advance" means, with respect to Tranche A, each advance by the
Tranche A Lender, and, with respect to Tranche B, each advance by a Tranche B
Lender, in each case to the Borrower hereunder on a Borrowing Date or, where
the context so requires, the amount of such advance from time to time
outstanding.
"Agent" means The Long-Term Credit Bank of Japan, Limited, New York
Branch, acting in its capacity as facility agent for the Tranche B Lenders
hereunder, or any successor thereto appointed pursuant to Section 8.10 hereof.
"Applicable Margin" means for all Advances (including any Deferred
Portion thereof) (i) on any date during the period beginning on the Effective
Date and ending on December 31, 1999, 1.125%, and (ii) on any date following
December 31, 1999 while this Agreement is in effect, 0.875%.
"Arrangers" means the financial institutions named under the
caption "Arrangers" on the signature pages hereof.
<PAGE> 9
3
"Arun III Contract" has the meaning set forth in the KGC Sales
Contract.
"Assumed Interest Rate" means the interest rate per annum set forth
on Schedule 3; provided, however, that at any time and from time to time
following the date hereof upon the reasonable request of the Borrower, the
Tranche A Lender or the Agent, the Borrower, the Tranche A Lender and the Agent
shall negotiate in good faith to reach agreement on an interest rate per annum
to serve as the Assumed Interest Rate which is acceptable to the Borrower, the
Tranche A Lender and the Agent. If agreement cannot be reached on such
interest rate within 10 Business Days following a request for such
negotiations, then the Assumed Interest Rate shall be the interest rate per
annum specified in writing by a Selected Qualified Bank as the most appropriate
interest rate to assume for purposes of calculating the Debt Coverage Ratio.
"Availability Period" means the period beginning on the Effective
Date and ending on the earlier of (i) the date nine months following the
Completion Date or (ii) September 10, 1998.
"Basic Agreements" means the agreements listed on Schedule 1 hereto.
"Bontang Plant" means the natural gas liquefaction plant at Bontang
Bay on the east coast of Kalimantan, Indonesia, including all related
facilities, such as natural gas processing plants for the production of LNG and
liquefied petroleum gas consisting of propane and butane, utilities, storage
tanks, loading lines and arms, harbor, docks, berths, tugboats, residential
community, workshops, offices, fixed plant and equipment and communication
systems, together with replacements, improvements, additions and expansions of
all such facilities (including Train G), together also with natural gas
transmission lines extending from "Delivery Points" as defined in the
Processing Agreement, and from such other points in other fields from which
natural gas is supplied, to the said natural gas liquefaction plant (including
associated knock-out drums but excluding natural gas gathering pipelines within
fields).
"Bontang V Payment Account" has the meaning set forth in Article 1
of the Trust Agreement.
"Borrowed Amounts" has the meaning set forth in Section 2.2(b)
hereof.
"Borrower" means BankAmerica International, solely as Trustee under
the Trust Agreement and not in its individual capacity. The term "Borrower"
does not include
<PAGE> 10
4
BankAmerica International in any other capacity or any one or more of the
Producers.
"Borrowing" means a borrowing hereunder consisting of Advances of a
Tranche made to the Borrower at the same time by all then participating Lenders
severally.
"Borrowing Date" means (i) with respect to the initial Borrowing, a
Business Day occurring on or after the fifth Business Day following the
Effective Date and specified in a Notice of Borrowing as a date on which the
Borrower will make a Borrowing hereunder and (ii) thereafter a Business Day
occurring, on the eighth, ninth, tenth, eleventh or twelfth day of any calendar
month and specified in a Notice of Borrowing as a date on which the Borrower
will make a Borrowing hereunder; provided that not more than one Borrowing Date
may occur during any single calendar month and no Borrowing Date may occur
following the last day of the Availability Period; and provided further that if
a Borrowing Date would otherwise occur on a date which is not a Business Day,
such Borrowing Date shall be the immediately succeeding Business Day, or, if
any such extension would cause the Borrowing Date to be a date later than the
twelfth calendar day of the relevant month, then the Borrowing Date shall be
the immediately preceding Business Day.
"Business Day" means any day on which (i) dealings in Dollar
deposits are carried on in the London interbank market and (ii) commercial
banks are not authorized or required to close in any of London, the City of New
York or Tokyo.
"Buyer" means each of (i) Korea Gas Corporation, a corporation
organized under the laws of the Republic of Korea, as buyer under the KGC Sales
Contract, (ii) Chinese Petroleum Corporation, a corporation organized under the
laws of the Republic of China, as buyer under the CPC Sales Contract and (iii)
each of the Japanese Buyers, as buyers under the New 1973 Sales Contract.
"Commitment" means, with respect to each Lender, the principal
amount set forth opposite such Lender's name under the caption "Commitment" on
the signature pages hereof, as such amounts may be reduced from time to time
pursuant to Section 3.8 hereof, or such Lender's commitment to lend such
amounts, as the context may require.
"Completion Date" means the date on which each of the Tranche A
Lender and the Agent shall have received a written notice from the Borrower as
required by Sec-
<PAGE> 11
5
tion 6.1(e) hereof, to which is attached a notice from Pertamina to the effect
that:
(i) the construction of the Additional Plant and the
Loading Facilities has been completed in accordance with the Development Plan
and the Additional Plant and the Loading Facilities have been fully and finally
accepted by Pertamina under the Construction Documents; and
(ii) the Additional Plant has demonstrated processing
capabilities consistent with those contained in the Development Plan and at
least 170,000 metric tons of LNG meeting the quality specifications set forth
in each of the LNG Sales Contracts have been produced over a period of 30
consecutive days and delivered to storage during such period.
"Construction Documents" means (i) the EPC Contract and (ii) the
Loading Facilities Construction Contract.
"CPC Sales Contract" means the Memorandum of Agreement between
Pertamina and Chinese Petroleum Corporation for Sale and Purchase of LNG during
1998 and 1999, dated as of December 6, 1994, as heretofore and hereafter
modified or amended, until such time as no amounts that may then or thereafter
be payable thereunder or with respect thereto would, if paid, constitute Source
of Debt Service, at which time such Memorandum shall cease, for purposes hereof
and for purposes of the Producers Agreement, to be the CPC Sales Contract and
an LNG Sales Contract.
"CPC SDS Period" has the meaning set forth in the definition of
Source of Debt Service.
"CPC Supply Agreements" means, for as long as the CPC Sales
Contract is an LNG Sales Contract:
(i) Package V Supply Agreement (1998-1999 LNG Sales to
Chinese Petroleum Corporation), dated June 16, 1995, by and between Pertamina,
on the one hand, and the members of the Vico Group, on the other hand, as
heretofore and hereafter modified or amended;
(ii) Package V Supply Agreement (1998-1999 LNG Sales to
Chinese Petroleum Corporation), dated June 16, 1995, by and between Pertamina,
on the one hand, and the members of the Total Group, on the other hand, as
heretofore and hereafter modified or amended;
(iii) Package V Supply Agreement (1998-1999 LNG Sales to
Chinese Petroleum Corporation), dated June 16, 1995, by and between Pertamina,
on the one hand, and Unocal,
<PAGE> 12
6
on the other hand, as heretofore and hereafter modified or amended; and
(iv) Package V Supply Agreement (1998-1999 LNG Sales to
Chinese Petroleum Corporation), dated June 16, 1995, by and between Pertamina,
on the one hand, and Unocal and Inpex, on the other hand, as heretofore and
hereafter modified or amended.
"Debt Coverage Ratio" means:
(i) during the Availability Period, an amount determined as
the product of (a) (i) the sum of (x) the present value as of September 10,
1998 (determined by discounting by the Assumed Interest Rate at the time of
calculation) of the Source of Debt Service reasonably anticipated to be payable
from such date to the Final Maturity Date plus (y) the amount held in the
Reserve Account at the time of calculation, divided by (ii) the total
Commitments, multiplied by (b) 100; and
(ii) thereafter, an amount determined as the product of (a)
(i) the sum of (x) the present value as of the time of calculation (determined
by discounting by the Assumed Interest Rate at the time of calculation) of the
Source of Debt Service reasonably anticipated to be payable from the time of
calculation to the Final Maturity Date plus (y) the amount held in the Reserve
Account at the time of calculation, divided by (ii) the outstanding principal
amount of the Notes at the time of calculation, multiplied by (b) 100.
The assumptions necessary for calculating the Debt Coverage Ratio are set forth
in Schedule 3 hereto. These assumptions shall remain in effect for purposes of
calculating the Debt Coverage Ratio, whenever required, until such time as new
assumptions have been mutually agreed by the Borrower, the Tranche A Lender and
the Agent or specified by a Selected Qualified Bank, in each case as provided
herein. The Borrower, the Tranche A Lender or the Agent may at any time (but
not more than once each calendar quarter) request a reconsideration of such
assumptions, whereupon the Borrower, the Tranche A Lender and the Agent shall
negotiate in good faith to reach agreement on the assumptions described below,
used in calculating the Debt Coverage Ratio which are acceptable to the
Borrower, the Tranche A Lender and the Agent. The assumptions to be negotiated
in good faith are, in addition to the Assumed Interest Rate as provided in the
definition thereof, those with respect to the realized export prices of all
classifications of Indonesian crude oil and the U.S. Consumer Price Index, in
each case as such realized export prices and Consumer Price Index are used for
determining the LNG sales price in the relevant LNG Sales
<PAGE> 13
7
Contract. If the Borrower, the Tranche A Lender and the Agent cannot reach
agreement on such assumptions within 10 Business Days following a request by
one to the others for such negotiations, then such assumptions shall be those
specified in writing by a Selected Qualified Bank.
"Debt Coverage Reserve Account" has the meaning set forth in
Article 1 of the Trust Agreement.
"Debt Service Account" has the meaning set forth in Article 1 of
the Trust Agreement.
"Deferred Portion" means any portion of the outstanding principal
amount of a Tranche, the payment of which has been deferred pursuant to Section
2.10(b) hereof.
"Development Plan" means the Badak LNG Train "G" Project
Development Plan prepared by Project Gas and Petrochemical, dated February
1995, as heretofore and hereafter amended.
"Dollars" and the sign "$" mean such coin or currency of the United
States of America as is, at the relevant time, legal tender for the payment of
public and private debts.
"Drawdown Schedule" has the meaning set forth in Section 2.2(c)
hereof.
"Effective Date" has the meaning set forth in Section 5.1 hereof.
"Encumbrance" means any lien, security interest, mortgage, deed of
trust, pledge, charge or any other encumbrance of any kind, including, without
limitation, the rights of a vendor, lessor or similar party under any
conditional sale agreement or other title retention agreement or lease
substantially equivalent thereto, any production payment, and, with respect to
any property or assets, any other right of or arrangement with any creditor to
have its claim satisfied out of any such property or assets, or the proceeds
therefrom, prior to the general creditors of the owner thereof.
"EPC Contract" means each of (i) the Bontang LNG Expansion Project
Train G Contract No. B60-JMC-001 Agreement between Pertamina and IKPT, dated
March 20, 1995, (ii) the Bontang LNG Expansion Project Train G Contract No.
B60-JMC-001 Interim Contract between Pertamina and IKPT, dated March 20, 1995,
(iii) Articles 1, 2, 6, 8, 9 and 18 of the Collaboration Agreement dated March
1, 1995 among IKPT, Chiyoda Corporation and Mitsubishi Corporation, and (iv)
the letter agreement dated March 1, 1995 among Chiyoda
<PAGE> 14
8
Corporation, Mitsubishi Corporation and Pertamina, each as heretofore and
hereafter amended.
"Events of Default" means any of the events specified in Section 7
hereof.
"Excluded Taxes" means:
(i) with respect to Tranche A, (x) any Taxes imposed by
Japan or any department, agency or political subdivision or taxing authority
thereof or therein and (y) the additional amount of any Taxes that may be
imposed upon or with respect to a Payment arising solely by reason of the fact
that the Tranche A Lender changes the source of the funds it uses to make or
maintain Advances from that contemplated as of the date hereof for any reason
other than a change in the source of funding made in connection with
maintaining any overdue principal or other amounts owing pursuant to this
Agreement with respect to Tranche A or the Tranche A Note or any Deferred
Portion of Tranche A; and
(ii) with respect to Tranche B, (x) any Taxes (including
withholdings) based upon gross or net income payable by a Tranche B Lender or
the Agent to the jurisdiction of such Lender's incorporation or the
jurisdictions in which such Lender has its principal executive office or in
which its Lending Office is located, or to any department, agency or other
political subdivision or taxing authority in any of such jurisdictions and (y)
the additional amount of any Taxes (other than Taxes described in the preceding
clause (x) prior to a change in the Lending Office) that may be imposed upon or
with respect to a Payment arising solely by reason of the facts that the Lender
is a foreign corporation or other non-resident person within the meaning of the
Internal Revenue Code of 1986, as amended, and the Lending Office receiving
such Payment is not located in the United States of America. Solely for
purposes of the preceding sentence, the term "Lending Office" shall mean, in
addition to the definition set forth below in this Section 1, a branch or
office of a Tranche B Lender which has physical custody of a Tranche B Note,
this Agreement or the Letter Agreement or which conducts the activities that
are the responsibilities of a Tranche B Lender described in this Agreement or,
solely in the event that a taxing jurisdiction asserts a Tax by reason of the
fact that a branch or office of a Tranche B Lender previously had (but no
longer has) such custody or conducted (but no longer conducts) such activities,
such other branch or office.
"Extension Period" has the meaning set forth in the definition of
Source of Debt Service.
<PAGE> 15
9
"Final Maturity Date" means the fortieth Maturity Date occurring
following the last day of the Availability Period.
"Front End Fee Letter Agreement" has the meaning set forth in
Section 2.8(a) hereof.
"Gross Invoice Amount" means:
(i) with respect to the KGC Sales Contract, the sum,
without duplication, of (a) the amounts payable to the Borrower pursuant
thereto in respect of LNG purchased, (b) amounts payable to the Borrower
pursuant to Section 6.3 of each KGC Supply Agreement (with respect to amounts
payable to Pertamina), (c) all amounts payable to the Borrower on account of
interest due by reason of late payment of invoices for LNG under the KGC Sales
Contract pursuant to the provisions thereof that result from the incorporation
therein of Sections 10.3(d) of each of the Arun III Contract and the Korea II
Contract (as defined in the KGC Sales Contract), (d) amounts payable to the
Borrower relating to transportation charges, if any, other than demurrage and
(e) all demurrage payable to the Borrower under the KGC Sales Contract pursuant
to the provisions thereof that result from the incorporation therein of Section
4.5 of the Arun III Contract;
(ii) with respect to the CPC Sales Contract, the sum,
without duplication, of (a) the amounts payable to the Borrower pursuant
thereto in respect of LNG purchased, (b) amounts payable to the Borrower
pursuant to Section 6.3 of each CPC Supply Agreement (with respect to amounts
payable to Pertamina), (c) all amounts payable to the Borrower on account of
interest due by reason of late payment of invoices for LNG under the CPC Sales
Contract pursuant to the provisions thereof that result from the incorporation
therein by reference of Section 10.3(c) of the Badak III LNG Sales Contract (as
defined in the CPC Sales Contract), (d) amounts payable to the Borrower
relating to transportation charges, if any, other than demurrage and (e) all
demurrage payable to the Borrower under the CPC Sales Contract pursuant to the
provisions thereof that result from the incorporation therein by reference of
Section 4.4 of the Badak III LNG Sales Contract; and
(iii) with respect to the New 1973 Sales Contract, the sum,
without duplication, of (a) the amounts payable to the Borrower pursuant
thereto in respect of LNG purchased or, if not taken, required to be purchased
but not taken thereunder, (b) amounts payable to the Borrower pursuant to
Section 5.3 of each Japanese Supply Agreement (with respect to amounts payable
to Pertamina), (c) all amounts payable to the Borrower on account of interest
due
<PAGE> 16
10
by reason of the late payment of invoices for LNG under the section of the
Second A/R 1973 Sales Contract that corresponds to Section 10.3 of Attachment A
to the 1973 Extension MOA, (d) amounts payable to the Borrower under the New
1973 Transportation Arrangements and (e) all demurrage and other amounts
payable to the Borrower by the Buyer under the sections of the Second A/R 1973
Sales Contract that correspond to Sections 4.4(c), 4.5(b) and 4.6 of Attachment
A to the 1973 Extension MOA;
provided that the Gross Invoice Amount (other than amounts paid to Pertamina
solely with respect to the transportation of cargoes of LNG, including without
limitation demurrage payments and non-utilization costs) shall not be reduced
by any rebate, set-off, reduction or discount given or agreed to by one or more
parties to any LNG Sales Contract from such amount payable as so defined,
adjusted and calculated; and provided further that if the Borrower is
authorized and requested by the Producers (which authorization and request may
be given pursuant to Section 1.16(b) of the Producers Agreement) to execute and
deliver an agreement providing for the amendment of this definition of Gross
Invoice Amount, and if the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders also execute and deliver such agreement this definition of
Gross Invoice Amount shall be deemed amended for all purposes of this Agreement
as set forth in such agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness or other obligation of
any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay or to maintain financial statement conditions or
otherwise) or (ii) entered into for the purpose of assuring in any other manner
the obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in part);
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business.
"IKPT" means P.T. Inti Karya Persada Tehnik, an Indonesian
corporation.
"Indebtedness" means, with respect to any Person, (i) all
indebtedness or obligations of such Person for borrowed money, (ii) all
indebtedness or obligations of such Person evidenced by bonds, debentures,
notes, swap agree-
<PAGE> 17
11
ments or other similar instruments or agreements, and all securities issued by
such Person providing for mandatory payments of money, whether or not
contingent, (iii) all obligations of such Person to pay the deferred purchase
price of property or services, except trade accounts payable arising in the
ordinary course of business, (iv) all obligations of such Person as lessee
under capital leases, (v) all obligations of such Person to purchase securities
(or other property) which arise out of or in connection with the sale of the
same or substantially similar securities or property, (vi) all non-contingent
obligations of such Person to reimburse any Person in respect of amounts paid
under a letter of credit or similar instrument to the extent that such
reimbursement obligations remain outstanding five business days after they
become non-contingent, (vii) Indebtedness of others secured by an Encumbrance
on any asset of such Person, whether or not such Indebtedness is assumed by
such Person or (viii) all Guarantees by such Person of or with respect to the
Indebtedness of another Person.
"Inpex" means Indonesia Petroleum, Ltd.
"Insured Bontang Plant" means the Bontang Plant as defined herein
but excluding: (i) property located outside the perimeter fence (other than the
feed gas knock-out drums which are located in a separately fenced area to the
west of the main plant and which are included in the meaning of Insured Bontang
Plant); (ii) land acquisition, site preparation, grading and infilling; (iii)
roads, gates and fences; (iv) foundations other than parts exposed at or above
grade level; (v) pilings; (vi) underground pipes, sewers and drains; (vii) LNG
and LPG (liquefied petroleum gas) loading docks other than the equipment and
superstructures thereon; (viii) cooling water intakes other than the equipment
thereon; (ix) cargo docks and navigational aids located offshore; (x) moveables
other than spare parts; (xi) fresh water systems, outfall canals and diversion
dikes; and (xii) temporary electrical and communications equipment.
"Interest Payment Date" means the last day of each Interest Period.
"Interest Period" means (except in the case of the initial Interest
Period applicable to a Borrowing), with respect to Tranche A, a period of three
months, and, with respect to Tranche B, a period of three or six months
selected or deemed selected by the Borrower as provided in Section 2.4 hereof,
and, in each case, determined as follows:
(i) The initial Interest Period for each Borrowing will
begin on the date of such Borrowing and will
<PAGE> 18
12
end on the March 10, June 10, September 10 or December 10 next occurring within
three months thereafter, and each subsequent Interest Period for such Borrowing
will begin on the Interest Payment Date ending the previous Interest Period and
end on the June 10, September 10, December 10 or March 10 next occurring three
or six months thereafter, as the case may be, subject to Section 2.4 hereof and
clauses (ii), (iii) and (iv) of this definition.
(ii) Subject to clause (iv) of this definition, all
Borrowings for which Interest Periods end on the same Interest Payment Date
shall be consolidated so that all subsequent elections of Interest Periods for
such Borrowings shall apply to all such Borrowings so consolidated.
(iii) If any Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the immediately
succeeding Business Day.
(iv) If the Borrower wishes to elect an Interest Period of
six months for Borrowings of Tranche B and if the aggregate outstanding
principal amount of the Borrowings of Tranche B for which a Notice of Interest
Period is then to be given is greater than the amount of the repayment
installment of such Tranche due to the Tranche B Lenders on a Maturity Date
approximately three months following the date of the proposed election, then,
for purposes of calculating interest, such Borrowings shall be divided and
henceforth treated as two separate Borrowings of such Tranche (such division to
be pro rata as to each Tranche B Lender's Advances), one of an amount equal to
the amount of the repayment installment of such Tranche due to the Tranche B
Lenders on such Maturity Date (the Interest Period for which will end on such
Maturity Date) and the other of an amount equal to the remainder of such
consolidated Borrowings of such Tranche. The Borrower's election of a six
month Interest Period shall only apply to such remainder of the consolidated
Borrowings of such Tranche.
"Japanese Buyers" means Chubu Electric Power Co., Inc., The Kansai
Electric Power Co., Inc., Kyushu Electric Co., Inc., Nippon Steel Corporation,
Osaka Gas Co., Ltd. and Toho Gas Co., Ltd.
"Japanese Supply Agreements" means, for as long as the New 1973
Sales Contract is an LNG Sales Contract:
(a) during the portion of the Extension Period commencing on
January 1, 2000 and ending on December 31, 2009:
(i) Package V Supply Agreement for Natural Gas in Support
of the 1973 LNG Sales Contract Extension, dated June 16, 1995, by and between
Pertamina, on the one
<PAGE> 19
13
hand, and the members of the Vico Group, on the other hand, as heretofore and
hereafter modified or amended;
(ii) Package V Supply Agreement for Natural Gas in Support
of the 1973 LNG Sales Contract Extension, dated June 16, 1995, by and between
Pertamina, on the one hand, and the members of the Total Group, on the other
hand, as heretofore and hereafter modified or amended;
(iii) Package V Supply Agreement for Natural Gas in Support
of the 1973 LNG Sales Contract Extension, dated June 16, 1995, by and between
Pertamina, on the one hand, and Unocal, on the other hand, as heretofore and
hereafter modified or amended; and
(iv) Package V Supply Agreement for Natural Gas in Support
of the 1973 LNG Sales Contract Extension, dated June 16, 1995, by and between
Pertamina, on the one hand, and Unocal and Inpex, on the other hand, as
heretofore and hereafter modified or amended.
(b) during the portion of the Extension Period, if any,
commencing after December 31, 2009, such supply agreements as provide for the
supply of natural gas to the Bontang Plant in support of sales under the New
1973 Sales Contract during all or part of such period.
"KGC Sales Contract" means the Memorandum of Agreement for Purchase
and Sale of LNG During 1995-1999, dated September 30th, 1994, by and between
Pertamina and Korea Gas Corporation, as heretofore and hereafter modified or
amended, until such time as no amounts that may then or thereafter be payable
thereunder or with respect thereto would, if paid, constitute Source of Debt
Service, at which time such Memorandum shall cease, for purposes hereof and for
purposes of the Producers Agreement, to be the KGC Sales Contract and an LNG
Sales Contract.
"KGC SDS Period" has the meaning set forth in the definition of
Source of Debt Service.
"KGC Supply Agreements" means, for as long as the KGC Sales
Contract is an LNG Sales Contract:
(i) Package V Supply Agreement (1995-1999 LNG Sales to
Korea Gas Corporation), dated June 16, 1995, by and between Pertamina, on the
one hand, and the members of the Vico Group, on the other hand, as heretofore
and hereafter modified or amended;
(ii) Package V Supply Agreement (1995-1999 LNG Sales to
Korea Gas Corporation), dated June 16, 1995, by and between Pertamina, on the
one hand, and the members of
<PAGE> 20
14
the Total Group, on the other hand, as heretofore and hereafter modified or
amended;
(iii) Package V Supply Agreement (1995-1999 LNG Sales to
Korea Gas Corporation), dated June 16, 1995, by and between Pertamina, on the
one hand, and Unocal, on the other hand, as heretofore and hereafter modified
or amended;
(iv) Package V Supply Agreement (1995-1999 LNG Sales to
Korea Gas Corporation), dated June 16, 1995, by and between Pertamina, on the
one hand, and Unocal and Inpex, on the other hand, as heretofore and hereafter
modified or amended.
"Legal Requirements" means all applicable (i) laws, rules,
regulations, ordinances, orders, decrees, permits, licenses, authorizations,
directions and requirements of all governments and governmental departments,
commissions, boards, authorities and agencies, (ii) court and governmental
administrative agency judgments and injunctions, (iii) arbitral awards and (iv)
requirements of courts and arbitral tribunals.
"Lender" means each of, and "Lenders" means all of, the Tranche A
Lender and each of the Tranche B Lenders, any transferee pursuant to and
subject to the conditions set forth in Section 10.4 hereof and their respective
permitted successors and assigns.
"Lending Office" means (i) initially for each Lender its office or
branch located as of the date hereof at its address set forth on the signature
pages hereof and (ii) subsequently for each Lender such other office or branch
of such Lender as such Lender may designate by notice in writing to the
Borrower and the Agent on behalf of the Tranche B Lenders as the office or
branch from or at which such Lender's Advances with respect to a Tranche will
thereafter be made or maintained and for the account of which all payments of
principal of and interest on the relevant Notes and all other payments to such
Lender under this Agreement will thereafter be made; provided that the
designation of a new Lending Office shall be subject to the conditions stated
in Section 10.4 hereof.
"Letter Agreement" has the meaning set forth in Section 2.8(b)
hereof.
"LIBOR" has the meaning set forth in Section 2.5(a) hereof.
"LNG" has the meaning set forth in Article 1 of the Processing
Agreement.
<PAGE> 21
15
"LNG Sales Contract" means each of, and "LNG Sales Contracts" means
all of, the CPC Sales Contract, the KGC Sales Contract and the New 1973 Sales
Contract.
"Loading Facilities" means the third LNG/LPG loading dock and new
LPG storage tank to be located adjacent to the Bontang Plant, in each case as
described in and consistent with the Development Plan.
"Loading Facilities Construction Contract" means the construction
contract with respect to the Loading Facilities contemplated by the Development
Plan.
"Majority Lenders" means the Tranche A Lender and the Majority
Tranche B Lenders.
"Majority Tranche B Lenders" means at any time Tranche B Lenders
holding in excess of 66-2/3% of the aggregate unpaid principal amount of the
Advances of Tranche B, or if no such Advances are at the time outstanding,
Tranche B Lenders having in excess of 66-2/3% of the aggregate amount of the
Commitments with respect to Tranche B.
"Management and Agency Fee Letter Agreement" has the meaning set
forth in Section 2.8(b) hereof.
"Maturity Date" means the first March 10, June 10, September 10 or
December 10 to occur at least three months following the last day of the
Availability Period and, thereafter, each March 10, June 10, September 10 and
December 10 occurring three months following the last of the same to occur,
each of which shall be an Interest Payment Date; provided, however, that if any
such date is not a Business Day, such Maturity Date shall be the immediately
succeeding Business Day.
"New 1973 Sales Contract" means (i) until the Second A/R 1973 Sales
Contract has been duly authorized, executed and delivered by Pertamina and the
other parties thereto, the 1973 Extension MOA and (ii) thereafter, the Second
A/R 1973 Sales Contract.
"New 1973 Transportation Arrangements" means the contractual
arrangements providing for the transportation of all quantities of LNG
contemplated to be delivered pursuant to the New 1973 Sales Contract, as
modified or amended from time to time.
"1973 Extension MOA" means the Memorandum of Agreement Re: 1973 LNG
Sales Contract Extension, dated October 6, 1994, by and between Pertamina and
the Japanese Buyers, as heretofore and hereafter modified or amended, until
superseded by the Second A/R 1973 Sales Contract.
<PAGE> 22
16
"1973 Sales Contract" means the LNG Sales Contract, dated as of
December 3, 1973, between Pertamina and the Japanese Buyers, as heretofore and
hereafter modified or amended, but excluding the New 1973 Sales Contract.
"Note" means any one of the Tranche A Note or Tranche B Notes
provided for in Section 2.9 hereof.
"Notice of Borrowing" means a notice from the Borrower to each of
the Tranche A Lender and the Agent substantially in the form of Exhibit A
hereto.
"Notice of Completion" means a notice from the Borrower to the
Tranche A Lender and the Agent substantially in the form of Exhibit B-3 hereto.
"Notice of Deferral" means a notice from the Borrower to each of
the Tranche A Lender and the Agent substantially in the form of Exhibit B-1
hereto.
"Notice of Interest Period" means a notice from the Borrower to the
Agent substantially in the form of Exhibit B-2 hereto.
"Notice Lenders" has the meaning set forth in Section 2.6.
"Pari Passu Swap Indebtedness" has the meaning set forth in Section
6.4 hereof.
"Payments" has the meaning set forth in Section 3.3 hereof.
"Person" means and includes any individual, corporation, juridical
entity, association, statutory body, partnership, joint venture, trust, estate,
unincorporated organization or government, state or any political subdivision,
instrumentality, agency or authority thereof.
"Pertamina" means Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara, a State Enterprise of the Republic of Indonesia, which is wholly owned
by the Republic of Indonesia, and its successors and assigns permitted under
the Producers Agreement.
"Plant Use Agreement" means the Second Amended and Restated
Agreement for Use and Operation of Plant dated August 12, 1991, but effective
as of February 9, 1988, between Pertamina and P.T. Badak, as heretofore and
hereafter modified or amended.
<PAGE> 23
17
"Processing Agreement" means the Amended and Restated Bontang
Processing Agreement, dated as of February 9, 1988, among the Producers (or
their predecessors in interest) on the one hand and P.T. Badak on the other, as
heretofore and hereafter modified or amended.
"Producers" means Pertamina, Virginia Indonesia Company, OPICOIL
Houston, Inc., Virginia International Company, Lasmo Sanga Sanga Limited, Union
Texas East Kalimantan Limited, Universe Gas & Oil Company, Inc., Total
Indonesie, Indonesia Petroleum, Ltd. and Unocal Indonesia Company and Persons
succeeding to their interests in the manner permitted by Section 6.3 of the
Producers Agreement.
"Producers Agreement" means the Bontang V Producers Agreement of
even date herewith among the Producers, the Tranche A Lender, the Agent, the
Intercreditor Agent, the Technical Agent, the Arrangers and the Tranche B
Lenders, as hereafter modified or amended.
"P.T. Badak" means P.T. Badak Natural Gas Liquefaction Company, a
corporation organized under the laws of the Republic of Indonesia.
"Qualified Bank" has the meaning set forth in Section 6.6(b) hereof.
"Quarterly Debt Service" has the meaning set forth in Section 9.1
hereof.
"Quarterly Period" shall mean the period from and including the
making of the initial Borrowing to and including the next to occur of March 10,
June 10, September 10 and December 10, and thereafter each subsequent period of
approximately three calendar months ending on the next to occur of March 10,
June 10, September 10 or December 10, as the case may be; provided that if the
last day of a Quarterly Period would be a day which is not a Business Day such
Quarterly Period will end on the immediately succeeding Business Day and that
each subsequent Quarterly Period will begin on the calendar day (whether or not
a Business Day) immediately following the last day of the preceding Quarterly
Period.
"Reference Banks" means the London Branches of each of The
Long-Term Credit Bank of Japan, Limited, The Fuji Bank, Limited and Credit
Lyonnais.
"Reference Date" has the meaning set forth in Section 2.5(a) hereof.
"Regular Reserve Account" has the meaning set forth in Article 1 of
the Trust Agreement.
<PAGE> 24
18
"Reserve Account" has the meaning set forth in Article 1 of the
Trust Agreement.
"Reserve Account Borrowed Amount" has the meaning set forth in
Section 2.2(b) hereof.
"Reserves" has the meaning set forth in Section 2.6 hereof.
"Responsible Officer of the Borrower" means the chairman and vice
chairman of the board of directors, the chairman of the executive committee of
the board of directors, the president, any executive vice president, any senior
vice president, any senior director or any vice president of BankAmerica
International.
"Second A/R 1973 Sales Contract" means the Second Amended and
Restated 1973 LNG Sales Contract, substantially in the form attached to the
1973 Extension MOA as Attachment A, as hereafter modified or amended, until
such time as no amounts that may then or thereafter be payable thereunder or
with respect thereto would, if paid, constitute Source of Debt Service, at
which time such Contract shall cease, for purposes hereof and for purposes of
the Producers Agreement, to be the Second A/R 1973 Sales Contract and an LNG
Sales Contract.
"Section 10.4(a) Affiliate" has the meaning set forth in Section
10.4(a) hereof.
"Selected Qualified Bank" has the meaning set forth in Section
6.6(a) hereof.
"Source of Debt Service" means
I.(i) in respect of each amount payable to the Borrower for
cargoes of LNG delivered on or after January 1, 1998 and for cargoes ordered
for delivery on or before December 31, 1999 (the "KGC SDS Period") under the
KGC Sales Contract, or payable with respect to the KGC SDS Period to the
Borrower pursuant to the Supply Agreements or otherwise pursuant to the KGC
Sales Contract (without duplication), the portion, if any, of the amount so
payable equal to 90% of the LNG Related Portion (as defined in the KGC Sales
Contract) of the Gross Invoice Amount payable (a) under each invoice rendered
with respect to each such cargo, and (b) otherwise in respect of each such
cargo, plus 90% of all indemnities and additional amounts payable by the Buyer
with respect to the KGC SDS Period under the KGC Sales Contract (excluding such
amounts required to be paid to Pertamina with respect to the transportation of
such cargoes of LNG, including, without limitation, demurrage payments),
without any reduction or set-off from any such amounts (for
<PAGE> 25
19
purposes hereof, a cargo shall be deemed delivered when title thereto passes to
KGC pursuant to the terms of the KGC Sales Contract);
(ii) in respect of each amount payable to the Borrower for
cargoes of LNG delivered on or after January 1, 1998 and for cargoes ordered
for delivery on or before December 31, 1999 (the "CPC SDS Period") under the
CPC Sales Contract, or payable with respect to the CPC SDS Period to the
Borrower pursuant to the Supply Agreements or otherwise pursuant to the CPC
Sales Contract (without duplication), the portion, if any, of the amount so
payable equal to 90% of the LNG Related Component (as defined in the CPC Sales
Contract) of the Gross Invoice Amount payable (a) under each invoice rendered
with respect to each such cargo, and (b) otherwise in respect of each such
cargo, plus 90% of all indemnities and additional amounts payable by the Buyer
with respect to the CPC SDS Period under the CPC Sales Contract (excluding such
amounts required to be paid to Pertamina with respect to the transportation of
such cargoes of LNG, including without limitation demurrage payments), without
any reduction or set-off from any such amounts (for purposes hereof, a cargo
shall be deemed delivered when title thereto passes to CPC pursuant to the
terms of the CPC Sales Contract);
(iii) in respect of each amount payable to the Borrower for
LNG purchased during the period from and including January 1, 2000 to and
including December 31, 2014 (the "Extension Period") or for LNG required to be
purchased but not taken during the Extension Period, under the New 1973 Sales
Contract, or payable with respect to the Extension Period to the Borrower
pursuant to the Supply Agreements or otherwise pursuant to the New 1973 Sales
Contract (without duplication), the portion, if any, of the amount so payable
equal to 21% of the LNG Element (as defined in the New 1973 Sales Contract) of
the Gross Invoice Amount payable (a) under each invoice rendered with respect
to each cargo purchased during the Extension Period, or in the case of LNG
required to be purchased during the Extension Period but not taken under each
invoice rendered with respect to the same quantity not taken, and (b) otherwise
in respect of each such cargo, plus 21% of all indemnities and additional
amounts payable by any of the Buyers with respect to the Extension Period under
the New 1973 Sales Contract (excluding such amounts required to be paid to
Pertamina with respect to the transportation of such cargoes of LNG, including
without limitation demurrage payments and non-utilization costs), without any
reduction or set-off from any such amounts; and
<PAGE> 26
20
II. in respect of any period, the aggregate amount of the
Source of Debt Service payable during such period.
Notwithstanding the foregoing, if the Borrower is authorized and requested by
the Producers (which authorization and request may be given pursuant to Section
1.16(b) of the Producers Agreement) to execute and deliver an agreement
providing for the amendment of this definition of Source of Debt Service, and
if the Tranche A Lender and the Agent on behalf of the Tranche B Lenders also
execute and deliver such agreement, this definition of Source of Debt Service
shall be deemed amended for all purposes of this Agreement as set forth in such
agreement.
"Subordinated Indebtedness" has the meaning set forth in Section
6.4 hereof.
"Supply Agreement" means each of, and "Supply Agreements" means all
of, the CPC Supply Agreements, the KGC Supply Agreements and the Japanese
Supply Agreements.
"Support Facilities" means the three new tug-boats and the
community support facilities to be located adjacent to the Bontang Plant, in
each case as described in and consistent with the Development Plan.
"Taxes" means any present or future taxes, levies, imposts, duties,
fees, assessments, deductions, withholdings or other charges of whatsoever
nature, that may now or hereafter be imposed or asserted by any jurisdiction or
any political subdivision thereof or any taxing authority therein and all
interest, penalties or similar liabilities with respect thereto.
"Total Group" means Total Indonesie and Inpex and their successors
in interest.
"Train G" means, collectively, (i) the Additional Plant, (ii) the
Support Facilities and (iii) the Loading Facilities.
"Tranche" means Tranche A or Tranche B and "Tranches" means
Tranche A and Tranche B.
"Tranche A" means Advances of the Tranche A Lender in an aggregate
maximum principal amount not exceeding $678,650,000.00.
"Tranche A Lender" means Bontang Train-G Project Finance Co., Ltd.
and its successors and assigns hereunder.
<PAGE> 27
21
"Tranche A Note" has the meaning set forth in Section 2.9 hereof.
"Tranche B" means Advances of the Tranche B Lenders in an aggregate
maximum principal amount not exceeding $290,850,000.00.
"Tranche B Lender" means each of the banks and other financial
institutions named under the caption "Tranche B Lenders" on the signature pages
hereof and their respective successors and assigns.
"Tranche B Note" has the meaning set forth in Section 2.9 hereof.
"Transfer Certificate" has the meaning set forth in Section 10.4(b)
hereof.
"Transferee" and "Transferees" have the meanings set forth in
Section 10.4(b) hereof.
"Trust Agreement" means the Bontang V Trustee and Paying Agent
Agreement among BankAmerica International, as Trustee, and the Producers, dated
as of the date hereof, as hereafter modified or amended.
"Unocal" means Unocal Indonesia Company.
"Vico Group" means Virginia Indonesia Company, Virginia
International Company, OPICOIL Houston, Inc., Lasmo Sanga Sanga Limited, Union
Texas East Kalimantan Limited, and Universe Gas & Oil Company, Inc. and their
successors in interest.
SECTION 2. THE ADVANCES
2.1 The Commitments. Upon the terms and subject to the
conditions set forth in this Agreement, during the Availability Period the
Tranche A Lender agrees to make Advances to the Borrower of Tranche A, and each
Tranche B Lender severally, and not jointly or jointly and severally, agrees to
make Advances to the Borrower of Tranche B, in each case in Dollars through its
Lending Office. The Advances shall be made by each Lender on the Borrowing
Dates and in the amounts provided for in Section 2.2 hereof, but in no event in
an amount that exceeds the aggregate amount of its Commitment; provided that
such Commitment has not theretofore been terminated or cancelled pursuant to
Section 3.4(a) hereof or Section 3.8 hereof or otherwise.
<PAGE> 28
22
2.2 Purpose and Manner of Borrowing.
(a) Subject to the limitations provided in Section 2.1
hereof, the Borrower shall have the right to elect to borrow from the Lenders
on each Borrowing Date amounts to be used to pay for costs incurred, or to be
incurred, in connection with or otherwise relating to the design, engineering,
procurement and construction of or otherwise relating to the Additional Plant,
the Loading Facilities and, to the extent provided for in the Drawdown Schedule
as the same may be revised from time to time, the Support Facilities.
(b) Subject to the limitations provided in Section 2.1
hereof, the Borrower shall have the right to elect to borrow from the Lenders,
in addition to the amounts permitted by Section 2.2(a) hereof, the following
amounts ("Borrowed Amounts"):
(i) on each Borrowing Date occurring during the
Availability Period, an amount to be used to pay, and equal in amount to
(or rounded upward to the next integral multiple of $1,000,000 as
provided in Section 2.2(d)), the sum of the amount of interest, fees,
expenses, taxes and other amounts payable by the Borrower pursuant to
Sections 2.3, 2.7, 2.8, 3.3, 3.4(b), 6.6 and 10.6 hereof, which amounts
shall be used only to pay the amounts referred to therein which are due
on such Borrowing Date, and
(ii) on each Borrowing Date to occur in 1998, an
amount (the "Reserve Account Borrowed Amount") to be paid to the Reserve
Account, which amount shall not exceed the lesser of (A)(1) the maximum
amount permitted by the terms of Section 3.2(h)(i) of the Trust Agreement
to be held in the Reserve Account on such Borrowing Date, as reasonably
estimated and reflected in the relevant Notice of Borrowing, less (2) the
amount that would be held in the Reserve Account on such Borrowing Date
if no amount were borrowed hereunder to deposit in the Reserve Account on
such Borrowing Date, as reasonably estimated and reflected in the
relevant Notice of Borrowing, or (B) the amount of then undrawn
Commitments less the sum of (1) 100 percent of costs estimated to be
required for the completion and final acceptance of the Additional Plant
and the Loading Facilities pursuant to the Development Plan and the
Construction Documents, as set forth in the report referred to in Section
5.4(b) hereof plus (2) the amount of interest, fees, expenses, taxes and
other amounts which are reasonably estimated to be incurred by the
Borrower pursuant to Section 2.3, 2.7, 2.8, 3.3, 3.4(b), 6.6 and 10.6
hereof during the
<PAGE> 29
23
Availability Period and which have not been paid as of such Borrowing
Date.
The amount of any Borrowings made pursuant to this Section 2.2(b) shall be
added to the outstanding principal amount of the Advances and shall bear
interest as specified in Section 2.3, 2.4, 2.5, 2.6 and 2.7 hereof.
(c) The Borrower has delivered to the Tranche A Lender and
the Agent on behalf of the Tranche B Lenders a drawdown schedule (as revised
from time to time as provided herein, the "Drawdown Schedule"), a copy of which
is attached hereto as Schedule 2, that sets forth the currently expected
schedule of Borrowings, including Borrowing Dates and amounts of Borrowings
(separately identifying Borrowings under Sections 2.2(a), 2.2(b)(i) and
2.2(b)(ii) hereof and, with respect to Borrowings under Section 2.2(a),
separately identifying Borrowings relating to the different costs related to
Train G as provided therein), anticipated to be requested during the
Availability Period. The Borrower shall update the Drawdown Schedule from time
to time, but in any event not less frequently than approximately every six
months following the initial Borrowing Date and shall immediately provide such
updated Drawdown Schedule to the Tranche A Lender and the Agent on behalf of
the Tranche B Lenders. If at any time it is anticipated that a Borrowing to be
made on a Borrowing Date will be in an amount greater than 110% of the amount
indicated for such Borrowing on the then current Drawdown Schedule or pursuant
to any previous notice given pursuant to this sentence, the Borrower shall use
all reasonable efforts (but shall not be liable for failure) to deliver notice
thereof, which shall include the then anticipated amount of such Borrowing, to
the Tranche A Lender and the Agent as soon as practicable in order to
facilitate the Lenders' funding arrangements with respect to such Borrowing.
(d) (i) With respect to the initial Borrowing only, the
Borrower shall give to each of the Tranche A Lender and the Agent on behalf of
the Tranche B Lenders, in each case not later than noon, New York time, on or
prior to the sixth Business Day preceding such initial Borrowing Date, a Notice
of Borrowing, in writing, which shall specify the amount of such Borrowing and
the account or accounts to which such Borrowing shall be made available, each
of which shall be the proper account for the deposit of each portion of such
Borrowing as provided in the Trust Agreement; provided that notice to the
Tranche A Lender with respect to such initial Borrowing Date shall be deemed
timely if received by the Tranche A Lender not later than noon Tokyo time on
the date five Business Days preceding such Borrowing Date. Notwithstanding the
foregoing, the
<PAGE> 30
24
initial Borrowing Date may not occur prior to July 14, 1995.
(ii) With respect to each subsequent Borrowing, the
Borrower shall give to each of the Tranche A Lender and the Agent on behalf of
the Tranche B Lenders, in each case not later than noon, New York time, on or
prior to the eighth Business Day preceding such Borrowing Date, a Notice of
Borrowing, in writing, which shall specify the amount of such Borrowing and the
account or accounts to which such Borrowing shall be made available, each of
which shall be the proper account for the deposit of each portion of such
Borrowing as provided in the Trust Agreement; provided that notice to the
Tranche A Lender with respect to such Borrowing Date shall be deemed timely if
received by the Tranche A Lender not later than noon Tokyo time on the date
seven Business Days preceding such Borrowing Date.
(iii) The amount to be drawn down on any Borrowing Date
shall be $5,000,000.00 or any larger integral multiple of $1,000,000.00, except
in the case of the final Borrowing Date, in which case the amount to be drawn
down shall be any amount of the undrawn Commitments specified by the Borrower;
provided that the aggregate amount to be drawn down on any Borrowing Date shall
in no event exceed the aggregate amount of then outstanding Commitments. The
total amount to be drawn down on any Borrowing Date shall be apportioned 70% to
the Tranche A Lender and 30% to the Tranche B Lenders, and the amount
apportioned to the Tranche B Lenders shall be apportioned by the Agent on a pro
rata basis among the outstanding Commitments of the Tranche B Lenders. A
Notice of Borrowing, once received by the Tranche A Lender and the Agent, shall
not be revocable by the Borrower.
(e) With respect to each Notice of Borrowing received by
the Tranche A Lender, upon and subject to the terms and conditions of this
Agreement, before 1:00 p.m. New York time on the Borrowing Date identified
therein the Tranche A Lender shall make available in Dollars to the Borrower to
the account or accounts in New York City specified with respect to Tranche A in
such Notice of Borrowing on such Borrowing Date the amount of funds requested
of the Tranche A Lender by the Borrower in such Notice of Borrowing in same day
settlement funds by credit of Federal or other immediately available funds.
(f) Upon receipt of a Notice of Borrowing, the Agent shall
forthwith notify each Tranche B Lender of the Borrowing Date identified
therein. Before 11:00 a.m. New York time on such Borrowing Date each Tranche B
Lender will make available in Dollars the amount of such Tranche B Lender's
Advance to be made on such Borrowing Date in same day settlement funds by
credit of Federal or other immedi-
<PAGE> 31
25
ately available funds satisfactory to the Agent to the account of the Agent
(account no. 544-7-75066) at Chemical Bank, N.A. located at 4 New York Plaza,
New York, 10004, U.S.A. for the account of the Borrower or at such other office
or bank in New York, New York or elsewhere as the Agent may from time to time
designate by telex (to be confirmed by letter) to the Tranche B Lenders. Upon
and subject to the terms and conditions of this Agreement, before 1:00 p.m.
New York time on such Borrowing Date the Agent on behalf of the Tranche B
Lenders shall make available to the Borrower to the account or accounts in New
York City as shall have been specified with respect to Tranche B by the
Borrower in such Notice of Borrowing on such Borrowing Date the funds made
available to the Agent pursuant to the next preceding sentence in the same
funds as received by the Agent.
(g) The failure of a Lender to make an Advance to be made
by it on the date specified therefor shall not relieve any other Lender of its
obligation to make its Advance hereunder on such date, and no Lender shall be
responsible for the failure of any other Lender to make an Advance to be made
by such other Lender on the date specified therefor. Unless the Agent shall
have been notified by a Tranche B Lender one Business Day prior to a Borrowing
Date (which notice shall be effective only upon receipt) that such Tranche B
Lender does not intend to make available to it such Tranche B Lender's Advance
with respect to Tranche B to be made on such date, the Agent may (but shall
have no obligation to) assume that such Tranche B Lender has made such Tranche
B Lender's Advance available to it on such date, and the Agent may, in reliance
upon such assumption, make available (but shall have no obligation to make
available) to the Borrower a corresponding amount. If the Tranche B Lender's
Advance is not in fact made available to the Agent by such Tranche B Lender,
the Agent shall be entitled to recover such amount either on demand from such
Tranche B Lender or on demand and in accordance with the provisions of Section
3.10 hereof from the Borrower together with interest thereon at a rate per
annum representing the interest cost to the Agent (as determined by the Agent
using reasonable efforts to minimize such cost) of funding the amount in
question until reimbursement thereof to the Agent; provided that to the extent
such amount is recovered from the Borrower, interest paid thereon by the
Borrower shall not exceed the rate or rates per annum then applicable to the
Advances made with respect to Tranche B.
2.3 Interest. The Borrower shall pay interest on the unpaid
principal amount of all Advances outstanding from time to time at the
applicable interest rates determined in accordance with Section 2.5 or 2.6
hereof, as the case may be, with respect to each Interest Period. Such
interest
<PAGE> 32
26
payable with respect to each Interest Period shall be paid on the Interest
Payment Date at the end of such Interest Period. Interest on the Advances
shall be calculated from and including the relevant Borrowing Date up to but
not including the date of actual receipt and shall be computed on the basis of
a year of 360 days, and shall be payable for the actual number of days elapsed.
2.4 Election of Interest Periods for Tranche B. The Borrower
shall have the option to elect an Interest Period of three months or six months
to apply to the entire amount of the Borrowings outstanding with respect to
Tranche B for which an Interest Period is then to be determined, except (i) for
the initial Interest Period referred to in clause (i) of the definition of
Interest Period; (ii) for each other Interest Period during the Availability
Period, each of which shall be a three-month Interest Period; (iii) with
respect to any amounts of principal coming due in approximately three months,
to which a three-month Interest Period shall apply as provided in clause (iv)
of the definition of Interest Period; and (iv) with respect to any Deferred
Portion of such Tranche, to which a three-month Interest Period shall apply.
Such option shall be exercised by delivery to the Agent of a written Notice of
Interest Period and the Agent shall promptly notify the Tranche B Lenders of
the Interest Period so elected. If a Notice of Interest Period in respect of
any Interest Period is not received by the Agent on behalf of the Tranche B
Lenders at least five Business Days prior to the commencement of such Interest
Period, the Borrower shall be deemed to have elected an Interest Period of
three months' duration.
2.5 Determination of Interest Rates.
(a) On the Business Day (the "Reference Date") that is two
Business Days prior to the commencement of each Interest Period, the Tranche A
Lender shall fix the interest rate for the Advances with respect to Tranche A
and any Deferred Portion of Tranche A to be outstanding with respect to and
during such Interest Period, and the Agent on behalf of the Tranche B Lenders
shall fix the interest rate for the Advances with respect to Tranche B and any
Deferred Portion of Tranche B to be outstanding with respect to and during such
Interest Period, in each case at the rate per annum equal to the sum of the
Applicable Margin plus the London Interbank Offered Rate (the London Interbank
Offered Rate is referred to as "LIBOR"). LIBOR for each such Interest Period
shall be the rate for deposits in Dollars which appears on page 3750 of the
Telerate screen (or such other page as may replace that page on the Telerate
screen for the purpose of displaying London interbank Dollar deposit rates of
leading reference banks and as may be
<PAGE> 33
27
selected by the Tranche A Lender and the Agent on behalf of the Tranche B
Lenders) as of approximately 11:00 a.m., London time, on the Reference Date for
a period equal to such Interest Period, as determined by each of the Tranche A
Lender and the Agent on behalf of the Tranche B Lenders. If such an offered
rate is not available on the relevant page of the Telerate screen or if the
Telerate screen is unavailable, or if an offered rate is not quoted on the
Telerate screen for Dollars or for the period required at or about 11:00 a.m.
(London time) on the Reference Date, LIBOR for each such Interest Period shall
be the arithmetic mean (rounded upward, if necessary, to the nearest 1/16 of
1%) of the rates which are quoted at or about 11:00 a.m., London time, on the
Reference Date for a period equal to such Interest Period, on such Business Day
on the "LIBO" page of the Reuters Monitor Money Rates Service (or such other
page of the Reuters Monitor Money Rates Service as may replace such LIBO page
for the purpose of displaying London interbank Dollar offered rates of leading
reference banks and as may be selected by the Tranche A Lender and the Agent on
behalf of the Tranche B Lenders). So long as at least two quotations are
available on the "LIBO" page for a period equal to such Interest Period, LIBOR
for such Interest Period shall be determined in accordance with the preceding
sentence on the basis of the offered quotations as quoted. The determinations
of the Tranche A Lender and the Agent on behalf of the Tranche B Lenders shall
be conclusive in the absence of manifest error.
(b) If pursuant to Section 2.5(a) hereof the use of the
"LIBO" page is required, and the "LIBO" page does not at the appointed time
with respect to any Interest Period display at least two offered quotations,
LIBOR for such Interest Period shall be the average (rounded upward, if
necessary, to the nearest 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 as of approximately 11:00 a.m., London time, on the
Reference Date for a period comparable to such Interest Period and in an amount
of $50,000,000.00. The determination of the Tranche A Lender and the Agent on
behalf of the Tranche B Lenders shall be conclusive in the absence of manifest
error and shall be made on the above basis as soon as practicable thereafter,
New York time. If for any reason no quotation is furnished by one or more of
the Reference Banks to the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders, the Tranche A Lender and the Agent on behalf of the Tranche
B Lenders shall determine such interest rate on the basis of the quotations
furnished by the remaining Reference Banks.
2.6 Alternative Interest Rates; Voluntary Prepayment. If, on any
date on which an interest rate is to
<PAGE> 34
28
be fixed pursuant to Section 2.5 hereof, (i) none of the Reference Banks is
able to furnish a quotation to the Tranche A Lender and the Agent on behalf of
the Tranche B Lenders for purposes of determining an interest rate pursuant to
Section 2.5(b) hereof or (ii) for purposes of determining an interest rate
pursuant to Section 2.5(b) hereof the Tranche A Lender and the Agent on behalf
of the Tranche B Lenders are notified by all of the Reference Banks that
deposits in Dollars in an amount of $50,000,000.00 are not being offered to the
Reference Banks in the London interbank market or (iii) the Agent is notified
by Notice Lenders (as defined in the last sentence of this Section 2.6) that
the rate or rates for Dollar deposits displayed on the Telerate screen or the
"LIBO" page (as applicable pursuant to Section 2.5(a) hereof) or, in the event
that LIBOR for such Interest Period is being determined pursuant to Section
2.5(b) hereof, the rates at which Dollar deposits are being offered to the
Reference Banks in the London interbank market plus all costs associated with
reserves, special deposits, deposit insurance or similar requirements to be
maintained or paid in accordance with the regulations or other requirements of
the Federal Reserve System, the Federal Deposit Insurance Corporation or any
other department, agency or instrumentality of the United States of America or
any state thereof (collectively, "Reserves") in effect on the date of this
Agreement do not adequately reflect the cost to the relevant Lenders of making
or maintaining for the next succeeding Interest Period their respective
Advances with respect to Tranche A or Tranche B, as the case may be, or any
Deferred Portion thereof, then the Agent shall promptly give notice of such
fact to the Borrower and the relevant Lenders. During the 30 days next
succeeding the giving of such notice, the Borrower and the relevant Lenders
shall negotiate in good faith in order to arrive at a mutually satisfactory
interest rate which shall be applicable to such Advances and Deferred Portions
to be outstanding during such Interest Period instead of LIBOR. If within such
30-day period the Borrower and the relevant Lenders agree in writing upon an
alternative interest rate, such rate shall be substituted for LIBOR and shall
be effective with respect to the relevant amounts from the commencement of such
Interest Period. The Borrower shall pay to the relevant Lenders interest on
such Advances and Deferred Portions calculated based upon such alternative
interest rate plus the Applicable Margin during such Interest Period. If the
Borrower and the relevant Lenders fail to agree upon such an alternative
interest rate within such 30-day period, the interest rate during such Interest
Period, applicable to each relevant Lender's Advance and each relevant Lender's
Deferred Portion and effective from the commencement of such Interest Period
shall be such rate as such Lender shall determine (in a certificate delivered
by such Lender to the Agent setting
<PAGE> 35
29
forth the basis of the computation of such rate, which certificate shall in the
absence of manifest error be conclusive and binding on the Borrower) to be
necessary to compensate each such Lender for its actual out-of-pocket cost, and
costs associated with such Reserves (determined in good faith using reasonable
efforts to minimize the interest cost to the Borrower, rounded upward, if
necessary, to the nearest 1/16 of 1% and disregarding for such purposes all
costs of Reserves in effect on the date of this Agreement), as of the
commencement of such Interest Period, of funds for such Interest Period in an
amount equal to the aggregate principal amount of each relevant Lender's
Advances and each relevant Lender's Deferred Portion to which such Interest
Period relates plus the Applicable Margin. The Agent shall notify the Borrower
of such determination as promptly as practicable. After the Agent shall have
notified the Borrower of such determination and during the period such interest
rate continues to be applicable, the Borrower may elect to prepay any one or
more of the relevant Notes or the Deferred Portion of the relevant Notes
without premium or penalty (except as provided in Section 2.7(b) hereof) in
accordance with the provisions of Section 3.6 hereof. For purposes of this
Section 2.6, "Notice Lenders" means at any time either (i) the Tranche A Lender
or (ii) Tranche B Lenders holding in excess of 15% of the aggregate unpaid
principal amount of the Tranche B Advances, or if no such Advances are at the
time outstanding, Tranche B Lenders having in excess of 15% of the aggregate
amount of the Commitments with respect to Tranche B.
2.7 Interest Rate on Overdue Amounts; Other Indemnities.
(a) The Borrower shall pay interest on overdue principal of
the Tranche A Note or any Tranche B Note and, so far as may be lawful, on any
other overdue amount owing pursuant to this Agreement, the Notes and the Letter
Agreement, from and including the date the payment thereof was due to, but not
including, the day of actual payment, at a rate per annum which shall be (i)
with respect to the period ending on December 31, 1999, 2.1%, and (ii)
thereafter, 1.85%, in each case over (A) the rate which appears on page 3750
(or any successor page) of the Telerate Screen at or about 11:00 a.m., London
time, on the day such rate of interest is determined, for deposits in Dollars
with maturities of at least six days and not exceeding six months, as the
Tranche A Lender may elect with respect to the Tranche A Note and any other
amounts payable to the Tranche A Lender and as the Agent on behalf of the
Tranche B Lenders may elect with respect to the Tranche B Notes and any other
amounts payable to it or to the Tranche B Lenders, in each case as determined,
as appropriate, by the Tranche A Lender and the Agent on behalf of the Tranche
B Lenders
<PAGE> 36
30
upon consulting the relevant page of the Telerate screen, (B) if such rate is
not available on the relevant page of the Telerate Screen or if the Telerate
Screen is unavailable, the arithmetic mean (rounded upward, if necessary, to
the nearest 1/16 of 1%) of the offered quotations in effect at or about 11:00
a.m., London time, on the day such rate of interest is determined for deposits
in Dollars with maturities of at least six days and not exceeding six months,
as the Tranche A Lender may elect with respect to the Tranche A Note and any
other amounts payable to the Tranche A Lender and as the Agent on behalf of the
Tranche B Lenders may elect with respect to the Tranche B Notes and any other
amounts payable to it or to the Tranche B Lenders as displayed on the "LIBO"
page, in each case as determined, as appropriate, by the Tranche A Lender and
the Agent upon consulting such "LIBO" Page (or any successor page) of the
Reuters Monitor Money Rates Service or (C) if the LIBO Page should be used
pursuant to clause (B) but does not at the time of determination display at
least two offered quotations, the average (rounded upward, if necessary, to the
nearest 1/16 of 1%) of the respective rates at which deposits in Dollars with
maturities of longer than six days and shorter than six months, as the Tranche
A Lender or the Agent on behalf of the Tranche B Lenders may elect, are offered
to each of the Reference Banks in the London interbank market as of
approximately 11:00 a.m., London time, on the day such rate of interest is
determined in an amount approximately equal to the aggregate amount of such
overdue payment due to the relevant Lenders. If for any of the reasons
specified in clauses (i), (ii) or (iii) of Section 2.6 hereof an alternative
interest rate would be determined pursuant thereto, then such alternative
interest rate shall be determined and the Borrower shall pay to the relevant
Lenders interest on such overdue principal or other amounts at a rate per annum
that shall be (i) with respect to the period ending on December 31, 1999, 2.1%,
and (ii) thereafter, 1.85%, in each case over such alternative interest rate
without the addition of the Applicable Margin.
(b) To the extent permitted by applicable law, without
prejudice to the other rights of the Lenders under Sections 2.7(a) and 10.6(b)
hereof, the Borrower shall indemnify, without duplication, each such Lender
against, hold each such Lender harmless from and promptly pay to the Tranche A
Lender or the Agent on behalf of each Tranche B Lender, as the case may be, all
out-of-pocket costs, losses (excluding loss of profit) or expenses which each
such Lender may sustain or incur as a consequence of (i) any portion of a
Borrowing not being made, after notice thereof has been given by the Borrower,
other than due to a breach by one or more Lenders of its or their obligations
hereunder, (ii) any prepayment of any Advance (including any Deferred Portion
thereof) or (iii) the failure by the
<PAGE> 37
31
Borrower to pay when due the principal of or interest on any Note or any other
amount payable under this Agreement or the Letter Agreement, including but not
limited to breakage and other funding costs and any amounts payable by such
Lender in order to maintain its Advances, including any Deferred Portion
thereof, until the end of the relevant Interest Period in the event of
prepayment or until payment of all amounts then due by acceleration or
otherwise in the event of a failure to pay, but excluding any such costs,
losses or expenses resulting from prepayment on an Interest Payment Date of
amounts for which an Interest Period ends on such Interest Payment Date as
permitted in accordance with Section 3.7 hereof. In each case involving a
prepayment (other than a prepayment under Section 3.7 hereof for which no
costs, losses or expenses are payable), each Lender shall act in good faith and
use reasonable efforts to minimize the costs, losses and expenses payable by
the Borrower hereunder.
(c) A certificate of any Lender setting forth in reasonable
detail the basis for the determination of the amounts necessary to indemnify
such Lender pursuant to Section 2.7(b) shall be conclusive as to the
determination of such amounts in the absence of manifest error.
2.8 Fees.
(a) The Borrower hereby agrees to pay a non-refundable
front end fee in the amount specified in and otherwise in accordance with the
letter agreement between the Borrower and the Tranche A Lender of even date
herewith (the "Front End Fee Letter Agreement").
(b) The Borrower hereby agrees to pay a non-refundable
management fee and a non-refundable agency fee in the amount specified in and
otherwise in accordance with the management and agency fee letter agreement
between the Borrower and the Agent of even date herewith (the "Management and
Agency Fee Letter Agreement" and, collectively with the Front End Fee Letter
Agreement, the "Letter Agreement").
(c) The Borrower agrees to pay to the Agent for the account
of each Tranche B Lender a commitment fee at the rate of 1/4 of 1% per annum on
the daily undrawn amount of such Tranche B Lender's Commitment during the
period from and including the Effective Date to and including the last day of
the Availability Period. Such fee will be calculated on an estimated basis on
the first day of each Interest Period in accordance with the undrawn amount of
such Tranche B Lender's Commitment on that day and amounts in respect thereof
shall be accumulated for payment and paid in accordance with Sections 3.2 and
3.3 of the Trust Agreement, subject to adjustment when any Advance is made
hereunder.
<PAGE> 38
32
Such commitment fee shall be calculated on the basis of the actual number of
days elapsed and a 360-day year and shall be paid in arrears, in accordance
with Section 3.2 hereof, initially on the first Interest Payment Date,
thereafter on each Interest Payment Date that occurs during the Availability
Period and finally on the Interest Payment Date on or immediately following the
last day of the Availability Period.
2.9 The Notes. The Tranche A Lender's Advances shall be
evidenced by a single promissory note of the Borrower (the "Tranche A Note"),
substantially in the form of Exhibit C-1 hereto, and each Tranche B Lender's
Advances shall be evidenced by a single promissory note of the Borrower (a
"Tranche B Note"), substantially in the form of Exhibit C-2 hereto, each
payable to the order of such Lender for the account of its Lending Office in an
amount equal to such Lender's Commitment or, if less, the aggregate unpaid
principal amount of such Lender's Advances. Each Note shall be dated the date
of its delivery pursuant to Section 5.1 hereof, shall have the blanks therein
appropriately completed, and shall bear interest as specified in Sections 2.3,
2.4, 2.5, 2.6 and 2.7 hereof. Each Lender shall, and is hereby irrevocably
authorized by the Borrower to, endorse on the schedule attached to its Note or
on a continuation of such schedule attached to and made a part of such Note an
appropriate notation evidencing the date and amount of each Advance made by
such Lender and the date and amount of each payment, prepayment or deferral of
principal made by the Borrower with respect thereto. The failure so to record
any such amount or any error in so recording any such amount shall not,
however, limit or otherwise affect the obligations of the Borrower hereunder or
under any of the Notes to repay the principal amount of all Advances thereunder
together with all interest accruing thereon.
2.10 Repayment on Maturity Dates; Deferral.
(a) Subject to Section 2.10(b), on each Maturity Date the
Borrower shall repay with respect to each Tranche, as provided in Section 3.1
hereof, an amount of principal equal to the percentage of the principal amount
of such Tranche outstanding at the end of the Availability Period set forth
immediately below; provided that on the Final Maturity Date the Borrower shall
repay in full the amount of the aggregate Advances of both Tranches then
outstanding.
<PAGE> 39
33
<TABLE>
<CAPTION>
Percentage of
Maturity Date Advance Payable
------------- ---------------
<S> <C>
1st to 5th 0.8% each
6th to 17th 2.5% each
18th to 29th 2.75% each
30th to 40th 3.0% each
</TABLE>
(b) If after application of amounts to the payment of
interest and other amounts payable with respect to both Tranches on any
Maturity Date other than the Final Maturity Date, the aggregate of the amounts
held in the Debt Service Account and the Reserve Account will be insufficient
on such Maturity Date to pay all or a portion of the principal payable on such
Maturity Date with respect to both Tranches, then the Borrower may elect (by
giving not later than noon New York time on or prior to the eighth Business Day
preceding such Maturity Date an irrevocable Notice of Deferral to the Tranche A
Lender and the Agent, who shall promptly notify the Tranche B Lenders thereof;
provided that notice to the Tranche A Lender with respect to such Maturity Date
shall be deemed timely if received by the Tranche A Lender not later than noon
Tokyo time on the date seven Business Days preceding such Maturity Date) to
defer to the next succeeding Maturity Date payment of the amount of principal
for which such funds will be insufficient (pro rata for the account of each
Lender to the unpaid principal amount of the Notes) (such amount referred to as
the "Deferred Portion"), subject to the following being true on the Maturity
Date on which such insufficiency exists:
(i) The Borrower shall not have previously deferred
payments of any principal in accordance with this Section 2.10(b) either
(x) on the four consecutive Maturity Dates immediately preceding such
Maturity Date or (y) on a total of 15 previous Maturity Dates, whether or
not consecutive;
(ii) Each LNG Sales Contract pursuant to which Source
of Debt Service may then or in the future be payable shall be in full
force and effect;
(iii) No material breach or default under any LNG Sales
Contract pursuant to which Source of Debt Service may then or in the
future be payable shall exist and no notice of incipient material breach
or default shall have been given by any party thereto;
(iv) No authorization or approval required for the
continued validity and enforceability of any LNG Sales Contract pursuant
to which Source of
<PAGE> 40
34
Debt Service may then or in the future be payable shall have been revoked
or suspended; and
(v) No Event of Default shall have occurred and be
continuing or would occur with the giving of notice or the lapse of time.
2.11 Notices. The Tranche A Lender or the Agent, as appropriate
with respect to the Tranche A Note and the Tranche B Notes, respectively, shall
promptly give the Borrower, and the Agent shall promptly give the Tranche A
Lender or the Tranche B Lenders or each of them, as appropriate, with respect
to their Notes (i) notice of each interest rate (or interest rates) determined
pursuant to Sections 2.5, 2.6 or 2.7 hereof, the date of each of the next
Interest Payment Dates with respect to which the interest payable is then
calculable, the date of the next Maturity Date and the amount of principal or
interest on the relevant Tranche, as the case may be, the amount of commitment
fees estimated in accordance with Section 2.8(c) hereof to be paid to the
Tranche B Lenders on each of such dates and the amount of the agency fee, the
management fee and the front end fee provided for in the Letter Agreement, (ii)
as otherwise provided in this Agreement, notice of other relevant amounts due
and payable hereunder, (iii) upon satisfaction of the conditions precedent
contained in Section 5.2 hereof, notice to the effect that such conditions
precedent have been satisfied, (iv) upon the occurrence of the Effective Date,
notice to the effect that the Effective Date has occurred, and (v) the notices
to the Borrower by the Tranche A Lender or the Agent or both that Section
3.2(b) of the Trust Agreement requires this Agreement to provide for. The
Tranche A Lender or the Agent on behalf of the Tranche B Lenders, as
appropriate, shall provide the foregoing information to the Borrower at the
time and in the manner specified in Section 3.2(b) of the Trust Agreement;
provided that no failure or delay in the giving of such notice shall discharge
or excuse the Borrower from or permit the Borrower to delay making any payment
hereunder.
SECTION 3. PAYMENTS
3.1 Allocation of Amounts; Substitute Payment.
(a) Unless otherwise provided in this Agreement, all
payments by the Borrower to the Tranche A Lender and the Agent for the account
of the Tranche B Lenders shall be allocated as provided for in Section 3.3 of
the Trust Agreement. All payments by the Borrower of commitment fees shall be
made to the Agent for the account of the Tranche B Lenders, pro rata to their
respective
<PAGE> 41
35
Commitments. All payments referred to in this Section 3.1 which are received
by the Agent in the manner provided in Section 3.2 hereof shall be deemed to
have been made to the Tranche B Lenders, and the receipt by the Agent of such
payments shall discharge the Borrower from any further liability to make such
payments to such Tranche B Lenders.
(b) Notwithstanding anything to the contrary contained in
this Agreement or in any Note, but subject always to the provisions of Section
9 hereof, if the Agent shall have notified the Borrower that it shall have
become unlawful or, in the opinion of the Agent, impracticable for any payment
to be made as aforesaid, the Borrower shall pay to each Tranche B Lender for
its own account in such funds as are required by Section 3.2 hereof or in such
other manner as may be agreed between the Borrower and the relevant Tranche B
Lender and to such account as may be specified by the relevant Tranche B Lender
to the Borrower, the amount of the relevant Tranche B Lender's portion of the
payment in question. Each such Tranche B Lender shall keep the Agent fully
informed as to all amounts received by it and as to all agreements made between
it and the Borrower as referred to above.
3.2 Funds of Payment.
(a) Each payment made by the Borrower under this Agreement
with respect to Tranche A, under the Tranche A Note and to the Tranche A Lender
under the Letter Agreement shall be made in Dollars and in same day settlement
funds by credit of Federal or other immediately available funds satisfactory to
the Tranche A Lender (or such funds as may from time to time be customary for
the settlement in New York City of international banking transactions in
Dollars) not later than 10:00 a.m. Tokyo time on the Business Day on which such
payment is due. To effectuate the foregoing sentence and to ensure that the
Tranche A Lender and the Tranche B Lenders receive payment on the same calendar
date in their respective time zones, the Borrower shall issue, not later than
one Business Day prior to the Business Day on which any payment is due, an
irrevocable payment order in favor of the Tranche A Lender for value on the
Business Day on which such payment is due in the full amount of such payment,
such irrevocable payment order to be addressed to the Tranche A Lender's bank
in Tokyo, Japan (Account No. 02USD07160945-01) at The Long-Term Credit Bank of
Japan, Limited, Tokyo headquarters, Japan, or to such other bank or account of
the Tranche A Lender in Tokyo, Japan as the Tranche A Lender may at any time or
from time to time designate by written notice to the Borrower. The receipt by
the Tranche A Lender of such payment in accordance with such irrevocable
payment order shall fully discharge the Borrower's obligations with respect to
the
<PAGE> 42
36
amount paid. If and to the extent the Borrower shall have delivered a Notice
of Borrowing as provided herein that requests a Borrowing to pay for interest
or fees pursuant to Section 2.3, 2.7 or 2.8 hereof, and if the Borrowing Date
applicable to such Borrowing is also the date such payment is to be made to the
Tranche A Lender, then the payment order referred to in the second preceding
sentence shall expressly provide that payment pursuant thereto shall be subject
to the receipt by the Borrower by 1:00 p.m., New York City time, on the
relevant Borrowing Date of immediately available funds in the amount requested
in such Notice of Borrowing.
(b) Each payment made by the Borrower under this Agreement
with respect to Tranche B, the Tranche B Notes and to the Agent under the
Letter Agreement shall be made in Dollars and in same day settlement funds by
credit of Federal or other immediately available funds satisfactory to the
Agent (or such funds as may from time to time be customary for the settlement
in New York City of transactions in Dollars) not later than 11:00 a.m. New York
time on the Business Day on which such payment is due by credit to the account
of the Agent (Account No. 544-7-75066) at Chemical Bank, N.A., 4 New York
Plaza, New York, New York 10004 U.S.A. or to such other account of the Agent as
the Agent may at any time or from time to time designate by written notice to
the Borrower; provided that if and to the extent the Borrower shall have
delivered a Notice of Borrowing as provided herein that requests a Borrowing to
pay for interest or fees pursuant to Section 2.3, 2.7 or 2.8 hereof and if the
Borrowing Date applicable to such Borrowing is also the date such payment is to
be made to the Agent, then such portion of such payment as shall be payable by
the Borrower from the proceeds of such Borrowing shall be made as soon as
reasonably practical after the Borrower receives the proceeds of such
Borrowing, but in any case not later than 1:00 p.m. New York time on such
Business Day. The Agent will promptly cause each such payment received by it
to be distributed to each Tranche B Lender (in each case for the account of
such Tranche B Lender's Lending Office) in like funds with respect to each
payment received by such Agent for the account of such Tranche B Lenders or the
holders of the Tranche B Notes.
(c) Whenever any payment hereunder or under any Note falls
due on a day which is not a Business Day, the due date for such payment shall
be advanced to the next succeeding Business Day, unless the next succeeding
Business Day falls in another calendar month, in which case such payment shall
be the immediately preceding Business Day.
3.3 Set-Off, Counterclaim and Taxes. The Borrower will (i) pay
all amounts of principal of and
<PAGE> 43
37
interest on the Notes and all other amounts payable under this Agreement, the
Notes and the Letter Agreement ("Payments") without set-off or counterclaim,
and, to the extent permitted by law, free and clear of, and without deduction
or withholding for or on account of, any Taxes, and (ii) pay to, indemnify for
and hold each of the Lenders harmless from and against any Taxes which are
stamp or like taxes imposed directly or indirectly with respect to the
preparation, execution, delivery, registration, filing or recording of this
Agreement, the Notes, the Producers Agreement, the Trust Agreement, the Letter
Agreement or any document connected herewith or therewith and any Taxes which
are imposed directly or indirectly on any Lender or the Agent, with respect to
this Agreement, the Notes, the Producers Agreement, the Trust Agreement, the
Letter Agreement, any document connected herewith or therewith or the
transactions contemplated by any of the foregoing documents or any Payments.
Notwithstanding the foregoing, the provisions of the first sentence of this
Section 3.3 shall not require the Borrower to indemnify for any Excluded Taxes.
If any Taxes (other than Excluded Taxes) are required by law to be deducted or
withheld from any Payment, the Borrower will increase the amount of such
Payment to the Tranche A Lender or the Agent or both, and the Tranche B Lenders
through the Agent, to the extent necessary in order that the net amount
received by the Tranche A Lender and Agent, and the Tranche B Lenders through
the Agent, after deduction of all Taxes required to be deducted or withheld
with respect to such Payment as so increased and any other Taxes payable by the
Lenders with respect to the amount of such increase, will equal the full amount
of the Payment due and payable to the relevant Lender or Lenders. The Borrower
will furnish to each Lender, in such number of copies as such Lender shall
request, certified copies of tax receipts or other appropriate evidence of
payment, satisfactory to such Lender, evidencing the payment of all Taxes
levied or imposed upon any Payment within 45 days after the date any such
payment is due pursuant to applicable law. If any Taxes (other than Excluded
Taxes) are imposed on or with respect to any Payment or are required to be paid
by the Tranche A Lender, the Agent or any Tranche B Lender on or with respect
to any Payment or in connection with this Agreement or the Notes, the Borrower
will pay or otherwise indemnify and hold the Tranche A Lender, the Agent and
each Tranche B Lender harmless from any such Taxes or will reimburse to the
Tranche A Lender, the Agent and each Tranche B Lender on demand, subject to the
provisions of Section 3.10 hereof, such amounts as may be necessary in order
that the net amount received by the Tranche A Lender, the Agent and each
Tranche B Lender pursuant to such indemnity or reimbursement, after deduction
of all Taxes required to be deducted, withheld or otherwise paid by the Tranche
A Lender, the Agent and the Tranche B Lenders with respect to
<PAGE> 44
38
such amount, shall equal the amount of such Taxes so imposed or otherwise
subject to indemnity and reimbursement.
If a Lender shall receive a refund of any Taxes paid by the
Borrower pursuant to this Section 3.3 by reason of the fact that such Taxes
were not correctly or legally asserted, the Lender shall within 45 days after
receipt of such refund pay to the Borrower the amount of such refund, as
determined solely by the Lender; provided, however, that in no event shall the
amount paid by the Lender to the Borrower pursuant to this sentence exceed the
amount of Taxes originally paid by the Borrower; and provided further that no
Lender shall have any obligation under this Agreement to claim or otherwise
seek to obtain any such refund.
3.4 Change of Law; Certain Mandatory and Voluntary Prepayments;
Additional Amounts.
(a) Notwithstanding any other provision in this Agreement
to the contrary, if any change in any applicable law, rule or regulation or in
the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Lender (or its Lending Office) with any new request, interpretation or
directive of any relevant central bank or other governmental authority, shall
make it unlawful for any Lender (or its Lending Office) to (i) maintain its
Commitment, then such Commitment of such Lender shall thereupon terminate, or
(ii) maintain or fund its Advances, then such Commitment of such Lender shall
thereupon terminate, and the principal amount of such Lender's Note then
outstanding shall be repaid, together with interest accrued thereon and any
other amounts payable to such Lender under this Agreement, such Lender's Note
or the Letter Agreement, commencing immediately as an accelerated mandatory
prepayment in accordance with Sections 3.2 and 3.3 of the Trust Agreement;
provided, however, that all such amounts shall be paid on or prior to the Final
Maturity Date. Upon the occurrence of any such change or request making it
unlawful for the Tranche A Lender to maintain its Commitment as aforesaid, the
Tranche A Lender shall promptly forward to the Borrower evidence certified by
the Tranche A Lender as to such change or request. Upon the occurrence of any
such change or request making it unlawful for a Tranche B Lender to maintain
its Commitment as aforesaid, such Tranche B Lender shall promptly forward to
the Agent in writing, and the Agent shall promptly forward to the Borrower,
evidence certified by such Tranche B Lender as to such change or request.
(b) If any change in any applicable law, rule or regulation
or in the interpretation or administration thereof, or compliance by any Lender
with any request
<PAGE> 45
39
(whether or not having the force of law) of any relevant central bank or other
governmental authority, shall change the basis of taxation of payments to any
such Lender (or its Lending Office) of the principal of or interest on any of
the Notes or any other amounts payable under this Agreement or the Letter
Agreement (except for Excluded Taxes) or shall impose, modify or deem
applicable any similar requirement not in effect on the date of this Agreement
in respect of Reserves against assets of, deposits with or for the account of,
or credit extended by, or the Commitment of, any such Lender (or its Lending
Office) (except for Reserves in effect on the date of this Agreement), or shall
impose on any such Lender (or its Lending Office) or the London interbank
market any other condition not in effect on the date of this Agreement directly
affecting this Agreement, any of the Notes, the Letter Agreement or the
Advances and the result of any of the foregoing is to increase the cost to any
Lender of maintaining its Commitment or making or maintaining its Advances, or
to reduce the amount of any such payments received or receivable by any such
Lender (or its Lending Office) hereunder, by an amount deemed by such Lender to
be material, then the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender for such additional cost or
reduction. Such additional amount or amounts shall be paid on the Interest
Payment Date for the Interest Period to which such costs relate. Each Lender
agrees that it will promptly notify the Borrower of any event which will
entitle such Lender to an additional amount pursuant to this Section 3.4(b). A
certificate of such Lender setting forth the basis in reasonable detail for the
determination of such additional amount necessary to compensate such Lender as
aforesaid shall be conclusive as to the determination of such amount in the
absence of manifest error. After the receipt of any notice from any Lender
indicating that such Lender is entitled to an additional amount pursuant to
this Section 3.4(b), the Borrower may elect to prepay the relevant Note or
Notes of such Lender without premium or penalty (except as provided in Section
2.7(b) hereof) in accordance with the provisions of Section 3.6 hereof;
provided that any such prepayment may be made only if the amounts set forth in
the certificate described in the preceding sentence are paid by the Borrower
prior to or simultaneously with such prepayment.
(c) Each Tranche B Lender agrees that, upon the occurrence
of any event giving rise to the operation of Section 3.4(a) or (b) hereof with
respect to such Tranche B Lender, it will, if requested by the Borrower, and in
consultation with the Agent, use its best efforts to designate another Lending
Office for its Commitment or its Advances and/or for a period of thirty
calendar days after the date of such request use reasonable efforts to transfer
its Commitment and Advances to another Person in accordance
<PAGE> 46
40
with the procedures set forth in Section 10.4, in either case with the object
of avoiding the consequence of the event giving rise to the operation of
Section 3.4(a) or (b) hereof; provided that in either case such designation or
transfer can be made on such terms that such Tranche B Lender and its Lending
Office suffer no economic, legal or regulatory disadvantage. Nothing in this
Section 3.4(c) shall affect or postpone any of the obligations of the Borrower
or the rights of the Tranche B Lenders provided in Section 3.4(a) or (b)
hereof.
3.5 Prepayments in Connection with Completion of Train G; Debt
Coverage Reserve Mandatory Prepayments.
(a) Any amounts borrowed hereunder and not used as provided
in Section 2.2(a) hereof in connection with the completion of Train G or
otherwise used as provided in Section 2.2(b) hereof, shall be repaid to the
Lenders, or applied on the Lenders' behalf, on the Interest Payment Date ending
the Quarterly Period then in effect in accordance with the provisions of
Section 3.5(c)(ii)(1) of the Trust Agreement.
(b) If during any Quarterly Period the Borrower shall have
paid into the Debt Coverage Reserve Account any Source of Debt Service
pursuant to Section 3.2 of the Trust Agreement (as provided in Section 9.3
hereof), then on the Maturity Date occurring at the end of such Quarterly
Period the Borrower shall apply the Source of Debt Service so accumulated in
the Debt Coverage Reserve Account to prepay the Notes on a pro rata basis
(based on outstanding principal amount), with such prepayment to be applied to
the installments of principal due thereunder in the inverse order of maturity;
provided that for purposes of further calculations of the Debt Coverage Ratio
any such prepayment shall be deemed to have been applied to such installments
of principal pro rata so that the Final Maturity Date is not thereby changed.
3.6 Notice of Certain Voluntary Prepayments. Whenever the
Borrower has elected to prepay any relevant Note or Notes or any Deferred
Portion thereof pursuant to Section 2.6 or 3.4(b) hereof, the Borrower shall
give the Tranche A Lender and the Agent on behalf of the Tranche B Lenders
notice of such prepayment at least eight Business Days in advance thereof
(provided that such notice to the Tranche A Lender shall be deemed timely if
received by the Tranche A Lender in Tokyo at least seven Business Days in
advance thereof), and on the date specified in such notice (which shall be a
Business Day and a single date) the principal then outstanding of the affected
Note or Notes shall be repaid in full, together with interest accrued thereon
and, to the extent then ascertainable, any other amount
<PAGE> 47
41
payable under this Agreement to the Lender or Lenders holding such Note or
Notes. Any notice of prepayment under this Section 3.6 hereof shall be
irrevocable. Without limiting the right of the Borrower to prepay the Notes in
the manner provided in Section 2.6 or 3.4(b) and upon the prior notice as
provided above in this Section 3.6, the Borrower shall use its best efforts
(without incurring any liability additional to that provided for in Section 9.5
hereof) to provide the Tranche A Lender and the Agent on behalf of the Tranche
B Lenders with as much prior written notice of its intention to prepay any of
the Notes pursuant to Section 2.6 or 2.4(b) as is reasonably possible in the
circumstances.
3.7 Other Voluntary Prepayments. The Borrower may, upon not less
than eight Business Days' irrevocable prior notice to the Tranche A Lender and
the Agent on behalf of the Tranche B Lenders (provided that such notice to the
Tranche A Lender shall be deemed timely if received by the Tranche A Lender in
Tokyo at least seven Business Days prior to prepayment), prepay the Notes in
whole or in part on a pro rata basis (based on outstanding principal amount) on
any Interest Payment Date for the Notes being prepaid, and if in part in an
amount which is equal to $1,000,000.00 or an integral multiple of
$1,000,000.00. Each partial prepayment of any Notes made pursuant to this
Section 3.7 shall be applied to the installments of principal due thereunder in
the inverse order of maturity. Except as provided in Sections 2.7(b) hereof,
such prepayments shall be without premium or penalty; provided that the right
to prepay without premium or penalty shall not apply to any amounts declared
forthwith due and payable in accordance with Section 7 hereof. All prepayments
permitted pursuant to this Section 3.7 shall be made together with payment of
accrued interest on the principal amount prepaid, and, to the extent then
ascertainable, any other amount payable under this Agreement, the Notes or the
Letter Agreement. Without limiting the right of the Borrower to prepay the
Notes in the manner and upon the prior notice as provided above in this Section
3.7, the Borrower shall use its best efforts (without incurring any liability
additional to that provided for in Section 9.5 hereof) to provide the Tranche A
Lender and the Agent on behalf of the Tranche B Lenders with thirty days' prior
written notice of its intention to prepay all or any portion of the Notes
pursuant to this Section 3.7.
3.8 Cancellation of Commitments. The Borrower may without
premium or penalty (i) upon not less than 30 days' irrevocable prior notice to
the Tranche A Lender and the Agent on behalf of the Tranche B Lenders, cancel
the Commitments of the Lenders in whole or in part, and if in part in an
aggregate amount of $1,000,000.00 or an integral
<PAGE> 48
42
multiple of $1,000,000.00, all such cancellations to be on a pro rata basis as
among the Lenders based on their respective Commitments, or (ii) upon
irrevocable notice given simultaneously with or as part of the notice given
pursuant to Section 3.6 hereof to any Lender whose Note is prepaid in
accordance with the provisions of Section 3.6 hereof, cancel the Commitment of
such Lender.
3.9 No Reborrowing. The Commitments are not revolving in nature,
and no amount repaid or prepaid under this Agreement may be reborrowed
hereunder.
3.10 Payments to be Made at End of Interest Period. Except for
amounts owing pursuant to Sections 3.4(a), 7 and 10.6 hereof which become
payable as provided in such Sections, and notwithstanding any provision of any
Section other than Sections 3.4(a), 7 and 10.6 hereof to the contrary, in view
of the nature of the Borrower and the nature of the Source of Debt Service from
which payments hereunder will be made, all amounts becoming payable hereunder,
which would otherwise be due on a date which does not fall on an Interest
Payment Date instead shall be due on the Interest Payment Date next to occur
thereafter and prior to which the Borrower is notified that such amount is
payable, subject in each such case to the relevant provisions of Sections 3.2
and 3.3 of the Trust Agreement; provided, however, that all amounts due and
payable under this Agreement and the Notes shall be paid on or prior to the
Final Maturity Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower and, only to the extent expressly stated to be in its
individual capacity, BankAmerica International represent and warrant to the
Lenders that:
4.1 Power and Authority. The Borrower has full power, authority
and legal right to incur the Indebtedness and other obligations provided for in
this Agreement, the Notes and the Letter Agreement, to execute and deliver this
Agreement, the Notes, the Trust Agreement and the Letter Agreement and the
other documents contemplated hereby or referred to herein to which the Borrower
is a party, to borrow, pay and repay hereunder and under the Notes and the
Letter Agreement and to perform and observe the terms and provisions hereof and
thereof. BankAmerica International, in its individual capacity, is a banking
corporation duly organized and validly existing in good standing under the laws
of the United States of America and has the full power, authority and legal
right to execute, deliver and perform this Agreement, the Notes, the Trust
Agreement and the Letter Agreement as Trustee.
<PAGE> 49
43
4.2 Legal Action. All necessary legal action has been taken to
authorize the Borrower (i) to execute and deliver this Agreement, the Notes,
the Trust Agreement, the Letter Agreement and the other documents contemplated
hereby or referred to herein to which the Borrower is a party, (ii) to borrow,
pay and repay hereunder and under the Notes and the Letter Agreement and (iii)
to perform and observe the terms and provisions of this Agreement, the Notes,
the Trust Agreement and the Letter Agreement.
4.3 Restrictions. There is no Legal Requirement and no
contractual or other obligation binding on the Borrower or BankAmerica
International in its individual capacity, that is or will be contravened (or,
in the case of a contractual obligation, in respect of which a breach has
occurred or will occur) by reason of the execution and delivery of this
Agreement, the Notes, the Trust Agreement, the Letter Agreement or any of the
other documents contemplated hereby or referred to herein to which the Borrower
is a party, the making of Borrowings by the Borrower hereunder or the
performance or observance by the Borrower of any of the terms or provisions
hereof or thereof in each case in the manner contemplated hereby and thereby.
4.4 Registration and Approvals. No registrations, declarations
or filings with, or consents, licenses, approvals or authorizations of, any
legislative body, governmental department or governmental authority necessary
under any applicable laws are required of the Borrower or BankAmerica
International in its individual capacity for the due execution and delivery by
the Borrower, or for the performance by the Borrower, of this Agreement, the
Notes, the Trust Agreement, the Letter Agreement or any of the other documents
contemplated hereby or referred to herein to which the Borrower is a party, or
to authorize the Borrowings hereunder or to assure the validity or
enforceability hereof or thereof, except in each case for those as have been
made or obtained and copies of which have been furnished to the Tranche A
Lender and the Agent on behalf of the Tranche B Lenders and which are in full
force and effect.
4.5 Agreement Binding. This Agreement, the Trust Agreement and
the Letter Agreement constitute, and the Notes when executed and delivered
pursuant hereto for value will constitute, the legal, valid and binding
obligations of the Borrower enforceable against the Borrower to the extent
specified in Section 9 hereof in accordance with its and their respective
terms, subject in the case of enforcement to any applicable bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and to equitable principles of general application.
<PAGE> 50
44
4.6 Ranking of Advances; Encumbrances. The Borrower has no
outstanding Indebtedness charging or to be paid out of the Source of Debt
Service or Borrowed Amounts other than the obligations and liabilities of the
Borrower hereunder and under the Notes and the Letter Agreement and any
Indebtedness permitted by Section 6.4 hereof. The Borrower has not created,
incurred or suffered to exist (i) any Encumbrance on the Source of Debt Service
received or receivable by it prior to its deposit in the Bontang V Payment
Account, or (ii) any Encumbrance on any Borrowed Amounts, in each case under
clause (i) or (ii) resulting from any act of the Borrower or any failure by the
Borrower to perform any of its obligations under this Agreement or the Trust
Agreement or any of its duties thereunder, except any Encumbrance permitted
pursuant to Section 6.2 hereof.
4.7 Litigation. There is no suit, action, proceeding or
investigation pending against the Borrower or, to the knowledge of the
Borrower, threatened against the Borrower, which (a) questions the validity of
this Agreement, any Note, the Trust Agreement or the Letter Agreement, or any
action taken or to be taken by the Borrower pursuant hereto or thereto, (b)
affects or is likely to affect the amount of the Source of Debt Service
received by it or to the best of the Borrower's knowledge, receivable by it, or
(c) would or is likely to affect adversely the Borrower's ability to perform
its obligations under this Agreement, the Notes, the Trust Agreement or the
Letter Agreement or any other agreement to which it is a party or by which it
or its properties or assets is bound.
4.8 Compliance with Other Instruments, etc. BankAmerica
International in its individual capacity is not in violation of any term of its
charter or by-laws. The Borrower is not in violation of any term of any
agreement or any instrument to which it is a party or by which it or any of its
properties or assets is bound or of any Legal Requirement, which violation
would or is likely to have an adverse effect on the Borrower's ability to
perform its obligations under this Agreement, the Notes, the Trust Agreement,
the Letter Agreement or any other agreement to which it is a party or by which
it or its property or assets are bound.
4.9 No Defaults. No Event of Default referred to in Sections
7(a) through 7(e) hereof has occurred and is continuing and no event has
occurred or failed to occur, the occurrence or non-occurrence of which, with
the giving of notice or lapse of time or both, would constitute such an Event
of Default, and the Borrower is not in violation of any of its obligations
under the Trust Agreement.
<PAGE> 51
45
4.10 Trust Agreement. The copy of the Trust Agreement delivered
to the Lenders on the date hereof is a true, complete and correct copy thereof
as in effect on the date hereof.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent to the Effective Date. Except as the
Majority Lenders may otherwise consent, the effectiveness of this Agreement
(other than Sections 8, 9.5, 10.6 and 10.10 hereof which are effective upon due
execution and delivery of this Agreement) is subject to satisfaction in full of
each of the following conditions precedent, and the "Effective Date" shall be
the first Business Day on which each of such conditions precedent is so
satisfied:
(a) the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders shall have received on the Effective Date (or, in the case of
Section 5.1(a)(xiii), not fewer than 15 days prior to the Effective Date) the
following, all in form and, as to Section 5.1(a)(i) to (a)(xv) inclusive and
5.1(a)(xvii) and (xviii), in substance satisfactory to the Lenders:
(i) in the case of the Tranche A Lender only, the
Tranche A Note payable to the order of the Tranche A Lender complying
with the requirements of Section 2.9 hereof;
(ii) in the case of the Agent only, a Tranche B Note
payable to the order of each Tranche B Lender complying with the
requirements of Section 2.9 hereof;
(iii) a signed copy of an opinion of Kelley, Drye &
Warren, special counsel to the Borrower, substantially in the form of
Exhibit D-1 hereto, dated the Effective Date;
(iv) a signed copy of an opinion of Robert Rywkin,
counsel to the Borrower, substantially in the form of Exhibit D-2 hereto,
dated the Effective Date;
(v) a signed copy of an opinion of Budhy Rukiat,
legal counsel to Pertamina, substantially in the form of Exhibit E-1
hereto, dated not more than five Business Days prior to the Effective
Date;
(vi) a signed copy of an opinion of Andrews & Kurth
L.L.P., special New York counsel for each of the Producers other than
Pertamina, substan-
<PAGE> 52
46
tially in the form of Exhibit E-2 hereto, dated the Effective Date; and
signed copies of opinions of counsel for each of the Producers other than
Pertamina, substantially in the form of Exhibit E-3 hereto, dated the
Effective Date;
(vii) a signed copy of an opinion of White & Case,
special New York counsel to Pertamina, substantially in the form of
Exhibit E-4 hereto, dated the Effective Date;
(viii) a signed copy of an opinion of Paul, Weiss,
Rifkind, Wharton & Garrison, special counsel to the Tranche A Lender, the
Agent and the Tranche B Lenders, substantially in the form of Exhibit F-1
hereto, dated the Effective Date;
(ix) a signed copy of an opinion of Kim, Shin & Yu,
special Korean counsel to the Tranche A Lender, the Agent and the Tranche
B Lenders, substantially in the form of Exhibit F-2 hereto, dated the
Effective Date;
(x) a signed copy of an opinion of Tsar & Tsai,
special Taiwanese counsel to the Tranche A Lender, the Agent and the
Tranche B Lenders, substantially in the form of Exhibit F-2 hereto, dated
the Effective Date;
(xi) a copy of the Trust Agreement with all amendments
to the Effective Date certified by the Borrower;
(xii) a copy of a notice from the Producers to the
Borrower that they have approved the form and terms of this Agreement and
authorizing and requesting the execution and delivery of this Agreement
by the Borrower as contemplated by Section 3.1 of the Trust Agreement;
(xiii) a copy of the "Burmah Fleet Longevity Study Task
Force Final Report" dated November 18, 1994 relating to the LNG tankers
currently being used for the transport of LNG to the Buyers under the
1973 Sales Contract, and the Longevity Study of "Aquarius" Class LNG
Carriers on Behalf of Burmah Gas Transport Limited (BGT) -- Final Overall
Report dated November 4, 1994 referred to therein;
(xiv) a copy of the executed and delivered EPC Contract
with all amendments to the Effective Date certified by Pertamina, but not
including Exhibits A and B of the Bontang LNG Expansion
<PAGE> 53
47
Project Train G Contract No. B60-JMC-001 Agreement between Pertamina and
IKPT;
(xv) a certificate of Pertamina and, with respect to
each such agreement to which each representative referred to in Section
13.3 of the Trust Agreement is a party, a certificate of such
representative, to the effect that the copies of (i) the Development Plan
and (ii) each Basic Agreement, other than the Second A/R 1973 Sales
Contract and the New 1973 Transportation Arrangements, in each case as
amended, that were provided to the Tranche A Lender and the Agent on the
date hereof were true, correct and complete copies of such documents with
all amendments and that no change has been made in such documents since
the date of this Agreement, except for such changes as are permitted
without the consent of the Majority Lenders pursuant to the Producers
Agreement;
(xvi) a copy of the most recent statements, entitled
"Certificate of Gas Reserves as of May 31, 1994 of the Tunu Field in the
Mahakam Contract Area, Offshore East Kalimantan, Republic of Indonesia,"
"Certificate of Gas Reserves as of May 31, 1994 of the Tambora Field in
the Mahakam Contract Area, Offshore East Kalimantan, Republic of
Indonesia," "Certificate of Gas Reserves as of May 31, 1994 of the Sisi
Field, Offshore East Kalimantan, Republic of Indonesia," "Certificate of
Gas Reserves as of May 31, 1994 of the Peciko Field in the Mahakam
Contract Area, Offshore East Kalimantan, Republic of Indonesia,"
"Certificate of Gas Reserves as of May 31, 1994 of the Nubi Field,
Offshore East Kalimantan, Republic of Indonesia," "Certificate of Gas
Reserves as of May 31, 1994 of the Handil Field in the Mahakam Contract
Area, East Kalimantan, Republic of Indonesia," "Certificate of Gas
Reserves as of May 31, 1994 of the Bekapai Field in the Mahakam Contract
Area, Offshore East Kalimantan, Republic of Indonesia," "Certificate of
Gas Reserves as of May 31, 1994 of Certain Fields in the Unocal
Indonesia, Ltd. Contract Area, East Kalimantan, Republic of Indonesia,"
"Certificate of Gas Reserves as of May 31, 1994 of the Attaka Field in
the Unocal Indonesia, Ltd. Contract Area, Offshore East Kalimantan,
Republic of Indonesia," "Certificate of Gas Reserves as of May 31, 1994
of Certain Fields in the Sanga Sanga Contract Area, East Kalimantan,
Republic of Indonesia," "Certificate of Gas Reserves as of May 31, 1994
of the Semberah Field in the Sanga Sanga Contract Area, East Kalimantan,
Republic of Indonesia," "Certificate of Gas Reserves as of May 31, 1994
of the Nilam Field in the Sanga Sanga Contract Area, East Kalimantan,
Republic of Indonesia," "Certificate of Gas
<PAGE> 54
48
Reserves as of May 31, 1994 of the Mutiara Field in the Sanga Sanga
Contract Area, East Kalimantan, Republic of Indonesia" and "Certificate
of Gas Reserves as of May 31, 1994 of the Badak Field in the Sanga Sanga
Contract Area, East Kalimantan, Republic of Indonesia", each of which has
been prepared by DeGolyer and MacNaughton, relating to the gas reserves
in the Badak and certain other East Kalimantan fields, together with
reconciliations, satisfactory to the Tranche A Lender and the Agent,
indicating, as of a date not more than 15 days prior to the Effective
Date, the sufficiency of such gas reserves to meet the Seller's Gas
Supply Obligation (as defined in each of the LNG Sales Contracts);
(xvii) a certificate of Pertamina to the effect that (i)
Property Insurance Policy No. NE0056-DA dated June 1994, together with
any amendments, issued by P.T. Tugu Pratama Indonesia in favor of
Pertamina, among others, covering the Insured Bontang Plant (excluding
Train G) and (ii) Contractors "All Risks" Insurance Policy No. EF
0045-ED, dated June 19, 1995, together with any amendments, issued by
P.T. Tugu Pratama Indonesia in favor of Pertamina, among others, covering
Train G have been delivered to the Tranche A Lender and the Agent prior
to the date hereof and, except as permitted by Section 1.11 of the
Producers Agreement, remain in full force and effect in compliance with
Section 1.11 of the Producers Agreement; and
(xviii) certified copies of all required authorizations
and consents of all relevant governmental authorities of Indonesia
(certified by Pertamina) and Japan (certified by the Tranche A Lender),
if any, in connection with the transactions contemplated by this
Agreement, the Notes, the Letter Agreement and the Producers Agreement;
provided that no certified copy of any required authorization or consent
of The Export-Import Bank of Japan shall be required if the Tranche A
Lender shall certify that it has received oral confirmation that such
authorization or consent has been granted.
(b) all legal matters in connection with the transactions
contemplated hereby and the satisfaction of the conditions precedent contained
in this Section 5.1, and all documents and instruments evidencing such matters
or incident thereto including, but not limited to, the documents delivered
pursuant to this Section 5.1 shall be satisfactory in form and substance to
special counsel to the Lenders, and special counsel to the Lenders shall have
received all such other documents and instruments, or copies
<PAGE> 55
49
thereof, certified if requested, as they may reasonably request in order to
enable them to pass upon such matters;
(c) no Event of Default shall have occurred and be
continuing and no event shall have occurred or failed to occur the occurrence
or non-occurrence of which, with the giving of notice or lapse of time or both
would constitute, an Event of Default;
(d) the representations and warranties of the Borrower
contained in this Agreement and of the Producers contained in the Producers
Agreement shall be true and correct on and as of the Effective Date with the
same effect as though such representations and warranties had been made on and
as of the Effective Date;
(e) the Trust Agreement and the Producers Agreement shall
have been executed and delivered by each of the parties thereto in form and
substance satisfactory to the Lenders; and
(f) the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders shall have received copies certified by the Borrower to be
true and correct as of the Effective Date of (i) the designation of each entity
and individual authorized to give borrowing instructions under Section 3.4(a)
of the Trust Agreement, (ii) the borrowing instructions to the Borrower
relating to the initial Advance from an entity and individual so designated,
and (iii) specimen signatures of the persons who are authorized to act for the
Borrower under and in accordance with the terms of this Agreement, the Notes,
the Trust Agreement and the Letter Agreement.
5.2 Conditions Precedent to Certain Advances. Except as the
Majority Lenders may otherwise consent, the obligation of each Lender to make
any Advance that, when aggregated with the other Advances requested by the
Borrower in the relevant Notice of Borrowing, would cause the aggregate
outstanding principal amount of Indebtedness under this Agreement and the Notes
to exceed $275,000,000.00, is subject to the condition precedent that the
Tranche A Lender and the Agent shall have received, on or before the date of
the relevant Notice of Borrowing, all in form and substance satisfactory to the
Lenders:
(a) a signed copy of an opinion of qualified in-house legal
counsel of Pertamina, substantially in the form of Exhibit G-1 hereto;
(b) a signed copy of an opinion of White & Case, special
New York counsel to Pertamina, substantially in the form of Exhibit G-2 hereto;
<PAGE> 56
50
(c) a signed copy of an opinion of special Japanese counsel
to the Tranche A Lender, the Agent and the Tranche B Lenders, substantially in
the form of Exhibit G-3 hereto;
(d) copies of the Second A/R 1973 Sales Contract and all of
the New 1973 Transportation Arrangements, duly executed and delivered by each
of the parties thereto, certified by Pertamina as correct and complete copies
of such agreements; and
(e) a certificate of Pertamina in substantially the form of
Exhibit G-4 hereto.
5.3 Conditions Precedent to the Initial and Subsequent Advances.
Except as the Majority Lenders may otherwise consent, the obligation of each
Lender to make each Advance to be made by such Lender hereunder (including the
initial such Advance) is subject to the satisfaction in full of each of the
following conditions precedent:
(a) the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders shall have received a Notice of Borrowing in accordance with
the provisions of Section 2.2(d) hereof;
(b) on the date of the making of such Advance and after
giving effect thereto (i) no Event of Default shall have occurred and be
continuing and no event shall have occurred or failed to occur the occurrence
or non-occurrence of which, with the giving of notice or lapse of time or both
would constitute, an Event of Default, and (ii) the representations and
warranties of the Borrower contained in this Agreement and of the Producers
contained in the Producers Agreement, shall be true and correct on and as of
the date of the making of such Advance with the same effect as though such
representations and warranties had been made on and as of such date;
(c) the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders shall have received from the Borrower a statement from the
Producers conforming to the requirements of Section 6.1(b) hereof indicating
that the Debt Coverage Ratio (calculated using the assumptions provided for in
such Section in effect as of the date of the relevant Notice of Borrowing) is
not less than 150%;
(d) there shall have been no material adverse change since
the date of this Agreement (i) in the business, assets, financial condition or
results of operation of the Borrower or any of the Producers which affects
materially and adversely, or would be likely to affect materially and
adversely, the performance by
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Pertamina of or the ability of Pertamina to perform its obligations under any
of the LNG Sales Contracts, or (ii) in the operation of the Bontang Plant;
(e) the authorizations and consents described in Section
5.1(a)(xviii) hereof shall be in full force and effect;
(f) no event shall have occurred or circumstance exist that
renders impracticable any of the events set forth in clauses (i) or (ii) of the
definition of Completion Date in Section 1 hereof; and
(g) with respect to the making of the initial Advances
only, if such Advances are to be made 30 or more days after the Effective Date,
the Tranche A Lender and the Agent on behalf of the Tranche B Lenders shall
have received at least three Business Days prior to the relevant Borrowing Date
from each of the counsel referred to in Section 5.1 hereof signed copies of an
opinion, dated not more than five days prior to date of such Advances, to the
effect that no change has occurred with respect to the matters stated in the
opinion delivered by such counsel pursuant to Section 5.1 hereof.
5.4 Conditions Precedent to Advances to Fund Reserve Account.
Except as the Majority Lenders may otherwise consent, the obligation of each
Lender to make any Advance requested pursuant to Section 2.2(b)(ii) is subject
to the satisfaction in full of the following conditions precedent:
(a) the notice of Mechanical Completion (as defined in the
EPC Contract) with respect to the Additional Plant shall have been issued as
contemplated by Section 11.1.2 of the EPC Contract, and the Tranche A Lender
and the Agent on behalf of the Tranche B Lenders shall have received, at or
prior to the delivery of the Notice of Borrowing with respect to such Advance,
a copy of such notice certified by Pertamina; and
(b) the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders shall have received, at or prior to the delivery of the
Notice of Borrowing with respect to such Advance a copy of a report concerning
the estimated cost of completing the Additional Plant and the Loading
Facilities pursuant to the Development Plan and the Construction Documents
prepared by the Producers as of a date after the date of the notice of
Mechanical Completion referred to in clause (a) above, accompanied by a written
opinion of the engineering firm then qualified under Section 1.14(c) of the
Producers Agreement to prepare the semi-annual report contemplated thereby,
which opinion shall
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be to the effect that the engineering firm has reviewed the status of the
construction of the Additional Plant and the Loading Facilities and has
concluded that such estimated cost of so completing such facilities contained
in such report of the Producers is reasonable in its judgment.
5.5 Representations. The making of each Borrowing hereunder
shall be deemed to be a representation and warranty by the Borrower as of the
date of such Borrowing that the facts specified in Section 5.3(b)(i) hereof as
to Sections 7(a) through 7(e) hereof only, Section 5.3(b)(ii) hereof and
Section 5.3(d) hereof in each case as to the Borrower only are true and correct
on the date of such Borrowing.
SECTION 6. COVENANTS
Until payment in full of all of the Notes, and of all other amounts
due and owing under this Agreement at the time the Notes are paid in full,
unless compliance with the provisions of this Section shall have been waived by
the Majority Lenders, the Borrower covenants and agrees with the Lenders as to
Sections 6.1 through 6.5, and the Borrower, on the one hand, and the Lenders
and the Agent, on the other hand, covenant and agree with each other as to
Section 6.6.
6.1 Information. The Borrower shall provide or cause to be
provided to the Tranche A Lender and the Agent:
(a) as soon as possible and in any event within 45 days
after the end of each of the first three Quarterly Periods ending in each year
from and after 1998, for each such Quarterly Period, and within 45 days after
the end of the fourth Quarterly Period ending in each such year, for the
preceding four Quarterly Periods taken as a whole and for the final Quarterly
Period, a statement setting forth for the relevant period or periods (i) the
Gross Invoice Amounts invoiced under each of the LNG Sales Contracts and the
amount of such Gross Invoice Amounts that does and does not constitute Source
of Debt Service, including (u) with respect to the KGC Sales Contract, the LNG
Portion (as defined in such contract), (v) with respect to the CPC Sales
Contract, the LNG Related Component (as defined in such contract) and (w) with
respect to the New 1973 Sales Contract, the LNG Element (as defined in such
contract), (ii) the amount of such Gross Invoice Amount received by the
Borrower, (iii) the amount of such Gross Invoice Amount received by the
Borrower that does and does not constitute Source of Debt Service, including
(x) with respect to the KGC Sales Contract, the LNG Portion (as defined in such
contract), (y) with respect to the CPC Sales Contract, the LNG Related
Component (as defined in such
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contract) and (z) with respect to the New 1973 Sales Contract, the LNG Element
(as defined in such contract) and (iv) the debits and credits from the Debt
Service Account and Reserve Account and all subaccounts thereof (as provided in
the Trust Agreement);
(b) on or prior to the first day of each Quarterly Period,
a statement in writing setting forth (i) the Source of Debt Service reasonably
anticipated to be payable in each Quarterly Period to the Final Maturity Date,
(ii) the aggregate principal, interest and other amounts reasonably anticipated
to be payable during each Quarterly Period to the Final Maturity Date under
this Agreement, the Notes and the Letter Agreement, (iii) the Debt Coverage
Ratio (calculated as provided in the definition thereof) and (iv) the
reasonably anticipated Gross Invoice Amount under each of the LNG Sales
Contracts in each Quarterly Period to the Final Maturity Date and the
reasonably anticipated amount of such Gross Invoice Amount that will and will
not constitute Source of Debt Service, such statement to be prepared using the
most recent assumptions in effect in accordance with the last paragraph of the
definition of Debt Coverage Ratio in Section 1 hereof; provided, however, that
additional statements containing the information set forth above shall be
provided each time the Assumed Interest Rate and Debt Coverage Ratio shall
change as contemplated in the definitions of such terms in Section 1 hereof;
(c) information of the type referred to in clauses (a) and
(b) of this Section 6.1 at such times other than those specified above as the
Tranche A Lender or the Agent on behalf of the Tranche B Lenders may reasonably
request;
(d) as soon as a Responsible Officer of the Borrower
obtains actual knowledge thereof, notice of each Event of Default and each
event which has occurred or failed to occur, the occurrence or non-occurrence
of which with the giving of notice or lapse of time would constitute an Event
of Default; and
(e) as soon as the Borrower receives notice from Pertamina
that the events set forth in clauses (i) and (ii) of the definition of
Completion Date have occurred, a written notice substantially in the form of
Exhibit B-3 hereto, together with the original copy of the Notice of Completion
to Trustee substantially in the form included as part of Exhibit B-3 hereto;
and
(f) as soon as the Borrower receives notice from the
Producers pursuant to Section 3.5(c) of the Trust Agreement that Train G has
been completed, a written notice
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together with the copy of the notice from the Producers certifying that such
event has occurred.
The Agent shall forthwith cause a copy of all information provided
under this Section 6.1 to be distributed to each Tranche B Lender.
6.2 Negative Pledge. The Borrower will not create, incur or
suffer to exist any Encumbrance on the Source of Debt Service received or
receivable by it prior to its deposit in the Bontang V Payment Account, or any
Encumbrance on any Borrowed Amounts, in each case resulting from any act or any
failure to perform any obligation of the Borrower under this Agreement or of
the Bontang V Trustee under the Trust Agreement or any duty as Bontang V
Trustee, except any Encumbrance, if any, (i) arising pursuant to the Trust
Agreement or in favor of the holders of Indebtedness permitted in accordance
with Section 6.4 hereof or (ii) arising pursuant to statute or otherwise by
operation of law, and not pursuant to any agreement, which is discharged in the
ordinary course of business and which is not enforced by attachment or levy.
6.3 No Consent to Changes. The Borrower will not (i) terminate
or revoke the Trust Agreement, or (ii) amend, modify, revise, supplement or
waive any of the provisions of (a) Article 1, 4 or 10 or Section 2.1, 2.2, 2.4,
3.1, 3.2, 3.3 (other than Section 3.3(i)), 3.5 or 3.7, or the third sentence of
Section 8.2 of the Trust Agreement, in each case other than to permit the
Borrower to enter into Subordinated Indebtedness or Pari Passu Swap
Indebtedness, or (b) any other provision of the Trust Agreement if any such
amendment, modification, revision, supplement or waiver would or would be
likely to affect adversely the trust created under such Trust Agreement, the
rights of the Lenders under or the ability of the Borrower to perform its
obligations under this Agreement, the Notes or the Letter Agreement. Any
consent of the Majority Lenders necessary to permit any action otherwise
prohibited by this Section 6.3 shall not be unreasonably withheld. The
Borrower shall promptly provide to the Tranche A Lender and the Agent on behalf
of the Tranche B Lenders copies of any agreement or document evidencing any
revocation, amendment, modification or revision of the Trust Agreement or any
provision thereof not requiring the consent of the Majority Lenders under this
Section 6.3.
6.4 Indebtedness. The Borrower shall not create, assume or
become liable for, directly or indirectly, any Indebtedness charging or to be
paid out of the Source of Debt Service, except for (i) all obligations and
liabilities under this Agreement, the Notes or the Letter Agreement, (ii) any
Indebtedness (a) that shall be payable out of
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amounts of the Source of Debt Service only after the Trustee shall have
accumulated amounts in the Debt Service Account and the Reserve Account during
each Interest Period required to be accumulated therein pursuant to Sections 7
and 9 hereof, (b) the terms and conditions of which have been approved as to
form and substance by the Majority Lenders, such approval not to be
unreasonably withheld, and (c) the proceeds of which shall be applied solely in
connection with the Bontang Plant (the Indebtedness referred to in this clause
(ii), "Subordinated Indebtedness") and (iii) with respect to Source of Debt
Service only, obligations (other than Subordinated Indebtedness) in respect of
interest rate swap arrangements of the Borrower entered into solely for the
purpose of exchanging floating interest rate obligations with respect to the
aggregate Commitments or the Advances outstanding under this Agreement for
fixed interest rate obligations, if such Indebtedness is pari passu in right of
payment and does not benefit from any Encumbrance other than equally and
ratably with, or subordinate to, the Indebtedness owed to the Lenders under
this Agreement, the Notes and the Letter Agreement and if the terms and
conditions of such arrangements are approved as to form and substance by the
Majority Lenders ("Pari Passu Swap Indebtedness"), such approval not to be
unreasonably withheld; provided that the withholding of any consent by the
Majority Lenders under either Section 6.4(ii) or Section 6.4(iii) shall be
deemed reasonable if the Borrower and the Majority Lenders are unable to agree
with respect to (x) amendments to this Agreement, including without limitation
amendments to the definition of "Debt Coverage Ratio," with respect to such
Subordinated Indebtedness or Pari Passu Swap Indebtedness, as the case may be,
(y) amendments to the Trust Agreement relating to such Subordinated
Indebtedness or Pari Passu Swap Indebtedness, as the case may be, or (z) such
other changes to the terms and conditions, including the Events of Default, of
the Trust Agreement, the Producers Agreement and this Agreement as the Majority
Lenders shall request in connection with such Subordinated Indebtedness or Pari
Passu Swap Indebtedness, as the case may be. The Borrower shall not create,
assume or become liable for, directly or indirectly, any Indebtedness charging
or to be paid out of any Borrowed Amounts, except for Indebtedness for which
such Borrowed Amounts were borrowed.
6.5 Notice at End of Availability Period. After the end of the
Availability Period, the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders shall deliver to the Borrower a notice setting forth the
outstanding amounts of principal and interest as of the final Borrowing Date
and a repayment schedule. The Borrower shall either promptly confirm that it
agrees with such amounts and such schedule by signing and returning to each of
the Tranche A Lender and the Agent on behalf of the Tranche B Lenders a
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copy of such notice or promptly deliver to the Tranche A Lender and the Agent
on behalf of the Tranche B Lenders a notice indicating that it does not agree
and specifying the reasons therefor. The delivery or lack of delivery of such
notice to the Borrower shall in no way affect any of the obligations of the
Borrower pursuant to this Agreement other than those set forth in this Section
6.5.
6.6 Selection of Qualified Bank.
(a) If at any time the Assumed Interest Rate or the
assumptions necessary for calculating the Debt Coverage Ratio are, pursuant to
the definition of Assumed Interest Rate or Debt Coverage Ratio, to be specified
by a Qualified Bank, either (i) the Borrower shall select, no later than 15
Business Days after the request for negotiations referred to in the relevant
definition, one of the banks listed on Schedule 4 hereto (as such Schedule 4
may be amended by the Borrower, the Tranche A Lender and the Agent from time to
time), other than any such bank with respect to which the Tranche A Lender or
the Agent has, within 10 Business Days after the request for negotiations in
question, given written notice of its reasonable objection or (ii) if the
Borrower shall not have selected a bank as provided in the foregoing clause
(i), if at any time all of the banks on Schedule 4 have been so objected to in
one or more such notices or if such Qualified Bank shall not have specified the
Assumed Interest Rate or such other assumptions, as the case may be, within 10
Business Days after being selected, the Tranche A Lender and the Agent shall
select the Qualified Bank, with the consent of the Borrower, such consent not
to be unreasonably withheld; provided, however, that for purposes of the
foregoing, a failure to respond to a request for such consent within three
Business Days shall be deemed to be the granting of such consent. A Qualified
Bank so selected is referred to herein as a "Selected Qualified Bank." The
Selected Qualified Bank shall render a written report addressed to the
Borrower, the Producers, the Tranche A Lender and the Agent setting forth its
determination and containing a statement to the effect that it is qualified and
able to make a fair, informed and impartial decision concerning the matters
submitted to it for its decision. Prior to the end of the Availability Period,
the fees and charges of Selected Qualified Banks may be paid by the Borrower
out of Borrowings drawn down for such purpose (and, if so borrowed, shall be
paid out of such Borrowings), and following the end of the Availability Period,
such fees and expenses may be paid as contemplated by Section 3.3(b)(iv) of the
Trust Agreement.
(b) A "Qualified Bank" shall mean, in addition to each of
the financial institutions listed on
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Schedule 4 hereto (as the same may be amended from time to time) and not
objected to as provided in Section 6.6(a) hereof, each of the following: (i)
any commercial bank that has (a) a net worth in excess of $100,000,000.00 or
(b) outstanding debt securities that are rated A or better by Standard & Poor's
Rating Group or its equivalent by Moody's Investors Service or another
nationally recognized rating agency in the United States or (ii) an investment
bank of outstanding international reputation, and in the case of either of (i)
or (ii), that is a well-recognized and active participant in international
capital markets and is experienced in oil or gas-related financings and does
not control and is not controlled by or under common control with any of the
Lenders or any of the Producers.
SECTION 7. EVENTS OF DEFAULT
If any one or more of the following events ("Events of Default")
shall occur and be continuing:
(a) (i) failure to make any payment of the principal of any
of the Notes with respect to either or both of the Tranches within two days
following, or interest on any of the Notes with respect to either or both of
the Tranches within three days following, the date when due and payable in
accordance with the terms hereof and thereof (provided that for the purposes of
this clause (i) a deferral of payment of an amount of principal pursuant to
Section 2.10(b) hereof shall not be deemed to be a failure to make such
payment), or (ii) failure to pay any other amounts payable under this
Agreement, any of the Notes or the Letter Agreement within seven days following
the date when due in accordance with the terms of this Agreement, including
Section 3.10 hereof; or
(b) any representation or warranty made or deemed made by
or on behalf of the Borrower in Section 4 or Section 5.3 of this Agreement or
in any certificate delivered to the Tranche A Lender, the Agent or the Tranche
B Lenders pursuant hereto shall prove to have been incorrect or misleading in
any material respect as of the date when made; or
(c) failure by the Borrower to perform or observe any term,
covenant or agreement contained in Section 6.2, 6.3 or 6.4 hereof; or
(d) failure by the Borrower to perform its obligations
under Section 6.1(d) hereof for seven days after written notice of such failure
shall have been given to the Borrower by the Tranche A Lender or by the Agent
at the request of any Tranche B Lender; or
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(e) any failure by the Borrower to perform or observe any
term, covenant or agreement contained in this Agreement (other than those
referred to in clauses (a), (b), (c), (d) or (f) of this Section 7), or any
failure by the Borrower or any Producer to perform or observe any term,
covenant or agreement contained in the Trust Agreement, for 30 days after
written notice of such failure shall have been given to the Borrower by the
Tranche A Lender or by the Agent at the request of any Tranche B Lender; or
(f) a Default as defined in the Producers Agreement shall
have occurred thereunder;
then the Tranche A Lender and the Agent shall, upon the written request of the
Majority Lenders, by notice of default given to the Borrower, (i) declare the
Commitment of each Lender to be forthwith terminated and/or (ii) declare all
the Notes outstanding hereunder to be forthwith due and payable, whereupon the
then outstanding principal amount of such Notes, together with accrued interest
thereon and any and all other amounts due under this Agreement and the Letter
Agreement, shall forthwith become due and payable without diligence,
presentment, demand, protest, notice of dishonor, or other notice of any kind,
all of which are hereby expressly waived by the Borrower.
Should the principal amount of the Notes be declared or become due
and payable in the foregoing manner, the entire amount of the Source of Debt
Service received by the Borrower thereafter shall to the extent provided by the
Trust Agreement, as and when received by the Borrower, be accumulated and paid
to the Tranche A Lender and the Agent on behalf of the Tranche B Lenders for
application to the amounts owing by the Borrower under this Agreement, the
Notes which were declared to be or which became due and payable and the Letter
Agreement until all principal of and interest on such Notes and all other
amounts then due and payable under this Agreement, the relevant Notes and the
Letter Agreement shall have been paid in full.
SECTION 8. AGENT, ETC.
The Tranche B Lenders, the Agent, the Intercreditor Agent, the
Technical Agent and the Arrangers agree among themselves and, (i) where the
context of Section 8.9 or 8.10 so requires, with the Borrower and (ii) where
the context of Section 8.8 so requires, with the Tranche A Lender, as follows:
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8.1 Appointment and Authority.
(a) Each Tranche B Lender, and each subsequent holder of
any Tranche B Note by its acceptance thereof, irrevocably authorizes the Agent
to receive all payments of principal, interest and other amounts due to such
Tranche B Lender or such holder under this Agreement and the Tranche B Notes
and to take all other actions on behalf of such Tranche B Lender or such holder
and to exercise such powers hereunder as are specifically delegated to such
Agent by the terms hereof, together with all other such powers as shall be
reasonably incidental thereto.
(b) The relationship between each of the Tranche B Lenders
and the Agent is and shall be that of agent and principal only, and nothing
herein shall be construed to constitute the Agent a trustee for any holder of a
Tranche B Note or of a participation therein nor to impose on the Agent duties
and obligations other than those expressly provided for herein nor to confer
upon the Agent any relationship of agency or trust with the Borrower. Neither
the Agent, nor any of its directors, officers, employees or agents shall be
liable to any of the Tranche B Lenders for any action taken or omitted to be
taken by it or them hereunder or in connection herewith, whether as a result of
any conflicts affecting or involving the Agent resulting from its
responsibilities relating to this Agreement, the Commitments of the Tranche B
Lenders, Tranche B or otherwise, except for its own gross negligence or willful
misconduct. Each of the Tranche B Lenders, and each subsequent holder of any
Tranche B Note by its acceptance thereof, agrees (which agreement shall survive
payment of the Tranche B Notes) to indemnify the Agent (to the extent not
reimbursed by the Borrower) in amounts which are pro rata to the respective
Commitments of such Tranche B Lenders and, in the case of a subsequent holder
of any Tranche B Notes, of the Tranche B Lender from whom such holder acquired
(directly or indirectly) such Tranche B Notes, from and against any and all
losses, claims, damages, liabilities and expenses of any kind (including
failure to receive any payment specified in the Management and Agency Fee
Letter Agreement) which may be imposed on, incurred by or asserted against the
Agent (in its capacity as such) in any way related to or arising out of this
Agreement or any Advances with respect to Tranche B or any action taken or
omitted by such Agent under this Agreement whether as a result of any conflicts
affecting or involving the Agent resulting from its responsibilities relating
to this Agreement, the Commitments of the Tranche B Lenders, Tranche B or
otherwise, except (i) normal administrative expenses incidental to the
performance of their duties as such Agent and Arrangers hereunder and (ii) any
losses,
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claims, damages, liabilities or expenses resulting from its or their gross
negligence or willful misconduct.
8.2 Agent May Rely on Documents. The Agent shall be entitled to
rely on any communication, instrument or document reasonably believed by it to
be genuine and correct and to have been signed or sent by the proper Person or
Persons, and with respect to all legal matters shall be entitled to rely on the
advice of legal and other professional advisors selected by it from time to
time concerning all matters relating to this Agreement, the Tranche B Notes and
its duties hereunder and thereunder, and shall not be liable to any of the
Tranche B Lenders for the consequences of such reliance.
8.3 No Amendment to Duties of Agent Without Consent. The Agent
shall not be bound by any waiver, amendment, supplement or modification of this
Agreement which affects its duties under this Agreement unless it shall have
given its prior written consent, as Agent, thereto.
8.4 Responsibilities of Agent and Arrangers. The Agent may treat
the payee of any Tranche B Note as the holder thereof until written notice of
the transfer thereof shall have been received by it pursuant to Section 10.4
hereof. The Agent does not make any warranty or representation to any Tranche
B Lender, and shall not be responsible for any recitals, statements,
representations or warranties herein or in any document prepared by or given by
the Borrower or any other Person to the Tranche B Lenders in connection
herewith (or for the accuracy or completeness of any such document) or for the
execution, effectiveness, genuineness, validity or enforceability of this
Agreement or the Tranche B Notes or any other document, agreement or instrument
delivered in connection herewith or related hereto, or be liable for failing to
make any inquiry concerning the performance or observance of any of the terms,
provisions or conditions of this Agreement or any Tranche B Note or any other
document, agreement or instrument delivered in connection herewith or related
hereto. The Agent shall be entitled to retain for its own use any amounts paid
to it in its capacity as such. The Agent shall not be deemed to have known of
the occurrence of an Event of Default or other event the occurrence or
non-occurrence of which with the giving of notice or lapse of time or both
would become an Event of Default or comparable event under any other agreement
unless the Agent has received written notice from a Tranche B Lender or the
Borrower specifying such Event of Default or other event and stating that such
notice is a "Notice of Default" or from any other relevant Person so
specifying. If (i) the Agent receives a notification pursuant to the preceding
sentence, or (ii) the
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Borrower fails to pay in accordance with the terms hereof to the Agent when due
the principal of or interest on any Tranche B Note or any commitment fee
payable to any Tranche B Lender hereunder, the Agent shall promptly give
written notice thereof to the Tranche B Lenders. The Agent may decline to take
any action except upon the written direction of the Majority Tranche B Lenders
in accordance with the voting procedures agreement entered into by the Tranche
B Lenders and the Agent on the date hereof and the Agent may obtain a
ratification by such Majority Tranche B Lenders of any action taken by it under
this Agreement or any other document, agreement or instrument delivered in
connection herewith or related hereto as provided in such voting procedures
agreement. The Agent shall have no liability to the Tranche B Lenders for any
action taken by it upon the direction of the Majority Tranche B Lenders or if
ratified by the Majority Tranche B Lenders, nor shall the Agent have any such
liability for any failure to act unless the Agent has been instructed to act by
the Majority Tranche B Lenders. The action of the Majority Tranche B Lenders
shall in each case bind all of the Tranche B Lenders hereunder. The Agent
shall not be required to take any action which exposes the Agent to personal
liability (unless indemnified to its satisfaction for any and all consequences
of such action) or which is contrary to this Agreement or any Legal
Requirement.
8.5 Funding Costs of Agent. If at any time the Agent makes
available to a Tranche B Lender amounts due from the Borrower hereunder which
the Borrower has failed to make available to the Agent, then the Tranche B
Lender shall on first demand forthwith refund such amounts to the Agent
together with interest thereon at the rate offered by the Agent for overnight
Dollar deposits in the New York Federal Funds market.
8.6 Agent in Individual Capacity. The Agent and its affiliates
in their capacities as Tranche B Lenders shall have the same rights and powers
hereunder as any Tranche B Lender and may exercise such rights and powers as
though the Agent were not the Agent. The Agent and its affiliates may (without
having to account therefor to any Tranche B Lender) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with the Borrower, any of the Borrower's affiliates, the Producers and any of
the Producers' affiliates, as if such Agent were not acting in such capacity
hereunder.
8.7 Credit Decision. Each Tranche B Lender represents, warrants
and acknowledges that it has, independently and without reliance upon the
Agent, the Arrangers or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own
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credit analysis and decision to enter into this Agreement. Each Tranche B
Lender also acknowledges that it will, independently and without reliance upon
the Agent, the Arrangers or any other Lender, 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.
8.8 Arrangers, Intercreditor Agent, Technical Agent, Tranche A
Lender. Nothing in this Agreement shall impose on the Arrangers, the
Intercreditor Agent, the Technical Agent, or the Tranche A Lender in their
capacity as such, any duties or obligations whatsoever among themselves or in
favor of the Tranche B Lenders or any of them.
8.9 Change of Administrative Office of Agent. The Agent may at
any time or from time to time by written notice to the Borrower and to each
Tranche B Lender designate a different office from which its duties as Agent
will thereafter be performed; provided that no such change to a location
outside of the City of New York shall be made without the Borrower's consent,
which consent shall not be unreasonably withheld.
8.10 Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, the Agent may resign at any time by
giving written notice thereof to the Tranche B Lenders and to the Borrower.
The Agent may be removed at any time with or without cause by the Majority
Tranche B Lenders. Upon any such resignation or removal, such Majority Tranche
B Lenders shall have the right to appoint such successor Agent. If no
successor Agent shall have been so appointed by such Majority Tranche B Lenders
and shall have accepted such appointment within 30 days after any such retiring
Agent's giving of notice of resignation, then such retiring Agent may appoint
such successor Agent. No successor Agent shall be appointed without the
consent of the Borrower, which consent shall not be unreasonably withheld or
delayed. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of such retiring
Agent, and such retiring Agent shall be discharged from its duties and
obligations hereunder. After any such retiring Agent's resignation hereunder
as Agent, the provisions of this Section 8 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as any such Agent hereunder.
<PAGE> 69
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SECTION 9. SOURCE OF DEBT SERVICE; NO RECOURSE
9.1 Accumulation for Debt Service. Pursuant to Sections 3.2 and
3.3 of the Trust Agreement and except as therein stated, the Borrower shall pay
(i) into the Debt Service Account the entire amount of all Borrowed Amounts
(other than Reserve Account Borrowed Amounts) immediately upon receipt thereof,
(ii) into the Reserve Account the entire amount of all Reserve Account Borrowed
Amounts immediately upon receipt thereof and (iii) starting with the first day
after the end of the Availability Period, into the Debt Service Account the
entire amount of each payment of the Source of Debt Service, as and when
actually received by the Borrower, until the aggregate amount accumulated in
the Debt Service Account shall be sufficient to pay the principal of and
interest due on all of the Notes, as well as all other amounts due and payable
under this Agreement, the Notes and the Letter Agreement, in each case during
such Quarterly Period; provided, however, that for any six-month Interest
Period, the amount of the Source of Debt Service paid over to and accumulated
in the Debt Service Account for principal and interest due during such Interest
Period shall be in accordance with Sections 3.2 and 3.3 of the Trust Agreement.
All such principal, interest and other amounts due during any Interest Period
are referred to herein as the "Quarterly Debt Service" for such Interest
Period.
9.2 Accumulation in Regular Reserve Account.
(a) Pursuant to Sections 3.2 and 3.3 of the Trust
Agreement, during each Quarterly Period that ends on a Maturity Date, after all
amounts of Source of Debt Service required to be paid into the Debt Service
Account pursuant to Section 9.1 hereof with respect to such Quarterly Period
have been so paid, the Borrower shall pay into the Regular Reserve Account the
entire remaining amount of each payment of the Source of Debt Service, as and
when actually received by the Borrower, until the aggregate amount accumulated
in such Regular Reserve Account shall equal 100% of the amount of Quarterly
Debt Service reasonably anticipated to be due during the two Quarterly Periods
next succeeding such Quarterly Period. For purposes of determining such
amounts of Quarterly Debt Service, the interest rate applicable to the Advances
(including any Deferred Portion thereof) scheduled to be outstanding during
each of such two succeeding Quarterly Periods shall be or be deemed to be the
interest rate, if any, then in effect in respect of principal to be outstanding
during the next succeeding Interest Period and, if no such rate shall then be
in effect, shall be deemed to be the interest rate in effect for the then
current Interest Period.
<PAGE> 70
64
(b) Notwithstanding Sections 9.1 and 9.2(a) hereof, and
subject to Section 9.2(c) hereof, if there is any Source of Debt Service during
the period from and including January 1, 1998 to and including the last day of
the Availability Period, the Borrower shall pay the full amount thereof into
the Regular Reserve Account pursuant to Section 3.2 of the Trust Agreement so
long as and to the extent that the amount therein is less than 100% of the
amount of Quarterly Debt Service reasonably anticipated (in the manner
prescribed in Section 9.2(a) hereof) to be due on the first two Maturity Dates.
(c) If there is any Source of Debt Service at any time
prior to the satisfaction of the conditions precedent set forth in Section 5.2
hereof, then after all amounts of Source of Debt Service required to be paid
into the Debt Service Account and the Regular Reserve Account pursuant to
Sections 9.1, 9.2(a) and 9.2(b) and, if any, the Debt Coverage Reserve Account
pursuant to Section 9.3 hereof have been so paid, the Borrower shall pay the
entire remaining amount thereof into the Regular Reserve Account pursuant to
Section 3.2 of the Trust Agreement; provided, however, that upon the
satisfaction of such conditions precedent all amounts held in the Regular
Reserve Account in excess of the amounts required to be so held pursuant to
Sections 9.2(a) and (b) hereof shall be applied in accordance with Sections 3.2
and 3.3 of the Trust Agreement.
9.3 Deposit in Debt Coverage Reserve Account. Pursuant to
Section 3.2 of the Trust Agreement, if at any time at or after the end of the
Availability Period the Certificate delivered to the Tranche A Lender and the
Agent pursuant to 6.1(b) of this Agreement indicates that the Debt Coverage
Ratio at the time of calculation is less than 130%, then for each Quarterly
Period then in effect or thereafter occurring, after all amounts of Source of
Debt Service required to paid into the Debt Service Account and the Regular
Reserve Account pursuant to Sections 9.1 and 9.2 hereof with respect to such
Quarterly Period have been so paid, the Borrower shall pay into the Debt
Coverage Reserve Account the entire remaining amount of each payment of the
Source of Debt Service, as and when actually received by the Borrower. Amounts
deposited and held in the Debt Coverage Reserve Account shall be applied as
provided in Section 3.5(b) hereof until the Debt Coverage Ratio shall equal or
exceed 130%. The procedure set forth in this Section 9.3 shall continue in
effect in each subsequent Quarterly Period until the Debt Coverage Ratio,
calculated at the commencement of any such Quarterly Period, equals or exceeds
130%.
9.4 Payments Made from Debt Service Account and Reserve Account.
Except for any personal liability of the
<PAGE> 71
65
Borrower arising as specifically provided in this Agreement and except for any
prepayments pursuant to Section 9.3 hereof, all payments to be made by the
Borrower under this Agreement, the Notes and the Letter Agreement, including in
each case, without limitation, payments due on the Final Maturity Date, shall
be made only from the Debt Service Account as at any applicable time the same
shall be funded under Sections 3.2 and 3.3 of the Trust Agreement; provided,
however, that if amounts held in the Debt Service Account and the Debt Coverage
Reserve Account are insufficient to pay all such amounts when due, any amounts
then held in the Regular Reserve Account shall be applied to make such payments
to the extent provided in Section 3.3 of the Trust Agreement. Except in
accordance with the preceding sentence with respect to any personal liability
of the Borrower, the Borrower shall only be obligated to make payments under
this Agreement, the Notes and the Letter Agreement, including in each case,
without limitation, payments due on the Final Maturity Date, out of amounts of
the Source of Debt Service and Borrowed Amounts received by it. The Borrower
agrees that, as long as moneys are held in such Debt Service Account and such
sub-accounts of the Reserve Account, the Lenders, to the extent necessary to
make payments in accordance with the terms of the Trust Agreement of principal,
interest and other amounts due under this Agreement, the Notes and the Letter
Agreement, are among those having a right as provided under Section 2.2 of the
Trust Agreement to receive disbursements thereunder.
9.5 No Recourse. In furtherance of Sections 9.1 to 9.4 hereof,
each of the Tranche A Lender, the Agent, the Intercreditor Agent, the Technical
Agent, the Arrangers, the Tranche B Lenders and each holder of a Note, by its
acceptance thereof, agrees that, except as provided in Sections 9.3 and 9.4,
(i) it will look solely to the Source of Debt Service and Borrowed Amounts to
the extent provided in Sections 9.3 and 9.4 hereof for all payments to be made
by the Borrower under this Agreement, the Notes and the Letter Agreement, as
provided therein or herein, including in each case, without limitation,
payments due on the Final Maturity Date, and that no recourse shall be had for
the payment of the principal of or interest on the Notes or the payment of any
other amounts due under this Agreement or the Letter Agreement, or shall be had
for any claim based on any provision hereof or thereof, against BankAmerica
International (or any entity acting as successor trustee under the Trust
Agreement) in its individual capacity, or against any past, present or future
stockholder, officer, director, employee or agent of BankAmerica International
(or any entity so acting), or against the grantors, settlors or beneficiaries
of any trust under the Trust Agreement, either directly or through the Borrower
or any successor of any thereof, under any constitution, statute or rule of law
or
<PAGE> 72
66
by the enforcement of any assessment, or otherwise, and (ii) neither
BankAmerica International (or any such entity acting as such successor trustee)
nor any such other Person shall have any personal obligation, liability or duty
whatsoever to the Tranche A Lender, the Agent, the Intercreditor Agent, the
Technical Agent, the Arrangers or the Tranche B Lenders or any holders of the
Notes or anyone else for or with respect to any such payment or for the
performance of or compliance with any covenant or agreement contained in any of
said documents or for the truth, accuracy or completeness of any statement or
representation made in any such document, except only in the case of
BankAmerica International (or any such entity acting as successor trustee) for
any material breach of a representation or warranty expressly made by it under
Section 4 or Section 5.3 hereof in its individual capacity and such liability
as may arise under this Agreement for gross negligence or willful misconduct in
acting hereunder. In such connection the Borrower (a) shall be entitled to act
upon any notice, certificate, request, direction, waiver, receipt or other
document which it in good faith believes to be genuine and it shall be entitled
to rely upon the due execution, validity and effectiveness of, and the truth
and acceptability of any provisions contained in, any of the foregoing so
received, (b) may consult with, and obtain advice from qualified accounting and
legal advisers in connection with the performance of its obligations and it
shall incur no liability and shall be fully protected in acting in good faith
in accordance with the opinion and advice of such advisers, and (c) shall have
no duties other than those specifically set forth or provided for herein nor
any obligation to familiarize itself with nor any responsibility with respect
to any other agreement relating to the transactions contemplated by this
Agreement to which it is not a party.
9.6 Not to Limit Remedies. Nothing contained in this Section 9
shall be construed to limit the exercise and enforcement, in accordance with
the terms of this Agreement, the Notes or the Letter Agreement, of the rights
and remedies of the Tranche A Lender, the Agent, the Intercreditor Agent, the
Technical Agent, the Arrangers or the Tranche B Lenders or any holders of the
Notes against the Borrower hereunder to the extent of the Source of Debt
Service and Borrowed Amounts as provided herein.
SECTION 10. MISCELLANEOUS
10.1 Notices. Any notice required or permitted to be given
hereunder shall be in writing and shall be (a) personally delivered, (b)
transmitted by postage prepaid registered mail, return receipt requested, (c)
transmitted
<PAGE> 73
67
by telex (with postage prepaid mail confirmation) or (d) sent by telecopier to
the parties as follows (as elected by the party giving such notice):
To the Borrower: BankAmerica International, as
Trustee under the Bontang V Trust
Agreement dated as of July 1, 1995
1 World Trade Center, 9th Floor
New York, New York 10017
Attention: Vice President-Manager
Telex: 62944
Answerback: BOA UW
Telecopier: (212) 390-2249
To the Tranche A Bontang Train-G Project Finance Co.,
Lender: Ltd.
Ebisu Neonato, 14th Floor
1-18, Ebisu 4-chome
Shibuya-ku
Tokyo, Japan
Attention: Treasurer
Telex: (0)2422027
Answerback: BGPF J
Telecopier: (03) 5423-5593
To the Agent: The Long-Term Credit Bank
of Japan, Limited
New York Branch
165 Broadway
New York, New York 10006
Attention: Vice President,
Business Promotion II
Telex: 425722
Answerback: LTCB UI
Telecopier: (212) 608-2371
To the Tranche B As provided on the signature
Lenders: pages hereof
Any notice relating to a Borrowing or a prepayment shall only be effective on
receipt of a legible copy thereof. Except as otherwise specified in this
Agreement, all notices and other communications shall be deemed to have been
duly given on (i) the date of delivery if delivered personally at or before
5:00 p.m. on the date of delivery in the time zone of the recipient (otherwise
on the day immediately following the date of delivery), (ii) five days
following posting if transmitted by mail, (iii) the date of transmission if
transmitted by telex with confirmed answerback received at or before 5:00 p.m.
on the date of transmission in the time zone of the recipient (otherwise on the
day immediately following the date of transmission) or (iv) the date of
<PAGE> 74
68
receipt of a legible copy thereof if sent by telecopier received at or before
5:00 p.m. on the date of transmission in the time zone of the recipient
(otherwise on the day immediately following the date of receipt), whichever
shall first occur. Any party may change its address for purposes hereof by
notice to the other parties.
10.2 No Waiver; Remedies Cumulative. No failure to exercise and
no delay in exercising, on the part of the Tranche A Lender, the Agent, the
Tranche B Lenders or the holders of any Note, any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. Subject always to the provisions of Section 9 hereof, the rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law. The provisions of this Agreement shall
inure to the benefit of any subsequent holder of the Notes.
10.3 Use of English Language. All documents or notices to be
delivered pursuant to or in connection with this Agreement shall be in the
English language. English shall be the official language for construction and
interpretation of this Agreement, the Notes, the Letter Agreement and all
agreements, notices, documents and instruments related thereto. If the
original of any such document or notice is not in the English language, an
English translation thereof shall be delivered.
10.4 Assignment; Successors and Assigns; Participations.
(a) This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Tranche A Lender, the Arrangers, the Tranche B
Lenders, the Agent and their respective successors and permitted assigns. The
Borrower may not assign any of its rights or delegate any of its obligations
hereunder without the written consent of all of the Lenders. Any Lender may at
any time sell, assign, transfer, negotiate, or otherwise dispose of, in whole
or in part, with the prior written consent (such consent not to be unreasonably
withheld) of the Borrower, its rights and obligations under this Agreement or
the Notes; provided, that such consent by the Borrower shall not be required
for any proposed sale, assignment, transfer, negotiation or other disposition
by a Tranche B Lender to another financial institution (i) at least 75% of the
voting shares of which are held directly or indirectly by such Tranche B
Lender, or (ii) holding directly or indirectly at least 75% of the voting
shares of such Tranche B Lender or (iii) at least 75% of the voting shares of
which are held directly or
<PAGE> 75
69
indirectly by a corporation which holds directly or indirectly at least 75% of
the voting shares of such Tranche B Lender (any of the foregoing described
transferees, a "Section 10.4(a) Affiliate"). The exercise of such right by any
Lender is, however, subject to the conditions that the transferee shall (x) not
have any right at the time of transfer, or shall have effectively waived any
right existing in the transferee at the time of transfer, pursuant to Section
3.3 hereof to claim from the Borrower tax indemnification and pursuant to
Section 3.4(b) hereof to claim from the Borrower any additional amounts, in
either case above and beyond that or those which could have been claimed by the
transferor at the time of transfer, (y) not have any right at the time of
transfer pursuant to Section 3.4(a) hereof not possessed by the transferor at
the time of transfer, and (z) in the case of any transfer to a Section 10.4(a)
Affiliate, not have designated a Lending Office in any jurisdiction with
respect to which the Borrower is at the time of transfer prohibited by
applicable state or federal laws of the United States from doing business.
(b) In furtherance of the foregoing clause (a), any Lender
wishing to transfer any of its rights and obligations under this Agreement or
the Notes to any Person shall effect such transfer in the following manner:
(i) The Lender and the Person or Persons to which the
Lender wishes to transfer any of such rights and obligations (the "Transferee"
or "Transferees") shall duly complete and execute a transfer certificate in the
form of Exhibit C-3 hereto (the "Transfer Certificate").
(ii) Unless the intended Transferee is stated in the
relevant Transfer Certificate to be a Section 10.4(a) Affiliate, the Lender
shall obtain the consent of the Borrower to the transfer by having the Borrower
evidence its consent in the space provided therefor in the Transfer
Certificate.
(iii) The Lender then and only then shall deliver the
Transfer Certificate to the Agent together with (x) a photocopy of the Transfer
Certificate as executed by the Lender, the Transferee and the Borrower, (y) the
Note or Notes in respect of which the transfer is being made, and (z) payment
of the transfer fee of $1,000, upon receipt of which the Agent shall
acknowledge receipt of such Transfer Certificate in the space provided therefor
in the photocopy and deliver the same to the Transferee.
(iv) Each transfer shall become effective on the later
of (x) the date specified for such transfer in the related Transfer Certificate
and (y) the
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70
fifth Business Day after acknowledgment of receipt of the related Transfer
Certificate by the Agent.
(v) Upon a transfer becoming effective in the
foregoing manner, the Transferee shall assume the obligations and acquire the
rights which are the subject of such transfer with the same effect as if such
Transferee had been an original party hereto as a Lender with the rights and
obligations acquired and assumed by such Transferee as the result of such
transfer.
(c) The Agent shall as promptly as practicable deliver to
the Borrower a copy of each Transfer Certificate the receipt of which is
acknowledged pursuant to this Section 10.4 together with the Note or Notes
received with respect thereto, whereupon the Borrower shall execute and deliver
into the custody of the Agent one or more new Notes (of the same category as
the Notes subject to transfer and dated the date to which interest has been
paid on the Advances evidenced thereby) (i) in the principal amounts being
retained, if any, and/or transferred by the transferor and the Transferee or
Transferees, respectively, (ii) payable to the order of such transferor and/or
Transferee or Transferees, respectively, and (iii) in an aggregate principal
amount equal to that evidenced by the Note or Notes which are the subject of
such transfer.
(d) The Agent shall as promptly as practicable deliver to
the relevant Transferees all new Notes delivered into its custody pursuant to
Section 10.4(c) hereof.
(e) The Agent and the Borrower may treat each Lender as the
holder of the Note drawn to its order and delivered to such Lender, whether
pursuant to Section 2.9 hereof or this Section 10.4, except in those
circumstances where a transfer has become effective pursuant to this Section
10.4 but the new Note or Notes to be issued in connection with such transfer
have yet to be issued, in which case the transferor and Transferee or
Transferees parties to such transfer shall be treated as the holder or holders
of the existing Note or Notes related to such transfer to the extent of their
respective interests as set forth in the relevant Transfer Certificate.
(f) All agreements, representations and warranties made
herein shall survive the making of any such transfer hereunder by any Lender.
(g) Notwithstanding anything otherwise contained in this
Section 10.4, each Lender may grant participations which do not create or
purport to create binding obligations of the Borrower, in whole or in part, in
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71
its rights under this Agreement and the Notes without any restriction and
without notice to the Borrower.
(h) The parties named on the signature pages hereof under
the captions "Arrangers", "Intercreditor Agent" and "Technical Agent" are
intended to have such benefits, and in accepting any such benefits also to
accept such obligations, as may be expressly provided for such parties herein
to the same extent as if such parties had actually executed and delivered this
Agreement.
10.5 Amendments. Any provision of this Agreement or the Notes may
be amended or waived if, and only if, such amendment or waiver shall be in
writing and signed by the Tranche A Lender (except with respect to Section 8
hereof (other than Section 8.8 hereof)), the Majority Tranche B Lenders and, if
the Agent's rights or duties as agent are affected, the Agent; provided that
any such amendment must also be signed by the Borrower; and provided, further
that no such amendment or waiver shall, unless signed by the Tranche A Lender
and each Tranche B Lender, do any of the following: (a) increase or decrease
the Commitment of any Lender or subject any Lender to any additional obligation
hereunder; (b) reduce the amount or postpone the date of any payment of
principal, interest or other amount hereunder with respect to a Tranche; (c)
with respect to Tranche B only, reduce the percentage of the amount of the
Commitments with respect to Tranche B or the Advances with respect to Tranche
B, specified in the definition of "Majority Tranche B Lenders" or otherwise
required to take any action hereunder; or (d) amend or waive any provision of
this Section 10.5. Any such amendment or waiver shall be signed by the Tranche
A Lender and by the Agent on behalf of the relevant Tranche B Lenders if the
Agent has been so authorized in writing or by telex, cable or facsimile
transmission by the Majority Tranche B Lenders or all of the Tranche B Lenders,
as the case may be. Any amendment or waiver signed by the Agent in accordance
with the preceding sentence shall be binding upon the Tranche B Lenders and any
holder of a Tranche B Note. Any action that the Agent may take on behalf of
the Majority Tranche B Lenders under this Agreement and that the Agent in fact
so takes shall be binding on all of the Tranche B Lenders.
10.6 Expenses; Indemnification.
(a) Subject to such limitations as are separately agreed,
whether or not the transactions contemplated by this Agreement shall be
consummated, the Borrower agrees (i) to pay, or reimburse the Tranche A Lender
and the Agent, on behalf of the Tranche B Lenders, for, all reasonable fees,
disbursements, expenses (including without limitation travel expenses) and
other charges of the
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72
Lenders' special New York, Japanese, Taiwanese and Korean counsel and (ii) to
pay or reimburse the Tranche A Lender and, with respect to the Arrangers, the
Agent on behalf of the Arrangers, for, all other reasonable out-of-pocket
expenses of the Tranche A Lender and the Arrangers, including, but not limited
to, travel and photocopying expenses, in each case in connection with the
preparation, negotiation and signing of, and the initial disbursement under,
this Agreement; provided that, subject to Section 10.6(b) hereof, the Borrower
shall not be obligated to pay or reimburse the Lenders for any such fees,
disbursements, expenses or other charges that were incurred prior to April 5,
1995 or after the initial Borrowing Date; and provided, further, that the
Borrower shall pay or reimburse any fees and disbursements of Merlin
Associates, Inc. in connection with the preparation of the report referred to
in Section 1.19 of the Producers Agreement up to an aggregate maximum of
$50,000.00. The Borrower shall pay such amounts, to the extent then incurred,
on or before the earliest to occur of (i) the initial Borrowing Date, (ii) the
thirtieth day following the Effective Date or (iii) the sixtieth day following
the date hereof. If such thirtieth or sixtieth day referred to in the
preceding clauses (ii) and (iii) shall occur earlier than the initial Borrowing
Date, then, in addition to the amount paid on such day, the Borrower shall also
pay on the initial Borrowing Date any such amounts that are incurred after such
thirtieth or sixtieth day and on or before the initial Borrowing Date.
(b) The Borrower agrees (i) to pay, or reimburse the
Tranche A Lender or the Agent or both, as the case may be, for all reasonable
out-of-pocket expenses, including, but not limited to, travel expenses, legal
fees, disbursements and other charges of Lenders' counsel incurred by the
Tranche A Lender or the Agent or both in connection with any amendment or
supplement to, or modification or waiver of, this Agreement, the Trust
Agreement, the Producers Agreement or other related documents after this
Agreement has been fully executed, and, subject to such limitations as are
separately agreed, in connection with the satisfaction of the conditions
precedent set forth in Section 5.2 hereof, and (ii) whether or not amounts due
under this Agreement, any of the Notes or the Letter Agreement are accelerated,
upon the occurrence of an Event of Default or an event the occurrence or
nonoccurrence of which would, with notice or lapse of time or both constitute
an Event of Default (but only if such event later becomes an Event of Default),
(x) to pay, or reimburse the holder of the Tranche A Note for, all reasonable
out-of-pocket expenses of such holder arising in connection with such Event of
Default or the enforcement of this Agreement, such Tranche A Note, the Letter
Agreement or the Producers Agreement, including but not limited to the fees,
disbursements and expenses (including without limitation travel expenses) and
other charges of counsel employed by such holder and (y) to pay, or reimburse
the Agent for, all reasonable out-of-pocket expenses of the Agent and each
holder of any Tranche B Notes arising in connection with such Event of Default
or the enforcement of this Agreement, such Tranche B Notes, the Letter
Agreement or the Producers Agreement, including but not limited to the fees,
disburse-
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73
ments and expenses (including without limitation travel expenses) and other
charges of counsel employed by the Agent or such holder. The Borrower shall
pay any such amounts for which an invoice is delivered to it on or prior to the
end of the Availability Period, on or before the earlier of (A) the next
Borrowing Date or (B) the next Interest Payment Date following delivery to the
Borrower of the invoice therefor. The Borrower shall pay any such amounts for
which an invoice is delivered to it after the Availability Period, as provided
in the Trust Agreement.
10.7 Sharing of Set-Off and Other Payments. In the event that any
Tranche B Lender shall have received an amount in excess of its ratable share
of payments hereunder or under the Tranche B Notes through the exercise of any
lien, set-off or similar right or any voluntary payment by the Borrower, such
Tranche B Lender shall promptly (and in any event within 15 days) purchase for
cash, without recourse that portion of each other Tranche B Lender's Advances
as will result in each Tranche B Lender receiving its ratable share of the
amount of such lien, set-off or similar right, or voluntary payment; provided
that to the extent that such excess amount or any portion thereof is
subsequently recovered from the purchasing Tranche B Lender, its purchases from
the other Tranche B Lenders shall be rescinded and the price repaid without
interest; and provided further that if, after acceleration of the maturity of
the relevant Tranche B Notes pursuant to Section 7 hereof, any Tranche B Lender
shall commence an action or proceeding in any court to enforce the relevant
Tranche B Notes held by such Tranche B Lender and as a result thereof, or in
connection therewith, shall receive an excess payment on such Tranche B Notes,
such Tranche B Lender shall not be required to share any portion of such excess
payment with a Tranche B Lender which has received sufficient notice to enable
it to and which, has the legal right to, but does not, join such action or
proceeding or commence and diligently prosecute a separate action or proceeding
to enforce its Tranche B Notes in another court. Nothing herein contained
shall in any way affect (a) expenses pursuant to Section 2.7(b) hereof,
prepayments pursuant to Section 3.4 hereof and interest payments calculated in
accordance with the provisions of the fifth sentence of Section 2.6 hereof and
(b) the right of any Lender to obtain payment of indebtedness of the Borrower
other than
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Indebtedness under this Agreement, the Notes and the Letter Agreement.
10.8 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts together shall constitute one and the same instrument. Complete
sets of counterparts shall be lodged with the Tranche A Lender, the Agent and
the Borrower.
10.9 Table of Contents and Section Headings. The table of
contents and the section headings in this Agreement are inserted for
convenience of reference only and shall be ignored in construing this
Agreement.
10.10 Governing Law. This Agreement and the Notes shall be
governed by and construed in accordance with the laws of the State of New York,
United States of America, applicable to agreements made and to be performed
entirely within such State.
10.11 Severability. If any one or more of the provisions
contained in this Agreement or any document executed in connection herewith
shall be invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired.
10.12 Term of Agreement. The term of this Agreement shall
commence on the date hereof and shall end on the termination of all of the
Lenders' Commitments or payment in full of all of the Notes and all other
amounts payable under this Agreement and the Letter Agreement, whichever is
later. The agreements of the Borrower to pay expenses and indemnities pursuant
to Sections 3 and 10.6 of this Agreement shall survive the repayment of the
Advances
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and the cancellation of all of the Notes until all amounts payable thereunder
are paid in full.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective duly authorized signatories as of the
date hereof.
<TABLE>
<S> <C>
The Borrower
------------
BANKAMERICA INTERNATIONAL,
as Trustee aforesaid
By /s/ VINCENT CHORNEY
-----------------------------------
Name: Vincent Chorney
Title: Attorney-in-Fact
Commitment Tranche A Lender
- ---------- ----------------
$678,650,000.00 BONTANG TRAIN-G PROJECT FINANCE
CO., LTD.
By /s/ RINTARO HARA
-----------------------------------
Name: Rintaro Hara
Title: President
Lending Office:
Ebisu Neonato
14th Floor
1-18, Ebisu 4-chome, Shibuya-ku
Tokyo, Japan
Attention: Treasurer
Telex: (0)2422027
Answerback: BGPF J
Telecopier No.: (03) 5423-5593
</TABLE>
<PAGE> 82
76
<TABLE>
<S> <C>
Arrangers
---------
CREDIT LYONNAIS
By /s/ PHILIPPE SOUSTRA
-----------------------------------
Name: Philippe Soustra
Title: Attorney-in-Fact
THE FUJI BANK, LIMITED
By /s/ HAJIME TANIMURA
-----------------------------------
Name: Hajime Tanimura
Title: Attorney-in-Fact
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED
By /s/ KENICHI AMANO
-----------------------------------
Name: Kenichi Amano
Title: Attorney-in-Fact
Facility Agent ("Agent")
------------------------
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED
NEW YORK BRANCH
By /s/ KENICHI AMANO
-----------------------------------
Name: Kenichi Amano
Title: Attorney-in-Fact
</TABLE>
<PAGE> 83
77
<TABLE>
<S> <C>
Intercreditor Agent
-------------------
THE FUJI BANK, LIMITED
Technical Agent
---------------
CREDIT LYONNAIS
Tranche B Lenders
-----------------
Commitment
- ----------
$25,000,000.00 CREDIT LYONNAIS
By /s/ PHILIPPE SOUSTRA
-----------------------------------
Name: Philippe Soustra
Title: Attorney-in-Fact
Lending Office:
Credit Lyonnais/IFAP/MTC 5
1 Rue des Italiens
75 009 Paris, France
Attention: Ms. Annick Paccioni
Assistant Manager
Central Department of
Asset & Project
Financial Engineering
Telex: 285 018 F
Answerback: CREDC/A
Telecopier No.: 33-1-4295-3814
</TABLE>
<PAGE> 84
78
<TABLE>
<S> <C>
Commitment
- ----------
$15,700,000.00 THE DAIWA BANK, LIMITED
NEW YORK BRANCH
By /s/ SHINICHI THOUE
-----------------------------------
Name: Shinichi Thoue
Title: Attorney-in-Fact
Lending Office:
666 Fifth Avenue, 3rd Floor
New York, New York 10103-0300
Attention: Mr. Masafumi Asai
Vice President &
Manager
Loan Section
Telex: RCA 232246
Answerback: NEW DAIWA
Telecopier No.: (212) 554-7210
Commitment
- ----------
$7,600,000.00 THE DAI-ICHI KANGYO BANK, LIMITED
NEW YORK BRANCH
By /s/ TAKAYUKI NAKAYAMA
-----------------------------------
Name: Takayuki Nakayama
Title: Attorney-in-Fact
Lending Office:
One World Trade Center, Suite 4911
New York, New York 10048
Attention: Ms. Lisa Saito
Investment Banking
Department II
Telex: 232988
Answerback: DKB UR
Telecopier No.: (212) 542-0579
</TABLE>
<PAGE> 85
79
<TABLE>
<S> <C>
Commitment
- ----------
$25,000,000.00 THE FUJI BANK, LIMITED
NEW YORK BRANCH
By /s/ HAJIME TAMURA
-----------------------------------
Name: Hajime Tamura
Title: Attorney-in-Fact
Lending Office:
Two World Trade Center, 79th Floor
New York, New York 10048
Attention: Mr. Thomas Boylan
(Vice President)
Credit Contact
Ms. Rosanna Caminiti
(Assistant Manager)
Administrative Contact
Telex: 420626
Answerback: 420626
Telecopier No.: (212) 321-9407
(212) 321-9408
Commitment
- ----------
$19,650,000.00 THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/ KENICHIRO MURATA
-----------------------------------
Name: Kenichiro Murata
Title: Attorney-in-Fact
Lending Office:
245 Park Avenue
New York, New York 10167
Attention: Mr. Ryosuke Shigetomi
Vice President
Real Estate & Project
Finance Department
(copy to Mr. K. Murata)
Telex: 420802
Answerback: KOGI UI
Telecopier No.: (212) 949-0134
</TABLE>
<PAGE> 86
80
<TABLE>
<S> <C>
Commitment
- ----------
$19,650,000.00 KOREA FIRST BANK
NEW YORK AGENCY
By /s/ HEUNG-JE KIM
-----------------------------------
Name: Heung-Je Kim
Title: Attorney-in-Fact
Lending Office:
410 Park Avenue
New York, New York 10022
Attention: Mr. Jin Hang Lee
Senior Assistant
General Manager
Mr. Bong Young Kim
Assistant General Manager
Telex: 668115 or 425747
Answerback: KOFIRST NY or KORFBK A
Telecopier No.: (212) 319-0255
Commitment
- ----------
$25,000,000.00 THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
NEW YORK BRANCH
By /s/ KENICHI AMANO
-----------------------------------
Name: Kenichi Amano
Title: Attorney-in-Fact
Lending Office:
165 Broadway
New York, New York 10006
Attention: Mr. Hisashi Saito
Vice President,
Business Promotion II
Telex: 425722
Answerback: LTCB UI
Telecopier No.: (212) 608-2303
</TABLE>
<PAGE> 87
81
<TABLE>
<S> <C>
Commitment
- ----------
$19,650,000.00 THE MITSUBISHI BANK, LIMITED
NEW YORK BRANCH
By /s/ YOSHISABURO MOGI
-----------------------------------
Name: Yoshisaburo Mogi
Title: Attorney-in-Fact
Lending Office:
Two World Financial Center
225 Liberty Street
New York, New York 10281
Attention: Mr. Hiroaki Fuchida
Vice President &
Manager
U.S. Corporate Banking
Department
Telex: 232328
Answerback: MITUR
Telecopier No.: (212) 667-3562
Commitment
- ----------
$19,650,000.00 THE MITSUBISHI TRUST AND
BANKING CORPORATION
NEW YORK BRANCH
By /s/ TATSUHISA TESHIMA
-----------------------------------
Name: Tatsuhisa Teshima
Title: Attorney-in-Fact
Lending Office:
520 Madison Avenue, 26th Floor
New York, New York 10022
Attention: Mr. Ichiro Yanagiya
Manager Finance IV
Telex: 425078
Answerback: MTAB UI
Telecopier No.: (212) 755-2349
</TABLE>
<PAGE> 88
82
<TABLE>
<S> <C>
Commitment
- ----------
$19,650,000.00 THE NORINCHUKIN BANK
NEW YORK BRANCH
By /s/ SHOJIRO MATSUOKA
-----------------------------------
Name: Shojiro Matsuoka
Title: Attorney-in-Fact
Lending Office:
245 Park Avenue, 29th Floor
New York, New York 10167
Attention: Mr. Takehiko Ishihara
Assistant Manager
Telex: 6720068
Answerback: NOCHUBANK
Telecopier No.: (212) 697-5754
Commitment
- ----------
$19,650,000.00 THE SAKURA BANK, LIMITED
NEW YORK BRANCH
By /s/ MASAO UMEMURA
-----------------------------------
Name: Masao Umemura
Title: Attorney-in-Fact
Lending Office:
277 Park Avenue, 45th Floor
New York, New York 10172
Attention: Mr. Yasuhiro Terada
Senior Vice President
Structured Finance
Department
(copy to Mr. T. Fujinawa)
Telex: 421242
Answerback: MITKBK NY
Telecopier No.: (212) 888-7651
</TABLE>
<PAGE> 89
83
<TABLE>
<S> <C>
Commitment
- ----------
$19,650,000.00 THE SANWA BANK, LIMITED
NEW YORK BRANCH
By /s/ AKIRA TEKEUCHI
-----------------------------------
Name: Akira Tekeuchi
Title: Attorney-in-Fact
Lending Office:
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Ms. Elizabeth Murphy
Assistant Vice President
Loan Administration
Telex: RCA 232423
Answerback: SWBUR
Telecopier No.: (212) 754-1851
Commitment
- ----------
$15,700,000.00 SOCIETE GENERALE
TOKYO BRANCH
By /s/ PATRICK FROGER
-----------------------------------
Name: Patrick Froger
Title: General Manager for
Japanese Branches
Lending Office:
2-9, Nishi-Shinbashi 1-chome
Minato-ku,
Tokyo 105 Japan
Attention: Mr. Toshio Hamasaki
Senior Vice President
Corporate Marketing
Department IV
Telex: 28611
Answerback: SOGE
Telecopier No.: (813) 3503-4090
</TABLE>
<PAGE> 90
84
<TABLE>
<S> <C>
Commitment
- ----------
$19,650,000.00 THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By /s/ KIYOTAKA KUROKAWA
-----------------------------------
Name: Kiyotaka Kurokawa
Title: Attorney-in-Fact
Lending Office:
277 Park Avenue
New York, New York 10172
Attention: Mr. Keiji Hayashida
Assistant Vice President
International Finance
Department U.S.A.
Telex: 420515(ITT)
Answerback: SMBK UI
Telecopier No.: (212) 593-9522
Commitment
- ----------
$19,650,000.00 THE TOKAI BANK, LIMITED
NEW YORK BRANCH
By /s/ TURO SATOH
-----------------------------------
Name: Turo Satoh
Title: Attorney-in-Fact
Lending Office:
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Mr. Masayuki Kawahara
Vice President
Utilities Finance Group
Telex: 211250
Answerback: TOKAI UR
Telecopier No.: (212) 754-2171
</TABLE>
<PAGE> 1
BONTANG V
PRODUCERS AGREEMENT
by
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
VIRGINIA INDONESIA COMPANY
OPICOIL HOUSTON, INC.
VIRGINIA INTERNATIONAL COMPANY
LASMO SANGA SANGA LIMITED
UNION TEXAS EAST KALIMANTAN LIMITED
UNIVERSE GAS & OIL COMPANY, INC.
TOTAL INDONESIE
UNOCAL INDONESIA COMPANY
INDONESIA PETROLEUM, LTD.
in favor of
BONTANG TRAIN-G PROJECT FINANCE CO., LTD.
as Tranche A Lender,
THE BANKS named herein as Tranche B Lenders
and
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
NEW YORK BRANCH
as Facility Agent
THE FUJI BANK, LIMITED
as Intercreditor Agent
CREDIT LYONNAIS
as Technical Agent
Tranche B Arranged by
CREDIT LYONNAIS
THE FUJI BANK, LIMITED
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
Dated as of July 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART 1 PRODUCERS' AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Authorization of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.2 Approval of Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3 Rights to Bontang Plant and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.4 No Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.6 Enforcement of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.7 Operation of Bontang Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.8 Replacement of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.9 Indebtedness; Permitted Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.10 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.12 Reserve Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.14 Construction of Train G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.15 Notices Relating to Source of Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.16 Effect of Certain Events with Respect to LNG Sales
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.17 Payment Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.18 Monitoring Total Project Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.19 Construction Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.20 Loading Facilities Construction Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.21 Debt Service Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.22 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.23 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
PART 2 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.1 Due Incorporation; Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.2 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Registrations and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.5 Agreement Binding; No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.7 Compliance with Other Instruments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.8 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.10 No Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.11 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PART 3 DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.1 Default Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.2 Remedy for Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
3.3 Diversion and Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.4 Liability Share Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
PART 4 INSURED LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.1 Effect of Total Loss of Additional Plant or Loading
Facilities Prior to Operational Acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.2 Effect of Total Loss of Insured Bontang Plant . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.3 Insurance Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.4 Other Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
PART 5 SCOPE OF PRODUCERS' LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
PART 6 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.2 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.3 Assignment; Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . 37
6.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.6 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.8 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.10 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Schedule 1 Liability Share Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
(ii)
<PAGE> 4
BONTANG V
PRODUCERS AGREEMENT
Dated as of
July 1, 1995
Bontang Train-G Project Finance Co., Ltd., as Tranche A Lender,
and
Credit Lyonnais, The Fuji Bank, Limited and The Long-Term Credit Bank of Japan,
Limited as Arrangers and The Long-Term Credit Bank of Japan, Limited, New York
Branch, as Facility Agent, The Fuji Bank, Limited as Intercreditor Agent and
Credit Lyonnais, as Technical Agent, under the Loan Agreement
Dear Sirs:
Each of the undersigned Producers confirms that it has
authorized and requested the Trustee to enter into the Loan Agreement. In
connection therewith, the undersigned Producers hereby confirm for your benefit
and for the benefit of the other parties to such Loan Agreement executing this
Agreement, any permitted successor or successors to your or their interests
thereunder, and the holders of the Notes referred to in such Loan Agreement the
matters set forth below.
* * * * *
As used above and below in this Agreement, the following
capitalized expressions shall have the meanings set forth below, such meanings
to be applicable to both the singular and plural forms of such expressions.
"Affected Facilities" has the meaning set forth in Section 4.4
hereof.
"Approved Institutions" means the United States headquarters
or a United States branch of the following financial institutions: (i) any
branch or affiliate of BankAmerica International with the power to act as
Trustee or (ii) any other bank, trust company or financial institution (in each
case with trust powers) which (1) has a net worth in excess of $100,000,000.00
or (2) has outstanding debt securities rated A or better by Standard and Poor's
Rating Group or its equivalent by Moody's Investors Service
<PAGE> 5
or another nationally recognized rating agency in the United States.
"Bontang Excess Sales Trust Agreement" has the meaning set
forth in Article 1 of the Trust Agreement.
"Bontang Excess Sales Trustee" has the meaning set forth in
Article 1 of the Trust Agreement.
"Bontang I Trust Agreement" has the meaning set forth in
Article 1 of the Trust Agreement.
"Bontang I Trustee" has the meaning set forth in Article 1 of
the Trust Agreement.
"Bontang III Trust Agreement" means the Bontang III Trustee
and Paying Agent Agreement, dated as of February 9, 1988, among the Producers
or their predecessors in interest, and Continental Bank International, as
heretofore or hereafter amended or modified.
"Bontang III Trustee" means the trustee and paying agent under
the Bontang III Trust Agreement.
"Bontang V Payment Account" has the meaning set forth in
Article 1 of the Trust Agreement.
"Default" has the meaning set forth in Section 3.1 hereof.
"Default Shortfall" has the meaning set forth in Section 3.2
hereof.
"Diversion" has the meaning set forth in Section 3.3 hereof.
"Diversion Shortfall" has the meaning set forth in Section 3.3
hereof.
"Engineering Firm" means Merlin Associates, Inc.
"EPC Contractor" means P.T. Inti Karya Persada Tehnik, as
contractor under the EPC Contract.
"Gas Supply Area" has the meaning set forth in Section 1.12(a)
hereof.
"Inpex" means Indonesia Petroleum, Ltd.
"Insurance Shortfall" has the meaning set forth in Section 4.3
hereof.
2
<PAGE> 6
"Japanese Taxes" means any Taxes imposed by Japan or any
political subdivision or taxing authority thereof or therein with respect to
any amount constituting Source of Debt Service.
"Liability Share" has the meaning set forth in Section 3.4
hereof.
"Loading Facilities Contractor" means the contractor under the
Loading Facilities Construction Contract.
"Loading Facilities Sub-Contractor" means any sub-contractor
that may be appointed under the Loading Facilities Construction Contract.
"Loan Agreement" means the Bontang V Loan Agreement, dated as
of the date hereof, among the Trustee, as borrower thereunder, the Tranche A
Lender, the Tranche B Lenders and the Agent, the Intercreditor Agent, the
Technical Agent and the Arrangers parties thereto, as hereafter amended.
"Lost Facilities" has the meaning set forth in Section 4.1
hereof.
"Plant Insurance" has the meaning set forth in Section 1.11(b)
hereof.
"Plant Insurance Proceeds" has the meaning set forth in
Section 1.11(b) hereof.
"Production Sharing Contracts" means to the extent such
contracts relate to the supply of natural gas to the Bontang Plant, each of:
(a) as to Pertamina and the Vico Group, (i) until
August 8, 1998, the Amended and Restated Production Sharing Contract dated
April 23, 1990, as hereafter modified or amended, between Pertamina, on the one
hand, and the members of the Vico Group on the other, and (ii) effective August
8, 1998, the Production Sharing Contract dated April 23, 1990, as hereafter
modified or amended, between Pertamina, on the one hand, and the members of the
Vico Group, on the other;
(b) as to Pertamina and the Total Group, (i) until
March 31, 1997, the Amended and Restated Production Sharing Contract dated
January 11, 1991, as hereafter modified or amended, between Pertamina, on the
one hand, and the members of the Total Group, on the other, and (ii) effective
March 31, 1997, the Production Sharing
3
<PAGE> 7
Contract dated January 11, 1991, as hereafter modified or amended, between
Pertamina, on the one hand, and the members of the Total Group, on the other;
(c) as to Pertamina and the Unocal Group, (i) until
October 24, 1998, the Amended and Restated Production Sharing Contract dated
January 11, 1991, as hereafter modified or amended, between Pertamina, on the
other hand, and Unocal on the other, and (ii) effective October 25, 1998, the
Production Sharing Contract dated January 11, 1991, as hereafter modified or
amended, between Pertamina, on the one hand, and Unocal, on the other; and
(d) as to Pertamina and Inpex, effective March 31,
1997, the Production Sharing Contract dated March 28, 1991, as hereafter
modified or amended, between Pertamina, on the one hand, and Inpex, on the
other.
"Regular Reserve Account" has the meaning set forth in Article
1 of the Trust Agreement.
"Sub-Contractor" means each of the Chiyoda Corporation and the
Mitsubishi Corporation, as subcontractors under the EPC Contract.
"Total Group" means Total Indonesie and Inpex, and their
successors in interest.
"Total" means Total Indonesie.
"Trustee" means BankAmerica International, as Bontang V
Trustee under the Trust Agreement, and its successors thereunder pursuant to
Section 1.8 hereof.
"Unocal Group" means Unocal and Inpex, and their successors in
interest; provided, however, that Inpex shall cease to be a member of the
Unocal Group on March 31, 1997.
"Vico Group" means Virginia Indonesia Company, Virginia
International Company, OPICOIL Houston, Inc., Lasmo Sanga Sanga Limited, Union
Texas East Kalimantan Limited, and Universe Gas & Oil Company, Inc., and their
successors in interest.
In addition to the definitions set forth above, and except as
otherwise provided in this Agreement, capitalized expressions which are defined
in the Loan Agreement are used herein with the meanings defined in the Loan
Agreement, unless the context shall otherwise specifically require.
* * * * *
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PART 1
PRODUCERS' AGREEMENTS
Each of the Producers covenants to the Lenders solely as to
itself until payment in full of the principal of and interest on the Notes and
payment in full of all amounts owing under the Loan Agreement and the Letter
Agreement at the time of such payment in full of such Notes, unless compliance
with the provisions of this Part 1 shall have been waived by the Majority
Lenders, to do and perform the following:
1.1 Authorization of Borrowings. Each of the Producers
has reviewed the Loan Agreement (including the form of Notes attached thereto)
and the Letter Agreement, and has authorized and requested the Borrower to
enter into the Loan Agreement and the Letter Agreement and to execute and
deliver the Notes, in each case, not in its individual capacity but solely as
Trustee under the Trust Agreement, to make and repay Borrowings, to pay
interest on the Borrowings, to pay other amounts and to perform the other
obligations of the Borrower, all of the foregoing under and in accordance with
the terms of the Loan Agreement, the Notes and the Letter Agreement. For
purposes of effecting each Borrowing, each Producer other than Pertamina hereby
irrevocably authorizes and designates Pertamina as its agent with full power
and authority on behalf of such Producer to authorize and request the Borrower
to effect such Borrowing or to designate an entity and individuals in
accordance with the Trust Agreement to do the same, or both. Pertamina hereby
accepts such authorization and agrees to perform on behalf of the Producers
(including on its own behalf) the obligations authorized pursuant to, and
accepts the designation contained in, this Section 1.1 and in the Trust
Agreement.
1.2 Approval of Expenditures. The Producers confirm that
in accordance with Article 10 of the Processing Agreement they have made
arrangements among themselves whereby, and the Producers hereby covenant to the
Lenders that, all invoices of all project creditors shall be approved or
disapproved in good faith in accordance with objective standards customarily
followed in the oil and gas industry in construction activities of the sort
contemplated by the Development Plan.
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1.3 Rights to Bontang Plant and Improvements. The
Producers agree that Pertamina shall exclusively hold and shall continue to
maintain title to the Bontang Plant, and all rights and interests in and to the
Bontang Plant, subject with respect to Pertamina's rights and interests to
rights and interests created under the Basic Agreements and any rights and
interests created in other parties which do not adversely affect the processing
of LNG thereat in the amounts and in the manner contemplated by the Processing
Agreement for sale under the LNG Sales Contracts, and Pertamina agrees that it
will not create, incur or suffer to exist any Encumbrances on the Bontang
Plant, except for Encumbrances arising pursuant to statute or otherwise by
operation of law, which shall be discharged in the ordinary course of business
and shall not be enforced by attachment or levy.
1.4 No Amendments, etc. Each of the Producers agrees:
(a) with respect to the Trust Agreement, such
Producer shall not (i) terminate or revoke the Trust Agreement, or (ii) amend,
modify, revise, supplement or waive any of the provisions of Article 1, 4 or 10
or Section 2.1, 2.2, 2.4, 3.1, 3.2, 3.3 (other than Section 3.3(i)), 3.5 or 3.7
or the third sentence of Section 8.2 of the Trust Agreement, in each case other
than to permit the Borrower to enter into Subordinated Indebtedness or Pari
Passu Swap Indebtedness as permitted by the Loan Agreement, or any other
provision of the Trust Agreement, if any such amendment, modification,
revision, supplement or waiver would or would be likely to affect adversely the
trust created under the Trust Agreement, the rights of the Lenders under the
Loan Agreement or Notes or the ability of the Borrower to perform its
obligations under such Loan Agreement, Notes or the Letter Agreement, or (iii)
change or agree to the change of the trustee thereunder, except as contemplated
by Section 1.8 hereof;
(b) with respect to each Basic Agreement (other
than the Second A/R 1973 Sales Contract and the New 1973 Transportation
Arrangements) and, if and when duly executed and delivered, the Second A/R 1973
Sales Contract and the New 1973 Transportation Arrangements, each Production
Sharing Contract and each Construction Document to which it is a party, such
Producer shall not (i) terminate or revoke such Basic Agreement (except for a
termination or revocation of any portion of the New 1973 Transportation
Arrangements that will not impair Pertamina's ability to deliver LNG under the
New 1973 Sales Contract in any material respect), Production Sharing Contract
or Construction Document or (ii) amend, modify, revise,
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supplement or waive any of the provisions of such Basic Agreement, Production
Sharing Contract or Construction Document (x) if any such amendment,
modification, revision, supplement or waiver would or would be likely to, after
giving effect thereto, (A) cause the Debt Coverage Ratio under the Loan
Agreement at any time that amounts are outstanding thereunder to be less than
150% or (B) conflict with or affect adversely the rights of the Lenders under
the Loan Agreement, Notes or the Letter Agreement or the obligations of the
Borrower under the Loan Agreement, Notes, the Letter Agreement or Trust
Agreement or conflict with or impair the obligations of the Producers pursuant
to this Agreement (other than an assignment permitted pursuant to Section 6.3
hereof); or (y) if the Debt Coverage Ratio already is, at the relevant time,
less than 150% and if any such amendment, modification, revision, supplement or
waiver would or would be likely to, after giving effect thereto, cause the Debt
Coverage Ratio to be reduced further; provided, however, that if a Basic
Agreement incorporates by reference the provisions of a separate agreement or
agreements, the provisions of this Section 1.4(b) shall apply to such
provisions of such separate agreement or agreements if any termination,
revocation, amendment, modification, supplement or waiver thereof would have
the effect of the same on such Basic Agreement;
(c) with respect to each LNG Sales Contract,
Pertamina shall not consent to the assignment or delegation by any Buyer
thereunder of any of such Buyer's rights or obligations thereunder; and
(d) with respect to the Construction Documents,
Pertamina shall not consent to the assignment or delegation of any of the
rights or obligations of the EPC Contractor or the Sub-Contractor and, upon the
execution of the Loading Facilities Construction Contract, shall not consent to
the assignment or delegation of any of the rights or obligations thereunder of
the Loading Facilities Contractor or the Loading Facilities Sub-Contractor,
other than (i) a delegation by the EPC Contractor to the Sub-Contractor or by
the Loading Facilities Contractor to the Loading Facilities Sub-Contractor in
accordance with the Construction Documents or (ii) a delegation to
subcontractors, and use of suppliers, in the ordinary course of construction
implementation.
Any consent of the Majority Lenders necessary to permit any
action otherwise prohibited by this Section 1.4 shall not be unreasonably
withheld. Each of the Producers shall promptly provide or cause to be provided
to the Tranche A Lender and the Agent correct and complete copies of (i) if and
when executed, the Second A/R 1973 Sales
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Contract, the New 1973 Transportation Arrangements (the constituent documents
of which will be delivered as a package concurrently with the delivery of the
Second A/R 1973 Sales Contract) and any other transportation agreements
relating to the New 1973 Sales Contract entered into as contemplated by Section
1.5(b) hereof and (ii) whether or not requiring consent of the Lenders pursuant
to this Section 1.4, any agreement or document evidencing any amendment,
modification, revision, supplement or waiver of any provision of the Trust
Agreement, any of the Basic Agreements to which it is a party, any of the
Construction Documents to which it is a party (excluding change orders and
similar modifications or supplements arising in the ordinary course of
construction implementation) or any Production Sharing Contract to which it is
a party and, in the case of an amendment to the Trust Agreement providing for
Subordinated Indebtedness or Pari Passu Swap Indebtedness with respect to
amounts to be held and distributed under the Trust Agreement, copies of the
proposed amendment not less than 10 Business Days prior to execution thereof.
1.5 Compliance with Agreements.
(a) Each of the Producers agrees that it will
duly perform in a timely manner each obligation contemplated to be performed by
it under this Agreement and the Trust Agreement, including, without limitation,
(i) giving notices, instructions, certificates (including, without limitation,
certificates as to the accuracy of the representations and warranties set forth
in this Agreement and the compliance by the Producers with the terms of this
Agreement), approvals and communications necessary or appropriate in order (x)
to effect Borrowings, repayments and payments by the Trustee as Borrower under
and in accordance with the terms of the Loan Agreement, the Notes and the
Letter Agreement and (y) to permit the Borrower to perform its other
obligations under the Loan Agreement, (ii) providing financial and other
information to the Trustee to be supplied to the Lenders under and in
accordance with the Loan Agreement, and (iii) giving of other notices,
instructions, approvals and communications contemplated by the Trust Agreement.
(b) Each of the Producers that is a party thereto
also agrees duly to perform its obligations under the Construction Documents
(including the Loading Facilities Construction Contract after it has been duly
executed and delivered by the parties thereto), the Production Sharing
Contracts, the Supply Agreements, the LNG Sales Contracts and any
transportation agreements and agreements to pay for shipping of cargoes under
an LNG Sales Contract including,
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without limitation, when and if executed, the New 1973 Transportation
Arrangements, except in respects which are not material and not likely to give
rise to the assertion of a claim for breach thereunder, and to perform in all
material respects the terms of the other Basic Agreements to which it is a
party, as the same may be amended from time to time as permitted by Section 1.4
hereof. The Producers shall maintain in effect at all relevant times, whether
pursuant to the New 1973 Transportation Arrangements or other agreements,
sufficient shipping capacity in order to deliver all cargoes of LNG required to
be delivered to the Japanese Buyers under the New 1973 Sales Contract during
the term thereof (as the same may be extended from time to time up to and
including December 31, 2014) until such time as no amounts that may then or
thereafter be payable thereunder or with respect thereto would, if paid,
constitute Source of Debt Service.
1.6 Enforcement of Agreements. The Producers agree that,
if the Borrower shall fail to perform any of its obligations under the Trust
Agreement, then the Producers shall give written notice to the Borrower as
promptly as practical under the circumstances demanding that all of the
Borrower's obligations under the Trust Agreement be immediately performed and
simultaneously deliver a copy of such notice to the Tranche A Lender and the
Agent. Each Producer shall promptly enforce all legal rights it possesses
against the Borrower to compel performance by the Borrower of its obligations
under the Trust Agreement, and give notices from time to time to the Tranche A
Lender and the Agent with respect to the actions being taken. Each of the
Producers that is a party thereto shall, with due diligence and in a reasonable
and prudent manner, enforce its rights (a) under the Construction Documents
against the EPC Contractor, the Sub-Contractor, the Loading Facilities
Contractor, the Loading Facilities Sub-Contractor and any other sub-contractors
under the Construction Documents, and (b) under the LNG Sales Contracts, (c)
under the Plant Use Agreement, (d) under the Processing Agreement and (e) when
and if duly executed and delivered, under the New 1973 Transportation
Arrangements and any other transportation agreements contemplated by Section
1.5(b) hereof.
1.7 Operation of Bontang Plant. Each Producer that is a
shareholder of P.T. Badak shall use its best efforts, as a shareholder, to
cause P.T. Badak or any successor to P.T. Badak under the Plant Use Agreement
to operate the Bontang Plant in the manner required pursuant to the Plant Use
Agreement and to cause P.T. Badak or any successor to P.T. Badak to perform its
obligations under the Processing Agreement in the manner required under the
Processing Agreement.
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1.8 Replacement of Trustees.
(a) The Producers may, solely with the prior written
consent of the Majority Lenders, appoint any Approved Institution as successor
trustee under the Trust Agreement. The Producers shall, if any of the
circumstances set forth in Section 1.8(b) hereof shall have occurred and be
continuing and if requested by the Majority Lenders, (1) appoint one of the
institutions referred to in clause (ii) of the definition of Approved
Institutions, if any of the circumstances set forth in Sections 1.8(b)(i), (ii)
and (iii)(3) hereof shall have occurred and, (2) with respect to any other
circumstance referred to in Section 1.8(b) hereof, appoint any institution
other than a branch of the Borrower referred to in such definition as successor
trustee under the Trust Agreement. Any such appointment made pursuant to this
Section 1.8(a) shall, for purposes of this Agreement, become effective upon the
written confirmation by such institution, solely in its capacity as successor
trustee under the Trust Agreement, of its assumption of the obligations of
successor trustee under such Trust Agreement and of the Borrower under the Loan
Agreement, all of the Notes and the Letter Agreement.
(b) The circumstances referred to in Section
1.8(a) hereof are as follows:
(i) The Borrower, BankAmerica
International or Bank of America National Trust and Savings Association or any
successor trustee appointed pursuant to this Section 1.8 shall:
(1) make an assignment for the
benefit of creditors; or
(2) file a petition in bankruptcy,
petition or apply to any tribunal or applicable regulatory authority
for the appointment of a custodian, receiver, trustee or official with
similar powers for it or a substantial part of its property or assets,
or commence any case or proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution or
liquidation or similar law or statute of any jurisdiction, whether now
or hereafter in effect; or
(3) if there shall have been filed
any such petition or application, or any such case or proceeding shall
have been commenced against it, indicate its consent to, approval of
or acquiescence in any such petition, application, case or proceeding
or any order for relief or the appointment of a custodian,
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receiver, trustee or official with similar powers or regulatory
authority for it or any substantial part of any of its properties or
assets, or suffer to exist any such case or proceeding in which an
order for relief is entered, or suffer any such custodianship,
receivership, trusteeship or jurisdiction of such similar official or
regulatory authority to continue undischarged for a period of 30 days
or more; or
(4) generally be unable to or
generally fail to pay its debts as such debts become due; or
(5) have concealed, removed, or
permitted to be concealed or removed, any part of its property, with
intent to hinder, delay or defraud its creditors or any of them, or
made or suffered a transfer of any of its property which may be
fraudulent under any bankruptcy, fraudulent conveyance or similar law
or shall have suffered or permitted, while insolvent, any creditor to
obtain an Encumbrance upon any of its property through legal
proceedings or distraint which is not vacated within 30 days from the
date such Encumbrance is created; or
(6) take appropriate corporate
action required to authorize any of the foregoing; or
(ii) The Borrower or any successor
trustee appointed pursuant to this Section 1.8 shall fail to perform any of its
obligations under the Trust Agreement; or
(iii) BankAmerica International or, except
in the case of clause (1) below, any person that becomes a successor trustee
pursuant to this Section 1.8 hereof, as relevant, shall:
(1) cease to be a wholly owned
subsidiary of Bank of America National Trust and Savings Association;
or
(2) dispose of all or substantially
all of its assets; or
(3) fail to pay principal of, or
premium or interest on, any of its Indebtedness in a material amount
when due for payment, whether by acceleration or otherwise, but after
giving effect to all applicable grace and waiver periods provided for
in the agreement or instrument creating or evidencing such
Indebtedness; or
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(iv) Any suit, legal action or proceeding
or governmental investigation shall be commenced, or any Legal Requirement
shall be in effect, which questions the power, authority or capacity of the
Borrower, BankAmerica International or any successor trustee under the Trust
Agreement to enter into the Trust Agreement, or to serve thereunder in
accordance with the terms thereof or to perform any material obligation
thereunder, or in the case of the Borrower, to enter into the Loan Agreement or
to perform any material obligation thereunder.
1.9 Indebtedness; Permitted Amounts. The Producers shall
neither enter into, nor authorize or request the Borrower or any other Person
to enter into, financing agreements or otherwise create, assume or become
liable for, directly or indirectly, any Indebtedness pursuant to any agreement
that will charge or be paid out of (x) the Source of Debt Service received by
the Trustee prior to its deposit in the Bontang V Payment Account, except for
(i) all obligations and liabilities under the Loan Agreement, the Notes and the
Letter Agreement, (ii) any Subordinated Indebtedness incurred pursuant to
Section 6.4 of the Loan Agreement and (iii) obligations in respect of Pari
Passu Swap Indebtedness incurred pursuant to Section 6.4 of the Loan Agreement,
or (y) any Borrowed Amounts, except for the purposes for which such Borrowed
Amounts are borrowed.
1.10 Negative Pledge. The Producers shall not create or
agree to, or authorize or request the Borrower or any other Person to create or
agree to, any Encumbrance on the Source of Debt Service prior to its deposit in
the Bontang V Payment Account or on any Borrowed Amounts, except any
Encumbrance, if any, (i) arising from the assignments made in the Supply
Agreements by Pertamina to the other Producers of the production sharing
percentages of such Producers of amounts payable by the Buyers under the LNG
Sales Contracts and certain other amounts as provided in the Supply
Agreements,(ii) arising pursuant to the Trust Agreement or in favor of the
holders of Indebtedness as permitted in accordance with Section 1.9 hereof, or
(iii) arising pursuant to statute or otherwise by operation of law in
connection with any transportation agreement related to any LNG Sales Contract
and discharged in the ordinary course of business.
1.11 Insurance.
(a) Prior to operational acceptance of the
Additional Plant and the Loading Facilities by Pertamina pursuant to the
Construction Documents, Pertamina shall maintain or cause to be maintained "All
Risk" Builder's Risk
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Insurance as required pursuant to the Construction Documents.
(b) Prior to operational acceptance of the
Additional Plant and the Loading Facilities by Pertamina pursuant to the
Construction Documents, Pertamina shall maintain, or cause to be maintained,
with respect to the Insured Bontang Plant (excluding Train G) and, upon and
after such operational acceptance, Pertamina shall maintain, or cause to be
maintained with respect to the Insured Bontang Plant (excluding the Support
Facilities), property and casualty insurance (the "Plant Insurance") on terms
at least as favorable to Pertamina as, and having coverage substantially
similar to, the policy furnished to the Tranche A Lender and the Agent prior to
the date hereof and in an amount which is the greater of (i) the sum of (w) the
full replacement value of the Insured Bontang Plant (excluding the Support
Facilities), together with spare parts located within the perimeter fences
thereof, and (x) the maximum value of the inventory forming a part of the
Insured Bontang Plant (excluding the Support Facilities), determined on the
basis of an independent appraisal provided in the manner described below in
this Section 1.11(a) (if such Plant Insurance in such amount is available on
commercially reasonable terms), or (ii) 125% of the sum of (y) all amounts
outstanding from time to time under the Loan Agreement, the Notes and the
Letter Agreement, plus (z) all other Indebtedness of any Person outstanding,
the holders of which, directly or indirectly, are entitled to share in the
proceeds of the Plant Insurance (the "Plant Insurance Proceeds") prior to or on
an equal and ratable basis with the Lenders (as the Lenders' rights are
determined under Section 4.1 hereof). In determining the full replacement
value of the Insured Bontang Plant pursuant to clause (i) above, the cost of
the following shall be excluded: all basic engineering and that part of the
detail engineering that may be based on existing drawings and available
specifications, all dredging work, water wells, all major excavation work and
the use of heavy earth-moving equipment, and surplus materials in excess of
five percent (5%) of required quantities. As of the date hereof, the appraisal
of the Insured Bontang Plant contemplated above shall be the appraisal dated
February, 1994 prepared by RDI Consultants which has been delivered to the
Tranche A Lender and the Agent prior to the date hereof. Thereafter, the
appraisal of the Insured Bontang Plant contemplated above shall be the
independent appraisal most recently prepared with respect thereto, including
any of the following: (1) upon the written request of the Tranche A Lender and
the Agent, Pertamina shall promptly cause to be prepared and delivered to the
Tranche A Lender and the Agent an appraisal prepared by an independent
appraiser, who shall be acceptable to the
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Tranche A Lender and the Agent in their reasonable judgment; provided, however,
that the Tranche A Lender and the Agent may not request Pertamina to cause any
such appraisal to be prepared and delivered more than once every five years,
and (2) the Tranche A Lender and the Agent may from time to time have prepared
for their benefit and at the sole cost of the Lenders an appraisal of an
independent appraiser, who shall be acceptable to the Producers in their
reasonable judgment, and Pertamina shall, and shall cause P.T. Badak to,
cooperate reasonably in the preparation of such appraisal.
(c) All Plant Insurance shall be maintained with
(i) P.T. Tugu Pratama Indonesia, or (ii) so long as Indonesian law requires
that the relevant insurance be maintained with an Indonesian insurance company,
any Indonesian insurance company other than P.T. Tugu Pratama Indonesia
approved by the Majority Lenders, which approval shall not be unreasonably
withheld, or (iii) if Indonesian law changes to permit the relevant insurance
to be maintained with one or more non-Indonesian insurance companies, any
insurance company other than P.T. Tugu Pratama Indonesia approved by the
Majority Lenders.
(d) Pertamina agrees that all Plant Insurance
shall have Pertamina as a loss payee, and that no party other than Pertamina,
the other Producers and P.T. Badak shall be a loss payee. Pertamina agrees
that it will not create or agree to any assignment of or security interest in
the Plant Insurance Proceeds, or create any right to receive the Plant
Insurance Proceeds other than equally and ratably with, or subordinated in
right of payment to, the rights of the Lenders pursuant to this Agreement in
favor of any Person other than the loss payees under the Plant Insurance.
(e) Pertamina shall, on or before the Effective
Date, provide to the Tranche A Lender and the Agent a correct and complete copy
of the policy or policies of insurance required by Sections 1.11(a) and (b)
hereof and, as promptly as practicable in the circumstances (but in no event
later than 30 days) following the issuance thereof, correct and complete copies
of each subsequent policy or policies of insurance required by Sections 1.11(a)
and (b) hereof. Pertamina shall also provide to the Tranche A Lender and the
Agent as promptly as practicable under the circumstances, correct and complete
copies of each amendment, modification or waiver and each notice of
cancellation or termination with respect to each policy of insurance required
by Sections 1.11(a) and (b) hereof (but in no event later than 30 days
following any such amendment, modification or waiver or receipt of any such
notice).
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1.12 Reserve Reports.
(a) The Producers agree that, if requested by
either the Tranche A Lender or the Agent, they will cause to be delivered to
the Tranche A Lender and the Agent correct and complete copies of the latest
reserve report or reports and any updates, modifications or supplements thereto
covering the areas which supply gas to the Bontang Plant (the "Gas Supply
Area"), prepared by DeGolyer and MacNaughton or another independent petroleum
engineering consulting firm of recognized standing in the petroleum industry
qualified by reputation and experience in the estimating of reserves of oil and
gas in subsurface reservoirs.
(b) Pertamina shall, before committing additional
natural gas from the Gas Supply Area to sale or other utilization, submit or
cause to be submitted to the Tranche A Lender and the Agent a copy of each
certificate and all supporting documentation furnished to one or more of the
Buyers pursuant to the provisions of the KGC Sales Contract that result from
the incorporation therein of Section 3.2(a) of each of the Arun III Contract
and the Korea II Contract (each as defined in the KGC Sales Contract), pursuant
to the provisions of the CPC Sales Contract that result from the incorporation
therein of Section 3.2(a) of the Badak III LNG Sales Contract (as defined in
the CPC Sales Contract) or pursuant to Section 3.2(a) of the Second A/R 1973
Sales Contract, together with a statement setting forth the calculation of the
Seller's Gas Supply Obligation (as defined in each LNG Sales Contract) and the
breakdown of such calculation by non-spot sale LNG sales contract, which
statement shall be in the form of that delivered to the Tranche A Lender and
the Agent pursuant to Section 5.1(a)(xvi) of the Loan Agreement.
1.13 Use of Proceeds.
(a) The proceeds of the Borrowings shall be used
solely for the payment of (i) the costs incurred or to be incurred in
connection with the design, engineering, procurement and construction of or
otherwise relating to the Additional Plant, the Loading Facilities and, in the
case of Borrowings that the Drawdown Schedule contemplates for such purpose
(but solely to the extent so contemplated), the Support Facilities, (ii)
interest, fees, expenses, taxes and other amounts payable by the Borrower
pursuant to Sections 2.3, 2.7, 2.8, 3.3, 3.4(b), 6.6 and 10.6 of the Loan
Agreement and (iii) funding the Reserve Account as provided in and solely to
the extent permitted by Section 2.2(b) of the Loan Agreement.
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(b) If, during the Availability Period, no
further amounts of the Commitments of the Lenders are available to be drawn by
the Borrower under the Loan Agreement, and if the proceeds of the Borrowings
are insufficient to pay the costs required for the completion of the Additional
Plant and the Loading Facilities as indicated in the most recent quarterly
status report delivered to the Tranche A Lender and the Agent pursuant to
Section 1.14(b) hereof, then, from time to time prior to the last day of the
Availability Period, the Producers may, to pay for such required costs,
instruct the Trustee to transfer to the Bontang V Payment Account from the
amounts then held in the Regular Reserve Account, subject to Section
3.3(b)(iii) of the Trust Agreement, amounts which shall not exceed in the
aggregate the lesser of (x) the aggregate amount of all Reserve Account
Borrowed Amounts borrowed pursuant to Section 2.2(b)(ii) of the Loan Agreement
or (y) the amounts needed to pay for such required costs. Any such instruction
shall be provided by written notice to the Trustee, the Tranche A Lender and
the Agent. The Producers shall use such amounts so transferred to the Bontang
V Payment Account solely for the purpose of paying for such required costs.
(c) If, following the last day of the
Availability Period, the Producers shall at any time have paid the cost of a
Selected Qualified Bank retained and performing services pursuant to Section
6.6 of the Loan Agreement, then Pertamina may instruct the Bontang V Trustee to
transfer to the Bontang V Payment Account from the amounts then held in the
Regular Reserve Account, subject to the conditions contained in Section
3.3(b)(iv) of the Trust Agreement, an amount which shall not exceed the amount
so paid to such Selected Qualified Bank. Pertamina shall give any such
instruction by giving notice to the Trustee, the Tranche A Lender and the Agent
setting forth the amount paid to the Selected Qualified Bank and attaching a
copy of the Selected Qualified Bank's invoice relating to the services so
performed.
1.14 Construction of Train G.
(a) Pertamina shall insure that Train G is
constructed and completed with due diligence and efficiency and in conformity
with sound administrative, engineering and financial practices.
(b) Pertamina shall deliver to each of the
Tranche A Lender and the Agent (i) a quarterly status report in reasonable
detail concerning construction of Train G, such report to include, but not be
limited to, the cost incurred to the end of such quarter and an estimate of
costs required for the completion and acceptance of Train G pursuant
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to the Development Plan and the Construction Documents, and (ii) such other
information in respect of Train G as the Tranche A Lender and the Agent may
reasonably request.
(c) Pertamina shall submit or cause to be
submitted to the Tranche A Lender and the Agent a semi-annual report, prepared
by the Engineering Firm or if the Engineering Firm becomes unacceptable to
Pertamina or to the Tranche A Lender and the Agent for any reason following the
date hereof, any other independent engineering firm of recognized standing in
the construction industry and acceptable to the Tranche A Lender and the Agent,
concerning the status of the construction of Train G. Such report shall be
based upon the reports delivered pursuant to Section 1.14(b) hereof and such
discussions and analysis thereof with representatives of Pertamina, the EPC
Contractor and the Sub-Contractor as the independent engineering firm deems
appropriate in order for the semi-annual report to provide, through the end of
such semi-annual period, a comparison of (i) the physical progress of the
construction of Train G with the progress scheduled for such period and (ii)
the expenditures made to achieve such physical progress with the amounts
forecast therefor.
(d) Pertamina shall not amend the Development
Plan in a manner that would result in a material increase in Pertamina's
expenditures or materially deviate from the Development Plan with regard to the
construction, completion or operation of Train G; provided, however, that
Pertamina may, to the extent necessary to comply with the provisions of Section
1.18 hereof, deviate from the Development Plan by declining to construct
specific portions of the Support Facilities.
(e) Pertamina shall, if requested by either the
Tranche A Lender or the Agent, permit representatives of the Tranche A Lender
or the Agent, and designees appointed by them with the consent of Pertamina,
which consent shall not be unreasonably withheld, to visit the site of the
construction of Train G to review and examine the current status of the
construction and implementation thereof.
(f) Pertamina shall promptly after it becomes
aware of such event, give notice to the Tranche A Lender and the Agent of any
event or occurrence that will, or would be reasonably likely to, (i) prevent
shipments of LNG under the KGC Sales Contract or the CPC Sales Contract on a
regular basis during 1998 and 1999 or (ii) prevent shipments of LNG under the
Second A/R 1973 Sales Contract on a regular basis during the term thereof (as
the same may be extended from time to time up to and includig December 31,
2014).
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1.15 Notices Relating to Source of Debt Service.
(a) Pertamina shall inform each of the Tranche A
Lender and the Agent by notice (with a copy to the Borrower) in advance of the
annual and quarterly shipment schedules, and of actual shipment information
promptly after shipment, with respect to each shipment for sale and delivery of
LNG related to the Source of Debt Service.
(b) Pertamina shall give notice to each of the
Tranche A Lender and the Agent promptly after it learns (i) of any event or
occurrence, in the nature of force majeure, and any material dispute which
could reasonably be expected to affect adversely the amount or time of receipt
of the Source of Debt Service and (ii) that any default under any LNG Sales
Contract has occurred or will occur with the giving of notice or lapse of time
or both. Pertamina shall thereafter also inform the Tranche A Lender and the
Agent of the status of such event at reasonable intervals during the
continuance thereof.
1.16 Effect of Certain Events with Respect to LNG Sales
Contracts.
(a) If (i) any LNG Sales Contract is terminated
or (ii) any sales under any LNG Sales Contract, which if made would give rise
to Source of Debt Service, are suspended in respect of any Buyer or Buyers or
an event of force majeure as to any LNG tanker or any Buyer's facilities
relevant to any LNG Sales Contract shall occur and such suspension of sales or
event of force majeure shall continue for a period of nine months, Pertamina
shall make all reasonable efforts to sell any LNG originally scheduled to be
sold to any affected Buyer or Buyers pursuant to any such LNG Sales Contract
after the date of termination or the end of such nine-month period, as the case
may be, which Pertamina reasonably anticipates will not be sold because of such
termination, suspension of sales or event of force majeure; provided, however,
that with respect to an event of the type specified in the foregoing clause
(ii), Pertamina shall not be obligated to enter into any replacement LNG sales
contract which Pertamina reasonably anticipates would cause it to be unable to
perform fully its obligations under the affected LNG Sales Contract upon the
cessation of such event of force majeure or suspension of sales; and provided
further that Pertamina may, in its sole discretion, make replacement sales
during any initial period of nine months during which sales are so suspended or
during which such an event of force majeure has occurred.
(b) Pertamina shall cause the proceeds of any
replacement sales made pursuant to Section 1.16(a)
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hereof to be paid to the Trustee as if such sales had been made pursuant to the
affected LNG Sales Contract and shall authorize and request the Borrower to
execute and deliver prior to the payment of any such proceeds an agreement
providing for any amendment of the definitions of Source of Debt Service and
Gross Invoice Amount contained in the Loan Agreement and the Trust Agreement
required to cause such proceeds to be included therein.
1.17 Payment Instructions.
(a) Subject to Section 1.8 hereof, Pertamina
hereby agrees to instruct each Buyer to pay to the Trustee all amounts payable
by such Buyer to Pertamina pursuant to the LNG Sales Contracts which constitute
Source of Debt Service, and not to change such instructions or the designation
of the Trustee as the recipient of amounts which constitute the Source of Debt
Service.
(b) Subject to Section 1.8 hereof, Pertamina
agrees to deliver or to cause to be delivered to the Trustee on the date
payment is made to the Trustee pursuant to Section 1.17(a), a written statement
correctly identifying the separate portions of such payment that relate to each
component of the Gross Invoice Amount and the Source of Debt Service and
specifying by category the portion of such payment that does not constitute
Source of Debt Service. Such statement shall identify, among other things, the
portion of such payment related to (x) with respect to the KGC Sales Contract,
the LNG Portion (as defined in such contract), (y) with respect to the CPC
Sales Contract, the LNG Related Component (as defined in such contract), and
(z) with respect to the New 1973 Sales Contract, the LNG Element (as defined in
such contract).
(c) With respect to all other relevant Basic
Agreements, Pertamina has designated or shall designate, and agrees not to
change the designation of, the Trustee as the recipient of amounts which
constitute the Source of Debt Service payable thereunder.
(d) On or promptly following the date hereof, the
Producers shall instruct the Bontang III Trustee, the Bontang I Trustee, the
Bontang Excess Sales Trustee and any other relevant trustee in writing to make
immediate payment to the Bontang V Trustee of any amounts received by any of
such trustee and deposited under the Bontang III Trust Agreement, the Bontang I
Trust Agreement, the Bontang Excess Sales Trust Agreement or any other relevant
trust agreement or trustee and paying agent agreement which constitute Source
of Debt Service as defined in the Loan Agreement. The Producers shall provide
copies
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of such written instruction (which may be reflected in an amendment to the
relevant trust agreements or trustee and paying agent agreements) to the
Tranche A Lender and the Agent simultaneously with sending such instructions to
the Bontang III Trustee, the Bontang I Trustee, the Bontang Excess Sales
Trustee and any other relevant trustee. The Producers agree that, so long as
any amounts remain owing to the Lenders under the Loan Agreement, the Notes or
the Letter Agreement, such written instruction shall not be revoked, amended or
modified, except with the prior written consent of the Majority Lenders.
1.18 Monitoring Total Project Expenditures.
(a) Pertamina hereby agrees that, during the
Availability Period, it will monitor Borrowings, interest rate(s) applicable to
the Notes and all other costs and expenditures relating to Train G on a
quarterly basis and in accordance with its customary procurement procedures, in
order to determine the extent to which the costs of specific portions of the
Support Facilities can be financed through Borrowings under the Loan Agreement
without causing the sum of (i) all reasonably anticipated costs of completing
the Additional Plant and the Loading Facilities that have not already been paid
for from the proceeds of previous Advances, (ii) all reasonably anticipated
costs of such specific portions of the Support Facilities that Pertamina
proposes to finance through Borrowings under the Loan Agreement, (iii) all
reasonably anticipated future Borrowed Amounts and (iv) all capitalized
interest with respect to the Notes that is reasonably anticipated to accrue
thereafter during the Availability Period to exceed the then remaining
Commitments. If and to the extent that at any time the Drawdown Schedule does
not provide for the financing of the costs of any specific portions of the
Support Facilities and such costs can be so financed without causing such sum
to exceed the then remaining Commitments, and if, after financing such costs
the remaining Commitments will be sufficient to fund fully the amounts referred
to in clauses (i), (ii) and (iv) above, then Pertamina may instruct the
Borrower to revise the current Drawdown Schedule to provide for the financing
of the costs of such specific portions of the Support Facilities through
Borrowings under the Loan Agreement. If and to the extent that at any time the
costs of any specific portions of the Support Facilities cannot be so financed
as provided in the first sentence hereof, then Pertamina shall instruct the
Borrower to revise the then current Drawdown Schedule to exclude such
financing.
(b) Pertamina shall submit, or cause to be
submitted to the Tranche A Lender and the Agent, with
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reasonable promptness after the end of each calendar quarter during the
Availability Period, a summary statement of its then current estimate of the
excess capacity of the Bontang Plant to be contractually uncommitted on March
31, 1998, excluding the LNG Sales Contracts and the capacity of the Additional
Plant.
1.19 Construction Report. Pertamina shall use its best
efforts to cooperate with the Agent and the Engineering Firm and to provide
such assistance as the Agent or the Engineering Firm may reasonably request
from time to time, in connection with the preparation by the Engineering Firm
of a single report to be completed as soon as practicable after the Effective
Date concerning the status of the Additional Plant. Such report shall be in
form and substance satisfactory to the Agent and shall (unless otherwise
agreed) be substantially similar in scope to the Technical Consultant's Report
of Merlin Associates, Inc., dated May 31, 1991, with respect to Pertamina
Bontang LNG Plant Train F Expansion Project. The fees and disbursements of the
Engineering Firm in connection with the preparation of such report shall be
reimbursed by the Borrower pursuant to Section 10.6 of the Loan Agreement up
to a maximum amount of $50,000.00.
1.20 Loading Facilities Construction Contract. Pertamina
shall enter into the Loading Facilities Construction Contract with a reliable
and reputable contractor, on terms which are based on sound administrative,
engineering and financial practices. Pertamina shall provide to the Tranche A
Lender and the Agent correct and complete copies of the final draft of such
Contract prior to execution thereof and, with reasonable promptness following
execution and delivery, correct and complete copies of the executed version of
the Loading Facilities Construction Contract.
1.21 Debt Service Accounts. Each of the Producers agrees
with respect to the Trust Agreement that, as long as moneys are held by the
Trustee in the Debt Service Account and Reserve Account, the Lenders are, to
the extent necessary for payments to be made in accordance with the terms of
the Trust Agreement of principal, interest and other amounts due under the Loan
Agreement, the Notes and the Letter Agreement, among those having a right, as
provided under Section 2.2 of the Trust Agreement, to receive disbursements
thereunder.
1.22 Expenses. To the extent that any amounts required to be
paid by the Borrower pursuant to Section 10.6(a) and, prior to the Completion
Date, Section 10.6(b), of the Loan Agreement are not paid when due, the
Producers shall, following notice from the
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Tranche A Lender or the Agent or both, as appropriate, immediately pay such
amounts or otherwise cause such amounts to be paid.
1.23 Financial Statements. Upon the request of the
Tranche A Lender or any Tranche B Lender made through the Agent, as
appropriate, from time to time, each Producer agrees to deliver to such Lender
in respect of one or more fiscal years (but no more than the three immediately
prior fiscal years) of such Producer or, where applicable, of any Person
controlling such Producer which reports its financial condition and results to
the public, any publicly available annual financial statements of such Producer
or Person.
PART 2
REPRESENTATIONS AND WARRANTIES
Each Producer makes the following representations and
warranties to the Lenders solely with respect to itself; provided, however,
that (i) each representation and warranty with respect to any agreement that is
dated on, as of or prior to the date hereof is made as of the date hereof, (ii)
each representation and warranty with respect to any other agreement will be
made as of the date such agreement is entered into and solely with respect to
the agreement being entered into as of such date, (iii) each representation and
warranty with respect to any agreement is made only by those Producers that are
parties thereto and (iv) Pertamina is the only Producer making the
representation and warranty in Section 2.9 hereof:
2.1 Due Incorporation; Power and Authority. Such
Producer is, and upon the due execution and delivery of any Construction
Document or Basic Agreement not heretofore executed and delivered will be, a
corporation or partnership duly organized and validly existing under the laws
of the jurisdiction of its incorporation or formation. Such Producer has, and
upon the due execution and delivery of any such agreement not heretofore
executed and delivered will have, full power, authority and legal right to
execute, deliver, perform and observe the terms and provisions of this
Agreement, the Trust Agreement, each Production Sharing Contract, each
Construction Document and each Basic Agreement.
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2.2 Legal Action. All necessary legal action has been
taken, and upon the due execution and delivery of any such agreement not
heretofore executed and delivered will have been taken, to authorize such
Producer to execute and deliver and to perform and observe the terms and
provisions of this Agreement, the Trust Agreement, each Production Sharing
Contract, each Construction Document and each Basic Agreement.
2.3 Restrictions. There is no Legal Requirement and no
contractual or other obligation binding on such Producer, and upon the due
execution and delivery of any Construction Document or Basic Agreement not
heretofore executed and delivered there will be no Legal Requirement and no
contractual or other obligation binding on such Producer, including, without
limitation, under any of the Basic Agreements or the Production Sharing
Contracts or any of the Construction Documents, that is or will be contravened
(or, in the case of a contractual obligation, in respect of which a breach has
occurred or will occur) by reason of the execution and delivery of or the
performance or observance by such Producer of any of the terms or provisions of
this Agreement or the Trust Agreement.
2.4 Registrations and Approvals. No registrations,
declarations or filings with, or consents, licenses, approvals or
authorizations of, any legislative body, governmental department or government
authority are necessary or required under any applicable law for the due
execution and delivery by such Producer, or for the performance by such
Producer, of this Agreement or the Trust Agreement, or to assure the validity
or enforcement hereof or thereof with respect to such Producer, except such as
have been obtained, copies of which have been provided to the Tranche A Lender
and the Agent in connection with the execution and delivery of this Agreement
and which remain in full force and effect.
2.5 Agreement Binding; No Defaults. This Agreement, the
Trust Agreement, each Production Sharing Contract, the EPC Contract and each
Basic Agreement other than the Second A/R 1973 Sales Contract and the New 1973
Transportation Arrangements constitute, and when duly executed and delivered
each of the Loading Facilities Construction Contract, the Second A/R 1973 Sales
Contract and the New 1973 Transportation Arrangements will constitute, the
legal, valid and binding obligations of such Producer enforceable against it in
accordance with each of their respective terms, subject in the case of
enforcement to any applicable bankruptcy, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and to
equitable principles of general
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application. No Default by such Producer has occurred and is continuing and no
event has occurred or failed to occur in each case pertaining to such Producer,
the occurrence or non-occurrence of which with the giving of notice or lapse of
time or both would constitute a Default. Such Producer is not, and upon the
due execution and delivery of each of the Loading Facilities Construction
Contract, the Second A/R 1973 Sales Contract and the New 1973 Transportation
Arrangements will not be, in violation of any of such Producer's obligations
under (i) the Trust Agreement, (ii) any of the Production Sharing Contracts,
the Supply Agreements or the LNG Sales Contracts, except for violations which
are not material and are not likely to give rise to the assertion of a claim
for breach, (iii) any of the Basic Agreements (other than those referred to in
the immediately preceding clause (ii)) or (iv) any of the Construction
Documents, in any material respect. Each of the Production Sharing Contracts,
the Plant Use Agreement and the Processing Agreement either does not by its
terms terminate, or is not by its terms scheduled to expire, prior to the time
of shipment of the last cargo giving rise to Source of Debt Service under the
New 1973 Sales Contract (except in the case of those Production Sharing
Contracts that are scheduled so to expire as provided in the relevant portion
of the definition of Production Sharing Contracts in the definition section
hereof), and each Supply Agreement either does not by its terms terminate, or
is not by its terms scheduled to expire, prior to the time of shipment of the
last cargo giving rise to Source of Debt Service under the LNG Sales Contract
to which such Supply Agreement relates; provided that the existing Japanese
Supply Agreements cover the period from January 1, 2000 to December 31, 2009.
2.6 Litigation. There is no suit, action, proceeding or
investigation pending against such Producer or, to the best of such Producer's
knowledge, threatened against such Producer, which (a) questions the validity
of this Agreement, the Trust Agreement, any Construction Document, any
Production Sharing Contract or any Basic Agreement, or any material action
taken or to be taken by such Producer pursuant hereto or pursuant to any
thereof, or (b) affects materially and adversely or is likely materially and
adversely to affect (i) the amounts of the Source of Debt Service payable to
the Trustee under any of the LNG Sales Contracts, or the right of the Borrower
to receive any such amounts under the Loan Agreement, (ii) the Bontang Plant or
Pertamina's interests therein or (iii) such Producer's ability to perform its
obligations under this Agreement, the Trust Agreement, any Construction
Document, any Production Sharing Contract or any Basic Agreement.
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2.7 Compliance with Other Instruments, etc. Such
Producer is not, and upon the due execution and delivery of any Construction
Document or Basic Agreement not heretofore executed and delivered will not be,
in violation of any term of its charter or by-laws or, as relevant, the
partnership agreement under which such Producer is formed, or any term of any
agreement or any instrument to which it is a party or by which it or any of its
properties is bound or any Legal Requirement, which violation would have a
material adverse effect on such Producer's ability to perform its obligations
under this Agreement, the Trust Agreement, any Production Sharing Contract, any
Construction Document or any Basic Agreement.
2.8 Other Agreements. Each of the Tranche A Lender and
the Agent has been provided with correct and complete copies of the Development
Plan, the EPC Contract (excluding Exhibits A and B of the agreement referred to
in clause (i) of the definition thereof) and the Basic Agreements, in each case
as amended and in effect on the date hereof. Each Producer represents and
warrants that, to the best of its knowledge, no party to any of such Production
Sharing Contracts, the Basic Agreements executed and delivered on or prior to
the date hereof or the EPC Contract, other than any other Producer, is, and
upon the due execution and delivery of each Construction Document or Basic
Agreement not heretofore executed and delivered no party to each such agreement
will be, in breach of any material obligation thereunder.
2.9 Insurance. Insurance policies of the type required
by Section 1.11 hereof are in full force and effect, no default or breach
exists thereunder which would give rise to a right to cancel the same, and no
notice of default or breach or notice of termination has been given to
Pertamina with respect thereto. On or prior to the Effective Date, correct and
complete copies of such insurance policies will be delivered to the Tranche A
Lender and the Agent.
2.10 No Encumbrance. There is no Encumbrance on the Source
of Debt Service prior to its deposit in the Bontang V Payment Account caused by
such Producer, for which such Producer is responsible or which relates to such
Producer, except Encumbrances, if any, (i) arising pursuant to statute or
otherwise by operation of law, and not pursuant to any agreement, which are not
being enforced by attachment or levy and which will be discharged in the
ordinary course of business or (ii) permitted by Section 1.10 hereof.
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2.11 No Material Adverse Change. There has been no
material adverse change since December 31, 1994 in (i) the business, assets,
financial position or results of operation of such Producer which affects
materially and adversely, or would be likely to affect materially and
adversely, the performance by Pertamina of or the ability of Pertamina to
perform its obligations under the LNG Sales Contracts or (ii) the operation of
the Bontang Plant.
PART 3
DEFAULTS
3.1 Default Defined. Each of the Producers agrees with
the Lenders that if any one or more of the following events shall occur it
shall be, so long as the same shall continue, a default hereunder (a
"Default"):
(a) a failure to comply with any of the
provisions of Section 1.1, 1.3, 1.4, 1.9, 1.10, 1.11, 1.17 (other than
1.17(b)), 1.21 or 6.3 hereof; or
(b) a failure to comply with any of the
provisions of Section 1.5, 1.6, 1.7, 1.14(f), 1.15(b), 1.16, 1.17(b), 1.18(a)
or 3.5 hereof for seven days after written notice of such failure shall have
been given to the Producers by the Tranche A Lender and the Agent; or
(c) a failure to comply with any of the
provisions of Part 1 hereof other than those referred to in Sections 3.1(a) and
(b) hereof for 30 days after written notice of such failure shall have been
given to the Producers by the Tranche A Lender and the Agent; or
(d) any representation or warranty made by any
Producer in this Agreement (including the representations contained in the
first paragraph following "Dear Sirs:" at the beginning of this Agreement)
shall prove to have been incorrect or misleading in any material respect as of
the date when made or deemed made; or
(e) (i) failure by any of the Producers to
pay principal of, or premium or interest on, any of its Indebtedness in an
amount which is material in the context of this Agreement when due for payment,
whether by acceleration or otherwise, but after giving effect to all applicable
grace and waiver periods provided for in the agreement or instrument creating
or evidencing such Indebtedness; or
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(ii) any of the Producers shall:
(1) make an assignment for the
benefit of creditors; or
(2) file a petition in bankruptcy,
petition or apply to any tribunal or applicable regulatory or
governmental authority for the appointment of a custodian, receiver,
trustee or official with similar powers for it or a substantial part
of its property or assets, or commence any case or proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation or similar law or statute of any
jurisdiction, whether now or hereafter in effect; or
(3) if any such petition or
application shall have been filed, or any such case or proceeding
shall have been commenced against it, indicate its consent to,
approval of or acquiescence in any such petition, application, case or
proceeding or the appointment of a custodian, receiver, trustee or
official with similar powers or regulatory or other governmental
authority for it or any substantial part of its properties or assets,
or suffer to exist any such case or proceeding in which an order for
relief is entered, or suffer any such custodianship, receivership,
trusteeship or jurisdiction of such official or regulatory or
governmental authority to continue undischarged for a period of 60
days or more; or
(4) generally be unable to or
generally fail to pay its debts as such debts become due; or
(iii) a failure by P.T. Badak to comply
with a material term or provision of the Plant Use Agreement or the Processing
Agreement;
provided, however, that the effect of the occurrence of any of the events or
circumstances referred to in this clause (e) is to affect, materially and
adversely, the performance by Pertamina of its obligations under any of the LNG
Sales Contracts or the ability of Pertamina to perform such obligations; or
(f) any statement furnished to the Tranche A
Lender or the Agent under any of Section 5.3(c) or 6.1 of the Loan Agreement
with respect to the Debt Coverage Ratio, the Gross Invoice Amount, the Source
of Debt Service, as of the date of such statement, (i) was not prepared based
on information concerning amounts outstanding under the Loan
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Agreement or the Notes which was complete and accurate in all material respects
or information concerning amounts of the Gross Invoice Amount or the Source of
Debt Service actually invoiced or received which was complete and accurate in
all material respects, or (ii) was not prepared based on assumptions concerning
future periods which were established as provided in the Loan Agreement, or
(iii) was delivered by the Producers in bad faith or by the Borrower pursuant
to a request or authorization of the Producers given in bad faith.
3.2 Remedy for Default. If at any time during one or
more Interest Periods the effect of any one or more Defaults is to cause the
Source of Debt Service received by the Borrower and payable to the Lenders to
be insufficient to satisfy any payment obligation when due under the Loan
Agreement, any of the Notes or the Letter Agreement (the difference between the
amount of the Source of Debt Service received with respect to any Interest
Period by the Borrower and payable to the Lenders under the Loan Agreement, any
of the Notes or the Letter Agreement and the amount which would have been so
received and payable but for such Default or Defaults, the "Default
Shortfall"), then each of the Producers which caused or is responsible for such
Default or to which such Default relates shall be obligated to pay an aggregate
amount to the Tranche A Lender and the Agent for the account of the Tranche B
Lenders, on the dates when due during or at the end of such Interest Period, in
the manner and with the effect of payments made by the Borrower as provided in
the Loan Agreement, the relevant Notes or the Letter Agreement, on account of
its Liability Share of the Default Shortfall, such that the net aggregate
amount received from each such Producer by the Tranche A Lender and the Agent
for the account of the Tranche B Lenders pursuant to this Section 3.2, after
deduction of all Taxes required to be deducted or withheld from, or otherwise
paid by the Lenders with respect to, such payment (but excluding Excluded Taxes
required to be so deducted, withheld or paid solely to the extent that the
amount of such Excluded Taxes does not exceed the amount of Excluded Taxes that
would have been deducted, withheld or otherwise paid by the Lenders, if there
had been no Default Shortfall, and the net amount were paid to, and received
by, the Lenders out of the Source of Debt Service), shall equal such Producer's
Liability Share of the Default Shortfall. The provisions of this Section 3.2
shall apply to breaches of Section 1.17(b) as if such breaches were a Default,
whether or not notice of such breach is given to the Producers by the Tranche A
Lender or the Agent.
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3.3 Diversion and Remedy. In addition to the Defaults
provided for in Section 3.1 hereof, if the effect during one or more Interest
Periods of (i) any claim asserted by, on behalf of, or against any one or more
of the Producers or any of its or their property or any interest in any of its
or their property, or against the Source of Debt Service, including, without
limitation, claims asserted by any governmental or taxing authority, or by, or
on behalf of, any creditor, trustee in bankruptcy, custodian, receiver or
similar official or authority, or (ii) the imposition of any Taxes on amounts
payable under any of the Supply Agreements or any of the LNG Sales Contracts,
in any such case constituting Source of Debt Service, or on any other payment
or receipt of the Source of Debt Service but excluding the effect, if any, of
any Japanese Taxes (such a claim referred to in clause (i) or imposition of
such Tax referred to in clause (ii), a "Diversion"), is to cause the Source of
Debt Service received by the Borrower and payable during or at the end of any
Interest Period to the Lenders to be insufficient to satisfy any payment
obligation when due under the Loan Agreement, any of the Notes or the Letter
Agreement (the difference between the amount of the Source of Debt Service
received by the Borrower and payable to the Lenders under the Loan Agreement,
the relevant Notes or the Letter Agreement and the amount which would have been
so received and payable but for such Diversion, the "Diversion Shortfall"),
each of the Producers which has caused or is responsible for such Diversion or
to which such Diversion relates, shall be obligated to pay an aggregate amount
to the Tranche A Lender and the Agent for the account of the Tranche B Lenders,
on the dates, in the manner and with the effect of payments made by the
Borrower as provided in the Loan Agreement, the relevant Notes or the Letter
Agreement, on account of its Liability Share of the Diversion Shortfall, such
that the net aggregate amount received from each such Producer by the Tranche A
Lender and the Agent for the account of the Tranche B Lenders pursuant to this
Section 3.3, after deduction of all Taxes required to be deducted or withheld
from, or otherwise paid by the Lenders with respect to, such payment (but
excluding Excluded Taxes required to be so deducted, withheld or paid solely to
the extent that the amount of such Excluded Taxes does not exceed the amount of
Excluded Taxes that would have been deducted, withheld or otherwise paid by the
Lenders if there had been no Diversion Shortfall, and the net amount were paid
to, and received by, the Lenders), shall equal such Producer's Liability Share
of the Diversion Shortfall.
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3.4 Liability Share Defined. The "Liability Share" of a
Producer which caused or is responsible for a Default or a Diversion or to
which such Default or Diversion relates which has given rise to a Default
Shortfall or a Diversion Shortfall, as the case may be, shall be with respect
to such Default Shortfall or Diversion Shortfall a percentage determined by
dividing the percentage interest of such Producer (as set forth in Schedule 1
hereto and as adjusted for changes in the Producers' Percentages as defined in
and pursuant to the Supply Agreements or the Production Sharing Percentages as
defined in the recitals thereof) by the aggregate percentage interest of all
Producers (as set forth in such Schedule 1 as so adjusted) which have caused or
which are responsible for such Default or Diversion or to which such Default or
Diversion relates. With respect to the imposition of Taxes referred to in
Section 3.3 hereof, each Producer shall be deemed to have caused the
corresponding Diversion to the extent of its percentage interest as shown in
Schedule 1 hereto, adjusted as aforesaid. No adjustment to the Producers'
Percentages or the Production Sharing Percentages referred to in this Section
3.4 shall be effective for purposes of this Agreement until the Producers have
provided to the Tranche A Lender and the Agent a copy of an amended Schedule 1
which properly reflects such adjustment. Any adjustment to the Producers'
Percentages or the Production Sharing Percentages or revision to Schedule 1
shall require the mutual agreement of the Producers, but shall not require any
consent, approval or other action by the Tranche A Lender, the Agent, any
Lender or the Trustee.
3.5 Notices. Each Producer shall promptly, and in any
event not later than three Business Days after obtaining actual knowledge
thereof, give notice to the Tranche A Lender and the Agent of the occurrence of
any Default or Diversion caused by such Producer or for which it is responsible
or to which it is related or any event that, with the giving of notice or the
passing of time, or both, would constitute such a Default or Diversion.
PART 4
INSURED LOSS
4.1 Effect of Total Loss of Additional Plant or Loading
Facilities Prior to Operational Acceptance. If any event occurs for which
insurance proceeds are payable by an insurance company under any insurance
policy referred to in Section 1.11(a) hereof relating to an actual total loss
or a constructive, compromised or arranged total loss (within the
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meaning of such policy) of the Additional Plant or the Loading Facilities or
both (the "Lost Facilities"), Pertamina agrees as follows:
(a) Pertamina shall, as promptly as possible in
the circumstances following such event, notify the Tranche A Lender and the
Agent of the occurrence of such event and shall, within six months following
such event, notify the Tranche A Lender and the Agent in writing whether or not
it intends to rebuild or reconstruct the Lost Facilities.
(b) If Pertamina notifies the Tranche A Lender
and the Agent that it does not intend to rebuild or reconstruct the Lost
Facilities, it shall promptly pay to the Tranche A Lender and the Agent such
amounts as are instructed by the Tranche A Lender and the Agent equal in the
aggregate to the lesser of the aggregate amounts outstanding under the Loan
Agreement, Notes and Letter Agreement and the aggregate amount of such
insurance proceeds paid to Pertamina in respect of such event.
(c) If Pertamina notifies the Tranche A Lender
and the Agent that it intends to rebuild or reconstruct the Lost Facilities,
then it shall proceed to do so with the services of a reliable and reputable
contractor, diligently and in good faith, and shall provide the Tranche A
Lender and the Agent with periodic written reports not less frequently than
quarterly in reasonable detail concerning the rebuilding or reconstruction and
including (i) the amount of insurance proceeds received under such policy, (ii)
the amount of funds expended to date on the rebuilding or reconstruction, (iii)
the proposed schedule for completion of the construction work, and (iv) the
progress of the construction work to date.
(d) If, at any time prior to completion,
Pertamina shall terminate the rebuilding or reconstruction of the Lost
Facilities or shall not be proceeding with such rebuilding or reconstruction
diligently and in good faith, then Pertamina shall be obligated promptly to pay
to each of the Tranche A Lender and the Agent for the account of the Tranche B
Lenders, such amounts as are instructed by the Tranche A Lender and the Agent
equal in the aggregate to the lesser of the amounts outstanding under the Loan
Agreement, the Note and the Letter Agreement and the aggregate insurance
proceeds which are paid to Pertamina under such policy in respect of such event
and not in good faith expended or committed to be expended (pursuant to a
commitment which cannot by its terms be avoided) on such rebuilding or
reconstruction.
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4.2 Effect of Total Loss of Insured Bontang Plant. If
any event occurs for which insurance proceeds are payable by an insurance
company under any insurance policy referred to in Section 1.11(b) hereof
relating to an actual total loss or a constructive, compromised or arranged
total loss (within the meaning of such policy) of the Insured Bontang Plant
(which term, for purposes of this Section 4.2 and Section 4.4, shall exclude
Train G if such loss occurs prior to operational acceptance of the Additional
Plant and the Loading Facilities by Pertamina pursuant to the Construction
Documents and, thereafter, shall include all of Train G other than the Support
Facilities), Pertamina agrees as follows:
(a) Pertamina shall, as promptly as possible in
the circumstances following such event, notify the Tranche A Lender and the
Agent of the occurrence of such event and shall, within six months following
such event, notify the Tranche A Lender and the Agent in writing whether or not
it intends to rebuild or reconstruct the Insured Bontang Plant.
(b) If Pertamina so notifies the Tranche A Lender
and the Agent that it does not intend to rebuild or reconstruct the Insured
Bontang Plant, it shall promptly pay to each of the Tranche A Lender and the
Agent for the account of the Tranche B Lenders such amounts as are instructed
by the Tranche A Lender and the Agent in an aggregate amount equal to the
lesser of the share referred to below of the total insurance proceeds that are
paid to Pertamina under such policy in respect of such event and the aggregate
amount outstanding under the Loan Agreement, Notes and Letter Agreement after
giving effect to any payment made pursuant to Section 4.1(b) hereof.
(c) If Pertamina notifies the Tranche A Lender
and the Agent that it intends to rebuild or reconstruct the Insured Bontang
Plant, then it shall, subject to the proviso of Section 4.4 hereof, proceed to
do so with the services of a reliable and reputable contractor, diligently and
in good faith, applying amounts equal to the proceeds of the insurance to the
extent required, and shall provide the Tranche A Lender and the Agent with
periodic written reports not less frequently than quarterly in reasonable
detail concerning the rebuilding or reconstruction and including (i) the amount
of insurance proceeds received under such policy, (ii) the amount of funds
expended to date on the rebuilding or reconstruction, (iii) the proposed
schedule for completion of the construction work, and (iv) the progress of the
construction work to date.
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(d) If, at any time prior to completion,
Pertamina shall terminate the rebuilding or reconstruction or shall not be
proceeding with such rebuilding or reconstruction diligently and in good faith,
then Pertamina shall be obligated promptly to pay to each of the Tranche A
Lender and the Agent for the account of the Tranche B Lenders such amounts as
are instructed by the Tranche A Lender and the Agent in an aggregate amount
equal to the lesser of the share referred to below or the total insurance
proceeds that are paid to Pertamina under such policy in respect of such event
and not in good faith expended or committed to be expended (pursuant to a
commitment which cannot by its terms be avoided) on such rebuilding or
reconstruction and the aggregate amounts outstanding under the Loan Agreement,
the Notes and the Letter Agreement after giving effect to any payments made
pursuant to Sections 4.1(b) and 4.2(b) hereof.
The share referred to in clauses (b) and (d) above of such
total insurance payments shall be (i) the total amount of such payments
multiplied by (ii) a fraction the numerator of which is the aggregate principal
amount of Indebtedness outstanding under the Loan Agreement, Notes and the
Letter Agreement at the time amounts are payable to the Lenders under this
Section 4.2 and the denominator of which is equal to the sum of the aggregate
principal amount of the Indebtedness outstanding under the Loan Agreement and
the aggregate principal amount of all Indebtedness of any Person outstanding at
such time, the holders of which, directly or indirectly, are entitled to share
in the Plant Insurance Proceeds prior to or on an equal and ratable basis with
the Lenders (as the Lenders' rights are determined under this Section 4.2).
4.3 Insurance Shortfall. If by reason of a failure of
Pertamina to comply with Section 1.11 hereof, the share of insurance payments
of the type referred to in Sections 4.1(b) and (d) and 4.2(b) and (d) hereof is
insufficient to pay in full all principal, interest and other amounts payable
under the Loan Agreement and the Notes and all amounts payable under the Letter
Agreement (the amount of such insufficiency, an "Insurance Shortfall"),
Pertamina shall be obligated to pay the amount of the Insurance Shortfall to
each of the Tranche A Lender and the Agent for the account of the Tranche B
Lenders in such amounts as are instructed by the Tranche A Lender and the Agent
on the dates, in the manner of and with the effect of payments made by the
Borrower as provided in the Loan Agreement, the Notes and the Letter Agreement,
such that the net amount received by the Lenders, pursuant to this Section 4.3,
after deduction of all Taxes required to be deducted or withheld from, or
otherwise paid by the Lenders,
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with respect to, such payment (but excluding Excluded Taxes required to be so
deducted, withheld or otherwise paid solely to the extent that the amount of
such Excluded Taxes does not exceed the amount of Excluded Taxes that would
have been deducted, withheld or otherwise paid by the Lenders if there had been
no Insurance Shortfall, and the net amount were paid to, and received by the
Lenders out of an amount equal to such share of insurance), shall equal the
Insurance Shortfall.
4.4 Other Losses. Upon a partial loss of the Additional
Plant, the Loading Facilities or the Insured Bontang Plant (the "Affected
Facilities"), as the case may be, or a total loss thereof with respect to which
Pertamina has not given notice pursuant to Section 4.1 or 4.2 hereof that it
intends not to rebuild and if Pertamina has not applied amounts equal to the
insurance proceeds paid to Pertamina to repayment of the Indebtedness
outstanding under the Loan Agreement, the Notes and the Letter Agreement in the
manner contemplated by Sections 4.1 and 4.2 hereof, Pertamina shall proceed to
rebuild or reconstruct the Affected Facilities with the services of a reliable
and reputable contractor, diligently and in good faith, applying amounts equal
to the proceeds of the insurance referred to in Section 1.11(a) or (b), as the
case may be, to the extent required and shall provide the Tranche A Lender and
the Agent with the periodic reports described in clause 4.l(c) or 4.2(c)
hereof, as the case may be, as provided in such clause; provided, however, that
if (i) it is reasonably anticipated by the Majority Lenders that amounts held
in the Debt Service Account (after application of amounts held in the Regular
Reserve) and amounts to be paid during the remaining respective terms of the
LNG Sales Contracts will be insufficient to pay the amounts then outstanding
under the Loan Agreement, the Notes and Letter Agreement and (ii) either (A)
the Second A/R 1973 Sales Contract has not been duly executed and delivered or
(B) if it has been duly executed and delivered, it has not been extended to
provide for a termination date of December 31, 2014 or later or the Japanese
Supply Agreements then in effect do not provide for the supply of natural gas
required in connection with the Second A/R 1973 Sales Contract for the period
through and including December 31, 2014, then the Plant Insurance Proceeds may
be applied towards such reconstruction or repair of the Affected Facilities
only if arrangements acceptable to the Majority Lenders shall have been made
for (x) the sale of a volume of LNG at least equal to the volume of LNG that,
but for such total or partial loss, would have been sold during the remaining
term of the Second A/R 1973 Sales Contract, if the same has been duly executed
and delivered, and (y) the application of a portion of the proceeds of such
sales as the Source of Debt Service on the
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same basis as would have been the case if such sales had been made under the
Second A/R 1973 Sales Contract.
PART 5
SCOPE OF PRODUCERS' LIABILITIES
Except as stated in Sections 3.2, 3.3, 3.4 and Part 4 hereof
and then only to the limited extent specifically stated therein, no recourse
shall be had for the payment of the principal of or interest on the Notes or
the payment of any other amounts due under the Loan Agreement or the Letter
Agreement, or shall be had for any claim based on any provision of the Notes,
the Loan Agreement or the Letter Agreement, against any of the Producers, or
against any past, present or future stockholder, partner, officer, director,
employee, or agent of any of the Producers, either directly or through the
Borrower or any successor of the Borrower, or under the Trust Agreement or
under any constitution, statute or rule of law or by the enforcement of any
assessment, or otherwise, and, except as above provided, no such Person shall
have any personal obligation, liability or duty whatsoever to the Tranche A
Lender, the Agent, the Intercreditor Agent, the Technical Agent, the Arrangers
or any of the Tranche B Lenders or any holders of the Notes or anyone else for
or with respect to any such payment, the performance of or compliance with any
covenant or agreement contained in the Loan Agreement, the Letter Agreement,
the Trust Agreement or this Agreement or the truth, accuracy or completeness of
any statement or representation made in or pursuant to any such document.
Furthermore, the obligations of the Producers hereunder are several, and not
joint or joint and several, and there shall be no recourse to any Producer by
any Person party to the Loan Agreement or the Letter Agreement or by any holder
of a Note or otherwise for any liability of another of the Producers which may
have arisen hereunder, it being expressly agreed and understood, however, that
the failure of a Producer to perform its obligations under this Agreement shall
not relieve any other Producer of its obligations hereunder.
The Tranche A Lender, the Agent, the Intercreditor Agent, the
Technical Agent, each Arranger, each Tranche B Lender, each holder of any of
the Notes and each other Person relying on or purporting to rely on the terms
of this Agreement in adopting any course of action shall be bound by the terms
of this Part 5 of this Agreement to the same extent as if its written
acceptance of the terms hereof were subscribed hereto.
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PART 6
MISCELLANEOUS
6.1 Notices. All notices, requests, demands or other
communications to or from the parties hereto shall be given or made by telex,
telecopier or by personal delivery in the manner provided in Section 10.1 of
the Loan Agreement. Any such notice, request, demand or communication shall be
sent in the case of each Producer to its address, telex number and answerback
or telecopier number set forth on the signature pages hereof or, where
applicable, to the designated representative of such Producer as set forth
below; or in each case with respect to any party to such other address, telex
or telecopier number as such party may designate for the purpose by written
notice to the party sending such notice, request, demand or communication.
Except as otherwise specified in this Agreement, all notices and other
communications shall be deemed to have been duly given on (i) the date of
delivery if delivered personally at or before 5:00 p.m. on the date of delivery
in the time zone of the recipient (otherwise on the day immediately following
the date of delivery), (ii) following receipt if transmitted by mail, (iii) the
date of transmission if transmitted by telex with confirmed answerback received
at or before 5:00 p.m. on the date of transmission in the time zone of the
recipient (otherwise on the day immediately following the date of transmission)
or (iv) the date of receipt of a legible copy thereof if sent by telecopier
received at or before 5:00 p.m. on the date of transmission in the time zone of
the recipient (otherwise on the day immediately following the date of receipt),
whichever shall first occur. Any party may change its address for purposes
hereof by notice to the other parties.
In the case of notices and other communications for Virginia
Indonesia Company, OPICOIL Houston, Inc., Virginia International Company, Lasmo
Sanga Sanga Limited, Union Texas East Kalimantan Limited and Universe Gas & Oil
Company, Inc., such notices and communications shall be sent to Virginia
Indonesia Company, which is hereby designated the representative of such
Producers for such purpose. Total shall receive notices and other
communications for itself and Inpex, and Unocal shall receive notices and other
communications for itself and Inpex so long as Inpex is a member of the Unocal
Group and, thereafter, notices shall be sent to Inpex directly. A new or
successor representative may be designated by notice to such effect signed by
all such appropriate Persons given to the Tranche A Lender and the Agent 10
days in advance of any such change. Until
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receipt of any such notice, the Tranche A Lender and the Agent may rely on any
notice or other communication to the representative as being notice to each
such Person.
6.2 No Waiver; Remedies Cumulative. No failure to
exercise and no delay in exercising, on the part of any Person having rights
hereunder, any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Subject always to the
provisions of Part 5 hereof, the rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
6.3 Assignment; Successors and Assigns; Participations.
This Agreement shall be binding upon and inure to the benefit of the Tranche A
Lender, the Arrangers, the Tranche B Lenders, the Agent and the holders from
time to time of the Notes and their respective successors and permitted
assigns, in each case to the extent that the provisions of the Loan Agreement
and Letter Agreement inure to the benefit of such Persons and their respective
successors and permitted assigns thereunder, and except as specifically set
forth in this Section 6.3, no Person shall have or acquire any right or benefit
hereunder or in respect of any obligation of any Producer herein contained.
Except for the assignments prior to the date hereof pursuant to the Supply
Agreements (or after the date hereof in connection with and pursuant to any
Japanese Supply Agreement entered into pursuant to an extension of the New 1973
Sales Contract on substantially the same terms as the existing Japanese Supply
Agreements) by Pertamina to the other Producers of the production sharing
percentages of such Producers in amounts payable by the Buyer under the LNG
Sales Contracts and certain other amounts as specified in the Supply
Agreements, no Producer may assign any rights or delegate any obligations
hereunder or assign any rights in or to the Source of Debt Service prior to
deposit in the Bontang V Payment Account, without the written consent of the
Majority Lenders, such consent not to be unreasonably withheld; provided that
if another corporation, or other entity, wholly owned by or an agency of the
Republic of Indonesia should succeed to all rights and obligations of Pertamina
under the Trust Agreement and all of the Basic Agreements to which it is a
party, Pertamina may assign all of its rights and delegate all of its
obligations hereunder to such other corporation, entity or agency, such
assignment and delegation to become effective upon such Person's written
assumption (a copy of which shall be provided to the Tranche A Lender and the
Agent and which shall confirm the
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assignment of rights and the assumption of obligations by such Person under the
Trust Agreement, the LNG Sales Contracts and all other Basic Agreements to
which the assignor is a party) of all of Pertamina's obligations hereunder
including, without limitation, the restrictions on assignments and delegations
contained in this Section 6.3 which shall apply to all assignees of the rights
and delegees of the obligations of Pertamina and its assignees and delegees;
and provided further that any Producer other than Pertamina may assign its
rights and delegate its obligations hereunder and assign its rights with
respect to the Source of Debt Service prior to deposit in the Bontang V Payment
Account, to the extent of and in conjunction with the assignment of its rights
and the delegation of obligations under the Trust Agreement and the Basic
Agreements, in each case to which it is a party, such assignment and delegation
to become effective upon such Person's written assumption (a copy of which
assumption shall be provided to the Tranche A Lender and the Agent and which
shall confirm to the extent provided in such assignment and delegation the
assignment of rights and the assumption of obligations under the Trust
Agreement and the Basic Agreements, in each case to which the assignor is a
party) of such Producer's obligations hereunder including, without limitation,
the restrictions on assignments and delegations contained in this Section 6.3
which shall apply to all assignees of the rights and delegees of the
obligations of such Producer and its assignees and delegees. The Producers may
treat each Lender as the holder of the Note or Notes drawn to its order and
delivered to such Lender until written notice of transfer shall have been
received by them. All agreements, representations and warranties made herein
shall survive the making of any such transfer hereunder by any Lender.
Notwithstanding the foregoing, each Lender may grant participations, in whole
or in part, in its rights under this Agreement to the extent that it may grant
participations in its rights under the Loan Agreement, Notes and Letter
Agreement.
6.4 Amendments. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver shall be in writing
and signed (including the form of signatures on any telex with appropriate
confirmed answerback, or telecopied version duly sent by the Person so amending
or waiving) by the Producers, the Tranche A Lender, the Agent and the Majority
Tranche B Lenders; provided that any waiver need only be signed by the party
granting the waiver. Any such amendment or waiver shall be signed by the Agent
on behalf of the Tranche B Lenders if the Agent has been so authorized in
writing or by telex by the Majority Tranche B Lenders. Any amendment or waiver
or telecopied version signed by the Agent in accordance with the preceding
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sentence shall be binding upon the Tranche B Lenders and any holder of a
Tranche B Note.
6.5 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts together shall constitute one and the same
instrument. Complete sets of counterparts shall be lodged with the Tranche A
Lender, the Agent and Pertamina.
6.6 Section Headings. The Section headings in this
Agreement are inserted for convenience of reference only and shall be ignored
in construing this Agreement.
6.7 Governing Law. This agreement shall be governed by
and construed in accordance with the laws of the State of New York, United
States of America, applicable to agreements made and to be performed entirely
within such state.
6.8 Consent to Jurisdiction.
(a) Solely for purposes of this Agreement, each
Producer hereby irrevocably consents that any suit, legal action or proceeding
against it or any of its property with respect to any of the obligations
arising under this Agreement may be brought in any New York State court located
in the Borough of Manhattan, City and State of New York or any Federal Court of
the United States of America located in the Southern District of New York, as
the Tranche A Lender, any Tranche B Lender or the Agent may elect, and by
execution and delivery of this Agreement, each Producer hereby irrevocably
submits to and accepts, solely as aforesaid, with regard to any such suit,
legal action or proceeding, for itself and in respect of its property,
generally and unconditionally, the non-exclusive personal jurisdiction of the
aforesaid courts. Each Producer hereby irrevocably designates, appoints and
empowers CT Corporation System, 1633 Broadway, New York, New York 10019 as its
agent to receive for and on its behalf service of process in New York in any
suit, legal action or proceeding with respect to this Agreement. It is
understood that a copy of any such process served on such agent shall be
promptly forwarded by airmail by the person commencing such suit, legal action
or proceeding to the relevant Producer at its address set forth on the
signature pages hereof, but the failure of the relevant Producer to receive
such copy shall not affect in any way the service of such process as aforesaid.
If service of process cannot be effected in the foregoing manner, each Producer
further, solely as aforesaid, irrevocably consents to the service of process in
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any such suit, legal action or proceeding by the mailing of copies thereof by
registered or certified airmail, postage prepaid, return receipt requested, to
the respective Producer at its address set forth on the signature pages hereof.
The foregoing, however, shall not limit the right of the Lenders to serve
process in any other manner permitted by law or to bring any suit, legal action
or proceeding or to obtain execution of judgment in any other jurisdiction.
(b) Solely as aforesaid, each Producer hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any suit, legal action or proceeding arising out of or
relating to this Agreement in any court located in the Borough of Manhattan,
City and State of New York and hereby further irrevocably waives any claim it
may now or hereafter have that a court located in the Borough of Manhattan,
City and State of New York is not a convenient forum for any such suit, legal
action or proceeding. Pertamina represents and warrants that this Agreement
and its obligations made hereunder and the transactions contemplated hereby
constitute commercial rather than public or governmental acts. Each Producer
(other than Pertamina, which waives its immunity as provided below) represents
and warrants that it is not entitled to claim immunity from legal proceedings
with respect to itself or any of its property on the grounds of sovereignty or
otherwise under any law or in any jurisdiction where an action may be brought
for the enforcement of any of the obligations arising under this Agreement or
the Trust Agreement. To the extent that any Producer or any of its property or
the Source of Debt Service, prior to deposit in the Bontang V Payment Account
has or hereafter may acquire any claim of right to immunity from set-off, legal
proceedings, attachment prior to judgment, other attachment, levy or execution
of judgments on the grounds of sovereignty or otherwise, each Producer on
behalf of itself and any successors, solely as aforesaid, hereby irrevocably
waives such claim of right to immunity for itself and its property in respect
of its obligations arising under this Agreement and the Trust Agreement and
each Producer agrees that it will not assert any such right to immunity in any
way which would impair the performance or ability of the Borrower to perform
its obligations under the Loan Agreement.
6.9 Severability. If any one or more of the provisions
contained in this Agreement or any document executed in connection herewith
shall be invalid, illegal or unenforceable in any respect under any applicable
law, the validity, legality and enforceability of the remaining provisions
contained herein shall not be in any way affected or impaired.
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6.10 Reinstatement. The obligations of the Producers to
make payments under this Agreement shall continue to be effective or shall be
reinstated, as the case may be, if, at any time, a payment or any part thereof,
of any amount paid to a Lender in respect of which a Producer is obligated to
make payment hereunder is rescinded or must otherwise be restored or returned
by the Lender upon the insolvency, bankruptcy or reorganization of the Borrower
or for any other reason, all as though such payment had not been made.
6.11 Confidentiality. No copy of (a) this Agreement, the
Loan Agreement or the Trust Agreement or (b) any other agreement to which any
Producer or the Trustee is a party or any document signed or issued by or on
behalf of any such Producer, which agreement or document is identified by any
Producer to the Tranche A Lender and the Agent as confidential, shall, without
Pertamina's consent for the agreements referred to in clause (a), or the
consent of the relevant Producer for agreements or documents referred to in
clause (b), be released or otherwise delivered by or on behalf of the Tranche A
Lender, the Agent, the Arrangers, the Intercreditor Agent, the Technical Agent
or any Tranche B Lender to any third party, except, prior to the Effective
Date, to any prospective lender in connection with the transactions
contemplated hereby pursuant to a confidentiality undertaking in a form
approved by the Producers on or prior to the date hereof. Notwithstanding the
foregoing, the agreements and documents referred to in the preceding sentence
may be released to any bank regulatory authority having jurisdiction over any
Lender, as may otherwise be required by law and to any prospective assignee of
or participant in the rights of the Lenders under the Loan Agreement, the Notes
and this Agreement upon execution by such Person of a confidentiality
undertaking in a form substantially similar to that approved by the Producers
on or prior to the date hereof. No public announcement or statement or
publication relating to any of the foregoing shall be made or released by or on
behalf of the Tranche A Lender, the Agent, the Arrangers or any Tranche B
Lender, without the prior written approval of the Producers.
* * * * *
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The undersigned Producers have caused this Agreement to be
duly executed by their respective duly authorized signatories as of the date
hereof.
<TABLE>
<S> <C>
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA
(PERTAMINA)
Jalan Medan Merdeka Timur 1A
Jakarta - Indonesia
Telex No.: 44134
Answerback: PTMJKT 1A
Telecopier No.: 62-21-365-685 By: /s/ FAISAL ABDAOE
Attention: Director of ----------------------------------------------------
Processing Name: Faisal Abdaoe
Title: President-Director and C.E.O.
VIRGINIA INDONESIA COMPANY
One Houston Center
1221 McKinney - Suite 700
Houston, Texas 77010
U.S.A.
Telex No.: 713-166-100
Answerback: VICO HOU By: /s/ TERRY QUINN
Telecopier No.: 713-754-6697 ----------------------------------------------------
Attention: Treasurer Name: Terry Quinn
Title: Vice President and
Chief Financial Officer
VIRGINIA INTERNATIONAL COMPANY
One Houston Center
1221 McKinney - Suite 600
Houston, Texas 77010
U.S.A.
Telex No.: N/A
Answerback: N/A By: /s/ RICHARD L. SMERNOFF
Telecopier No.: 713-654-8569 ----------------------------------------------------
Attention: Chief Financial Name: Richard L. Smernoff
Officer Title: Finance Director
LASMO SANGA SANGA LIMITED
100 Liverpool Street
London EC2M 2BB
United Kingdom
Telex No.: 8812970 By: /s/ RICHARD L. SMERNOFF
Answerback: LASMO G ----------------------------------------------------
Telecopier No.: 44-171-606-2893 Name: Richard L. Smernoff
Attention: Finance Director Title: Finance Director
</TABLE>
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<TABLE>
<S> <C>
UNION TEXAS EAST KALIMANTAN LIMITED
c/o Union Texas International
Corporation
P.O. Box 2120
Houston, Texas 77252-2120
U.S.A. By: /s/ ALAN CUNNINGHAM
Telex No.: 775255 ----------------------------------------------------
Answerback: UNOTEX PET HOU Name: Alan Cunningham
Telecopier No.: 1-713-968-2771 Title: Assistant Secretary
Attention: President
OPICOIL HOUSTON, INC.
2801 Post Oak Blvd. - Suite 300
Houston, Texas 77056
U.S.A.
Telex No.: N/A By: /s/ Roy C. H. Chiu
Answerback: N/A ----------------------------------------------------
Telecopier No.: 1-713-297-8108 Name: Roy C. H. Chiu
Ext. 322 Title: President
Attention: Vice President of
Finance
UNIVERSE GAS & OIL COMPANY, INC.
NYK Tennoz Building
2-20, Higashi-Shinagawa 2-chome
Shinagawa-ku, Tokyo 140
Japan
Telex No.: J26268
Answerback: UGO TOK
Telecopier No.: 81-3-5462-0679 By: /s/ TOSHIO NORIMATSU
Attention: General Manager to ----------------------------------------------------
Business Department Name: Toshio Norimatsu
Title: General Manager
Business Development
TOTAL INDONESIE
P.O. Box 1010
Jakarta 10010
Indonesia
Telex No.: 60980
Answerback: TOTALJ IA
Telecopier No.: 62-21-252-0814
Attention: President and By: /s/ BERNARD VITRY
General Manager ----------------------------------------------------
Name: Bernard Vitry
Title: President and
General Manager
</TABLE>
43
<PAGE> 47
<TABLE>
<S> <C>
INDONESIA PETROLEUM, LTD.
17th Floor, Ebisu Neonato,
No. 1-18, Ebisu 4-chome
Shibuya-ku, Tokyo 150, Japan
Telex No.: 2424210
Answerback: JAIPEX J By: /s/ KAZUO YOSHIKAWA
Telecopier No.: 81-3-5448-1244 ----------------------------------------------------
Attention: General Manager Name: Kazuo Yoshikawa
of Gas Business Title: Executive Senior
Department Managing Director
UNOCAL INDONESIA COMPANY
Ratu Plaza Office Tower
Jalan Jenderal Sudirman
Jakarta, Indonesia
Telex No. 47335 By: /s/ DONALD A. MACKAY
Answerback: UNOCAL IA ----------------------------------------------------
Telecopier No. 62-21-720-4499 Name: Donald A. MacKay
Attention: President Title: Assistant Treasurer
Accepted:
BONTANG TRAIN-G PROJECT FINANCE CO., LTD.
By: /s/ RINTARO HARA
--------------------------------------------------------
Name: Rintaro Hara
Title: President
</TABLE>
44
<PAGE> 48
<TABLE>
<S> <C>
Arranger
--------
CREDIT LYONNAIS
By /s/ PHILIPPE SOUSTRA
--------------------------------
Name: Philippe Soustra
Title: Attorney-in-Fact
THE FUJI BANK, LIMITED
By /s/ HAJIME TANIMURA
--------------------------------
Name: Hajime Tanimura
Title: Attorney-in-Fact
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED
By /s/ KENICHI AMANO
--------------------------------
Name: Kenichi Amano
Title: Attorney-in-Fact
Facility Agent ("Agent")
------------------------
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED
NEW YORK BRANCH
By /s/ KENICHI AMANO
--------------------------------
Name: Kenichi Amano
Title: Attorney-in-Fact
</TABLE>
45
<PAGE> 49
<TABLE>
<S> <C>
Intercreditor Agent
-------------------
THE FUJI BANK, LIMITED
Technical Agent
---------------
CREDIT LYONNAIS
Tranche B Lenders
-----------------
CREDIT LYONNAIS
By /s/ PHILIPPE SOUSTRA
--------------------------------
Name: Philippe Soustra
Title: Attorney-in-Fact
THE DAIWA BANK, LIMITED
NEW YORK BRANCH
By /s/ SHINICHI INOUE
--------------------------------
Name: Shinichi Inoue
Title: Attorney-in-Fact
THE DAI-ICHI KANGYO BANK, LIMITED
NEW YORK BRANCH
By /s/ TAKAYUKI NAKAYAMA
--------------------------------
Name: Takayuki Nakayama
Title: Attorney-in-Fact
THE FUJI BANK, LIMITED
NEW YORK BRANCH
By /s/ HAJIME TANIMURA
--------------------------------
Name: Hajime Tanimura
Title: Attorney-in-Fact
</TABLE>
46
<PAGE> 50
<TABLE>
<S> <C>
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/ KENICHIRO MURATA
--------------------------------
Name: Kenichiro Murata
Title: Attorney-in-Fact
KOREA FIRST BANK
NEW YORK AGENCY
By /s/ HEUNG-JE KIM
--------------------------------
Name: Heung-Je Kim
Title: Attorney-in-Fact
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED
NEW YORK BRANCH
By /s/ KENICHI AMANO
--------------------------------
Name: Kenichi Amano
Title: Attorney-in-Fact
THE MITSUBISHI BANK, LIMITED
NEW YORK BRANCH
By /s/ YOSHISABURO MOGI
--------------------------------
Name: Yoshisaburo Mogi
Title: Attorney-in-Fact
THE MITSUBISHI TRUST AND
BANKING CORPORATION
NEW YORK BRANCH
By /s/ TATSUHISA TESHIMA
--------------------------------
Name: Tatsuhisa Teshima
Title: Attorney-in-Fact
</TABLE>
47
<PAGE> 51
<TABLE>
<S> <C>
THE NORINCHUKIN BANK
NEW YORK BRANCH
By /s/ SHOJIRO MATSUOKA
--------------------------------
Name: Shojiro Matsuoka
Title: Attorney-in-Fact
THE SAKURA BANK, LIMITED
NEW YORK BRANCH
By /s/ MASAO UMEMURA
--------------------------------
Name: Masao Umemura
Title: Attorney-in-Fact
THE SANWA BANK, LIMITED
NEW YORK BRANCH
By /s/ AKIRA TAKEUCHI
--------------------------------
Name: Akira Takeuchi
Title: Attorney-in-Fact
SOCIETE GENERALE
TOKYO BRANCH
By /s/ PATRICK FROGER
--------------------------------
Name: Patrick Froger
Title: General Manager for Japanese
Branches
THE SUMITOMO BANK, LIMITED
NEW YORK BRANCH
By /s/ KIYOTAKA KUROKAWA
--------------------------------
Name: Kiyotaka Kurokawa
Title: Attorney-in-Fact
THE TOKAI BANK, LIMITED
NEW YORK BRANCH
By /s/ TORU SATOH
--------------------------------
Name: Toru Satoh
Title: Attorney-in-Fact
</TABLE>
48
<PAGE> 52
Schedule 1
Liability Share Percentages
<TABLE>
<CAPTION>
Pre Tax
Percentage
Interest (%)
------------
<S> <C>
Pertamina 44.2276%
OPICOIL Houston, Inc. 2.2183%
Virginia International Company 1.7330%
Virginia Indonesia Company 0.8318%
Lasmo Sanga Sanga Limited 2.9115%
Union Texas East Kalimantan Limited 2.9115%
Universe Gas & Oil Company, Inc. 0.4852%
Total Indonesie 20.7131%
Unocal Indonesia Company 2.4971%
Indonesia Petroleum, Ltd. 21.4709%
--------
100%
</TABLE>
<PAGE> 1
BONTANG V
TRUSTEE AND PAYING AGENT AGREEMENT
among
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
VIRGINIA INDONESIA COMPANY
OPICOIL HOUSTON, INC.
VIRGINIA INTERNATIONAL COMPANY
LASMO SANGA SANGA LIMITED
UNION TEXAS EAST KALIMANTAN LIMITED
UNIVERSE GAS & OIL COMPANY, INC.
TOTAL INDONESIE
UNOCAL INDONESIA COMPANY
INDONESIA PETROLEUM, LTD.
and
BANKAMERICA INTERNATIONAL
Dated as of July 1, 1995
<PAGE> 2
TABLE OF CONTENTS
Page
<TABLE>
<S> <C> <C>
ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 RECEIPT OF PAYMENTS WITH RESPECT TO LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.1 Designation of Bontang V Trustee and Bontang V General Account . . . . . . . . . . . . . . . . . 19
2.2 Bontang V Trust Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Allocation of Amounts Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.4 Proceeds of Cargo Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.5 Payments Under New 1973 Transportation Arrangements . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 3 POWER TO BORROW AND ENTER INTO INTEREST RATE SWAPS . . . . . . . . . . . . . . . . . . . . . . . 22
3.1 Enumeration of Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 Accumulation of Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.3 Payment of Debt Service; Choices; Delivery of Information and Certificates . . . . . . . . . . . 30
3.4 Borrowing Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.5 Disbursement Trust; Payment Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.6 Duties of Bontang V Trustee with Respect to Instructions . . . . . . . . . . . . . . . . . . . . 42
3.7 Bontang V Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 4 ESTABLISHMENT OF BONTANG V PAYMENT ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.1 Bontang V Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.2 Funds to be Deposited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.3 Other Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 5 DISBURSEMENTS WITH RESPECT TO PROCESSING CHARGES . . . . . . . . . . . . . . . . . . . . . . . . 44
5.1 Submission and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 6 TRANSPORTATION EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1 Submission and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.2 Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 7 DISBURSEMENTS WITH RESPECT TO OTHER CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1 Submission and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.2 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 8 DISBURSEMENTS WITH RESPECT TO SHARING PERCENTAGES . . . . . . . . . . . . . . . . . . . . . . . 46
8.1 Approved Level of Working Capital; Sharing Percentages . . . . . . . . . . . . . . . . . . . . . 46
8.2 Charging of Amounts Payable; Payment of Excess . . . . . . . . . . . . . . . . . . . . . . . . . 46
8.3 Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.4 Arrangements for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.5 Special Disbursement Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.6 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.7 Receipt of Special Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 9 PROCEDURES RESPECTING ACCOUNTS UNDER THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 49
9.1 Accounting for Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
9.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
9.3 Producer Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 10 INVESTMENT OF FUNDS HELD IN ACCOUNTS UNDER THIS AGREEMENT . . . . . . . . . . . . . . . . . . . 51
10.1 Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
10.2 Prudence and Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.3 Interest Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 11 CONCERNING THE BONTANG V TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.1 Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.3 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.4 Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.5 Application to Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.6 Successor Vested with Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.7 Payments After Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.9 Trustee in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 12 DEBT SERVICE ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.1 Debt Service Allocation Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.2 Estimated Debt Service Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
12.3 Aggregate Dollar Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
12.4 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
12.5 Income From the Disbursement Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.1 Counterparts; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
13.2 DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
13.4 Incumbency Certificates; Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
13.5 No Amendment Except in Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
13.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
iii
<PAGE> 5
BONTANG V
TRUSTEE AND PAYING AGENT AGREEMENT
__________________________
THIS AGREEMENT, made as of the 1st day of July, 1995 among
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA ("Pertamina"); and VIRGINIA
INDONESIA COMPANY ("Vico"), OPICOIL HOUSTON, INC. ("Opicoil"), VIRGINIA
INTERNATIONAL COMPANY, LASMO SANGA SANGA LIMITED, UNION TEXAS EAST KALIMANTAN
LIMITED, UNIVERSE GAS & OIL COMPANY, INC., TOTAL INDONESIE ("Total"), UNOCAL
INDONESIA COMPANY ("Unocal"), and INDONESIA PETROLEUM, LTD. ("Inpex"); and
BANKAMERICA INTERNATIONAL (the "Bontang V Trustee"), as Trustee and Paying
Agent;
W I T N E S S E T H :
WHEREAS, Pertamina, in collaboration with the Contractors
(such expression and certain other capitalized expressions used in these
Recitals have the meanings set forth in Article 1 hereof) has executed the LNG
Sales Contracts;
WHEREAS, the LNG Sales Contracts provide that the Buyers shall
pay amounts due thereunder to a bank in the United States designated by
Pertamina;
WHEREAS, under the Supply Agreements:
(i) each of the Contractors has agreed to make available,
for sale and delivery by Pertamina under the LNG Sales Contracts, a portion of
the LNG sold thereunder;
(ii) Pertamina has assigned to each Contractor a
percentage of certain amounts paid or payable by the Buyers thereunder;
(iii) Pertamina and the Contractors have agreed that
certain payments made by the Buyers shall be remitted directly to a bank in the
United States selected by Pertamina and the Contractors which will serve as
Trustee and Paying Agent for the purposes of causing the due payment in an
orderly administrative manner of certain costs and expenses of Pertamina and of
each Contractor incurred in the processing and sale of the LNG of each such
party;
WHEREAS, Pertamina and the Contractors wish to authorize the
Bontang V Trustee to borrow funds from time to
<PAGE> 6
2
time to pay for certain costs incurred and to be incurred in connection with
Financed Capital Projects;
WHEREAS, Pertamina, the Contractors and Continental Bank
International are parties to certain existing trustee and paying agent
agreements and BankAmerica International (both as successor in interest to
Continental Bank International and in its own right) may in the future enter
into other such agreements; and
WHEREAS, Pertamina and the Contractors wish to set forth
arrangements whereby certain amounts paid with respect to the LNG Sales
Contracts and certain other agreements will be received, held, managed and
disbursed by the Bontang V Trustee upon the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
The following defined terms shall have the meanings set forth
below, such meanings to be applicable to both the singular and the plural forms
of such expressions:
"Accountants" shall have the meaning set forth in Section 8.3.
"Additional Plant" shall have the meaning set forth in Section
1 of the Loan Agreement.
"Affected Lender" shall mean any Lender with respect to which
the Bontang V Trustee has received a Notice of Mandatory Prepayment. An
Affected Lender shall continue to be such for purposes of this Agreement until
the entire amount of the Mandatory Prepayment payable to it has been paid in
full.
"Agent" shall mean The Long-Term Credit Bank of Japan,
Limited, New York Branch, acting in its capacity as facility agent for the
Tranche B Lenders under the Loan Agreement, or any successor thereto appointed
pursuant to Section 8.10 thereof.
"Anticipated Loan Amounts" shall have the meaning set forth in Section
3.2(b)(iii).
<PAGE> 7
3
"Approved Level of Working Capital" shall have the meaning
set forth in Section 8.1.
"Arun III Contract" shall have the meaning set forth in the
KGC Sales Contract.
"Assumed Interest Rate" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Availability Period" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Badak III LNG Sales Contract" shall have the meaning set
forth in the CPC Sales Contract.
"Bontang Excess Sales Trust Agreement" shall mean the Bontang
Excess Sales Trustee and Paying Agent Agreement, originally dated as of
November 1, 1986, as amended and restated as of February 9, 1988, and as
amended by Amendment No. 1 thereto, dated as of July 1, 1995, each among the
Producers or their predecessors in interest, and Continental Bank
International, as hereafter modified or amended.
"Bontang Excess Sales Trustee" shall mean the trustee and
paying agent under the Bontang Excess Sales Trust Agreement.
"Bontang I Trust Agreement" shall mean the Badak Trustee and
Paying Agent Agreement, originally dated as of July 15, 1974, as amended and
restated as of February 9, 1988, and as amended by Amendment No. 1 thereto,
dated as of July 1, 1995, each among the Producers or their predecessors in
interest, and Continental Bank International, as hereafter modified or amended.
"Bontang I Trustee" shall mean the trustee and paying agent
under the Bontang I Trust Agreement.
"Bontang Plant" shall mean the natural gas liquefaction plant
at Bontang Bay on the east coast of Kalimantan, Indonesia, including all
related facilities, such as natural gas processing plants for the production of
LNG and liquefied petroleum gas consisting of propane and butane, utilities,
storage tanks, loading lines and arms, harbor, docks, berths, tug boats,
residential community, workshops, offices, fixed plant and equipment and
communication systems, together with replacements, improvements, additions and
expansions of all such facilities (including Train G), together also with
natural gas transmission lines extending from "Delivery Points" as defined in
the Processing Agreement, and from other such points in other fields from which
natural gas is supplied to the said natural gas liquefaction plant (including
associated knock-
<PAGE> 8
4
out drums but excluding natural gas gathering pipelines within fields).
"Bontang II Trust Agreement" shall mean the Badak Expansion
Trustee and Paying Agent Agreement, originally dated as of July 15, 1981, as
amended and restated as of July 15, 1991, among the Producers or their
predecessors in interest, and Continental Bank International, as hereafter
modified or amended.
"Bontang II Trustee" shall mean the trustee and paying agent
under the Bontang II Trust Agreement.
"Bontang III Trust Agreement" shall mean the Bontang III
Trustee and Paying Agent Agreement, dated as of February 9, 1988, among the
Producers or their predecessors in interest, and Continental Bank
International, as heretofore and hereafter modified or amended.
"Bontang III Trustee" shall mean the trustee and paying agent
under the Bontang III Trust Agreement.
"Bontang IV Trust Agreement" shall mean the Bontang IV Trustee
and Paying Agent Agreement, dated as of August 26, 1991, among the Producers or
their predecessors in interest, and Continental Bank International, as
heretofore and hereafter modified or amended.
"Bontang IV Trustee" shall mean the trustee and paying agent
under the Bontang IV Trust Agreement.
"Bontang V Depositary" shall mean the United States
headquarters or a United States branch of the following financial institutions
appointed pursuant to Section 3.7 as a depositary of funds, properties and
rights in the Debt Service Account and the Reserve Account for the purposes of
safekeeping, investment or disbursement thereof:
(a) any branch or affiliate of BankAmerica
International with the power to act as a Bontang V Depositary, or
(b) any other bank, trust company or financial
institution (in each case with trust powers) which (i) has a net worth in
excess of $100,000,000.00 or (ii) has outstanding debt securities rated A or
better by Standard and Poor's Rating Group or its equivalent by Moody's
Investors Service or another nationally recognized rating agency in the United
States and, in either case, has been approved in writing by the Producers, the
Tranche A Lender and the Agent on behalf of the Tranche B Lenders.
"Bontang V General Account" shall have the meaning set forth
in Section 2.1.
<PAGE> 9
5
"Bontang V Payment Account" shall mean a trust account of the
Bontang V Trustee established as a sub-account of the Bontang V General Account
pursuant to Section 4.1.
"Bontang V Trustee" shall mean BankAmerica International as
trustee and paying agent under this Agreement, or a successor thereto.
"Bontang V Trust Funds" shall have the meaning set forth in
Section 2.2.
"Bontang V Trust Funds Accounts" shall mean the accounts
referred to in Section 9.3.
"Borrowed Amounts" shall have the meaning set forth in Section
1 of the Loan Agreement.
"Borrowing" shall have the meaning set forth in Section 1 of
the Loan Agreement.
"Business Day" shall have the meaning set forth in Section 1
of the Loan Agreement.
"Buyer" shall mean each of (i) Korea Gas Corporation, a
corporation organized under the laws of the Republic of Korea, as buyer under
the KGC Sales Contract, (ii) Chinese Petroleum Corporation, a corporation
organized under the laws of the Republic of China, as buyer under the CPC Sales
Contract and (iii) each of the Japanese Buyers, as buyers under the New 1973
Sales Contract.
"Capital Payment Dates" shall mean the dates determined
pursuant to Section 3.2(a).
"Commitment" shall have the meaning set forth in Section 1 of
the Loan Agreement.
"Contractor" shall mean each of Virgina Indonesia Company,
Lasmo Sanga Sanga Limited, Union Texas East Kalimantan Limited, OPICOIL
Houston, Inc., Virginia International Company, Universe Gas & Oil Company, Inc.
Total Indonesie, Unocal Indonesia Company and Indonesia Petroleum, Ltd., and in
each case its predecessors and successors in interest (collectively, the
"Contractors").
"Contractor Group" shall mean any of the Vico Group, the Total
Group and the Unocal Group, and, after it ceases to be a member of the Unocal
Group, Inpex.
"CPC Sales Contract" shall mean the Memorandum of Agreement
between Pertamina and Chinese Petroleum Corporation for Sale and Purchase of
LNG during 1998 and 1999, dated as of December 6, 1994, as heretofore and
<PAGE> 10
6
hereafter modified or amended, until such time as no amounts that may then or
thereafter be payable thereunder or with respect thereto would, if paid,
constitute Source of Debt Service, at which time such Memorandum shall cease,
for purposes hereof and for purposes of the Producers Agreement, to be the CPC
Sales Contract and an LNG Sales Contract.
"CPC Supply Agreements" shall mean, for as long as the CPC
Sales Contract is an LNG Sales Contract:
(i) Package V Supply Agreement (1998-1999 LNG
Sales to Chinese Petroleum Corporation), dated June 16, 1995, by and between
Pertamina, on the one hand, and the members of the Vico Group, on the other
hand, as heretofore and hereafter modified or amended;
(ii) Package V Supply Agreement (1998-1999 LNG
Sales to Chinese Petroleum Corporation), dated June 16, 1995, by and between
Pertamina, on the one hand, and the members of the Total Group, on the other
hand, as heretofore and hereafter modified or amended;
(iii) Package V Supply Agreement (1998-1999 LNG
Sales to Chinese Petroleum Corporation), dated June 16, 1995, by and between
Pertamina, on the one hand, and Unocal, on the other hand, as heretofore and
hereafter modified or amended; and
(iv) Package V Supply Agreement (1998-1999 LNG
Sales to Chinese Petroleum Corporation), dated June 16, 1995, by and between
Pertamina, on the one hand, and Unocal and Inpex, on the other hand, as
heretofore and hereafter modified or amended.
"Debt Coverage Ratio" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Debt Coverage Reserve Account" shall mean a trust account of
the Bontang V Trustee established as a sub-account of the Reserve Account
pursuant to Section 3.2(c), and such term shall include all sub-accounts
thereof.
"Debt Service" shall mean payments into the Debt Service
Account and the Reserve Account, together with payments made by one or more
Producers and identified to the Bontang V Trustee as "Debt Service" under the
Debt Service Allocation Agreement.
"Debt Service Account" shall mean a trust account of the
Bontang V Trustee established as a sub-account of the Bontang V General Account
pursuant to Section 3.2(c), which may be established and maintained at the
offices of the Bontang V Trustee, or any Bontang V Depositary as permitted
<PAGE> 11
7
in accordance with the terms hereof and such term shall include all
sub-accounts thereof.
"Debt Service Allocation Agreement" shall mean the Amended and
Restated Debt Service Allocation Agreement, dated as of February 9, 1988, among
the Producers, as heretofore and hereafter modified or amended.
"Deferred Principal" shall mean any amount of principal due to
the Lenders (other than any Affected Lenders) under the Loan Agreement and the
Notes, the payment of which is deferred pursuant to Section 2.10(b) of the Loan
Agreement.
"Disbursement Trust Agreement" shall mean a disbursement
trustee and paying agent agreement entered into in the manner specified in
Section 3.5 under which the Loan Proceeds (other than amounts referred to in
Sections 3.2(d), (e), (f) and (g) and 3.4(b)(iii)(y)) shall be maintained until
use thereof is required, as thereafter modified or amended.
"Disbursement Trustee" shall mean BankAmerica International
acting as disbursement trustee and paying agent under the Disbursement Trust
Agreement, or a successor thereto.
"Effective Date" shall mean the date specified as such in the
Loan Agreement, as advised to the Bontang V Trustee in writing by the Tranche A
Lender and the Agent on behalf of the Tranche B Lenders.
"Encumbrance" shall mean any lien, security interest,
mortgage, deed of trust, pledge, charge or any other encumbrance of any kind,
including, without limitation, the rights of a vendor, lessor or similar party
under any conditional sale agreement or other title retention agreement or
lease substantially equivalent thereto, any production payment, and, with
respect to any property or assets, any other right of or arrangement with any
creditor to have its claim satisfied out of any such property or assets, or the
proceeds therefrom, prior to the general creditors of the owner thereof.
"Excluded Amounts" shall have the meaning set forth in
Section 2.1.
"Extension Period" shall have the meaning set forth in the
definition of "Source of Debt Service" in this Article 1.
"Financed Capital Project" shall have the meaning specified in
the Processing Agreement.
<PAGE> 12
8
"Gross Invoice Amount" shall mean:
(i) with respect to the KGC Sales Contract, the
sum, without duplication, of (a) the amounts payable to the Bontang V Trustee
pursuant thereto in respect of LNG purchased, (b) amounts payable to the
Bontang V Trustee pursuant to Section 6.3 of each KGC Supply Agreement (with
respect to amounts payable to Pertamina), (c) all amounts payable to the
Bontang V Trustee on account of interest due by reason of late payment of
invoices for LNG under the KGC Sales Contract pursuant to the provisions
thereof that result from the incorporation therein of Sections 10.3(d) of each
of the Arun III Contract and the Korea II Contract (as defined in the KGC Sales
Contract), (d) amounts payable to the Bontang V Trustee relating to
transportation charges, if any, other than demurrage and (e) all demurrage
payable to the Bontang V Trustee under the KGC Sales Contract pursuant to the
provisions thereof that result from the incorporation therein of Section 4.5 of
the Arun III Contract;
(ii) with respect to the CPC Sales Contract, the
sum, without duplication, of (a) the amounts payable to the Bontang V Trustee
pursuant thereto in respect of LNG purchased, (b) amounts payable to the
Bontang V Trustee pursuant to Section 6.3 of each CPC Supply Agreement (with
respect to amounts payable to Pertamina), (c) all amounts payable to the
Bontang V Trustee on account of interest due by reason of late payment of
invoices for LNG under the CPC Sales Contract pursuant to the provisions
thereof that result from the incorporation therein by reference of Section
10.3(c) of the Badak III LNG Sales Contract (as defined in the CPC Sales
Contract), (d) amounts payable to the Bontang V Trustee relating to
transportation charges, if any, other than demurrage and (e) all demurrage
payable to the Bontang V Trustee under the CPC Sales Contract pursuant to the
provisions thereof that result from the incorporation therein by reference of
Section 4.4 of the Badak III LNG Sales Contract;
(iii) with respect to the New 1973 Sales Contract,
the sum, without duplication, of (a) the amounts payable to the Bontang V
Trustee pursuant thereto in respect of LNG purchased or, if not taken, required
to be purchased but not taken thereunder, (b) amounts payable to the Bontang V
Trustee pursuant to Section 5.3 of each Japanese Supply Agreement (with respect
to amounts payable to Pertamina), (c) all amounts payable to the Bontang V
Trustee on account of interest due by reason of the late payment of invoices
for LNG under the section of the Second A/R 1973 Sales Contract that
corresponds to Section 10.3 of Attachment A to the 1973 Extension MOA, (d)
amounts payable to the Bontang V Trustee under the New 1973 Transportation
Arrangements and (e) all demurrage and other amounts payable to the Bontang V
Trustee by the Buyer under the sections of the Second A/R
<PAGE> 13
9
1973 Sales Contract that correspond to Sections 4.4(c), 4.5(b) and 4.6 of
Attachment A to the 1973 Extension MOA;
provided that the Gross Invoice Amount (other than amounts paid to Pertamina
solely with respect to the transportation of cargoes of LNG, including without
limitation demurrage payments and non-utilization costs) shall not be reduced
by any rebate, set-off, reduction or discount given or agreed to by one or more
parties to any LNG Sales Contract from such amount payable as so defined,
adjusted and calculated; and provided further that if the Bontang V Trustee is
authorized and requested by the Producers (which authorization and request may
be given pursuant to Section 1.16(b) of the Producers Agreement) to execute and
deliver an agreement providing for the amendment of this definition of Gross
Invoice Amount, and if the Tranche A Lender and the Agent on behalf of the
Tranche B Lenders also execute and deliver such agreement this definition of
Gross Invoice Amount shall be deemed amended for all purposes of this Agreement
as set forth in such agreement.
"Guarantee" by any Person shall mean any obligation,
contingent or otherwise, of such Person guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in
any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Indebtedness" shall mean, with respect to any Person, (i) all
indebtedness or obligations of such Person for borrowed money, (ii) all
indebtedness or obligations of such Person evidenced by bonds, debentures,
notes, swap agreements or other similar instruments or agreements, and all
securities issued by such person providing for mandatory payments of money,
whether or not contingent, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee under capital leases, (v) all obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the
sale of the same or substantially similar securities or property, (vi) all
non-contingent obligations of such Person to reim-
<PAGE> 14
10
burse any Person in respect of amounts paid under a letter of credit or similar
instrument to the extent that such reimbursement obligations remain outstanding
five business days after they become non-contingent, (vii) Indebtedness of
others secured by an Encumbrance on any asset of such Person, whether or not
such Indebtedness is assumed by such Person, or (viii) all Guarantees by such
Person of or with respect to the Indebtedness of another Person.
"Inpex" is defined in the title paragraph hereof.
"Interest" shall mean all amounts of interest, including
interest on Scheduled Principal, Deferred Principal and overdue amounts,
payable to the Lenders (other than any Affected Lenders) under Sections 2.3 and
2.7(a) of the Loan Agreement and under the Notes.
"Interest Payment Date" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Interest Period" shall have the meaning set forth in Section
1 of the Loan Agreement.
"Japanese Buyers" shall mean Chubu Electric Power Co., Inc.,
The Kansai Electric Power Co., Inc., Kyushu Electric Co., Inc., Nippon Steel
Corporation, Osaka Gas Co., Ltd. and Toho Gas Co., Ltd.
"Japanese Supply Agreements" shall mean, for as long as the
New 1973 Sales Contract is an LNG Sales Contract:
(a) during the portion of the Extension Period commencing
on January 1, 2000 and ending on December 31, 2009:
(i) Package V Supply Agreement for Natural Gas in
Support of the 1973 LNG Sales Contract Extension, dated June 16, 1995, by and
between Pertamina, on the one hand, and the members of the Vico Group, on the
other hand, as heretofore and hereafter modified or amended;
(ii) Package V Supply Agreement for Natural Gas in
Support of the 1973 LNG Sales Contract Extension, dated June 16, 1995, by and
between Pertamina, on the one hand, and the members of the Total Group, on the
other hand, as heretofore and hereafter modified or amended;
(iii) Package V Supply Agreement for Natural Gas in
Support of the 1973 LNG Sales Contract Extension, dated June 16, 1995, by and
between Pertamina, on the one hand, and Unocal, on the other hand, as
heretofore and hereafter modified or amended; and
<PAGE> 15
11
(iv) Package V Supply Agreement for Natural Gas in
Support of the 1973 LNG Sales Contract Extension, dated June 16, 1995, by and
between Pertamina, on the one hand, and Unocal and Inpex, on the other hand, as
heretofore and hereafter modified or amended.
(b) during the portion of the Extension Period, if any,
commencing after December 31, 2009, such supply agreements as provide for the
supply of natural gas to the Bontang Plant in support of sales under the New
1973 Sales Contract during all or part of such period:
"KGC Sales Contract" shall mean the Memorandum of Agreement
for Purchase and Sale of LNG during 1995-1999, dated as of September 30th,
1994, between Pertamina and the Korea Gas Corporation, as heretofore and
hereafter modified or amended, until such time as no amounts that may then or
thereafter be payable thereunder or with respect thereto would, if paid,
constitute Source of Debt Service, at which time such Memorandum shall cease,
for purposes hereof and for purposes of the Producers Agreement, to be the KGC
Sales Contract and an LNG Sales Contract.
"KGC Supply Agreements" shall mean, for as long as the KGC
Sales Contract is an LNG Sales Contract:
(i) Package V Supply Agreement (1995-1999 LNG
Sales to Korea Gas Corporation), dated June 16, 1995, by and between Pertamina,
on the one hand, and the members of the Vico Group, on the other hand, as
heretofore and hereafter modified or amended;
(ii) Package V Supply Agreement (1995-1999 LNG
Sales to Korea Gas Corporation), dated June 16, 1995, by and between Pertamina,
on the one hand, and the members of the Total Group, on the other hand, as
heretofore and hereafter modified or amended;
(iii) Package V Supply Agreement (1995-1999 LNG
Sales to Korea Gas Corporation), dated June 16, 1995, by and between Pertamina,
on the one hand, and Unocal, on the other hand, as heretofore and hereafter
modified or amended;
(iv) Package V Supply Agreement (1995-1999 LNG
Sales to Korea Gas Corporation), dated June 16, 1995, by and between Pertamina,
on the one hand, and Unocal and Inpex, on the other hand, as heretofore and
hereafter modified or amended.
"Lender" shall mean each of, and "Lenders" shall mean all of,
the Tranche A Lender and each of the Tranche B Lenders, any transferee pursuant
to and subject to the conditions set forth in Section 10.4 of the Loan
Agreement and their respective permitted successors and assigns.
<PAGE> 16
12
"Lenders Fees and Expenses" shall mean any amounts payable to
the Agent or any of the Lenders (other than any Affected Lenders) under
Sections 2.8 and 10.6 of the Loan Agreement and under the Letter Agreement.
"Letter Agreement" shall have the meaning set forth in Section
1 of the Loan Agreement.
"LNG" shall have the meaning set forth in Article 1 of the
Processing Agreement.
"LNG Sales Contract" shall mean each of, and "LNG Sales
Contracts" shall mean all of, the CPC Sales Contract, the KGC Sales Contract
and the New 1973 Sales Contract.
"Loading Facilities" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Loan Account" shall mean a trust account of the Bontang V
Trustee established as a sub-account of the Debt Service Account pursuant to
Section 3.2(c).
"Loan Agreement" shall mean the Loan Agreement among the
Bontang V Trustee, as borrower thereunder, the Tranche A Lender, the Tranche B
Lenders, the Agent, the Intercreditor Agent, the Technical Agent and the
Arrangers parties thereto, to be entered into pursuant to Section 3.1(a), as
hereafter modified or amended.
"Loan Percentage" shall mean, for any Affected Lenders at any
time, the percentage determined by dividing the principal amount of such
Affected Lenders' Notes outstanding at such time by the aggregate principal
amount outstanding at such time under all Lenders' Notes.
"Loan Proceeds" shall mean any funds disbursed by the Lenders
pursuant to the Loan Agreement.
"Majority Lenders" shall mean the Tranche A Lender and the
Majority Tranche B Lenders.
"Majority Tranche B Lenders" shall mean at any time Tranche B
Lenders holding in excess of 66-2/3% of the aggregate unpaid principal amount
of the advances by the Tranche B Lenders, or if no such advances are at the
time outstanding, Tranche B Lenders having in excess of 66-2/3% of the
aggregate amount of the commitments of the Tranche B Lenders to lend to the
Bontang V Trustee under the Loan Agreement.
"Mandatory Prepayment Account" shall mean a trust account of
the Bontang V Trustee established as a subaccount of the Debt Service Account
pursuant to Section 3.2(c).
<PAGE> 17
13
"Mandatory Prepayment" shall mean any required prepayment of
the entire outstanding principal of a Lender's Note, together with all other
amounts due to such Lender thereunder and under the Loan Agreement and the
Letter Agreement, the payment of which is mandatorily accelerated under Section
3.4(a) of the Loan Agreement.
"Maturity Date" shall have the meaning set forth in the Loan
Agreement.
"New 1973 Sales Contract" shall mean (i) until the Second A/R
1973 Sales Contract has been duly authorized, executed and delivered by
Pertamina and the other parties thereto, the 1973 Extension MOA and (ii)
thereafter, the Second A/R 1973 Sales Contract.
"New 1973 Transportation Arrangements" shall mean the
contractual arrangements providing for the transportation of all quantities of
LNG contemplated to be delivered pursuant to the New 1973 Sales Contract, as
modified or amended from time to time.
"1973 Extension MOA" shall mean the Memorandum of Agreement
Re: 1973 LNG Sales Contract Extension, dated October 6, 1994, between
Pertamina and the Japanese Buyers, as heretofore and hereafter modified or
amended, until superseded by the Second A/R 1973 Sales Contract.
"1973 Sales Contract" shall mean the LNG Sales Contract, dated
as of December 3, 1973, between Pertamina and the Japanese Buyers, as
heretofore and hereafter modified or amended, but excluding the New 1973 Sales
Contract.
"Note" shall mean a promissory note issued by the Bontang V
Trustee as borrower under the Loan Agreement to a Lender to evidence such
Lender's advances to the Bontang V Trustee as borrower under the Loan
Agreement.
"Notice of Acceleration" shall have the meaning set forth in
Section 3.3(d).
"Notice of Borrowing" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Notice of Mandatory Prepayment" shall have the meaning set
forth in Section 3.3(c).
"Other Trust Agreements" shall mean the Bontang I Trust
Agreement, the Bontang II Trust Agreement, the Bontang Excess Sales Trust
Agreement, the Bontang III Trust Agreement, the Bontang IV Trust Agreement, and
any other relevant agreements of this type entered into from time to
<PAGE> 18
14
time by Pertamina and the trustees parties thereto, among others, as hereafter
modified or amended.
"Pari Passu Swap Indebtedness" shall mean Indebtedness of the
Bontang V Trustee contemplated by Section 3.1(c).
"Person" shall mean and include any individual, corporation,
juridical entity, association, statutory body, partnership, joint venture,
trust, estate, unincorporated organization or government, state or any
political subdivision, instrumentality, agency or authority thereof.
"Pertamina" is defined in the title paragraph hereof.
"Processing Agreement" shall mean the Amended and Restated
Bontang Processing Agreement, dated as of February 9, 1988, among the Producers
(or their predecessors in interest) on the one hand and P.T. Badak on the
other, as heretofore and hereafter modified or amended.
"Producers" shall mean Pertamina (and its successors) and the
Contractors.
"Producers Agreement" shall mean the Bontang V Producers
Agreement of even date herewith among the Producers, the Tranche A Lender, the
Agent, the Intercreditor Agent, the Technical Agent, the Arrangers and the
Tranche B Lenders, as hereafter modified or amended.
"Production Sharing Contract" shall mean, to the extent such
contracts relate to the supply of natural gas to the Bontang Plant, each of:
(i) as to Pertamina and the Vico Group, (i) until
August 8, 1998, the Amended and Restated Production Sharing Contract dated
April 23, 1990, as hereafter modified or amended, between Pertamina, on the one
hand, and the members of the Vico Group on the other, and (ii) effective August
8, 1998, the Production Sharing Contract dated April 23, 1990, as hereafter
modified or amended, between Pertamina, on the one hand, and the members of the
Vico Group, on the other;
(ii) as to Pertamina and the Total Group, (i)
until March 31, 1997, the Amended and Restated Production Sharing Contract
dated January 11, 1991, as hereafter modified or amended, between Pertamina, on
the one hand, and the members of the Total Group, on the other, and (ii)
effective March 31, 1997, the Production Sharing Contract dated January 11,
1991, as hereafter modified or amended, between Pertamina, on the one hand, and
the members of the Total Group, on the other;
<PAGE> 19
15
(iii) as to Pertamina and the Unocal Group, (i)
until October 24, 1998, the Amended and Restated Production Sharing Contract
dated January 11, 1991, as hereafter modified or amended, between Pertamina, on
the other hand, and Unocal on the other, and (ii) effective October 25, 1998,
the Production Sharing Contract dated January 11, 1991, as hereafter modified
or amended, between Pertamina, on the one hand, and Unocal, on the other; and
(iv) as to Pertamina and Inpex, effective March
31, 1997, the Production Sharing Contract dated March 28, 1991, as hereafter
modified or amended, between Pertamina, on the one hand, and Inpex, on the
other.
"P.T. Badak" shall mean P.T. Badak Natural Gas Liquefaction
Company, a corporation organized under laws of the Republic of Indonesia.
"Quarterly Period" shall mean the period from and including
the making of the initial borrowing under the Loan Agreement to and including
the next to occur of March 10, June 10, September 10 and December 10, and
thereafter each subsequent period of approximately three calendar months ending
on the next to occur of March 10, June 10, September 10 or December 10, as the
case may be; provided that if the last day of the Quarterly Period would be a
day which is not a Business Day under the Loan Agreement such Quarterly Period
will end on the immediately succeeding Business Day and that each subsequent
Quarterly Period will begin on the calendar day (whether or not a Business Day)
immediately following the last day of the preceding Quarterly Period.
"Regular Reserve Account" shall mean a trust account of the
Bontang V Trustee established as a sub-account of the Reserve Account pursuant
to Section 3.2(c), and such term shall include all sub-accounts thereof.
"Reserve Account" shall mean a trust account of the Bontang V
Trustee established as a sub-account of the Bontang V General Account pursuant
to Section 3.2(c), which may be established at the offices of the Bontang V
Trustee, or any Bontang V Depositary, as permitted in accordance with the terms
hereof, and such term shall include all sub-accounts thereof.
"Scheduled Principal" shall mean the amount of principal
regularly scheduled to be payable to the Lenders (other than any Affected
Lenders) under Section 2.10(a) of the Loan Agreement and under the Notes.
"Second A/R 1973 Sales Contract" shall mean the Second Amended
and Restated 1973 LNG Sales Contract, substantially in the form attached to the
1973 Extension MOA as
<PAGE> 20
16
Attachment A, as hereafter modified or amended, until such time as no amounts
that may then or thereafter be payable thereunder or with respect thereto
would, if paid, constitute Source of Debt Service, at which time such Contract
shall cease, for purposes hereof and for purposes of the Producers Agreement,
to be the Second A/R 1973 Sales Contract and an LNG Sales Contract.
"Selected Qualified Bank" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Sharing Percentages" shall have the meaning set forth in
Section 8.1.
"Source of Debt Service" shall mean
I.(i) in respect of each amount payable to the Bontang V
Trustee for cargoes of LNG delivered on or after January 1, 1998 and for
cargoes ordered for delivery on or before December 31, 1999 (the "KGC SDS
Period") under the KGC Sales Contract, or payable with respect to the KGC SDS
Period to the Bontang V Trustee pursuant to the Supply Agreements or otherwise
pursuant to the KGC Sales Contract (without duplication), the portion, if any,
of the amount so payable equal to 90% of the LNG Related Portion (as defined in
the KGC Sales Contract) of the Gross Invoice Amount payable (a) under each
invoice rendered with respect to each such cargo, and (b) otherwise in respect
of each such cargo, plus 90% of all indemnities and additional amounts payable
by the Buyer with respect to the KGC SDS Period under the KGC Sales Contract
(excluding such amounts required to be paid to Pertamina with respect to the
transportation of such cargoes of LNG, including, without limitation, demurrage
payments), without any reduction or set-off from any such amounts (for purposes
hereof, a cargo shall be deemed delivered when title thereto passes to KGC
pursuant to the terms of the KGC Sales Contract);
(ii) in respect of each amount payable to the
Bontang V Trustee for cargoes of LNG delivered on or after January 1, 1998 and
for cargoes ordered for delivery on or before December 31, 1999 (the "CPC SDS
Period") under the CPC Sales Contract, or payable with respect to the CPC SDS
Period to the Bontang V Trustee pursuant to the Supply Agreements or otherwise
pursuant to the CPC Sales Contract (without duplication), the portion, if any,
of the amount so payable equal to 90% of the LNG Related Component (as defined
in the CPC Sales Contract) of the Gross Invoice Amount payable (a) under each
invoice rendered with respect to each such cargo, and (b) otherwise in respect
of each such cargo, plus 90% of all indemnities and additional amounts payable
by the Buyer with respect to the CPC SDS Period under the CPC Sales Contract
(excluding such amounts required to be paid to Pertamina with respect to the
trans-
<PAGE> 21
17
portation of such cargoes of LNG including, without limitation, demurrage
payments) without any reduction or set-off from any such amounts (for purposes
hereof, a cargo shall be deemed delivered when title thereto passes to CPC
pursuant to the terms of the CPC Sales Contract);
(iii) in respect of each amount payable to the
Bontang V Trustee for LNG purchased during the period from and including
January 1, 2000 to and including December 31, 2014 (the "Extension Period") or
for LNG required to be purchased but not taken during the Extension Period,
under the New 1973 Sales Contract, or payable with respect to the Extension
Period to the Bontang V Trustee pursuant to the Supply Agreements or otherwise
pursuant to the New 1973 Sales Contract (without duplication), the portion, if
any, of the amount so payable equal to 21% of the LNG Element (as defined in
the New 1973 Sales Contract) of the Gross Invoice Amount payable (a) under each
invoice rendered with respect to each cargo purchased during the Extension
Period, or in the case of LNG required to be purchased during the Extension
Period but not taken under each invoice rendered with respect to the same
quantity not taken, and (b) otherwise in respect of each such cargo, plus 21%
of all indemnities and additional amounts payable by any of the Buyers with
respect to the Extension Period under the New 1973 Sales Contract (excluding
such amounts required to be paid to Pertamina with respect to the
transportation of such cargoes of LNG including, without limitation, demurrage
payments and non-utilization costs), without any reduction or set-off from any
such amounts; and
II. in respect of any period, the aggregate amount of the
Source of Debt Service payable during such period.
Notwithstanding the foregoing, if the Bontang V Trustee is authorized and
requested by the Producers (which authorization and request may be given
pursuant to Section 1.16(b) of the Producers Agreement) to execute and deliver
an agreement providing for the amendment of this definition of Source of Debt
Service, and if the Tranche A Lender and the Agent on behalf of the Tranche B
Lenders also execute and deliver such agreement, this definition of Source of
Debt Service shall be deemed amended for all purposes of this Agreement as set
forth in such agreement.
"Special Disbursement Amount" shall mean an amount paid by the
Bontang V Trustee pursuant to a Special Disbursement Instruction or an amount
received by the Bontang V Trustee from the trustee and paying agent under any
of the Other Trust Agreements which such trustee and paying agent has notified
the Bontang V Trustee is a Special Disbursement Amount, as the case may be.
<PAGE> 22
18
"Special Disbursement Instruction" shall have the meaning set
forth in Section 8.5.
"Special Payment Account" shall mean a trust account of the
Bontang V Trustee established as a sub-account of the Debt Service Account
pursuant to Section 3.2(c).
"Special Payments" shall mean (i) any amounts of or with
respect to taxes, increased costs arising from regulatory changes, breakage and
other funding costs and losses, indemnities and any other amounts payable to
any of the Lenders (other than any Affected Lenders) under Sections 2.7(b), 3.3
and 3.4(b) of the Loan Agreement and (ii) any other amounts (other than Lenders
Fees and Expenses, Interest, Deferred Principal, Scheduled Principal and
Mandatory Prepayments) payable to any of the Lenders (other than any Affected
Lenders) under the Loan Agreement and the Notes. For avoidance of doubt, it is
expressly agreed that the term "Special Payments" does not include or refer to
prepayments of principal of the Advances pursuant to the Loan Agreement.
"Subordinated Indebtedness" shall mean Indebtedness of the
Bontang V Trustee contemplated by Section 3.1(b).
"Successor" shall have the meaning set forth in Section 11.4.
"Supply Agreement" shall mean each of, and "Supply Agreements"
shall mean all of, the CPC Supply Agreements, the KGC Supply Agreements and the
Japanese Supply Agreements.
"Total" is defined in the title paragraph hereof.
"Total Group" shall mean Total and Inpex, and their successors
in interest.
"Train G" shall have the meaning set forth in Section 1 of
the Loan Agreement.
"Tranche" shall mean Tranche A or Tranche B, and "Tranches"
shall mean Tranche A and Tranche B.
"Tranche A" shall mean all advances by the Tranche A Lender
under the Loan Agreement.
"Tranche A Lender" shall mean Bontang Train-G Project Finance
Co., Ltd. and its successors and assigns under the Loan Agreement.
<PAGE> 23
19
"Tranche B" shall mean all advances by the Tranche B Lenders
under the Loan Agreement.
"Tranche B Lenders" shall mean the banks and other financial
institutions named as such in the Loan Agreement and their respective
successors and assigns under the Loan Agreement.
"Transporter" shall mean a Person that contracts with
Pertamina to provide transportation of LNG under an LNG Sales Contract.
"Trustee's Office" shall mean the office of the Bontang V
Trustee, the address of which is set out in Section 13.3 or any other office of
the Bontang V Trustee in the United States the address of which is notified to
the Producers by the Bontang V Trustee pursuant to Section 13.3 or the office
specified in an instrument delivered by the Successor pursuant to Section 11.4.
"Unocal" is defined in the title paragraph hereof.
"Unocal Group" shall mean Unocal and Inpex, and their
successors in interest; provided, however, that Inpex shall cease to be a
member of the Unocal Group on March 31, 1997.
"Vico" is defined in the title paragraph hereof.
"Vico Group" shall mean Vico, Virginia International Company,
OPICOIL Houston, Inc., Lasmo Sanga Sanga Limited, Union Texas East Kalimantan
Limited, and Universe Gas & Oil Company, Inc. and their successors in interest.
ARTICLE 2
RECEIPT OF PAYMENTS WITH RESPECT TO LNG
2.1 Designation of Bontang V Trustee and Bontang V General
Account. Pursuant to the relevant provisions of the Supply Agreements and the
LNG Sales Contracts, Pertamina hereby designates, and each of the Contractors
hereby agrees to the designation of, the Bontang V Trustee named herein, and
directs the Bontang V Trustee to establish on the next Business Day following
the date hereof and maintain at the Trustee's Office an account, to be
designated as the "Bontang V General Account." Pertamina hereby designates the
Bontang V General Account, and each of the Contractors hereby agrees to such
designation of the Bontang V General Account, as the account to which the
following amounts shall be paid:
<PAGE> 24
20
(a) all amounts which become due and payable
under the KGC Sales Contract for, or otherwise relating to, cargoes delivered
thereunder on or after January 1, 1998;
(b) all amounts which become due and payable
under the CPC Sales Contract; and
(c) all amounts which become due and payable
under the New 1973 Sales Contract for, or otherwise relating to, cargoes
delivered thereunder during the Extension Period.
For purpose of the preceding sentence a cargo shall be deemed
delivered when title thereto passes to the relevant Buyer under the terms of
the relevant LNG Sales Contract. Without limiting the foregoing, and
notwithstanding any other provision herein to the contrary, the parties hereto
acknowledge and agree that (x) all amounts which become due and payable by the
Japanese Buyers under the 1973 Sales Contract with respect to cargoes required
to be delivered under such contract through and including December 31, 1999
shall not constitute Bontang V Trust Funds, and if received by the Bontang V
Trustee shall be paid over to the Bontang I Trustee, and (y) all amounts
payable by the Buyer under the KGC Sales Contract with respect to cargoes
delivered thereunder through and including December 31, 1997 shall not
constitute Bontang V Trust Funds, and if received by the Bontang V Trustee
shall be paid over to the Bontang Excess Sales Trustee (all such amounts
described in clauses (x) and (y) are herein called "Excluded Amounts").
2.2 Bontang V Trust Funds. All such amounts that shall have
been received in the Bontang V General Account pursuant to Section 2.1 (other
than Excluded Amounts) and any other amounts the Bontang V Trustee may receive
under the terms of this Agreement (together with any securities acquired by the
Bontang V Trustee pursuant to Article 10 and all interest thereon) are herein
referred to as the "Bontang V Trust Funds." The respective Sharing Percentages
of each Producer of all Bontang V Trust Funds shall be credited to the
respective Bontang V Trust Funds Accounts of each Producer, to be held in
trust, however, for the benefit of those having a right, to the extent provided
in this Agreement, to receive disbursements and distributions hereunder.
Immediately upon the Bontang V Trustee's receipt of any funds unambiguously
representing amounts payable to the Bontang V Trustee with respect to the LNG
Sales Contracts (other than Excluded Amounts), such funds shall be impressed
with the trust created hereby and become a part of the Bontang V Trust Funds
and shall be deposited in the Bontang V General Account.
<PAGE> 25
21
2.3 Allocation of Amounts Received. All amounts received by
the Bontang V Trustee pursuant to Section 2.1 and designated as representing
amounts payable for LNG delivered, or for LNG required to be purchased, but not
taken, under the LNG Sales Contracts, all amounts paid on account of interest
due by reason of the late payment of invoices, and all demurrage payments by
the Buyers, shall be deemed to be attributable to sales under the LNG Sales
Contracts. In the event the Bontang V Trustee receives any amount from any
Buyer which amount is not designated for the Bontang V General Account or for
any accounts established or to be established under the Other Trust Agreements,
it shall first contact the remitting party in order to determine the proper
designation for the amounts received, and shall solicit and, if possible,
obtain from the remitting party such documentation as the Bontang V Trustee
deems appropriate as evidence of such designation. In the event the remitting
party is unable to provide appropriate evidence of such designation, the
Bontang V Trustee shall notify the Producers of the amount received, the date
of receipt and any other information relevant to such amount known to the
Bontang V Trustee. The Bontang V Trustee shall thereupon request instructions
as to the proper allocation of the amount received and shall allocate such
amounts between the Bontang V General Account and any accounts established
under the Other Trust Agreements in accordance with instructions given jointly
by the Producers. Pertamina shall provide written notice to the Bontang V
Trustee identifying and itemizing in reasonable detail the portions of the
amounts received in the Bontang V General Account that do and do not constitute
Source of Debt Service. Until such notice has been delivered, all amounts
received in the Bontang V General Account shall be retained therein.
2.4 Proceeds of Cargo Insurance. The Producers hereby agree
that all proceeds from cargo insurance policies covering LNG transported for
sale under the LNG Sales Contracts (other than Excluded Amounts) shall be paid
directly to the Bontang V Trustee. All such amounts received by the Bontang V
Trustee and designated by the insurer as representing proceeds from cargo
insurance policies covering LNG transported for sale under the LNG Sales
Contracts on an ex-ship basis shall become a part of the Bontang V Trust Funds
and shall be deposited in the Bontang V General Account. In the event the
Bontang V Trustee receives any amounts from insurers that are not designated as
to origin, the procedures specified in Section 2.3 shall apply.
2.5 Payments Under New 1973 Transportation Arrangements.
Pertamina shall provide instructions that all amounts coming due to Pertamina
under the New 1973 Transportation Arrangements shall be paid directly to the
Bontang V Trustee. All such amounts received by the
<PAGE> 26
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Bontang V Trustee shall become a part of the Bontang V Trust Funds and shall be
deposited in the Bontang V General Account. Upon receipt of any such amount
that has not been designated as to origin, the procedures specified in Section
2.3 shall apply.
ARTICLE 3
POWER TO BORROW AND ENTER INTO INTEREST RATE SWAPS
3.1 Enumeration of Powers.
(a) In addition to its other powers hereunder,
the Bontang V Trustee shall have the power to borrow money from time to time
from the Lenders upon the terms and conditions set forth below:
(i) Upon its receipt of notice from the
Producers that they have determined that a credit facility for borrowing by the
Bontang V Trustee to pay for a portion of the capital costs incurred, or to be
incurred, in connection with the construction or financing of Train G is
desirable, the Bontang V Trustee, at the direction of the Producers, shall
undertake to obtain such credit facility, which shall be evidenced by the Loan
Agreement, the Notes and the Letter Agreement.
(ii) The Bontang V Trustee shall have the
power to enter into or modify the Loan Agreement, the Notes and the Letter
Agreement upon its receipt of notice from Pertamina and each of the Contractors
that they have approved the form and terms of such agreements or modifications
and that they authorize and request the Bontang V Trustee to enter into such
agreements or modifications. The Bontang V Trustee shall have the power to
obtain and repay Indebtedness and to pay other amounts and to perform other
obligations under the Loan Agreement, the Notes and the Letter Agreement.
Notwithstanding the provisions of Section 13.3, no representatives of the
Contractor Groups, any Contractor or any other individual or entity shall have
authority to give any approval under this Section 3.1(a) for any Contractor
other than itself, unless such Contractor shall give notice to the Bontang V
Trustee that it has appointed such representative or other individual or entity
to give such approval.
(iii) The Loan Agreement, the Notes and
the Letter Agreement shall contain provisions acceptable to the Bontang V
Trustee to the effect that no recourse may be had nor any claim thereunder made
against BankAmerica International in its individual capacity other than for
<PAGE> 27
23
breach of a representation or warranty made in its individual capacity or for
gross negligence or willful misconduct.
(b) In addition to its other powers hereunder,
the Bontang V Trustee shall have the power at any time to incur Indebtedness
that is payable out of amounts of the Source of Debt Service only after (i) the
Bontang V Trustee shall have accumulated amounts in the Debt Service Account
and the Reserve Account during each Interest Period required to be accumulated
therein pursuant to Section 3.2 or 3.3(d), as applicable, and (ii) any amounts
required to be deposited in the Debt Coverage Reserve Account and paid to the
Lenders therefrom under Sections 3.2 and 3.3, as applicable, have been so
deposited and paid (such Indebtedness, "Subordinated Indebtedness"), as
follows. Upon its receipt of notice from the Producers that they have
determined that Subordinated Indebtedness in the form of a credit facility for
borrowing by the Bontang V Trustee to pay for a portion of the capital costs
incurred, or to be incurred, in connection with a Financed Capital Project is
desirable, the Bontang V Trustee, at the direction of the Producers, shall
undertake to obtain and enter into one or more appropriate agreements relating
to such Subordinated Indebtedness; provided, however, that the Bontang V
Trustee shall not enter into any such agreement or amendment prior to (i)
receiving written notice from the Tranche A Lender and the Agent that the
Majority Lenders have approved such agreement in form and substance in
accordance with Section 6.4 of the Loan Agreement, and (ii) entering into an
appropriate amendment to this Agreement to make provision for making payments
under the agreements relating to such Subordinated Indebtedness to the extent
provided in the first sentence of this Section 3.1(b), which amendment shall
have been approved in writing as to form and substance by the Majority Lenders.
(c) In addition to its other powers hereunder,
the Bontang V Trustee shall have the power to incur Indebtedness (other than
Subordinated Indebtedness) in respect of interest rate swap arrangements of the
Bontang V Trustee entered into solely for the purpose of exchanging floating
interest rate obligations of the Bontang V Trustee under the Loan Agreement
into fixed interest rate obligations if such Indebtedness is only payable out
of Source of Debt Service and is pari passu in right of payment and does not
benefit from any Encumbrance other than equally and ratably with, or
subordinate to, the Indebtedness owed to the Lenders under the Loan Agreement,
the Notes and the Letter Agreement ("Pari Passu Swap Indebtedness"). Upon its
receipt of notice from the Producers that they have determined that such Pari
Passu Swap Indebtedness is desirable, the Bontang V Trustee, at the direction
of the Producers, shall undertake to obtain and enter into one or more
appropriate agreements relating to such Pari Passu Swap Indebted-
<PAGE> 28
24
ness; provided, however, that the Bontang V Trustee shall not enter into any
such agreement prior to (i) receiving written notice from the Tranche A Lender
and the Agent that the Majority Lenders have approved such agreement in form
and substance in accordance with Section 6.4 of the Loan Agreement, and (ii)
entering into an amendment to this Agreement making provision for making
payments under such agreement on a pari passu basis out of the Source of Debt
Service with the payments to be made to the Lenders under the Loan Agreement,
which amendment shall have been approved in writing as to form and substance by
the Majority Lenders.
(d) The provisions contained in the last sentence
of Section 3.1(a)(ii) and in Section 3.1(a)(iii) relating to the Loan Agreement
shall apply equally to any agreements relating to Subordinated Indebtedness or
Pari Passu Swap Indebtedness to be entered into by the Bontang V Trustee
pursuant to Section 3.1(b) or 3.1(c).
3.2 Accumulation of Debt Service.
(a) The Loan Agreement shall provide that all
payment dates for payment of principal and interest thereunder shall be uniform
dates within each calendar quarter, subject to any option provided for in the
Loan Agreement permitting the borrower thereunder to elect Interest Periods for
the calculation of interest which are six months in length and which end on the
same calendar quarter date (each such date ending a three-month or six-month
Interest Period for payment of principal or interest, a "Capital Payment
Date").
(b) (i) The Loan Agreement shall provide for the
Bontang V Trustee to receive, at the time of the initial borrowing and each
subsequent borrowing thereunder in each case in respect of the Quarterly
Period in which such borrowing occurs and on or about the first day of each
Quarterly Period thereafter, a notice from each of the Tranche A Lender, with
respect to Tranche A, and the Agent, with respect to Tranche B, of the amounts
of Scheduled Principal, Deferred Principal, regularly scheduled Interest and
regularly scheduled Lenders Fees and Expenses payable with respect to the
relevant Tranche on the Capital Payment Date occurring at the end of such
Quarterly Period, designating the Tranche to which such amounts relate.
(ii) The Loan Agreement shall provide for
the Bontang V Trustee to receive notice from the Tranche A Lender, with respect
to Tranche A, and the Agent, with respect to Tranche B, as the case may be, of
other amounts payable under the Loan Agreement, the Notes and the Letter
Agreement as the same shall become due and payable, designating the Tranche to
which such amounts relate and whether such amounts constitute principal,
Lenders Fees and
<PAGE> 29
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Expenses, Interest, Special Payments or Mandatory Prepayments.
(iii) The Loan Agreement shall provide for
the Bontang V Trustee to receive on or about December 31, 1997 and on or about
the first day of each Quarterly Period thereafter and on or following the date
of delivery of each Notice of Borrowing delivered thereafter, a notice from
each of the Tranche A Lender, with respect to Tranche A, and the Agent, with
respect to Tranche B, of the sum (such sum, the "Anticipated Loan Amounts") of
Scheduled Principal and Deferred Principal to be payable to the Lenders (other
than Affected Lenders) on each of the two Capital Payment Dates next succeeding
the Capital Payment Date occurring at the end of such Quarterly Period plus
Interest to accrue during the two Quarterly Periods next succeeding such
Quarterly Period plus Lenders Fees and Expenses reasonably anticipated to be
payable during such next two Quarterly Periods; provided, however, that during
the Availability Period, such sum shall be equal to (and the phrase Anticipated
Loan Amounts shall refer to) the Scheduled Principal and Deferred Principal to
become due to the Lenders (other than Affected Lenders) with respect to the
first two Maturity Dates plus Interest to be due on such Maturity Dates plus
Lenders Fees and Expenses reasonably anticipated to be due on such Maturity
Dates.
(iv) The Bontang V Trustee, without any
action or approval being required of the Producers, shall be entitled to rely
conclusively on each such statement in the absence of manifest error.
(c) On or before the Effective Date, the Bontang
V Trustee shall open in its own name, as Bontang V Trustee, at the Trustee's
Office, two sub-accounts of the Bontang V General Account, one designated as
the "Debt Service Account" (which term shall include all sub-accounts thereof),
and the other designated as the "Reserve Account" (which term shall include all
sub-accounts thereof). On or before the Effective Date, the Bontang V Trustee
shall also open in its own name at the Trustee's Office (i) two separate
sub-accounts of the Debt Service Account, one for each Tranche under the Loan
Agreement (each such sub-account, a "Loan Account"), (ii) two other separate
sub- accounts of the Debt Service Account, one for each Tranche under the Loan
Agreement (each such sub-account, a "Special Payment Account"), (iii) a
separate sub-account of the Debt Service Account (such sub-account to be
designated as the "Mandatory Prepayment Account"), and (iv) two separate
sub-accounts of the Reserve Account (such sub-accounts to be designated as the
"Regular Reserve Account" and the "Debt Coverage Reserve Account,"
respectively), all such sub-accounts to be used for the receipt,
administration and
<PAGE> 30
26
payment of principal, interest and other amounts due or to become due under the
Loan Agreement.
(d) If the Bontang V Trustee, as borrower under
the Loan Agreement, elects to borrow amounts thereunder, as permitted thereby,
for the purpose of paying any Lenders Fees and Expenses due thereunder as
specified in all notices received by the Bontang V Trustee of the type referred
to in Sections 3.2(b)(i) and (ii), without duplication, the amounts borrowed
for such purpose shall be immediately deposited into the Loan Accounts pro rata
in accordance with the amounts of such Lenders Fees and Expenses so borrowed
payable with respect to Tranche A and Tranche B, respectively.
(e) If the Bontang V Trustee, as borrower under
the Loan Agreement, elects to borrow amounts thereunder, as permitted thereby,
for the purpose of paying any Interest due thereunder as specified in all
notices received by the Bontang V Trustee of the type referred to in Sections
3.2(b)(i) and (ii), without duplication, the amounts borrowed for such purpose
shall be immediately deposited into the Loan Accounts pro rata in accordance
with the amounts of such Interest so borrowed payable with respect to Tranche A
and Tranche B, respectively.
(f) If the Bontang V Trustee, as borrower under
the Loan Agreement, elects to borrow amounts thereunder, as permitted thereby,
for the purpose of paying any Special Payments due thereunder as specified in
all notices received by the Bontang V Trustee of the type referred to in
Section 3.2(b)(ii), without duplication, the amounts borrowed for such purpose
shall be immediately deposited into the Special Payment Accounts pro rata in
accordance with the amounts of such Special Payments so borrowed payable with
respect to Tranche A and Tranche B, respectively.
(g) (i) If the Bontang V Trustee, as borrower
under the Loan Agreement, elects to borrow amounts thereunder, solely as
permitted thereby, for the purpose of funding the Regular Reserve Account, the
amounts borrowed for such purpose shall be immediately deposited into the
Regular Reserve Account.
(ii) If the Bontang V Trustee, as
borrower under the Loan Agreement, elects to borrow amounts thereunder, as
permitted thereby, for the purpose of reimbursing the Producers for amounts
paid by them to a Selected Qualified Bank retained pursuant to Section 6.6 of
the Loan Agreement to specify the Assumed Interest Rate or the assumptions
necessary for calculating the Debt Coverage Ratio, the amounts borrowed for
such purpose shall be immediately deposited into the Bontang V Payment Account.
<PAGE> 31
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(h) Subject to all payments (if any) required by
Section 3.3(d) having first been made, during the period beginning on January
1, 1998 and ending on the last day of the Availability Period, the Bontang V
Trustee shall, upon receipt, promptly pay over to the Reserve Account or the
Mandatory Prepayment Account, as applicable, for deposit in the appropriate
sub-account (or, in the case of clause (iv) below, to the Bontang V Payment
Account) or payment of all amounts of the Source of Debt Service received in
the Bontang V General Account in the following amounts and in the following
order of priority:
(i) First, to the Regular Reserve
Account until the aggregate amount accumulated therein shall be sufficient to
pay the Anticipated Loan Amounts at such time as specified in notices received
by the Bontang V Trustee of the type referred to in Section 3.2(b)(iii),
without duplication;
(ii) Second, prior to the receipt by the
Bontang V Trustee of notice from the Tranche A Lender and the Agent that the
conditions precedent contained in Section 5.2 of the Loan Agreement have been
satisfied, to the Regular Reserve Account;
(iii) Third, to the Mandatory Prepayment
Account, until the aggregate of all amounts of Mandatory Prepayments due and
payable, as specified in any applicable Notices of Mandatory Prepayment and to
the extent not previously paid pursuant to Section 3.3(c), have been paid in
full; and
(iv) Fourth, following receipt by the
Bontang V Trustee of notice from the Tranche A Lender and the Agent that the
conditions precedent contained in Section 5.2 of the Loan Agreement have been
satisfied, to the Bontang V Payment Account as provided in Section 4.2.
(i) Subject to all payments (if any) required by
Section 3.3(d) having first been made, commencing on the first day after the
end of the Availability Period under the Loan Agreement, and for each Quarterly
Period thereafter under the Loan Agreement, and continuing until the date of
payment of all amounts due thereunder, the Bontang V Trustee shall, upon
receipt, promptly pay over to the Debt Service Account with respect to each
such Quarterly Period for deposit in the appropriate sub-account all amounts of
the Source of Debt Service received in the Bontang V General Account in the
following amounts and in the following order of priority:
(i) First, to the Loan Accounts, pro
rata according to the amounts, if any, of Lenders Fees and Expenses due and
payable by the Bontang V Trustee on the
<PAGE> 32
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Capital Payment Date occurring at the end of such Quarterly Period (and on any
prior Capital Payment Date to the extent not previously paid), as specified in
all notices received by the Bontang V Trustee of the type referred to in
Sections 3.2(b)(i) and (ii), without duplication, until the aggregate amount
accumulated in the Loan Accounts shall be sufficient to pay the aggregate of
all such amounts of Lenders Fees and Expenses;
(ii) Second, to the Loan Accounts, pro
rata according to the amounts of Interest due and payable by the Bontang V
Trustee on the Capital Payment Date occurring at the end of such Quarterly
Period (and on any prior Capital Payment Date to the extent not previously
paid), as specified in all notices received by the Bontang V Trustee of the
type referred to in Sections 3.2(b)(i) and (ii), without duplication, until the
aggregate amount accumulated in the Loan Accounts (in excess of the amounts
referred to in clause (i) above) shall be sufficient to pay the aggregate of
all such amounts of Interest; provided, however, that with respect to any
six-month Interest Period, the amount of the Source of Debt Service to be paid
over to the Loan Account for Tranche B in respect of all Interest due on the
Capital Payment Date occurring at the end of such Interest Period shall, in the
first three months of such Interest Period, be an amount equal to one half of
all such Interest due, and in the second three months of such Interest Period,
be an amount equal to the other half of all such Interest due;
(iii) Third, to the Special Payment
Accounts, pro rata according to the amounts of Special Payments, if any, due
and payable by the Bontang V Trustee on the Capital Payment Date occurring at
the end of such Quarterly Period (and on any prior Capital Payment Date to the
extent not previously paid), as specified in all notices received by the
Bontang V Trustee of the type referred to in Section 3.2(b)(ii), without
duplication, until the aggregate amount accumulated in the Special Payment
Accounts shall be sufficient to pay the aggregate of all such amounts of
Special Payments;
(iv) Fourth, to the Loan Accounts, pro
rata according to the amounts, if any, of Deferred Principal due and payable by
the Bontang V Trustee on the Capital Payment Date occurring at the end of such
Quarterly Period (and on any prior Capital Payment Date to the extent not
previously paid), as specified in all notices received by the Bontang V Trustee
of the type referred to in Section 3.2(b)(i), without duplication, until the
aggregate amount accumulated in the Loan Accounts (in excess of the amounts
referred to in clauses (i) and (ii) above) shall be sufficient to pay the
aggregate of all such amounts of Deferred Principal; and
<PAGE> 33
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(v) Fifth, to the Loan Accounts, pro
rata according to the amounts of Scheduled Principal due and payable by the
Bontang V Trustee on the Capital Payment Date occurring at the end of such
Quarterly Period (and on any prior Capital Payment Date to the extent not
previously paid), as specified in all notices received by the Bontang V Trustee
of the type referred to in Sections 3.2(b)(i) and (ii), without duplication,
until the aggregate amount accumulated in the Loan Accounts (in excess of the
amounts referred to in clauses (i), (ii) and (iv) above) shall be sufficient to
pay the aggregate of all such amounts of Scheduled Principal.
(j) Subject to all payments (if any) required by
Section 3.3(d) having first been made, for each Quarterly Period referred to in
Section 3.2(i), after all amounts of Source of Debt Service required to be paid
into the Debt Service Account pursuant to Section 3.2(i) with respect to such
Quarterly Period have been so paid, the Bontang V Trustee shall, upon receipt,
promptly pay over to the Reserve Account or the Mandatory Prepayment Account,
as applicable, with respect to each such Quarterly Period for deposit in the
appropriate sub-account (or, in the case of clause (v) below, to the Bontang V
Payment Account) or payment of all additional amounts of the Source of Debt
Service received in the Bontang V General Account in the following amounts and
in the following order of priority:
(i) First, to the Regular Reserve
Account until the aggregate amount accumulated therein shall be sufficient to
pay the Anticipated Loan Amounts specified for such Quarterly Period in all
notices received by the Bontang V Trustee of the type referred to in Section
3.2(b)(iii), without duplication;
(ii) Second, prior to receipt by the
Bontang V Trustee of notice from the Tranche A Lender and the Agent that the
conditions precedent contained in Section 5.2 of the Loan Agreement have been
satisfied, subject to Sections 3.2(j)(iii) and (iv), to the Regular Reserve
Account;
(iii) Third, if the certificate delivered
to the Tranche A Lender and the Agent pursuant to Section 6.1(b) of the Loan
Agreement on or prior to the first day of such Quarterly Period indicates that
the Debt Coverage Ratio is less than 130%, to the Debt Coverage Reserve
Account;
(iv) Fourth, to the Mandatory Prepayment
Account, until the aggregate of all amounts of Mandatory Prepayments due and
payable, as specified in any applicable Notices of Mandatory Prepayment and to
the extent not pre-
<PAGE> 34
30
viously paid pursuant to Section 3.3(c), have been paid in full; and
(v) Fifth, following receipt by the
Bontang V Trustee of notice from the Tranche A Lender and the Agent that the
conditions precedent contained in Section 5.2 of the Loan Agreement have been
satisfied, to the Bontang V Payment Account as provided in Section 4.2.
(k) Subject to the requirement that all payments
(if any) required by Sections 3.3(c) and (d) shall in all events have first
been made, if the Producers have, prior to the Bontang V Trustee having paid
all or part of any Special Payments, advised the Bontang V Trustee, in writing,
to contest payment of any amounts of Special Payments, such contested amounts
of the Source of Debt Service accumulated in the Special Payment Accounts shall
remain on deposit therein until such time as Pertamina and the Contractors have
approved the use thereof for payment of such amounts or, if earlier, such time
as the Bontang V Trustee may be legally compelled to pay such amounts to the
Lenders through the exercise by such Lenders of the legal or equitable remedies
available to them.
3.3 Payment of Debt Service; Choices; Delivery of Information
and Certificates.
(a) Subject to all payments (if any) required by
Sections 3.3(b)(ii), 3.3(c) and (d) having first been made, on each Capital
Payment Date, the Bontang V Trustee shall pay the following amounts in the
following order of priority:
(i) First, all amounts of Lenders Fees
and Expenses then due and payable, as specified in all notices received by the
Bontang V Trustee of the type referred to in Sections 3.2(b)(i) and (ii),
without duplication, shall be paid to the Tranche A Lender and to the Agent for
the account of the Tranche B Lenders, pro rata in accordance with the portions
of such amounts payable with respect to Tranche A and Tranche B, respectively,
to the extent of and out of amounts then held in the Loan Accounts; provided,
however, that all amounts of Lenders Fees and Expenses due and payable under
Section 10.6(a) of the Loan Agreement, as specified in all notices received by
the Bontang V Trustee of the type referred to in Sections 3.2(b)(i) and (ii),
without duplication, shall be paid to the Tranche A Lender and to the Agent for
the account of the Tranche B Lenders, pro rata in accordance with the portions
of such amounts payable with respect to Tranche A and Tranche B, respectively,
on the earlier of (x) the date of the first borrowing by the Bontang V Trustee
under the Loan Agreement, (y) the thirtieth day following the Effective Date
under the Loan Agreement and (z) the sixtieth (60th) day following the
<PAGE> 35
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date of execution and delivery of the Loan Agreement, in each case to the
extent of and out of amounts then held in the Loan Accounts;
(ii) Second, all amounts of Interest then
due and payable, as specified in all notices received by the Bontang V Trustee
of the type referred to in Sections 3.2(b)(i) and (ii), without duplication,
shall be paid to the Tranche A Lender and to the Agent for the account of the
Tranche B Lenders pro rata in accordance with the portions of such amounts
payable with respect to Tranche A and Tranche B, respectively, to the extent of
and out of amounts then held in the Loan Accounts; provided, however, that any
amounts held in the Loan Account for Tranche B and (1) accrued in respect of
any six-month Interest Period in accordance with the proviso to Section
3.2(i)(ii), or (2) deposited as provided in Section 3.5(c)(ii)(1), shall be
held and paid as follows: (x) during the three-month period commencing on and
including the first day of such Interest Period and ending on but not including
the Capital Payment Date approximately three months following such first day,
any amounts deposited and held in such Loan Account in respect of Interest for
such three-month period shall be held for the pro rata account of the Tranche A
Lender and the Tranche B Lenders; (y) following the three-month period referred
to in the preceding clause (x), the amounts referred to in such clause (x), if
they continue to be so held in the Loan Account for the Tranche B Lenders,
shall be held for the sole benefit of the Tranche B Lenders in respect of
Interest due to them at the end of such Interest Period; and (z) during the
three-month period commencing on and including the Capital Payment Date
occurring approximately three months following the beginning of such Interest
Period and ending on but not including the Capital Payment Date ending such
Interest Period, any amounts deposited and held in such Loan Account in respect
of Interest for such three-month period shall be held for the pro rata account
of the Tranche A Lender and the Tranche B Lenders;
(iii) Third, subject to Section 3.2(k),
all amounts of Special Payments then due and payable, as specified in all
notices received by the Bontang V Trustee of the type referred to in Section
3.2(b)(ii), without duplication, shall be paid to the Tranche A Lender and to
the Agent for the account of the Tranche B Lenders, pro rata in accordance with
the portions of such amounts payable with respect to Tranche A and Tranche B,
respectively, to the extent of and out of amounts then held in the Special
Payment Accounts;
(iv) Fourth, all amounts of Deferred
Principal then due and payable, as specified in all notices received by the
Bontang V Trustee referred to in Sec-
<PAGE> 36
32
tion 3.2(b)(i), without duplication, shall be paid to the Tranche A Lender and
to the Agent for the account of the Tranche B Lenders, pro rata in accordance
with the portions of such amounts payable with respect to Tranche A and Tranche
B, respectively, to the extent of and out of amounts then held in the Loan
Accounts;
(v) Fifth, all amounts of Scheduled
Principal then due and payable, as specified in all notices received by the
Bontang V Trustee of the type referred to in Section 3.2(b)(i), without
duplication, shall be paid to the Tranche A Lender and to the Agent for the
account of the Tranche B Lenders, pro rata in accordance with the portions of
such amounts payable with respect to Tranche A and Tranche B, respectively, to
the extent of and out of amounts then held in the Loan Accounts;
(vi) Sixth, all amounts necessary to
ensure that the aggregate amount accumulated in the Regular Reserve shall be
sufficient to pay the Anticipated Loan Amounts specified for the Quarterly
Period commencing on such Capital Payment Date in notices received by the
Bontang V Trustee of the type referred to in Section 3.2(b)(iii), shall be paid
from the Debt Service Account to the Regular Reserve Account;
(vii) Seventh, if the certificate
delivered to the Tranche A Lender and the Agent pursuant to Section 6.1(b) of
the Loan Agreement on or prior to the first day of such Quarterly Period
indicates that the Debt Coverage Ratio for the Quarterly Period is less than
130%, all amounts required for application as provided in Section 3.3(b)(ii)
shall be paid from the Debt Service Account to the Debt Coverage Reserve
Account; and
(viii) Eighth, any amount held in the Debt
Service Account after all payments required by Sections 3.3(a)(i) through
(vii), inclusive, have been made, shall be paid to the Bontang V Payment
Account as provided in Section 4.2.
(b) (i) Subject to all payments (if any)
required by Sections 3.3(c) and (d) having first been made, to the extent that
on any Capital Payment Date (or, in the case of clause (v) below, on the date
of receipt by the Bontang V Trustee of the notice required therein) the amounts
held in any sub-account of the Debt Service Account are not sufficient to pay
in full all amounts payable under the Loan Agreement, the Notes and the Letter
Agreement on such Capital Payment Date that are to be paid out of amounts then
held in such sub-account, any amounts then held in the Regular Reserve Account
shall be applied to make such payments in the order of priority set forth in
Section 3.3(a)(i) through (v), inclusive; provided, however,
<PAGE> 37
33
that if, on any Capital Payment Date occurring during the Availability Period,
there are any undrawn amounts of the Commitments and such amounts are available
to be borrowed under the Loan Agreement, then the Bontang V Trustee may apply
amounts held in the Regular Reserve Account to make payment to the Lenders of
the Interest and Lenders Fees and Expenses due and payable on such Capital
Payment Date solely (1) upon receipt of notice from the Producers addressed to
the Tranche A Lender, the Agent and the Bontang V Trustee and (2) in an amount
by which the aggregate of such Interest and Lenders Fees and Expenses exceeds
the aggregate amount of the Commitments available to be borrowed on such date.
(ii) Subject to all payments (if any)
required by Section 3.3(d) having first been made, if on any Capital Payment
Date there shall be amounts held in the Debt Coverage Reserve Account, all such
amounts shall be paid to the Tranche A Lender and the Agent for the account of
the Tranche B Lenders as a prepayment of principal of the Notes in the manner
prescribed in the Loan Agreement for the making of prepayments from the Debt
Coverage Reserve Account.
(iii) Subject to all payments (if any)
required by Sections 3.3(b)(i), 3.3(c) and 3.3(d) having first been made, if at
any time during the Availability Period the Bontang V Trustee shall receive a
notice from the Producers given pursuant to Section 1.13(b) of the Producers
Agreement, the Bontang V Trustee shall transfer to the Bontang V Payment
Account, from amounts then held in the Regular Reserve Account, the amount
specified in such notice, provided that the aggregate of the amounts permitted
to be so transferred shall not exceed the aggregate amount borrowed pursuant to
Section 2.2(b)(ii) of the Loan Agreement.
(iv) Subject to all payments (if any)
required by Sections 3.3(b)(i), 3.3(b)(iii), 3.3(c) and 3.3(d) having first
been made, if, following the end of the Availability Period, the Bontang V
Trustee shall receive a notice from Pertamina given pursuant to Section 1.13(c)
of the Producers Agreement, then the Bontang V Trustee shall transfer to the
Bontang V Payment Account, from amounts then held in the Regular Reserve
Account, the amount specified in such notice.
(v) Subject to all payments (if any)
required by Sections 3.3(b)(i) through (iv), 3.3(b)(vi), 3.3(c) and 3.3(d)
having first been made, following receipt by the Bontang V Trustee of notice
that the conditions precedent contained in Section 5.2 of the Loan Agreement
have been satisfied, the amount, if any, by which the amounts then held in the
Regular Reserve Account exceed the Anticipated Loan Amounts required to be held
in the Regular
<PAGE> 38
34
Reserve Account pursuant to Section 3.2, shall be paid over to the Bontang V
Payment Account as provided in Section 4.2.
(vi) Subject to all payments (if any)
required by Sections 3.3(b)(i), 3.3(c) and 3.3(d) having first been made, if,
on any Capital Payment Date, following payment in full of all amounts then due
and payable on such Capital Payment Date to the Lenders under the Loan
Agreement, the Notes and the Letter Agreement, there remains in the Regular
Reserve Account any amount in excess of the Anticipated Loan Amounts then
required to be held in the Regular Reserve Account pursuant to Section 3.2,
such excess amount shall (x) at any time the certificate delivered to the
Tranche A Lender and the Agent pursuant to Section 6.1(b) of the Loan Agreement
indicates that the Debt Coverage Ratio for the Quarterly Period is less than
130%, be paid to the Debt Coverage Reserve Account for application as provided
in Section 3.3(b)(ii) or (y) if the circumstances set forth in clause (x) do
not apply, be paid over to the Bontang V Payment Account as provided in Section
4.2.
(c) (i) The Loan Agreement provides for
Mandatory Prepayments to be made with respect to the Notes of one or more of
the Lenders in circumstances involving illegality with respect thereto.
Notwithstanding Sections 3.3(a) and (b)(i), but subject to all payments (if
any) required by Sections 3.3(b)(ii) and 3.3(d) having first been made, upon
receipt by the Bontang V Trustee of any notice pursuant to Section 3.2(b)(ii)
that any Mandatory Prepayments have become due and payable to one or more
Affected Lenders (a "Notice of Mandatory Prepayment"), the Bontang V Trustee,
without any action or approval being required of Pertamina or the Contractors,
shall:
(1) Immediately pay to the Tranche
A Lender and the Agent for the account of such Affected Lenders, to
the extent necessary to pay the entire amount of the Mandatory
Prepayments payable to such Affected Lenders in full as shown on such
Notice of Mandatory Prepayment, the Loan Percentage for such Affected
Lenders of all amounts then held in the Debt Service Account and the
Regular Reserve Account; and
(2) Immediately upon deposit of any
amounts in the Mandatory Prepayment Account pursuant to Section 3.2(j)
or otherwise, pay all such amounts to the Tranche A Lender and the
Agent for the account of such Affected Lenders, to the extent the
amount of such Mandatory Prepayments shall not have been previously
paid.
(ii) All amounts paid to the Tranche A
Lender and the Agent for the account of the Affected Lenders pursuant to
Section 3.3(c)(i) shall be reflected in the
<PAGE> 39
35
records of the Bontang V Trustee as having been applied in the following order
of priority:
(1) First, to the payment of all
Lenders Fees and Expenses due and payable at the time of payment to
the Affected Lenders as specified in the applicable Notices of
Mandatory Prepayment;
(2) Second, to the payment of all
Interest due and payable at the time of payment to the Affected
Lenders as specified in the applicable Notices of Mandatory
Prepayment;
(3) Third, to the payment of all
principal then due and payable to the Affected Lenders as specified in
the applicable Notices of Mandatory Prepayment; and
(4) Fourth, to the payment of all
Special Payments due and payable at the time of payment to the
Affected Lenders as specified in the applicable Notices of Mandatory
Prepayment.
(d) The Loan Agreement may provide for the
acceleration of the Tranches outstanding and payable thereunder.
Notwithstanding Sections 3.3(a), (b) and (c), upon receipt by the Bontang V
Trustee of any notice of acceleration (a "Notice of Acceleration") from the
Tranche A Lender and the Agent, the Bontang V Trustee, without any action or
approval being required of the Producers, shall:
(i) Immediately apply all amounts then
held in all sub-accounts of the Debt Service Account and the Reserve Account to
the payment of the following amounts in the following order of priority, to the
extent not previously paid:
(1) First, all amounts referred to
in clause (y) of the proviso to Section 3.3(a)(ii) shall be paid to
the Tranche B Lenders in respect of Interest for the period referred
to in such clause (y);
(2) Second, all amounts of Lenders
Fees and Expenses due and payable at the time of payment, as specified
in the Notice of Acceleration or in any notices received by the
Bontang V Trustee of the type referred to in Section 3.2(b)(ii),
without duplication, shall be paid to the Tranche A Lender and to the
Agent for the account of the Tranche B Lenders, pro rata in accordance
with the portions of such amounts payable with respect to Tranche A
and Tranche B, respectively;
<PAGE> 40
36
(3) Third, all amounts of Interest
due and payable at the time of payment, as specified in the Notice of
Acceleration or in any notices received by the Bontang V Trustee of
the type referred to in Section 3.2(b)(ii), without duplication, shall
be paid to the Tranche A Lender and to the Agent for the account of
the Tranche B Lenders, pro rata in accordance with the portions of
such amounts payable with respect to Tranche A and Tranche B,
respectively;
(4) Fourth, all amounts of
principal then due and payable under the Loan Agreement and the Notes,
as specified in the Notice of Acceleration or in any notices received
by the Bontang V Trustee of the type referred to in Sections 3.2(b)(i)
and (ii), without duplication, shall be paid to the Tranche A Lender
and to the Agent for the account of the Tranche B Lenders, pro rata in
accordance with the portions of such amounts payable with respect to
Tranche A and Tranche B, respectively; and
(5) Fifth, all amounts of Special
Payments due and payable at the time of payment, as specified in the
Notice of Acceleration or in any notices received by the Bontang V
Trustee of the type referred to in Section 3.2(b)(ii), without
duplication, shall be paid to the Tranche A Lender and to the Agent
for the account of the Tranche B Lenders, pro rata in accordance with
the portions of such amounts payable with respect to Tranche A and
Tranche B, respectively;
(ii) Promptly upon receipt pay over to
the Debt Service Account all amounts of Source of Debt Service received in the
Bontang V General Account following receipt of the Notice of Acceleration; and
(iii) Immediately upon deposit of any
amounts in the Debt Service Account pursuant to Section 3.3(d)(ii), make the
payments referred to in Section 3.3(d)(i), to the extent not previously paid.
(e) The Loan Agreement may provide for the
exercise of choices or taking or refraining from taking any action by the
Bontang V Trustee as to certain matters, including, but not limited to, length
of Interest Period, acceptance of alternate interest rates, and optional
prepayment of loans. If the exercise of such a choice or the taking of any
other action with respect thereto is required of or permitted by the Bontang V
Trustee pursuant to the terms of such Loan Agreement which is not otherwise
specifically provided for in this Article 3, the Bontang V Trustee shall take
no action with respect thereto except such action as it has been specifically
authorized and directed to take, in writing, by the Producers.
<PAGE> 41
37
(f) The Loan Agreement may provide for the
delivery of information and certificates to the Lenders. To the extent the
information to be furnished is produced by the Bontang V Trustee in the
performance of its duties under this Agreement, the Bontang V Trustee shall
supply such information and certificates to the Lenders as and when required,
without any action being required on the part of the Producers. Otherwise, the
Bontang V Trustee, as between itself and the Producers, shall have no
obligation to provide such information and certificates unless and until such
time as such information and certificates have been provided to the Bontang V
Trustee by the Producers, which, together with information produced by the
Bontang V Trustee in the performance of its duties hereunder, will enable the
Bontang V Trustee to provide to such Lenders the information and certificates
required under the Loan Agreement.
(g) In furtherance of the foregoing provisions of
this Section 3.3, the Bontang V Trustee shall provide to the Producers a copy
of each notice and declaration received by it from the Lenders under the Loan
Agreement promptly after receipt thereof by the Bontang V Trustee.
(h) All notices, approvals, instructions, and
other communications to be provided by the Producers to the Bontang V Trustee
pursuant to this Section 3.3 shall be given or made as provided in Section
13.3.
(i) The Bontang V Trustee shall promptly give
notice to the Allocation Trustees (as defined in Section 12.1) of
(1) each payment into the Debt
Service Account or Reserve Account made by the Bontang V Trustee;
(2) each payment of Debt Service of
which the Bontang V Trustee has been notified made by a Producer
pursuant to the Producers Agreement;
(3) each transfer to the Bontang V
Payment Account of funds in the Regular Reserve Account pursuant to
Section 4.2;
(4) each distribution of funds in
the Debt Service Account and Reserve Account pursuant to Section
3.3(k);
(5) each receipt of amounts from
the Disbursement Trustee to which the Producers are entitled pursuant
to Section 3.5(c); and
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(6) the portion of each such
payment of Debt Service, whether made by the Bontang V Trustee or a
Producer, borne by each Producer.
Solely for the purposes of this Section 3.3(i), the portion of
each such payment of Debt Service "borne by such Producer" shall be the portion
of each such payment under (1) above (other than payments made from Borrowed
Amounts) which is charged to such Producer's account pursuant to Section 8.2,
plus the sum of any payments under (2) above of which the Bontang V Trustee has
received notice from such Producer less the portion of each transfer and
distribution of funds referred to in clauses (3) and (4) above, and each amount
received referred to in clause (5) above, which is credited to such Producer's
account pursuant to Section 8.2.
(j) The Bontang V Trustee shall furnish the
Accountants with such information as they may from time to time request (with a
copy to the Producers), to the extent such information is in the possession of
the Bontang V Trustee, as to Debt Service and other matters stated by the
Accountants to be necessary to enable them to perform their functions under the
Debt Service Allocation Agreement in a timely manner.
(k) After the date of payment of the final
installment of principal of and accrued interest on the loans made pursuant to
the Loan Agreement and the payment of all other amounts due thereunder and
under the Notes and the Letter Agreement, the Bontang V Trustee shall forthwith
convert to cash any investments then held in the Debt Service Account and
Reserve Account and promptly give notice to the Accountants of the amount held
in such account after the receipt of such cash proceeds. Upon receipt of
instructions from the Accountants, which shall state that they are issued
pursuant to provisions of the Debt Service Allocation Agreement relating to
final distribution of the Debt Service Account and Reserve Account, the Bontang
V Trustee shall distribute the funds then held in the Debt Service Account and
Reserve Account, as specified in such instructions, and thereafter close the
relevant accounts.
3.4 Borrowing Instructions.
(a) Prior to any borrowing under the Loan
Agreement, Pertamina shall give the Bontang V Trustee written notice of each
entity and individual authorized to give borrowing instructions to the Bontang
V Trustee with respect to the Loan Agreement. No other entity or individual
shall be authorized to give such borrowing instructions. Any such entity or
individual may be changed by subsequent written notice from Pertamina to the
Bontang V Trustee.
<PAGE> 43
39
(b) Each borrowing instruction shall specify (i)
that the borrowing is to be made under the Loan Agreement, (ii) the date and
amount thereof and (iii) the persons to whom the Loan Proceeds should be paid,
which (x) in the case of amounts still to be applied to the design,
engineering, procurement and construction of or otherwise relating to Train G
shall be a disbursement trust fund of the type referred to in Section 3.5, (y)
in the case of reimbursement of costs previously incurred for the design,
engineering, procurement and construction of or otherwise relating to Train G
shall be to such persons as the borrowing instruction shall specify, and (z) in
the case of Borrowed Amounts, shall be as provided in Sections 3.2(d), (e), (f)
and (g).
(c) In the event any borrowing instruction does
not include all of the information required by subsection (b) above, the
Bontang V Trustee shall promptly so notify the instructing entity by telex or
telecopier (with a copy to the Producers) and shall not comply with such
incomplete instructions.
(d) The Bontang V Trustee shall take such action
as is required to effect the specified borrowing under the Loan Agreement.
3.5 Disbursement Trust; Payment Instructions.
(a) Subject to Sections 3.2(d), (e), (f) and (g)
and 3.4(b)(iii)(y), all Loan Proceeds and all amounts transferred from the
Regular Reserve Account to the Payment Account pursuant to Section 3.3(b)(iii)
("Transferred Amounts") shall be disbursed directly into a disbursement trust
fund pursuant to a Disbursement Trust Agreement for Train G having the
following features:
(i) The disbursement trust fund will be
maintained by BankAmerica International, as Disbursement Trustee.
(ii) The parties to the Disbursement
Trust Agreement shall be the Disbursement Trustee and the Bontang V Trustee.
(iii) The Bontang V Trustee shall have the
power to enter into or modify the Disbursement Trust Agreement upon its receipt
of notice from the Producers that they have approved the form and terms of such
agreement or modification and that they authorize and request the Bontang V
Trustee to enter into such agreement or modification. Notwithstanding the
provisions of Section 13.3, the representative of a Contractor shall not have
authority to give such approval for any Contractor other than itself.
<PAGE> 44
40
(b) (i) Pertamina shall, at the time the
Disbursement Trust Agreement is executed and delivered, give the Bontang V
Trustee written notice of each entity and individual authorized to give payment
instructions to the Bontang V Trustee with respect to the Disbursement Trust
Agreement. No other entity or individual shall be authorized to give such
payment instructions. Any such entity or individual may be changed by
subsequent written notice from Pertamina to the Bontang V Trustee.
(ii) Each payment instruction shall be
transmitted by telex or telecopier to the Bontang V Trustee, with a copy by
hand delivery or by telex or telecopier to the Producers, and shall include the
following information:
(1) the Disbursement Trust
Agreement under which the payment is to be made;
(2) the name of the payee and the
place and manner of payment;
(3) the amount of such payment and
the currency to be used; and
(4) a brief description of the
purpose of such payment, together with the relevant invoice number or
designation of other relevant payment documentation.
(iii) In the event any payment instruction
does not include all of the information required by subsection (ii) above, the
Bontang V Trustee shall promptly so notify the instructing entity by telex or
telecopier (with a copy to the Producers) and shall not comply with such
incomplete instructions.
(iv) Except in the case of payments to be
made as provided in Section 3.4(b) for costs previously incurred or as provided
in Sections 3.2(d), (e), (f) and (g), the Bontang V Trustee shall forward each
payment instruction to the Disbursement Trustee.
(c) (i) With respect to the Disbursement Trust
Agreement and the investment income earned from amounts held thereunder in each
calendar year, the Producers shall, subject to Section 3.5(c)(ii)(1), on or
after February 15 in each year, cause the Accountants to notify the Bontang V
Trustee (with a copy to the Producers) of the amount of such investment income
earned during the previous calendar year (and not disbursed pursuant to payment
instructions) and the portions due each of the Producers. Upon receipt of each
such notice, the Bontang V Trustee shall promptly send the same to the
Disbursement Trustee, which notices shall include a payment instruction for the
<PAGE> 45
41
Disbursement Trustee to pay such amount to the Bontang V Trustee.
(ii) The Producers shall notify the
Bontang V Trustee when any Financed Capital Project to be paid for under the
Disbursement Trust Agreement has been completed. Any such notice shall contain
the following information:
(1) Until such time as the Bontang
V Trustee shall have received notice from the Tranche A Lender and the
Agent on behalf of the Tranche B Lenders that the Lenders have been
paid in full all amounts owed to them under the Loan Agreement, the
Notes and the Letter Agreement, instructions to hold for the account
of the Lenders and pay on the next following Capital Payment Date to
the Tranche A Lender and the Agent for the account of the Tranche B
Lenders to their accounts provided in the Loan Agreement any Loan
Proceeds and Transferred Amounts still held under the Disbursement
Trust Agreement to the extent necessary to make payment to the Lenders
of all such amounts owing to them. The Bontang V Trustee shall apply
all such Loan Proceeds and Transferred Amounts and the income accrued
thereon on the next following Capital Payment Date under Section
3.5(a) of the Loan Agreement in the following order of priority, pro
rata as to Tranche A and Tranche B:
(A) First, to the extent that such
amounts are not otherwise paid as provided in Section 3.3, to
the payment of all Lenders Fees and Expenses due and payable
on such Capital Payment Date;
(B) Second, to the extent that such
amount is not otherwise paid as provided in Section 3.3, to
the payment of all Interest due and payable on such Capital
Payment Date, provided, however, that if such Capital Payment
Date occurs during, but not at the end of, a six-month
Interest Period then in effect with respect to Tranche B, the
pro rata amount allocable to such six- month Interest Period
shall be one-half of the amount due at the end of such
Interest Period, and such amount shall be deposited in the
Loan Account for Tranche B and held in such account for the
Tranche B Lenders, and treated as provided in the proviso to
Section 3.3(a)(ii);
(C) Third, to the extent that such
amount is not otherwise paid as provided in Section 3.3, to
the payment of all principal then due and payable on such
Capital Payment Date;
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42
(D) Fourth, to the extent that such
amounts are not otherwise paid as provided in Section 3.3, to
the payment of all Special Payments due and payable on such
Capital Payment Date; and
(E) Fifth, applied to prepay the
Notes, which prepayment, if partial, shall be applied pro rata
to the principal amounts due thereunder in the order of
maturity.
(2) Upon satisfaction of the
requirements of clause (1) above, instructions with respect to Loan
Proceeds and Transferred Amounts still held under the Disbursement
Trust Agreement, identifying the portion thereof to be paid to the
Bontang V Trustee for the account of the Producers and the portion
thereof to which each of the Producers is entitled.
(3) With respect to investment
income earned under the Disbursement Trust Agreement and not
previously distributed, the portion thereof to be paid to the Bontang
V Trustee for the account of the Producers and the portion thereof to
which each of the Producers is entitled.
Upon receipt of such notice, the Bontang V Trustee shall send
the same to the Disbursement Trustee together with an instruction to terminate
the disbursement trust under, and to make payment of all amounts then held
under, the Disbursement Trust Agreement in conformity with the notice referred
to above in this clause (ii) and the terms of the Disbursement Trust Agreement.
3.6 Duties of Bontang V Trustee with Respect to Instructions.
In acting on any borrowing instruction or forwarding any payment instruction
hereunder or any Notice of Borrowing under the Loan Agreement, the Bontang V
Trustee shall not have any responsibility for determining whether or not the
borrowing being incurred or the payment being made is being properly incurred
or made in accordance with the provisions of any agreement or any
understandings among the Producers or any other parties, it being understood
that the Bontang V Trustee's sole responsibility in such circumstances shall be
to take such action with respect to such instruction as specified in Section
3.4 or Section 3.5(b), as the case may be.
3.7 Bontang V Depositaries. The Bontang V Trustee shall,
upon the authorization and request of the Producers, and in accordance with the
Loan Agreement, appoint or remove any Bontang V Depositary as set forth below.
<PAGE> 47
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(a) The Bontang V Trustee may entrust any Bontang
V Depositary with the exclusive custody and possession of any funds, properties
and rights in the Debt Service Account or the Reserve Account or both. The
Bontang V Trustee's responsibility with respect to the funds, properties and
rights held by a Bontang V Depositary shall be only to maintain and administer
the accounting of the Debt Service Account or the Reserve Account or both.
Each Bontang V Depositary shall have the exclusive custody and possession of
the funds, properties and rights held by it.
(b) It shall be a condition to the appointment of
any Bontang V Depositary hereunder that the bank, trust company or financial
institution so appointed shall conform to the definition of "Bontang V
Depositary" set forth herein and shall agree to hold the funds, properties and
rights held by it in trust on the same basis, and subject to the same rights
and obligations, as are set forth in this Agreement with respect to the Bontang
V Trustee, and upon such agreement such rights and obligations shall be enjoyed
by and binding upon such Bontang V Depositary. The terms of appointment of any
Bontang V Depositary shall not be inconsistent with the provisions of this
Agreement.
(c) Without the written consent of the Producers
and the Majority Lenders pursuant to the Loan Agreement, no funds, properties
or rights shall be transferred from the custody and possession of the Bontang V
Trustee to the custody and possession of a Bontang V Depositary nor, except in
the case such transfer shall be required for effecting payments necessary
hereunder, shall any such funds, properties or rights be transferred from a
Bontang V Depositary to the Bontang V Trustee without such consent.
ARTICLE 4
ESTABLISHMENT OF BONTANG V PAYMENT ACCOUNT
4.1 Bontang V Payment Account. On or before the Effective
Date, a sub-account of the Bontang V General Account designated as the "Bontang
V Payment Account" shall be opened by the Bontang V Trustee in its own name, as
Bontang V Trustee, at the Trustee's Office. If requested by the Producers, the
Bontang V Trustee shall open in its own name, as Bontang V Trustee, at the
Trustee's Office, one or more sub-accounts of the Bontang V Payment Account
(each a "Payment Subaccount").
4.2 Funds to be Deposited. Commencing on the date of the
first receipts by the Bontang V Trustee under Article 2 and continuing
throughout the term of this Agree-
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44
ment the Bontang V Trustee shall deposit in the Bontang V Payment Account (i)
promptly after receipt by it of any amount hereunder (other than Loan
Proceeds), all amounts in the Bontang V General Account other than Source of
Debt Service, (ii) as and when specified herein, all amounts required to be
transferred from the Debt Service Account or the Reserve Account to the Bontang
V Payment Account, (iii) any Loan Proceeds to be deposited in the Bontang V
Payment Account pursuant to Section 3.2(g)(ii), and (iv) promptly after
receipt, all amounts of Source of Debt Service in the Bontang V General Account
not required to be paid over into the Debt Service Account or the Reserve
Account pursuant to the provisions of Sections 3.2 and 3.3. If any Payment
Subaccounts have been opened by the Bontang V Trustee pursuant to Section 4.1,
amounts deposited into the Bontang V Payment Account shall be further credited
to the appropriate Payment Subaccount pursuant to the written instructions of
the Producers provided at the time such Payment Subaccount is opened or at any
subsequent date.
4.3 Other Prepayments. Any prepayments of the Notes pursuant
to Sections 2.6, 3.4(b) or 3.7 of the Loan Agreement (other than a prepayment
in full of all amounts due and payable under the Loan Agreement, the Notes and
the Letter Agreement) shall be made solely from the amounts held from time to
time in the Bontang V Payment Account and otherwise in accordance with the
provisions of such Sections 2.6, 3.4(b) or 3.7.
ARTICLE 5
DISBURSEMENTS WITH RESPECT TO PROCESSING CHARGES
5.1 Submission and Payment. The Producers shall submit to
the Bontang V Trustee debit notes received from P.T. Badak on account of LNG
processing charges. To the extent that funds are then held in the Bontang V
Payment Account the Bontang V Trustee shall, promptly upon receipt of notice
from the Producers that any such debit note has been approved for payment, pay
to P.T. Badak from the Bontang V Payment Account the amount of such debit note,
pursuant to procedures to be agreed upon pursuant to Section 5.2.
5.2 Payment Procedures. The Producers shall agree with P.T.
Badak on appropriate procedures for the payment of funds payable to P.T. Badak
pursuant to Section 5.1, and shall advise the Bontang V Trustee of such
procedures, which shall include a requirement that P.T. Badak furnish the
Bontang V Trustee with an acknowledgment that each payment by the Bontang V
Trustee hereunder fully satisfies
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the liabilities of the Producers with respect to the debit note to which the
payment relates.
ARTICLE 6
TRANSPORTATION EXPENSES
6.1 Submission and Payment. Pertamina shall submit to the
Bontang V Trustee (with a copy to the Contractors) each invoice relating to
shipment of LNG that it may receive from a Transporter pursuant to the New 1973
Transportation Arrangements or such other transportation contract as may be
applicable to the sale of LNG under the LNG Sales Contracts. To the extent
that funds are then held in the Bontang V Payment Account, the Bontang V
Trustee shall, promptly upon receipt of notice from the Producers that any such
invoice has been approved for payment, pay to the Transporter shown on such
invoice from the Bontang V Payment Account the amount of such invoice, pursuant
to such procedures, which shall specify the place and manner of payment, as
shall be established with the Bontang V Trustee by the Producers.
6.2 Payment Procedure. Pertamina, in consultation with the
Contractors, shall agree with each Transporter as to appropriate procedures for
the payment of funds payable to such Transporter out of the Bontang V Payment
Account under Section 6.1, and shall advise the Bontang V Trustee of such
procedures, which shall include a requirement that such Transporter furnish the
Bontang V Trustee with an acknowledgment that each payment by the Bontang V
Trustee hereunder satisfies the liabilities of Pertamina to which the payment
relates.
ARTICLE 7
DISBURSEMENTS WITH RESPECT TO OTHER CHARGES
7.1 Submission and Payment. It is contemplated that other
charges with respect to the production, sale or delivery of LNG sold under the
LNG Sales Contracts will from time to time be payable from the Bontang V
Payment Account. Any Producer may submit to the Bontang V Trustee payment
orders or instructions, or invoices or other statements, received by it with
respect to such charges. To the extent that funds are then held in the Bontang
V Payment Account, the Bontang V Trustee shall, promptly upon receipt of notice
from the Producers that any such payment order, instruction, invoice or
statement has been approved for payment, pay to the person entitled thereto
from the Bontang V Payment
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Account the amount thereof, pursuant to procedures to be agreed upon pursuant
to Section 7.2.
7.2 Payment Procedures. The Producers shall agree with the
person submitting any invoice or statement payable pursuant to Section 7.1 on
appropriate procedures for the payment thereof, and shall advise the Bontang V
Trustee of such procedures, which shall include a requirement that the person
receiving payment furnish the Bontang V Trustee with an acknowledgment that
each payment by the Bontang V Trustee hereunder fully satisfies the liabilities
of the Producers with respect to the invoice or statement to which the payment
relates.
ARTICLE 8
DISBURSEMENTS WITH RESPECT TO SHARING PERCENTAGES
8.1 Approved Level of Working Capital; Sharing Percentages.
For the purposes of this Agreement the "Approved Level of Working Capital"
shall be that amount, if any, specified to the Bontang V Trustee in a notice
from the Producers, and the respective "Sharing Percentages" of each Producer
with respect to an LNG Sales Contract shall be the percentages set forth in the
most recent certificates furnished to the Bontang V Trustee pursuant to Section
8.3.
8.2 Charging of Amounts Payable; Payment of Excess. The
respective Sharing Percentages of each Producer of all amounts required to be
paid into the Debt Service Account and the Reserve Account under Sections 3.2
and 3.3, and of all amounts required to be paid under Articles 5, 6 and 7 and
Sections 8.5 and 11.2, shall be charged to each such Producer's Bontang V Trust
Fund Account. The (i) respective Sharing Percentages of each Producer of any
funds deposited in the Bontang V Payment Account pursuant to Section 4.2, (ii)
amount of any excess funds distributed to each Producer from the Debt Service
Account and Reserve Account pursuant to Section 3.3(k), and (iii) portion due
each Producer from any amounts received by the Bontang V Trustee from the
Disbursement Trustee pursuant to Section 3.5(c), shall be credited to each such
Producer's Bontang V Trust Fund Account. Whenever and to the extent that the
amount held in the Bontang V Payment Account at the end of any business day of
the Bontang V Trustee in the City of New York is in excess of the Approved
Level of Working Capital, after having deducted all amounts of Source of Debt
Service then required to be paid into the Debt Service Account and the Reserve
Account under Sections 3.2 and 3.3, and all amounts then payable by the Bontang
V Trustee under Articles 5 and 6 and Sections 8.5 and 11.2, then, except as
otherwise provided in Section 8.3 or Article 12, such excess
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shall be immediately paid out to the Producers in accordance with their
respective Sharing Percentages applicable to such amount, as specified in the
most recent certificate for the current year furnished pursuant to Section 8.3.
8.3 Accountants. The Producers shall mutually appoint a firm
of independent public accountants to act as the accountants hereunder (the
"Accountants") and shall promptly advise the Bontang V Trustee of such
appointment.
The Accountants shall be directed to furnish to the Bontang V
Trustee (with a copy to the Producers) a certificate on or before the 15th day
of December in each calendar year (initially for 1995 on or before December 15,
1995) setting forth the respective Sharing Percentages of each Producer for the
following calendar year (for 1995 in the case of the first such certificate)
with respect to each LNG Sales Contract in effect during such calendar year.
The Sharing Percentages with respect to an LNG Sales Contract
shall be calculated as provided in the respective Supply Agreements applicable
to such LNG Sales Contract and the respective Production Sharing Contracts,
based upon actual or estimated production and costs as required thereby.
The Accountants shall also be directed to furnish to the
Bontang V Trustee (with a copy to the Producers) on or before the 15th day of
March, June and September in each calendar year, commencing March 15, 1996 a
revision of the certificate furnished for such year setting forth the
respective Sharing Percentages of each Producer based upon revised estimates of
production and costs for such year.
In addition, the Accountants shall be directed to furnish to
the Bontang V Trustee (with a copy to the Producers) on or before the 15th day
of February in each calendar year, commencing February 15, 1996, a final
version of the certificate for the previous year setting forth the respective
Sharing Percentages of each Producer based upon actual production and costs for
the previous year.
Every revised and final certificate shall specify the amount,
if any, by which the aggregate amount paid by the Bontang V Trustee to each
Producer pursuant to the initial certificate and any earlier revisions thereof
under this Article 8 was greater or less than the amount that would have been
paid to each on the basis of the Sharing Percentages which are certified
therein and shall specify the amount that will be required to be paid to any
underpaid Producer, in order to bring the total amount paid to it into
equitable relation to the amount paid to any overpaid Producers so that the
payments, as adjusted, would be in accordance with such Sharing Percentages.
In the event that any
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such certificate indicates that any of the Producers has been underpaid, the
Bontang V Trustee, after receipt of the certificate, shall pay to any such
Producers pro rata in proportion to the amount by which each such Producer was
underpaid, all amounts otherwise payable under this Article 8 to the Producers
which have been overpaid until each such underpaid Producer shall have received
the entire amount stated in the certificate as required to be paid to such
underpaid Producer. After each such Producer has received the entire amount it
is entitled to receive as aforesaid, the Bontang V Trustee shall make all
future payments to the Producers out of the funds remitted in respect of the
LNG Sales Contracts in accordance with the Sharing Percentages specified in the
most recent certificate relating thereto furnished to Bontang V Trustee
pursuant to this Section 8.3.
8.4 Arrangements for Payment. Each Producer shall make such
reasonable arrangements with the Bontang V Trustee as it shall deem appropriate
for the payment to it of amounts payable to it under the terms of this Article
8. Except as otherwise provided in Section 8.5, each Contractor shall make its
own arrangements with respect to such payments directly with the Bontang V
Trustee and, notwithstanding the provisions of Section 13.3, the representative
of any Contractor Group shall have no authority to act for any Contractor other
than itself in making such arrangements.
8.5 Special Disbursement Instructions. The Producers
acknowledge that from time to time it may be necessary for amounts which would
otherwise be paid to Producers pursuant to Section 8.2 to be paid instead to
(a) persons who have submitted invoices or other statements for charges with
respect to the production, sale or delivery of LNG or LPG from the Bontang
Plant under sales contracts other than the LNG Sales Contracts, (b) the trustee
under any trust established to pay charges of the type described in (a) above,
or (c) the trustee under any of the Other Trust Agreements, in order to satisfy
certain obligations of the Producers having interests in the Bontang V Payment
Account. Accordingly, notwithstanding the payment arrangements made with the
Bontang V Trustee pursuant to Section 8.4, each Contractor hereby authorizes
the representative of any of the Contractor Groups of which it is a member, as
designated in or pursuant to Section 13.3, to give to the Bontang V Trustee
from time to time on its behalf such Special Disbursement Instructions as such
representative may deem necessary or appropriate to authorize such payments.
Each representative shall give copies of any such Special Disbursement
Instruction to the members of its Contractor Group contemporaneously with the
transmission thereof to the Bontang V Trustee, by the same means of
transmission. As used herein, a "Special
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Disbursement Instruction" means an instruction so entitled which (i) is given
by the Producers as provided in Section 13.3, (ii) instructs the Bontang V
Trustee to pay to persons described in clauses (a), (b), (c) or (d) above any
amount which would otherwise be paid to Producers pursuant to Section 8.2, and
(iii) specifies the funds from which such payment is to be made. Any Special
Disbursement Instruction requiring payment to another trustee shall also
specify the account or accounts to which such funds are to be credited and
direct the Bontang V Trustee to notify such trustee that such payment is a
Special Disbursement Amount for the account or accounts so specified. The
inclusion of this Section 8.5 shall have no effect on the authority of the
Bontang V Trustee to act and rely upon any other special disbursement or
transfer instruction which does not comply with this Section 8.5 so long as
such instruction is given in an instrument executed by all of the Producers.
8.6 Payment Procedures. The Producers shall agree with
the persons specified in Section 8.5(a) on appropriate procedures for the
payment of the relevant invoices of statements, and shall advise the Bontang V
Trustee of such procedures which shall include a requirement that the person
receiving payment furnish the Bontang V Trustee with an acknowledgment that
each payment by the Bontang V Trustee hereunder fully satisfies the liabilities
of the person to which such invoice or statement is addressed with respect
thereto.
8.7 Receipt of Special Disbursements. The Bontang V
Trustee may from time to time receive Special Disbursement Amounts from the
trustee under any of the Other Trust Agreements. Immediately upon the Bontang
V Trustee's receipt of any funds identified as a Special Disbursement Amount,
such funds shall be impressed with the trust created hereby and become a part
of the Bontang V Trust Funds. Any such amounts received by the Bontang V
Trustee shall be deposited in the account hereunder specified by the remitting
trustee.
ARTICLE 9
PROCEDURES RESPECTING ACCOUNTS UNDER THIS AGREEMENT
9.1 Accounting for Assets. All assets under the jurisdiction
and control of the Bontang V Trustee and held from time to time in the Bontang
V Trust Funds shall be accounted for within the Bontang V General Account
specifying the sub-account and LNG Sales Contract to which such assets may be
allocated, the bank or banks at which cash deposits may be maintained and the
place or places at which investment securities may be held in custody for the
account
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of the Bontang V Trustee. The Bontang V Trustee shall maintain such books of
account and other records as may be necessary to ensure full and proper
segregation of the funds credited to such accounts as may be established by the
Bontang V Trustee hereunder. It shall also segregate, and keep such accounts
separate, from any accounts which may be established by it as trustee and
paying agent under the Other Trust Agreements. Such books of account shall be
open to inspection by the duly authorized representatives of the Producers at
all reasonable times.
9.2 Reports. The Bontang V Trustee shall furnish to each of
the Producers the following reports:
(a) As soon as practicable (and not later than 45
days) after the close of each calendar year, a statement prepared by the
Bontang V Trustee, setting forth the amount and source (by category and the
relevant LNG Sales Contract) of funds received pursuant to this Agreement and
the disbursement of such funds as disclosed by the records and accounts kept by
the Bontang V Trustee pursuant to Section 9.1 during such preceding calendar
year, and a statement of the cash and investments held in the accounts under
this Agreement as of the end of such period.
(b) Within 20 days after the close of each
calendar quarter a statement prepared by the Bontang V Trustee setting forth
the amount and source (by category and the relevant LNG Sales Contract) of
funds received pursuant to this Agreement and the disbursements of such funds
as disclosed by the records and accounts kept by the Bontang V Trustee pursuant
to Section 9.1 during such preceding calendar quarter and a statement of the
cash and investments held in the accounts under this Agreement as of the end of
such period.
(c) Promptly after its receipt or disbursement of
any funds pursuant to this Agreement, the Bontang V Trustee shall notify the
Producers by telex or telecopier of such transactions specifying the amount and
the source (by category and the relevant LNG Sales Contract) of the funds
received and disbursed and the amounts credited or charged to the Bontang V
General Account or any sub-account thereof.
Notwithstanding the provisions of Section 13.3 respecting the
representatives of the Contractors' Groups, each of the reports required by
clauses (a) and (b) of this Section 9.2 shall be furnished by the Bontang V
Trustee directly to each Contractor at its address specified pursuant to
Section 13.3.
9.3 Producer Accounts. The Bontang V Trustee shall maintain
separate accounts for each Producer which are sufficient to reflect each such
Producer's interest in the
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assets, liabilities, receipts and disbursements of the Bontang V Trust Funds,
and its right to distributions therefrom (the "Bontang V Trust Funds
Accounts"). It is the intention of each Producer that the trust created hereby
be a security trust of the type described in Treas. Reg. 1.61-13(b) and I.T.
1942, III-1 C.B. 11 (1924). Accordingly, each Producer agrees for U.S. income
tax purposes to account for its share of the receipts and disbursements made
pursuant to this Agreement as if it had received such amounts directly and made
such disbursements directly, and the Bontang V Trustee agrees for United States
income tax purposes, unless advised by the U.S. Internal Revenue Service to the
contrary, to treat such receipts and disbursements in a manner consistent with
its status as the agent for each such party, or if so advised by Bontang V
Trustee's counsel, as the trustee of a separate grantor trust for each such
party within the meaning of Section 671 of the U.S. Internal Revenue Code of
1986, as amended, and the regulations thereunder.
ARTICLE 10
INVESTMENT OF FUNDS HELD IN ACCOUNTS UNDER THIS AGREEMENT
10.1 Permitted Investments. The Bontang V Trustee shall
invest amounts held by it from time to time in the Bontang V Payment Account,
the Debt Service Account and the Reserve Account solely in:
(i) Eurodollar bank time deposits or
Eurodollar certificates of deposit with banks or both whose deposits are rated
"P-1" by Moody's Bank Credit Report Service and "A-1+" by Standard and Poor's
Rating Group CD Ranking Service, which may include any affiliate of the Bontang
V Trustee satisfying the foregoing criteria; or
(ii) such other types of short-term
interest-bearing bank time deposits and certificates of deposit (x) as to which
there is applicable a sovereign guarantee of repayment of principal, or other
evidence of sovereign support in respect of such repayment as approved by the
Producers and, with respect to amounts, if any, held in the Debt Service
Account or the Reserve Account or any sub-account thereof for the Lenders under
the Loan Agreement, approved by the Majority Lenders; and (y) issued by banks
having at least $100,000,000.00 (or its equivalent) of capital and earned
surplus (or equivalent accounts) as reflected in the then current financial
statements of the issuing banks, which may include any affiliate of the Bontang
V Trustee satisfying the foregoing criteria; or
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(iii) if, due to the relatively small
amount of funds to be invested, the unconventional period during which such
funds are to be invested or similar factors, investments of the type authorized
by clauses (i) and (ii) above are not generally available for such funds, the
Bontang V Trustee may invest such funds in short-term Eurodollar time deposits,
Eurodollar certificates of deposit or Eurodollar repurchase agreements, or any
combination of the foregoing, in each case with any bank or banks each having
at least $100,000,000.00 (or its equivalent in any other currency) of capital
and earned surplus (or equivalent accounts) as reflected in the then current
financial statements of such bank or banks, which may include any affiliate of
the Bontang V Trustee satisfying the foregoing criteria; provided, however,
that the aggregate principal amount of such funds so invested shall not exceed
$1,000,000.00 at any one time.
In no event shall the aggregate amount invested by the Bontang
V Trustee pursuant to the foregoing provisions in time deposits or certificates
of deposit with, or issued by, respectively, any one bank exceed 10% of such
bank's capital and earned surplus (or equivalent accounts) as reflected in the
bank's then current financial statements. For purposes of investments pursuant
to clause (ii) above, the Bontang V Trustee shall request the approval of the
Producers in accordance with Section 13.3 and, as applicable, the Majority
Lenders by giving notice, which request shall specify the type of investment
proposed and the nature of any sovereign guarantee or support applicable
thereto. The Bontang V Trustee shall use its best efforts to assure that the
final maturity of any such investment does not extend beyond the time when the
amounts used to acquire such investments would be required for any other
application hereunder.
For the purposes of investments made pursuant to the foregoing
clauses (i) and (iii), the Bontang V Trustee may submit to the Producers and to
the Tranche A Lender and the Agent a list of bank issuers of securities
satisfying the criteria of such clauses and may request that the Producers, the
Tranche A Lender and the Agent designate one or more such issuers, on the list
or otherwise, as acceptable to them for investment purposes. Upon receipt of
such list and request, the Producers, the Tranche A Lender and the Agent shall
designate from such list or propose one or more issuers satisfactory to them
for such investment purposes; if more than one such issuer is designated, the
designation shall indicate a priority among them; and no such designation with
respect to investments of amounts in the Bontang V Payment Account shall
require any approval or other action on the part of the Lenders or the Agent.
The Bontang V Trustee shall make no investments under such clauses (i) and
(iii) until it has received such a
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designation. The Bontang V Trustee shall not be liable for the results of any
investments made in the securities contemplated by clauses (i) and (iii) of
issuers so approved.
10.2 Prudence and Yield. In making any investments pursuant
to Section 10.1 the Bontang V Trustee shall be guided by the standards of a
prudent investor seeking the maximum yield available consistent with security
of principal at all times; provided that the Bontang V Trustee shall have no
liability whatsoever for the results of any investment approved by the
Producers and the Majority Lenders.
10.3 Interest Allocation. Interest or any other income
arising out of investment of the Bontang V Trust Funds shall be and become a
part of the Bontang V Trust Funds, allocated to the account for which such
investment was made. Interest or any other income arising out of investment of
funds in a sub-account of the Debt Service Account or the Reserve Account shall
be allocated to the sub-account for which such investment was made.
ARTICLE 11
CONCERNING THE BONTANG V TRUSTEE
11.1 Duties. In connection with its duties, rights and
powers under this Agreement (including in relation to transactions it may enter
into pursuant hereto), the Bontang V Trustee shall be subject to the following:
(a) The Bontang V Trustee shall be entitled to
act upon any notice, certificate, request, direction, waiver, receipt or other
document which it in good faith believes to be genuine; and it shall be
entitled to rely upon the due execution, validity and effectiveness, and the
truth and acceptability of any provisions contained therein.
(b) The Bontang V Trustee shall not be liable for
any error of judgment or for any act done or omitted by it in good faith or for
any mistake of fact or law, or for anything which it may do or refrain from
doing, including with respect to any provision herein requiring the Bontang V
Trustee to use its best efforts, except for its own gross negligence or willful
misconduct, nor shall the Bontang V Trustee be liable for special, indirect or
consequential loss or damage of any kind including, without limitation, lost
profits, except such losses or damages resulting from its willful misconduct.
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(c) The Bontang V Trustee may consult with, and
obtain advice from, accounting and legal advisers and it shall incur no
liability or loss and shall be fully protected in acting in good faith in
accordance with the opinion and advice of such advisers.
(d) The Bontang V Trustee shall have no duties
other than those specifically set forth or provided for in this Agreement. The
Bontang V Trustee shall have no obligation to familiarize itself with and shall
have no responsibility with respect to any agreement to which it is not a party
relating to the transactions contemplated by this Agreement nor any obligation
to inquire whether any notice, instruction, statement or calculation is in
conformity with the terms of any such agreement, except for those
irregularities, errors or mistakes apparent on the face of such document or to
the knowledge of the Bontang V Trustee. If, however, any remittance or
communication received by the Bontang V Trustee appears erroneous or irregular
on its face, the Bontang V Trustee shall be under a duty to make prompt inquiry
to the person or party originating such remittance or communication in order to
determine whether a clerical error or inadvertent mistake has occurred.
11.2 Compensation. The Bontang V Trustee shall be entitled
to reasonable compensation to be agreed upon from time to time among the
parties for the services to be performed by it hereunder or under any other
document entered into by the Bontang V Trustee at the request of, or with the
approval of, the Producers, or contemplated hereby or thereby, and to be
reimbursed for all reasonable out-of-pocket expenses incurred by the Bontang V
Trustee in connection therewith. The Bontang V Trustee may charge such agreed
compensation and expenses to the Bontang V Payment Account, providing the
Producers with such evidence as to the nature and amount of such expenses as
any of the Producers may reasonably require. If the balance in the Bontang V
Payment Account is insufficient therefor, each Producer shall pay such
compensation and expenses to the Bontang V Trustee, provided, however, that the
obligation of each respective Contractor with respect to this Section 11.2
shall be pro rata in accordance with its respective Sharing Percentage.
11.3 Resignation. The Bontang V Trustee may, at any time, by
notice to the Producers, the Tranche A Lender and the Agent, tender its
resignation as Trustee and Paying Agent under this Agreement. The Producers
may, at any time by notice jointly given by them, terminate the Bontang V
Trustee's appointment hereunder. Such resignation or termination shall be
effective as from the appointment of a successor as hereinafter provided.
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11.4 Appointment of Successor. Within 60 days of receipt of
a notice of resignation or issuance of a notice of termination, the Producers
shall jointly appoint a successor, being a bank in the United States acceptable
to the Producers. The proposed successor bank (the "Successor") shall promptly
give notice of its appointment to the Bontang V Trustee and shall execute and
deliver to each of the parties hereto an instrument in writing accepting its
appointment hereunder which shall specify the office of the Successor in the
United States which is to be the Trustee's Office for the purpose of this
Agreement.
11.5 Application to Court. If in any case a Successor shall
not be appointed pursuant to the foregoing provisions of this Article 11 within
the 60 days aforesaid, the Bontang V Trustee may apply to any court of
competent jurisdiction to appoint a Successor, notwithstanding the provisions
of Section 13.2. Such court may thereupon, in any case, after such notice, if
any, as such court may deem proper and prescribe, appoint a Successor.
11.6 Successor Vested with Rights. Upon and from the
execution and delivery of its acceptance in writing as aforesaid, the Successor
without any further act or deed shall become fully vested with all the rights,
powers and duties and subject to all the obligations of the Bontang V Trustee
hereunder, but the Bontang V Trustee, upon payment of all sums due it and on
the written request of the Producers shall execute and deliver an instrument
transferring to the Successor the Bontang V Trust Funds, including all funds
held in the Bontang V Payment Account, the Debt Service Account and the Reserve
Account and assigning to the Successor all its rights hereunder and under any
Bontang V Disbursement Trust Agreements and all of its rights with respect to
any Bontang V Depositary.
11.7 Payments After Notice. Upon and from the date of
notification from any Successor, any person required to pay amounts to the
Bontang V Trustee under this Agreement shall pay the Successor at its office
specified as aforesaid all amounts described herein as payable to the Bontang V
Trustee.
11.8 Indemnification. The Producers hereby agree to
indemnify the Bontang V Trustee for, and to hold it harmless against any loss,
liability, claim, judgment, settlement, compromise or reasonable expense
incurred or suffered without gross negligence or willful misconduct on the part
of the Bontang V Trustee, arising out of or in connection with its entering
into this Agreement, the Loan Agreement or any other document entered into by
the Bontang V Trustee at the request of, or with the approval of, the
Producers, or contemplated hereby or thereby, and carrying out its duties or
exercising its rights hereunder or thereunder, including
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the cost and expenses of defending itself against any claim of liability in the
premises.
11.9 Trustee in Individual Capacity. Each of the parties
hereto acknowledges and consents that the Bontang V Trustee, in its individual
capacity, or any affiliate thereof, shall have the same rights, powers and
authority to enter into any deposit agreement, loan agreement or any other
banking or business relationship permitted by law with any of the Producers,
the Lenders or the Agent (without having to account therefor to any of the
Producers) as though it were not the Trustee and Paying Agent under this
Agreement.
ARTICLE 12
DEBT SERVICE ALLOCATION
12.1 Debt Service Allocation Definitions. In addition to and
in amendment of the terms defined elsewhere in this Agreement, the following
terms shall, solely for purposes of this Article 12, have the meanings set
forth below:
"Aggregate Dollar Share" shall have the meaning set forth in
Section 12.3.
"Allocation Trust Agreements" shall mean this Agreement, the
Bontang II Trust Agreement, the Bontang III Trust Agreement, the Bontang IV
Trust Agreement, the Bontang Excess Sales Trust Agreement and the Bontang LPG
Trust Agreement.
"Allocation Trustees" shall mean all of the trustees under the
Allocation Trust Agreements, collectively, and "Allocation Trustee" shall mean
one of such Allocation Trustees as the context may require.
"Bontang LPG Trust Agreement" shall mean the Bontang LPG
Trustee and Paying Agent Agreement, dated as of August 1, 1988, among the
Producers and Continental Bank International, as heretofore and hereafter
amended.
"Bontang LPG Trustee" shall mean the trustee under the
Bontang LPG Trust Agreement.
"Borrowing Trustees" shall mean those Trustees which are a
party to any of the Financing Agreements and "Borrowing Trustee" shall mean one
of such Borrowing Trustees as the context may require.
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"Contingent Support Trustees" shall mean all of the trustees
under the Bontang Excess Sales Trust Agreement and any Special Long Term Sales
Trust Agreements of which the Bontang V Trustee has been notified by Pertamina,
collectively, and "Contingent Support Trustee" shall mean one of such
Contingent Support Trustees as the context may require.
"Debt Service" shall mean (i) amounts paid into any Debt
Service Account by a Borrowing Trustee (other than amounts so paid from the
proceeds of any borrowing under a Financing Agreement or by the Bontang III
Trustee from Contingent Support), (ii) amounts which any Borrowing Trustee has
been notified as having been paid by one or more Producers and identified to
such Borrowing Trustee as "Debt Service" under the Debt Service Allocation
Agreement with respect to indebtedness of such Borrowing Trustee, and (iii)
Contingent Support paid by any Contingent Support Trustee to the Bontang III
Trustee.
"Debt Service Accounts" shall mean all accounts, including any
sub-accounts thereof, which a Borrowing Trustee opens and into which it
transfers LNG revenues or other funds in anticipation of payments of, or as a
reserve for possible payment of, principal, interest and other fees and
expenses pursuant to any of the Financing Agreements, and "Debt Service
Account" shall mean one of such Debt Service Accounts as the context may
require.
"Estimated Debt Service Percentages" shall have the meaning
set forth in Section 12.2.
"Financing Agreement No. 3" shall mean Bontang III Loan
Agreement, dated as of February 9, 1988, as heretofore and hereafter amended,
entered into by the Bontang III Trustee.
"Financing Agreement No. 4" shall mean Bontang IV Loan
Agreement, dated as of August 26, 1991, as heretofore and hereafter amended,
entered into by the Bontang IV Trustee.
"Financing Agreement No. 5" shall mean Bontang V Loan
Agreement, dated as of the date hereof, as hereafter amended, entered into by
the Bontang V Trustee.
"Financing Agreements" shall mean Financing Agreement No. 3,
Financing Agreement No. 4, Financing Agreement No. 5 and any other agreement
designated as a "Financing Agreement" in a notice to the Bontang V Trustee from
the Producers.
"Producers Agreement" shall mean any agreement so entitled
among the Producers, or any of them, and lenders
<PAGE> 62
58
under a Financing Agreement, as amended as of the date hereof and hereafter
amended.
"Provisional Debt Service" shall mean, with respect to any
Debt Service, payments by any Allocation Trustee to reimburse Producers which
have borne more than their respective Estimated Debt Service Percentages of
such Debt Service, together with interest on the Reimbursement Amount from and
including the date of such Debt Service payment to, but not including, the date
of such reimbursement, at the rate equal to the weighted average of the
interest rates in effect under Financing Agreement No. 3 on the date of such
reimbursement.
"Reimbursement Amount" shall mean the amount of any
Provisional Debt Service payment other than the portion thereof attributable to
interest on said reimbursement amount.
"Special Long Term Sales Trust Agreements" shall have the
meaning set forth in Article I of the Bontang III Trust Agreement.
"Trust Agreements" shall mean, collectively, this Agreement
and all Other Trust Agreements, and "Trust Agreement" shall mean one of such
Trust Agreements as the context may require.
"Trustees" shall mean the trustees under the Trust Agreements,
and "Trustee" shall mean one of such Trustees as the context may require.
12.2 Estimated Debt Service Percentages. The Debt Service
Allocation Agreement requires that the Accountants calculate, and deliver to
the Allocation Trustees from time to time certificates setting forth, the
Estimated Debt Service Percentages for each Producer of the estimated amounts
of each type of Debt Service to be paid by the Borrowing Trustees, and the
Contingent Support Trustees (the percentages last so certified as to each
period for each Producer being its "Estimated Debt Service Percentages"). Each
Trust Agreement to which a Borrowing Trustee is a party provides that such
Borrowing Trustee shall promptly give notice to the Allocation Trustees of (i)
each payment into a Debt Service Account made by such Borrowing Trustee,
specifying any amounts so paid from the proceeds of any borrowing under a
Financing Agreement and, in the case of the Bontang III Trustee, from
Contingent Support, (ii) each transfer, payment or distribution from a Debt
Service Account, or any disbursement trust pursuant to a Financing Agreement,
of funds in excess of the amount required to be held therein from time to time,
(iii) each payment of Debt Service of which such Borrowing Trustee has been
notified made by a Producer pursuant to a Producers Agreement, and
<PAGE> 63
59
(iv) the portion of each such payment of Debt Service, whether made by such
Borrowing Trustee or a Producer, borne by each Producer, after taking into
account such Producer's interest in any excess funds transferred, paid or
distributed from any Debt Service Account, or any disbursement trust pursuant
to a Financing Agreement, to or for the account of any Producers. Each Trust
Agreement to which a Contingent Support Trustee is a party provides for similar
notices.
In the event that such notices received by the Bontang V
Trustee, together with the notices referred to in the last sentence of this
paragraph and all similar notices received from the other Allocation Trustees,
considered in the aggregate, show at any time that any Producers have borne
more than their Estimated Debt Service Percentages of Debt Service ("underpaid
Producers"), the Bontang V Trustee shall thereafter make Provisional Debt
Service payments to the underpaid Producers, pro rata in proportion to the
excess amount borne by each such Producer, out of all amounts otherwise payable
under Article 8 to the Producers which have borne less than their Estimated
Debt Service Percentages of such Debt Service until the Reimbursement Amount of
the aggregate Provisional Debt Service payments received by each of the
underpaid Producers from the Allocation Trustees equals the excess amount of
Debt Service borne by such Producer. The Bontang V Trustee shall promptly
advise each other Allocation Trustee of each such Provisional Debt Service
payment made by it.
12.3 Aggregate Dollar Share. The Debt Service Allocation
Agreement also requires that the Accountants calculate, and deliver to the
Allocation Trustees from time to time certificates setting forth, the portion
of Debt Service each Producer should have borne of the Debt Service paid by the
Borrowing Trustees and the Contingent Support Trustees (the amount last so
certified as to each period for each Producer being its "Aggregate Dollar
Share") and the portion thereof which has actually been borne by each Producer.
In the event that any such calculations indicate that any Producers have borne
more than their Aggregate Dollar Shares of Debt Service during the period in
question ("underpaid Producers"), the Accountants are required to instruct the
Bontang V Trustee to pay to the underpaid Producers, pro rata in proportion to
the excess amount borne by each such Producer, all amounts otherwise payable
under Article 8 to the Producers which have borne less than their Aggregate
Dollar Shares for the period in question until the aggregate amount received by
each of the underpaid Producers from the Allocation Trustees (as shown by the
notices referred to in the last sentence of this paragraph and all similar
notices received from the other Allocation Trustees) equals the amount stated
in such instructions to be the excess amount borne by such Producer. The
Bontang V Trustee
<PAGE> 64
60
shall promptly advise each other Allocation Trustee of each such payment
pursuant to this Section 12.3.
Upon receipt of any such instructions the Bontang V Trustee
shall give effect thereto commencing with the next payments to Producers
pursuant to Article 8.
12.4 Pro Rata Treatment. In the event that the funds
available for making the payments required by Sections 12.2 and 12.3 shall not
be sufficient to make the payments therein required in full, such funds shall
be paid to the Producers entitled to payments pursuant to such Sections pro
rata in proportion to the amounts payable to each such Producer thereunder.
12.5 Income From the Disbursement Trust. In order to
implement the provisions of Section 2.4 of the Debt Service Allocation
Agreement, upon receipt of instructions from the Accountants, which shall state
that they are issued pursuant to said Section, and receipt from the
Disbursement Trustee of the funds specified in such instructions, the Bontang V
Trustee shall distribute the funds so received as specified in such
instructions.
ARTICLE 13
MISCELLANEOUS
13.1 Counterparts; Term. This Agreement may be executed in
any number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts together shall constitute one and the same
instrument. Complete sets of counterparts shall be lodged with the Bontang V
Trustee. This Agreement shall be effective as of the date hereof, and shall
remain in effect until the Producers shall have notified the Bontang V Trustee
that this Agreement shall terminate.
13.2 DISPUTES. ALL DISPUTES ARISING AMONG THE PARTIES
RELATING TO THIS AGREEMENT OR THE INTERPRETATION OR PERFORMANCE HEREOF, SHALL
BE FINALLY SETTLED BY ARBITRATION CONDUCTED IN THE ENGLISH LANGUAGE IN PARIS,
FRANCE, BY THREE ARBITRATORS UNDER THE RULES OF ARBITRATION OF THE
INTERNATIONAL CHAMBER OF COMMERCE. JUDGMENT UPON THE AWARD RENDERED MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION, OR APPLICATION BE MADE TO SUCH COURT
FOR A JUDICIAL ACCEPTANCE OF THE AWARD AND AN ORDER OF ENFORCEMENT AS THE CASE
MAY BE. ANY AWARD MADE UNDER THIS SECTION 13.2 SHALL BE BINDING UPON ALL
PARTIES CONCERNED.
<PAGE> 65
61
13.3 Notices. All notices, approvals, instructions, and
other communications for purposes of this Agreement shall be in writing, which
shall include transmission by telex or telecopier. All communications given by
telex or telecopier shall be directed as set forth below, provided that in the
event any communication is received by the Bontang V Trustee from a telex or
telecopy number other than those set forth below, its responses thereto may be
directed to the number from which such communication was received.
(a) To Pertamina at the following mail, telex and
telecopier addresses:
Perusahaan Pertambangan Minyak dan Gas Bumi Negara
(Pertamina)
Jalan Medan Merdeka Timur 1A
Jakarta - Indonesia
Telex No.: 45018
Answerback: PTMJKT 1A
Telecopier No.: 62-21-345-2958
Attention: Director of
Finance
(b) To the Contractors comprising the Vico Group
at the following mail, telex and telecopier addresses:
Virginia Indonesia Company
One Houston Center
1221 McKinney - Suite 700
Houston, Texas 77010
U.S.A.
Telex No.: 713-166-100
Answerback: VICO HOU
Telecopier No.: 713-754-6697
Attention: Treasurer
(c) To the Contractors comprising the Total Group
at the following mail, cable, telex and telecopier addresses:
Total Indonesie
P.O. Box 1010
Jakarta 10010
Indonesia
Telex No.: 60980
Answerback: TOTALJ IA
Telecopier No.: 62-21-252-0814
Attention: President and
General Manager
(d) To the Contractors comprising the Unocal
Group at the following mail, telex and telecopier addresses:
<PAGE> 66
62
Unocal Indonesia Company
Ratu Plaza Office Tower
Jalan Jenderal Sudirman
Jakarta, Indonesia
Telex No. 47335
Answerback: UNOCAL IA
Telecopier No.: 62-21-720-4499
Attention: President
(e) To Inpex on or following March 31, 1997 at
the following mail, telex and telecopier address:
Indonesia Petroleum, Ltd.
17th Floor, Ebisu Neonato,
No. 1-18, Ebisu 4-Chome
Shibuya-ku, Tokyo 150, Japan
Telex No.: 2424210
Answerback: JAIPEX J
Telecopier No.: 81-3-5448-1244
Attention: General Manager
of Gas Business
Department
(f) To the Bontang V Trustee or the trustee under
any Other Trust Agreement at the following mail, telex, and telecopier
addresses:
BankAmerica International
1 World Trade Center
9th Floor
New York, New York 10017
Telex No.: 62 944
Answerback: BOA UW
Telecopier No.: 212-390-2249
Attention: Vice President-Manager
Each of Vico, Total and Unocal is hereby designated the sole representative of
the Contractors comprising its respective Contractor Group for the giving and
receipt of notices, approvals, instructions and other communications to or from
the Contractors under this Agreement and, to the extent Contractors are
entitled to give or receive notices, approvals or instructions thereunder, the
Other Trust Agreements. For purposes of the foregoing, unless specifically
provided otherwise and, with respect to Inpex, solely until March 31, 1997,
each reference in this Agreement to the Producers or the Contractors, shall
insofar as the Contractors are concerned, require notices, approvals and other
communications to and from such representatives. On and following March 31,
1997, each reference to the Producers or the Contractors shall, insofar as
Inpex is concerned, require notices, approvals and other communications to and
from Inpex. A new or successor representative may be designated by notice to
such effect signed by all the Contractors
<PAGE> 67
63
comprising a Contractor Group given to the parties to this Agreement ten days
in advance of any such change. Until receipt of any such notice, the parties
to this Agreement and the Other Trust Agreements may rely on any notice,
approval, instruction or other communication from or to the representative of a
Contractor Group as binding upon each of the Contractors in such Contractor
Group; provided, however, that except as provided in Section 8.5, nothing in
this Agreement is intended to grant the representative of a Contractor Group
(or any successor representative designated pursuant to this Section 13.3) any
power or authority as among the Contractors in such Contractor Group
themselves.
The parties may designate additional addresses for particular
communications as required from time to time, and may change any address, by
notice given ten days in advance of such additions or changes. Immediately
upon receiving communications by telex or telecopier a party may request a
repeat transmittal of the entire communication or confirmation of particular
matters.
Any notice to or from the Tranche A Lender or the Agent under
the Loan Agreement shall be given in accordance with this Section 13.3,
addressed, if to the Tranche A Lender or the Agent at the address set forth in
the Loan Agreement.
13.4 Incumbency Certificates; Notices.
(a) Pertamina and each representative of a
Contractor Group (or any successor representative of a Contractor designated
pursuant to Section 13.3) shall each furnish the Bontang V Trustee, from time
to time, with duly executed incumbency certificates showing the names, titles,
and specimen signatures of the persons authorized on behalf of such party to
give the notifications and approvals required by this Agreement.
(b) The Producers shall arrange for the
Accountants to provide the Bontang V Trustee from time to time with a
notification signed by two of its partners, advising the Bontang V Trustee of
the name and title, and furnishing a specimen signature, of the person or
persons authorized to execute the certificates and other documents required by
this Agreement.
(c) Each Producer shall, and the Producers shall
cause the Accountants to, agree with the Bontang V Trustee upon "test-key"
arrangements for the purpose of authenticating communications between them
respectively which authorize, accomplish, direct or otherwise deal with the
transfer of money under this Agreement. If the Bontang V Trustee or any
Producer receives such a communication which does not comply with such
arrangements, such
<PAGE> 68
64
recipient shall notify the sender of such failure to comply, requesting
correction thereof, and shall take no action in accordance with such
communication until such correction is effected.
(d) Each of the Contractors shall furnish the
Bontang V Trustee, from time to time, with such certificates or other evidence
as the Bontang V Trustee may reasonably require showing the names, titles, and
specimen signatures of the persons authorized on behalf of such party to make
the payment arrangements contemplated by Section 8.4. Each Contractor shall
also furnish the Bontang V Trustee, from time to time, with its address to
which the reports required by Section 9.2 shall be sent.
(e) The Bontang V Trustee shall furnish the
Producers with notice of the officers of the Bontang V Trustee who are
authorized to act on its behalf in the performance by the Bontang V Trustee of
its duties under this Agreement.
13.5 No Amendment Except in Writing. This Agreement may not
be revoked, amended, modified, varied or supplemented except by an instrument
in writing signed by all of the parties hereto.
13.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES
OF AMERICA, APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN
SUCH STATE.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized signatories as of
the date first above written.
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By /s/ FAISAL ABDAOE
----------------------------
Name: Faisal Abdaoe
Title: President-Director
<PAGE> 69
65
VIRGINIA INDONESIA COMPANY UNION TEXAS EAST
KALIMANTAN LIMITED
By /s/ TERRY QUINN By /s/ ALAN CUNNINGHAM
------------------------- -----------------------
Name: Terry Quinn Name: Alan Cunningham
Title: Vice President & CFO Title: Assistant Secretary
UNIVERSE GAS & OIL VIRGINIA INTERNATIONAL
COMPANY, INC. COMPANY
By /s/ TOSHIO NORIMATSU By /s/ RICHARD L. SMERNOFF
------------------------- -----------------------
Name: Toshio Norimatsu Name: Richard L. Smernoff
Title: General Manager Title: Finance Director
Business Development
TOTAL INDONESIE OPICOIL HOUSTON, INC.
By /s/ BERNARD VITRY By /s/ ROY C.H. CHIU
------------------------- -----------------------
Name: Bernard Vitry Name: Roy C.H. Chiu
Title: President & General Title: President
Manager
UNOCAL INDONESIA COMPANY LASMO SANGA SANGA LIMITED
By /s/ DONALD A. MACKAY By /s/ RICHARD L. SMERNOFF
------------------------- -----------------------
Name: Donald A. Mackay Name: Richard L. Smernoff
Title: Assistant Treasurer Title: Finance Director
INDONESIA PETROLEUM, LTD. BANKAMERICA INTERNATIONAL
By /s/ KAZUO YOSHIKAWA By /s/ GUY J. REY-HERME
------------------------- -----------------------
Name: Kazuo Yoshikawa Name: Guy J. Rey-Herme
Title: Executive Senior Title: Attorney-in-Fact
Managing Director
<PAGE> 70
APPOINTMENT OF ACCOUNTANTS
UNDER
BONTANG V TRUSTEE AND PAYING AGENT AGREEMENT
___________________________________
Reference is made to the Bontang V Trustee and Paying Agent
Agreement dated as of July 1, 1995 (the "Bontang V Trustee and Paying Agent
Agreement"), among the undersigned parties and BankAmerica International.
Terms defined in the Bontang V Trustee and Paying Agent Agreement shall have
the same meanings herein as so defined.
Pursuant to Section 8.3 of the Bontang V Trustee and Paying
Agent Agreement the independent public accounting firm of Hanadi Sujendro &
Co., Member firm of Klynveld Peat Marwick Goerdeler, and its successors from
time to time, is hereby appointed to act as the Accountants thereunder. In
preparation of the certificates required pursuant to Section 8.3 of the Bontang
V Trustee and Paying Agent Agreement such Accountants are authorized to rely
upon confirmations from the auditors of the Total Group and the Unocal Group
with respect to the percentages in which natural gas produced under their
respective Production Sharing Contracts is shared among such groups and
Pertamina.
Dated July 1, 1995.
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By _____________________________
Name:
Title:
VIRGINIA INDONESIA COMPANY UNION TEXAS EAST
KALIMANTAN LIMITED
By _________________________ By ________________________
Name: Name:
Title: Title:
<PAGE> 71
VIRGINIA INTERNATIONAL COMPANY UNIVERSE GAS & OIL
COMPANY, INC. COMPANY, INC.
By _________________________ By ________________________
Name: Name:
Title: Title:
OPICOIL HOUSTON, INC. TOTAL INDONESIE
By _________________________ By ________________________
Name: Name:
Title: Title:
LASMO SANGA SANGA LIMITED UNOCAL INDONESIA COMPANY
By _________________________ By ________________________
Name: Name:
Title: Title:
INDONESIA PETROLEUM, LTD.
By ________________________
Name:
Title:
<PAGE> 1
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
BADAK TRUSTEE AND PAYING AGENT AGREEMENT
AMENDMENT No. 1 dated as of July 1, 1995 among
(i) Continental Bank International, not in its individual
capacity but solely as Trustee under the Bontang I Trust Agreement (as defined
below); and
(ii) PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA,
VIRGINIA INTERNATIONAL COMPANY, VIRGINIA INDONESIA COMPANY, LASMO SANGA SANGA
LIMITED, UNION TEXAS EAST KALIMANTAN LIMITED, OPICOIL HOUSTON, INC., UNIVERSE
GAS & OIL COMPANY, INC., TOTAL INDONESIE, UNOCAL INDONESIA COMPANY and
INDONESIA PETROLEUM, LTD.
W I T N E S S E T H :
WHEREAS, the parties hereto (or their predecessors in
interest) are parties to the Badak Trustee and Paying Agent Agreement
originally dated as of July 15, 1974, as amended and restated as of February 9,
1988 (the "Bontang I Trust Agreement"); and
WHEREAS, the parties hereto have determined that the Trust
Agreement should be further amended as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The definition of "LNG Sales Contract" in the Bontang
I Trust Agreement is hereby amended so as to read in its entirety as follows:
" "LNG Sales Contract" means the LNG Sales Contract dated as
of December 3, 1973, as heretofore and hereafter amended or extended up to the
period ending on December 31, 1999 (but excluding any and all extensions,
supplements, modifications, renewals or amendments applicable to periods
subsequent to December 31, 1999) between Pertamina and The Chubu Electric Power
Co., Inc., The Kansai Electric Power Co., Inc., Kyushu Electric Power
1
<PAGE> 2
Co., Inc., Nippon Steel Corporation, and Osaka Gas Company, Ltd. ("Buyers")."
2. Section 1.1 of the Bontang I Trust Agreement is
hereby amended so as to read in its entirety as follows:
"1.1 Pursuant to Section 10.5 of the LNG Sales
Contract, Article 7 of the Base Load Supply Agreements, and Article 6 of the
KCO Supply Agreements, Pertamina hereby designates, and the Contractors hereby
agree to the designation of, the Trustee named herein as the Trustee and Paying
Agent to which all amounts which become due and payable by each Buyer under the
LNG Sales Contract and applicable to LNG from the Bontang Plant shall be paid.
Notwithstanding the foregoing or any other provision hereof to the contrary,
the parties hereto acknowledge and agree that all amounts which become due and
payable by the Buyers under the LNG Sales Contract (which term shall, solely
for this sentence, include any extensions, renewals and amendments applicable
to periods subsequent to December 31, 1999) with respect to cargoes required to
be delivered at any time on or after January 1, 2000 shall not constitute Badak
Trust Funds, and if received by the Trustee shall be paid over to the trustee
under the Bontang V Trustee and Paying Agent Agreement dated as of July 1,
1995."
3. Section 1.2 of the Bontang I Trust Agreement is
hereby amended by (i) deleting the word "All" at the beginning of Section 1.2
and inserting in lieu thereof the phrase "Subject to the second sentence of
Section 1.1, all" and (ii) deleting the word "Immediately" at the beginning of
the last sentence of Section 1.2 and inserting in lieu thereof the phrase
"Subject to the second sentence of Section 1.1, immediately."
4. Section 1.3 of the Bontang I Trust Agreement is
hereby amended by deleting the word "All" at the beginning of Section 1.3 and
inserting in lieu thereof the phrase "Subject to the second sentence of Section
1.1, all."
5. Except as amended hereby, the Trust Agreement remains
unchanged and in full force and effect.
6. THIS AMENDMENT SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
7. This Amendment may be executed in any number of
counterparts by the different parties hereto on separate counterparts, each of
which when so executed and
2
<PAGE> 3
delivered shall be an original, but all such counterparts together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective duly authorized signatories
as of the date hereof.
The Trustee
CONTINENTAL BANK INTERNATIONAL,
as Trustee aforesaid
By: /s/ VINCENT CHORNEY
-------------------------------------------
Name: Vincent Chorney
Title: Attorney-in-Fact
Producers
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA
(PERTAMINA)
By: /s/ F. ABADA'OE
-------------------------------------------
Name: F. Abada'oe
Title: President Director
VIRGINIA INDONESIA COMPANY
By: /s/ TERRY N. QUINN
-------------------------------------------
Name: Terry N. Quinn
Title: Vice President and C.F.O.
VIRGINIA INTERNATIONAL COMPANY
By: /s/ RICHARD L. SMERNOFF
-------------------------------------------
Name: Richard L. Smernoff
Title: Attornery-in-fact
Virginia International Company
3
<PAGE> 4
LASMO SANGA SANGA LIMITED
By: /s/ RICHARD L. SMERNOFF
-------------------------------------------
Name: Richard L. Smernoff
Title: Finance Director, LASMO plc
UNION TEXAS EAST KALIMANTAN LIMITED
By: /s/ R. A. CUNNINGHAM
-------------------------------------------
Name: R. A. Cunningham
Title: Assistant Secretary
OPICOIL HOUSTON, INC.
By: /s/ ROY, C.H. CHIU
-------------------------------------------
Name: Roy, C. H. Chiu
Title: President, Opicoil Houston, Inc.
UNIVERSE GAS & OIL COMPANY, INC.
By: /s/ TOSHIO NORIMATSU
-------------------------------------------
Name: Toshio Norimatsu
Title: General Manager
TOTAL INDONESIE
By: /s/ B. VITRY
-------------------------------------------
Name: B. Vitry
Title: President & General Manager
4
<PAGE> 5
UNOCAL INDONESIA COMPANY
By: /s/ DONALD A. MACKAY
-------------------------------------------
Name: Donald A. MacKay
Title: Assistant Treasurer
INDONESIA PETROLEUM, LTD.
By: /s/ KAZUO YOSHIKAWA
-------------------------------------------
Name: Kazuo Yoshikawa
Title: Executive Senior Managing
Director
5
<PAGE> 1
AMENDMENT NO. 1
TO
AMENDED AND RESTATED
BONTANG EXCESS SALES TRUSTEE
AND PAYING AGENT AGREEMENT
AMENDMENT No. 1 dated as of July 1, 1995 among
(i) Continental Bank International, not in its individual
capacity but solely as Trustee under the Bontang Excess Sales Trustee and
Paying Agent Agreement; and
(ii) PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA,
VIRGINIA INTERNATIONAL COMPANY, VIRGINIA INDONESIA COMPANY, LASMO SANGA SANGA
LIMITED, UNION TEXAS EAST KALIMANTAN LIMITED, OPICOIL HOUSTON, INC., UNIVERSE
GAS & OIL COMPANY, INC., TOTAL INDONESIE, UNOCAL INDONESIA COMPANY and
INDONESIA PETROLEUM, LTD.
W I T N E S S E T H :
WHEREAS, the parties hereto are parties to the Bontang Excess
Sales Trustee and Paying Agent Agreement originally dated as of November 1,
1986, as amended and restated as of February 9, 1988 (the "Trust Agreement");
and
WHEREAS, the parties hereto have determined that the Trust
Agreement should be further amended as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Article 1 of the Trust Agreement is hereby amended by
adding a new definition of "CPC 1994 Sales Contract" to be inserted immediately
following the definition of "CPC" and reading in its entirety as follows:
1
<PAGE> 2
" "CPC 1994 Sales Contract" means the Memorandum of
Agreement between PERTAMINA and Chinese Petroleum Corporation for Sale and
Purchase of LNG during 1998 and 1999, dated as of December 6, 1994, as amended
or modified from time to time." "
2. Article 1 of the Trust Agreement is hereby amended by
adding a new definition of "KGC 1994 Sales Contract" to be inserted immediately
following the definition of "Inpex" and reading in its entirety as follows:
" "KGC 1994 Sales Contract" means the Memorandum of
Agreement for Purchase and Sale of LNG during 1995-1999, dated September 30,
1994, by and between PERTAMINA and Korea Gas Corporation, as amended or
modified from time to time." "
3. The definition of "Excess Sales Contracts" in Article
1 of the Trust Agreement is hereby amended so as to read in its entirety as
follows:
"Excess Sales Contracts" shall mean:
(i) "Agreement for Sale and Purchase of Liquefied
Natural Gas" dated August 29, 1986, between PERTAMINA and Total International
Limited, as hereafter amended;
(ii) "Invoice Settlement Agreement for 1973 LNG
Sales Contract" and "Invoice Settlement Agreement for 1981 LNG Sales Contract"
both dated as of March 31, 1987, between PERTAMINA and divers Japanese buyers
of LNG, as hereafter amended, including any extension or renewal thereof;
(iii) "LNG Sales and Purchase Contract (Yokkaichi
LNG Trade)" dated August 28, 1987, between PERTAMINA and Nusantara Gas Services
Company, Inc., as hereafter amended, including any extension or renewal
thereof;
(iv) the Korean Quantities Agreement, it being
understood that after December 31, 1999, the Korean Carry-Over Quantities will
not be supplied under the 1973 LNG Sales Contract (as defined in the Korean
Quantities Agreement) and the 1973 LNG Sales Contract will not be the
Designated LNG Sales Contract (as defined in the Korean Quantities Agreement);
and
any other contract (other than any Excluded Excess Sales Contracts, the CPC
1994 Sales Contract and the KGC 1994 Sales Contract), for the sale of LNG to be
manufactured using existing or future excess capacity at the Bontang
2
<PAGE> 3
Plant; provided, that the KGC 1994 Sales Contract will constitute an Excess
Sales Contract solely with respect to cargoes delivered thereunder through and
including December 31, 1997."
4. Section 2.1 of the Trust Agreement is hereby amended
by deleting the word "Pursuant" at the beginning of Section 2.1 and inserting
in lieu thereof the phrase "Subject to the last sentence of Section 2.3,
pursuant."
5. Section 2.2 of the Trust Agreement is hereby amended
by (i) deleting the word "All" at the beginning of Section 2.2 and inserting in
lieu thereof the phrase "Subject to the last sentence of Section 2.3, all" and
(ii) deleting the word "Immediately" at the beginning of the last sentence of
Section 2.2 and inserting in lieu thereof the phrase "Subject to the last
sentence of Section 2.3, immediately."
6. Section 2.3 of the Trust Agreement is hereby amended
by adding a new sentence at the end thereof providing as follows:
"Notwithstanding the foregoing or any other provision
hereof to the contrary, the parties hereto acknowledge and agree that (a) all
amounts which become due and payable by the buyer under the KGC 1994 Sales
Contract for, or otherwise relating to, cargoes delivered under the KGC 1994
Sales Contract at any time on or after January 1, 1998, (b) all amounts which
become due and payable by the buyer under the CPC 1994 Sales Contract and (c)
all amounts which become due and payable on or after January 1, 2000 by the
buyers under the 1973 LNG Sales Contract (as defined in the Korean Quantities
Agreement, (the amounts described in (a), (b) and (c) referred to collectively
as the "Bontang V Trust Funds") shall not constitute Bontang Excess Sales
Trust Funds. Any Bontang V Trust Funds received by the Bontang Excess Sales
Trustee shall be paid over to the trustee under the Bontang V Trustee and
Paying Agent Agreement dated as of July 1, 1995."
7. Except as amended hereby, the Trust Agreement remains
unchanged and in full force and effect.
8. THIS AMENDMENT SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
9. This Amendment may be executed in any number of
counterparts by the different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all such
counterparts together shall constitute one and the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective duly authorized signatories
as of the date hereof.
The Trustee
CONTINENTAL BANK INTERNATIONAL,
as Trustee aforesaid
By: /s/ VINCENT CHORNEY
----------------------------------------
Name: Vincent Chorney
Title: Attorney-in-Fact
Producers
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA
(PERTAMINA)
By: /s/ F. ABDA'OE
----------------------------------------
Name: F. Abda'oe
Title: President Director
VIRGINIA INDONESIA COMPANY
By: /s/ TERRY N. QUINN
----------------------------------------
Name: Terry N. Quinn
Title: Vice President and C.F.O.
4
<PAGE> 5
VIRGINIA INTERNATIONAL COMPANY
By: /s/ RICHARD L. SMERNOFF
--------------------------------------------
Name: Richard L. Smernoff
Title: Attornery-in-fact
Virginia International
Company
LASMO SANGA SANGA LIMITED
By: /s/ RICHARD L. SMERNOFF
--------------------------------------------
Name: Richard L. Smernoff
Title: Finance Director, LASMO plc
UNION TEXAS EAST KALIMANTAN LIMITED
By: /s/ R. A. CUNNINGHAM
--------------------------------------------
Name: R. A. Cunningham
Title: Assistant Secretary
OPICOIL HOUSTON, INC.
By: /s/ ROY, C. H. CHIU
--------------------------------------------
Name: Roy, C. H. Chiu
Title: President, Opicoil Houston,
Inc.
UNIVERSE GAS & OIL COMPANY, INC.
By: /s/ TOSHIO NORIMATSU
--------------------------------------------
Name: Toshio Norimatsu
Title: General Manager
5
<PAGE> 6
TOTAL INDONESIE
By: /s/ B. VITRY
--------------------------------------------
Name: B. Vitry
Title: President & General Manager
UNOCAL INDONESIA COMPANY
By: /s/ DONALD A. MACKAY
--------------------------------------------
Name: Donald A. MacKay
Title: Assistant Treasurer
INDONESIA PETROLEUM, LTD.
By: /s/ KAZUO YOSHIKAWA
--------------------------------------------
Name: Kazuo Yoshikawa
Title: Executive Senior Managing
Director
6
<PAGE> 1
AMENDMENT NO. 1
TO
BONTANG III LOAN AGREEMENT
AMENDMENT No. 1 dated as of July 1, 1995 among
(i) Continental Bank International, not in its individual
capacity but solely as Trustee under the Bontang III Trustee and Paying Agent
Agreement among it and Perusahaan Pertambangan Minyak dan Gas Bumi Negara,
Virginia International Company, Virginia Indonesia Company, Lasmo Sanga Sanga
Limited, Union Texas East Kalimantan Limited, Opicoil Houston, Inc., Universe
Gas & Oil Company, Inc., Total Indonesie, Unocal Indonesia Company and
Indonesia Petroleum, Ltd. (or their predecessors in interest), dated as of
February 9, 1988; and
(ii) TRAIN-E FINANCE CO., LTD., as Tranche A Lender; and
(iii) THE INDUSTRIAL BANK OF JAPAN TRUST COMPANY, as Agent
on behalf of the Majority Tranche B Lenders.
W I T N E S S E T H :
WHEREAS, the parties hereto are parties to the Bontang III
Loan Agreement dated as of February 9, 1988 (the "Bontang III Loan Agreement");
and
WHEREAS, the parties hereto have determined that the Bontang
III Loan Agreement should be amended as provided herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. The definition of "Future Long Term Sales Contracts"
in Section 1 of the Bontang III Loan Agreement is hereby amended so as to read
in its entirety as follows:
" "Future Long Term Sales Contracts" means, with respect to
any First Contingent Support Period referred to in clauses (ii), (iii) and (iv)
of the definition thereof, all Long Term Sales Contracts in
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<PAGE> 2
effect and with respect to which payment or performance or both are not yet
completed (and any proceeds of which have not been deposited in the relevant
Contingent Support Account under the Bontang Excess Sales Trust Agreement) at
the time of commencement of such First Contingent Support Period, other than
(i) Special Long Term Sales Contracts, (ii) the Memorandum of Agreement between
Pertamina and Chinese Petroleum Corporation for the Sale and Purchase of LNG
during 1998 and 1999, dated and effective as of December 6, 1994, as amended or
modified from time to time, and (iii) the Memorandum of Agreement by and
between Pertamina and Korea Gas Corporation for Purchase and Sale of LNG during
1995-1999, dated September 30th, 1994, as amended or modified from time to
time, provided, that such Memorandum of Agreement shall constitute a Future
Long Term Sales Contract and a Contingent Support Agreement solely with respect
to cargoes delivered thereunder through and including December 31, 1997";
2. The definition of "1973 LNG Sales Contract" in
Section 1 of the Bontang III Loan Agreement is hereby amended so as to read in
its entirety as follows:
" "1973 LNG Sales Contract" means the LNG Sales
Contract, dated as of December 3, 1973, between Pertamina and The Chubu
Electric Power Co., Inc., The Kansai Electric Power Co., Inc., Kyushu Electric
Power Co., Inc., Nippon Steel Corporation and Osaka Gas Company, Ltd. as
heretofore and hereafter amended, including any extension of renewal thereof,
as supplemented by the Memorandum of Agreement between Pertamina and The Chubu
Electric Power Co., Inc., The Kansai Electric Power Co., Inc. and Kyushu
Electric Power Co., Inc., dated as of January 1, 1983, as heretofore and
hereafter amended, including any extension or renewal thereof; provided that
the term "1973 LNG Sales Contract" shall exclude any amendments, extensions or
renewals thereof with respect to the period on or after January 1, 2000 and on
and after such date the 1973 LNG Sales Contract will no longer constitute a
Contingent Support Agreement."
3. Except as amended hereby, the Bontang III Loan
Agreement remains unchanged and in full force and effect.
4. THIS AMENDMENT SHALL BE GOVERNED BY AND INTERPRETED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
5. This Amendment may be executed in any number of
counterparts by the different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all such
counterparts
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<PAGE> 3
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective duly authorized signatories
as of the date hereof.
The Trustee
CONTINENTAL BANK INTERNATIONAL,
as Trustee aforesaid
By: /s/ VINCENT CHORNEY
------------------------------------
Name: Vincent Chorney
Title: Attorney-in-Fact
The Lenders
TRAIN-E FINANCE CO., LTD.
By: /s/ KANJI SEKIMOTO
------------------------------------
Name: Kanji Sekimoto
Title: Senior Managing
Director
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY, as Agent on Behalf of the
Majority Tranche B Lenders
By: /s/ KENICHIRO MURATA
------------------------------------
Name: Kenichiro Murata
Title: Attornery-in-fact
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<PAGE> 1
SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
BETWEEN
PERUSAHAAN PERTAMBANGAN MINYAK DAN
GAS BUMI NEGARA (PERTAMINA),
AS SELLER
AND
CHUBU ELECTRIC POWER CO., INC.
THE KANSAI ELECTRIC POWER CO., INC.
KYUSHU ELECTRIC POWER CO., INC.
NIPPON STEEL CORPORATION
OSAKA GAS CO., LTD.
TOHO GAS CO., LTD.,
AS BUYERS
<PAGE> 2
SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 - DEFINITIONS 2
ARTICLE 2 - SALE AND PURCHASE 10
ARTICLE 3 - SOURCES OF SUPPLY 11
ARTICLE 4 - TRANSPORTATION AND UNLOADING 13
ARTICLE 5 - ONSHORE FACILITIES 23
ARTICLE 6 - DURATION OF CONTRACT 26
ARTICLE 7 - QUANTITIES 27
ARTICLE 8 - CONTRACT SALES PRICE 36
ARTICLE 9 - TRANSFER OF TITLE 50
ARTICLE 10 - INVOICES AND PAYMENT 51
ARTICLE 11 - QUALITY 55
ARTICLE 12 - PROGRAMMING AND SHIPPING MOVEMENTS 56
ARTICLE 13 - MEASUREMENTS AND TESTS 58
ARTICLE 14 - DUTIES, TAXES AND CHARGES 66
ARTICLE 15 - FORCE MAJEURE 67
ARTICLE 16 - ARBITRATION 69
ARTICLE 17 - APPLICABLE LAW 70
ARTICLE 18 - BUYERS' COORDINATOR 71
ARTICLE 19 - CONFIDENTIALITY 72
ARTICLE 20 - NOTICES 73
ARTICLE 21 - ASSIGNMENT 75
ARTICLE 22 - AMENDMENTS 76
ARTICLE 23 - SEVERALTY 77
ARTICLE 24 - DETAILS OF PERFORMANCE 78
ARTICLE 25 - SCOPE 79
ARTICLE 26 - COUNTERPARTS 80
ARTICLE 27 - EFFECTIVE DATE AND APPLICABILITY 81
SCHEDULE A - TESTING AND METHODS
</TABLE>
<PAGE> 3
SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
This LNG Sales Contract ("Contract"), dated as of the 3rd day of December,
1973, amended by Amendment No.1 dated as of the 31st day of August, 1976,
amended and restated as of the 1st day of January, 1990 and further amended as
of the 1st day of June, 1992 ("First A/R"), is hereby further amended and
restated as of the 3rd day of August, 1995 ("Second A/R") by and between
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA ("PERTAMINA"), a state
enterprise of the Republic of Indonesia ("Seller"), on the one hand, and CHUBU
ELECTRIC POWER CO., INC. ("Chubu Electric"), THE KANSAI ELECTRIC POWER CO.,
INC. ("Kansai Electric"), KYUSHU ELECTRIC POWER CO., INC. ("Kyushu Electric"),
NIPPON STEEL CORPORATION ("Nippon Steel"), OSAKA GAS CO., LTD. ("Osaka Gas")
and TOHO GAS CO., LTD. ("Toho Gas"), all corporations organized and existing
under the laws of Japan (referred to individually as "Buyer" and collectively
as "Buyers"), on the other hand.
WITNESSETH:
WHEREAS:
1. Seller and Buyers have, from time to time, amended the Contract to
incorporate new or revised terms relating to the sale and purchase of
LNG;
2. By Memorandum of Agreement Re : 1973 LNG Sales Contract Extension
("1973 Extension MOA") dated as of October 6, 1994, and subsequent
agreements Seller and Buyers agreed to extend the Contract to December
31, 2010 on agreed terms and conditions and to reflect such extension
in this Second A/R after the finalization of transportation
arrangements; and
3. Seller and Buyers have agreed on the appropriate revisions to reflect
the transportation arrangements in accordance with the provisions of
the 1973 Extension MOA, and Seller and Buyers desire to amend and
restate the Contract accordingly.
NOW, THEREFORE, Seller and each Buyer hereby agree to the following terms:
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<PAGE> 4
ARTICLE 1 - DEFINITIONS
The terms or expressions below will have the following meanings in this
Contract:
1.1 Actual Cubic Foot
A volume equal to the volume of a cube whose edge is one foot.
1.2 Adverse Weather Conditions
As defined in Section 4.4(b)(iii).
1.3 Affiliate
As defined in Article 19.
1.4 Allowance
The quantity of LNG by which a Buyer reduces a Quantity Deficiency in
respect of a given calendar year pursuant to the provisions of Section
7.3(d).
1.5 Allowance Restoration Period
As defined in Section 7.3(d)(iv).
1.6 Annual Program
As defined in Section 12.1(a).
1.7 Badak Facility
The liquefaction plant facilities, including processing, storage,
loading and related facilities and the Natural Gas transmission
pipelines from the field to the liquefaction plant, located in East
Kalimantan, Indonesia.
1.8 Base Rate
The rate of interest announced from time to time by Citibank, N.A.,
New York ("Citibank") as Citibank's base rate. The base rate may not
be the lowest rate charged by Citibank to its borrowers. If there is
any doubt as to the Base Rate for any period, a written confirmation
signed by an officer of Citibank shall conclusively establish the Base
Rate in effect for such period. In the event that Citibank shall for
any reason cease quoting a base rate as described above, then a
comparable rate shall be determined using rates then in effect and
shall be used in place of the said base rate.
-2-
<PAGE> 5
1.9 British Thermal Unit (BTU)
The amount of heat required to raise the temperature of one
avoirdupois pound of pure water from 59.oF to 60.oF at an absolute
pressure of 14.696 pounds per square inch.
1.10 Burmah
Burmah Gas Transport Limited, a Liberian corporation, and its
successors and assigns.
1.11 Burmah Vessels
The following LNG tankers: LNG Capricorn, LNG Gemini, LNG Leo, LNG
Libra, LNG Taurus, and LNG Virgo.
1.12 Business Day in Japan
Every day other than Saturdays, Sundays, National Holidays (including
compensatory days), and January 2 and 3.
1.13 Buyer Force Majeure
As defined in Section 4.6(a).
1.14 Buyers' Coordinator
Japan Indonesia LNG Co., Ltd. or such other entity as may be
designated by Buyers pursuant to Article 18.
1.15 Buyer's Facilities
For the purposes of Section 15.1 E in respect of any Buyer, the
Receiving Facilities of such Buyer and such other facilities directly
related to the use of LNG which, if not operational, would reduce the
amount of LNG which such Buyer is able to receive hereunder.
1.16 Certificate
As defined in Section 3.2(a).
1.17 Contract Sales Price
As defined in Section 8.1.
1.18 Coordinated Maintenance Schedule
As defined in Section 12.3.
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<PAGE> 6
1.19 Cubic Meter
A volume equal to the volume of a cube whose edge is one meter.
1.20 Delivery Point
The point at which the flange coupling of Buyer's unloading line joins
the flange coupling of the LNG discharging manifold on board the LNG
Tanker.
1.21 Demurrage Event
As defined in Section 4.4(a).
1.22 Dwiputra
The LNG tanker Dwiputra.
1.23 Exercising Buyer
As defined in Section 7.3(d)(i).
1.24 Extension Fleet
The Burmah Vessels and the Dwiputra.
1.25 Final Settlement
As defined in Section 8.5(a).
1.26 Fixed Quantity
As defined in Section 7.1.
1.27 Fixed Quantity Period
As defined in Section 7.1.
1.28 Force Majeure Deficiency
As defined in Section 7.6(a).
1.29 G.P.A.
Gas Processors Association.
1.30 Gas Supply Area
The areas in East Kalimantan, Indonesia, covered by production sharing
contracts between Seller and Seller's Suppliers, and such other nearby
contract areas as Seller may designate from time to time.
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<PAGE> 7
1.31 Gross Heating Value
The quantity of heat expressed in British Thermal Units produced by
the complete combustion in air of one cubic foot of anhydrous gas, at
a temperature of 60.0oF and at an absolute pressure of 14.696 pounds
per square inch, with the air at the same temperature and pressure as
the gas, after cooling the products of the combustion to the initial
temperature of the gas and air, and after condensation of the water
formed by combustion.
1.32 Inward Steaming Time
As defined in Section 4.4(b).
1.33 Liquefied Natural Gas (LNG)
Natural Gas in a liquid state at or below its boiling point at a
pressure of approximately one atmosphere.
1.34 LNG Element or LE
As defined in Section 8.1.
1.35 LNG Tanker
One of the vessels in the Extension Fleet or a Substitute LNG Tanker.
1.36 Loading Port
The port located at the Badak Facility.
1.37 M.S.A.
The Maritime Safety Agency of Japan.
1.38 Make-Good LNG
As defined in Section 7.3(d)(iv).
1.39 Make-Good Obligation
The obligation of a Buyer as set forth in Section 7.3(d)(iv) to take
and pay for LNG in an amount (measured in BTU's) equal to each
Allowance exercised.
1.40 Make-Up LNG
As defined in Section 7.5.
1.41 Natural Gas
Any hydrocarbon or mixture of hydrocarbons consisting essentially of
methane, other hydrocarbons, and non-combustible gases in a gaseous
state and
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<PAGE> 8
which is extracted from the subsurface of the earth in its natural
state, separately or together with liquid hydrocarbons.
1.42 Net Payments
The amount paid after deducting any amounts pursuant to section 8.3 of
a Charter and any other credits or sums which Seller receives with
respect to the applicable Seller's Transportation Arrangements (but
excluding any credits or sums which Seller receives with respect to
the cargo or with respect to the Omnibus and Waiver Agreements);
provided, however, that any sums received by Seller from Seller's
Transporter in the nature of damages or other compensation for breach
of contract or received by Seller from Guarantors under the Guarantee
shall be net of any attorney's fees, arbitrators' fees and costs, and
any other third party costs and expenses incurred by Seller in
recovering such damages or compensation.
1.43 Ninety-Day Schedule
As defined in Section 12.2.
1.44 Non-Utilization Cost
As defined in Section 4.6(a).
1.45 Notice of Readiness
The notice given at the time prescribed in Section 4.4(b) by the
Master of each LNG Tanker or its agent to Buyer by letter, telegraph,
telex, facsimile, radio or telephone that such LNG Tanker is ready to
discharge LNG.
1.46 Outward Steaming Time
As defined in Section 4.4(b).
1.47 Pacific
Pacific LNG Transport Limited, a Bahamas corporation, and its
successors and assigns.
1.48 Proved Remaining Recoverable Reserves
Reserves which have been proved to a high degree of certainty by
reason of actual completion, successful testing or in certain cases by
adequate core analyses, and which are defined areally by reasonable
geological interpretation of structure and known continuity of oil-or
gas-saturated material.
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<PAGE> 9
1.49 Quantity Deficiency
As defined in Section 7.3(a).
1.50 Receiving Facilities
The LNG receiving terminal facilities which Buyers have constructed or
will construct at the Unloading Ports including, without limitation,
berthing and unloading facilities, LNG storage tanks, vessel services
facilities and regasification plants.
1.51 Restoration Quantities
As defined in Section 7.6(a).
1.52 Safety Pledge Letter
As defined in Section 4.1(f).
1.53 Seller's Facilities
For the purpose of Section 15.1 D, Natural Gas reservoirs or (whether
heretofore constructed or to be constructed) production facilities in
the field, the facilities for transportation of Natural Gas from the
field, and the Badak Facility.
1.54 Seller Force Majeure
As defined in Section 8.3(a)(ii).
1.55 Seller's Gas Supply Obligation
From time to time on any given date, the amount of Natural Gas
required to satisfy the remaining obligations of Seller on such date
to supply LNG or Natural Gas from the Gas Supply Area plus the amount
of Natural Gas from the Gas Supply Area required to supply any
additional commitment or commitments which Seller anticipates making.
1.56 Seller's Suppliers
In respect of portions of the LNG to be sold hereunder :
(a) Total Indonesie and Indonesia Petroleum, Ltd.;
(b) Virginia Indonesia Company, Lasmo Sanga Sanga Limited, OPICOIL
Houston, Inc., Union Texas East Kalimantan Limited, Universe
Gas & Oil Company, Inc. and Virginia International Company;
(c) Unocal Indonesia Company;
(d) Indonesia Petroleum, Ltd.; and
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<PAGE> 10
such other entities that may, from time to time, execute a Supply
Agreement with Seller; and any successors and assigns of any of the
aforesaid suppliers who shall have agreed in writing to be bound by
all of the obligations of their respective assignors under the
applicable Supply Agreement with Seller.
1.57 Seller's Transportation Arrangements
The Fleetwide Agreement, Charters, and Paying Agent Agreement, each
dated as of July 25, 1995, between Burmah and Seller, and Deed
of Guarantee and all other agreements and instruments referred to
therein to which Seller is a party; the Time Charter Party dated June
2, 1994 between Pacific and Seller and all other agreements and
instruments referred to therein to which Seller is a party; and all
agreements and instruments to which Seller is a party relating to a
Substitute LNG Tanker; including, in each case, any amendments and
supplements thereto; but, in each case, only to the extent related to
the transportation of LNG hereunder.
1.58 Seller's Transporter
Burmah, Pacific or any entity providing a Substitute LNG Tanker.
1.59 Standard Cubic Foot (scf)
The quantity of Natural Gas, free of water vapor, occupying a volume
of one Actual Cubic Foot at a temperature of 60.0oF and at an absolute
pressure of 14.696 pounds per square inch.
1.60 Substitute LNG Tanker
An ocean-going vessel suitable for transporting LNG (other than a
vessel in the Extension Fleet) which Buyers have consented pursuant to
Section 4.1(c) that Seller may use for transportation of LNG
hereunder.
1.61 Supply Agreement
As defined in Section 3.1.
1.62 Take-or-Pay Quantity
As defined in Section 7.5.
1.63 TE Formula
As defined in Section 8.3(a).
1.64 TE Period
As defined in Section 8.3(a).
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<PAGE> 11
1.65 Transportation Element or TE
As defined in Section 8.1.
1.66 Unloading Ports
The ports at locations in or near Nagoya, Osaka, Himeji, Kita-Kyushu
and Oita, and at such other locations in Japan as may be agreed
between Seller and Buyers, where the Receiving Facilities are or will
be constructed.
1.67 U.S.CPI
The United States Consumer Price Index (determined by reference to :
All Urban Consumers (CPI-U); Unadjusted U.S. City Average; All items;
with a base period of 1982-84 = 100) as published by the U.S.
Department of Labor, Bureau of Labor Statistics.
1.68 Capitalized terms defined in Seller's Transportation Arrangements for
the Burmah Vessels and not otherwise defined herein shall have the
same meanings when used in this Contract.
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<PAGE> 12
ARTICLE 2 - SALE AND PURCHASE
Seller agrees to sell and deliver, and each Buyer agrees to purchase, receive
and pay for, or to pay for if not taken, LNG, in the quantities and at the
price and in accordance with the other terms and conditions set forth in this
Contract.
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<PAGE> 13
ARTICLE 3 - SOURCES OF SUPPLY
3.1 Sources of Supply
The Natural Gas to be processed into LNG and sold hereunder is to be
produced from the Gas Supply Area. Seller represents that Seller will
maintain throughout the term hereof the right to sell all quantities
of LNG to be sold hereunder. In this connection, Seller represents
that it has executed or will execute from time to time, as required in
order to maintain the right to sell the quantities of LNG to be sold
hereunder, agreements with production sharing contractors of Seller
under which agreements such production sharing contractors make
available for sale hereunder their respective interests in the
quantities of LNG to be sold hereunder ("Supply Agreement").
Notwithstanding any reference to Seller's Suppliers in this Contract,
Seller is fully responsible for performance of all the obligations of
Seller hereunder.
3.2 Reserves of Natural Gas
(a) Seller has furnished Buyers with statements, each entitled
"Certificate" and each dated on or prior to May 31, 1994, of
DeGolyer and MacNaughton expressing its estimate of Proved
Remaining Recoverable Reserves of Natural Gas in the Gas
Supply Area. Seller represents that such estimated quantity is
in excess of Seller's Gas Supply Obligation as of the date
hereof. Hereafter and throughout the term hereof, before
committing additional Natural Gas from the Gas Supply Area to
sale or other utilization, Seller shall secure from an
independent petroleum engineering consultant firm of
recognized standing in the petroleum industry, qualified by
reputation and experience in estimating reserves of oil and
Natural Gas in subsurface reservoirs, the written statement
(the "Certificate") of such firm expressing its estimate of
Proved Remaining Recoverable Reserves of Natural Gas in the
Gas Supply Area in an amount at least equal to Seller's Gas
Supply Obligation. Seller shall provide Buyers with copies of
each Certificate of such independent petroleum engineering
consultant firm on which Seller relies in making any such
commitment for supply of Natural Gas from the Gas Supply Area.
Seller shall also furnish all supporting documentation
provided by such independent petroleum engineering consultant
firm in connection with the issuance of such Certificate.
(b) If, during the term hereof, Seller obtains information from
its activities (including the activities of Seller's
production sharing contractors) in
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<PAGE> 14
operating fields in the Gas Supply Area which indicates
unforeseen adverse changes in the Proved Remaining Recoverable
Reserves of Natural Gas in the Gas Supply Area, Seller will
promptly inform Buyers of such situation and will further
inform Buyers of any measures which Seller may be required to
take in order to fulfill its obligations under this Contract.
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<PAGE> 15
ARTICLE 4 - TRANSPORTATION AND UNLOADING
4.1 General
(a) Seller shall be responsible for the continuous transportation
from the Badak Facility to the Receiving Facilities of the LNG
to be sold and delivered under this Contract and shall use LNG
Tankers for transportation of such LNG.
(b) Buyers shall be entitled to participate in transportation as
follows, at all times ensuring that such participation is
performed in an expedient manner:
(i) For the Burmah Vessels and Substitute LNG Tankers:
(A) Buyers shall have the right to participate
(consistent with Seller's Transportation
Arrangements) in all meetings between Seller
and Seller's Transporter related to payments
to be made by Buyers under this Contract, to
attend any arbitration proceeding pursuant to
Seller's Transportation Arrangements, and to
receive copies of reports, including audited
statements, that Seller receives from
Seller's Transporter and any correspondence
relating to amounts to be paid by Buyers
therefor;
(B) Seller shall consult and agree with Buyers
prior to exercising or expressly waiving its
rights (other than rights related to
day-to-day operations) under Seller's
Transportation Arrangements that will
significantly affect amounts payable by
Buyers and shall make reasonable efforts to
implement any reasonable requests of Buyers
in connection therewith;
(C) Seller shall consult and agree with Buyers
prior to amending or terminating in whole or
in part Seller's Transportation Arrangements
or concluding any new Seller's Transportation
Arrangements; and
(D) Seller shall permit Buyers to participate in
negotiations relating to any such amendment
or termination or
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<PAGE> 16
conclusion of such new Seller's
Transportation Arrangements.
(ii) For the Dwiputra, except as provided below, Buyers
shall not be entitled to review or participate in any
audit of costs or to otherwise participate in
Dwiputra-related matters. Buyers shall have the
following rights:
(A) to receive general information regarding the
maintenance and repair of the Dwiputra,
including information regarding proposed
dry-docking plans and time schedules of
significant maintenance and repair and
results thereof, and to receive copies of
shipyard reports which identify any
significant maintenance problems with the
Dwiputra;
(B) to make general observations to Seller
regarding maintenance and repair of the
Dwiputra;
(C) to attend Dwiputra ship/shore meetings to the
extent such meetings relate to the Receiving
Facilities; and
(D) to receive such information in respect of the
Dwiputra as is reasonably necessary to verify
the calculations required in Section 4.6 and
Article 8.
It is acknowledged that, prior to the date hereof, Buyers
together with Seller and Burmah have commissioned and
participated in a technical evaluation of the longevity of the
Burmah Vessels, conducted by Lloyd's Register of Shipping,
which confirmed that the condition, structural integrity,
reliability, and availability of the Burmah Vessels are
satisfactory to provide transportation under this Contract.
(c) If it is necessary to employ a vessel to substitute for a
vessel in the Extension Fleet to deliver the quantities under
this Contract, Seller shall arrange a Substitute LNG Tanker,
utilizing any rights it might have under Seller's
Transportation Arrangements for the Burmah Vessels or
utilizing other vessels that are then available. Buyers shall
have the right to offer a proposed Substitute LNG Tanker to
Seller. Seller shall finalize its arrangements for a
Substitute LNG Tanker only after obtaining Buyers' consent,
such consent not to be unreasonably withheld. If Buyers do
not consent to the arrangements which Seller
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<PAGE> 17
proposes for a Substitute LNG Tanker, then Seller and Buyers
shall discuss the availability of alternatives. If agreement
on an alternative is not reached within a reasonable period of
time, such unavailability of transportation shall be deemed to
constitute an event of force majeure pursuant to Section 15.1
I and the provisions of Article 15 shall apply.
(d) Seller will endeavor as far as reasonably practicable to
coordinate the day-to-day operations of the LNG Tankers and to
coordinate the operations of the LNG Tankers with common
standards, documentation and procedures with respect to:
(i) vessel/terminal interface, including joint ship/shore
meetings;
(ii) vessel compliance with applicable national and
international regulations;
(iii) cargo documentation;
(iv) vessel performance;
(v) cargo transfer procedures; and
(vi) Loading Port Conditions of Use and Omnibus and Waiver
Agreements.
Seller shall coordinate the LNG Tankers regarding
implementation of the Annual Program and Ninety-Day Schedule,
including (i) scheduling of dry-dock and lay-up periods; and
(ii) scheduling of Substitute LNG Tankers.
(e) Before using an LNG Tanker to undertake a voyage to a buyer
other than Buyers during or after the Fixed Quantity Period
2000, Seller shall obtain Buyers' consent, such consent not to
be unreasonably withheld.
(f) Seller shall use its best efforts to cause Seller's
Transporters to take such actions as are reasonably required
by Japanese authorities to evidence responsibility for safe
operation of LNG Tankers in accordance with the letter of the
vessel operator addressed to Japanese port authorities in
connection with permission for LNG Tankers to enter into
Unloading Ports ("Safety Pledge Letter"). Seller shall arrange
or shall cause Seller's Transporters to arrange for such
number and types of fireboats and
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<PAGE> 18
escort vessels as are required by the Japanese authorities to
attend the LNG Tankers so as to permit safe and efficient
movement of the LNG Tanker within the maritime safety areas
located in the approaches to and from the Unloading Ports.
4.2 Notices of LNG Tanker Movements and Characteristics of LNG Cargoes
(a) With respect to each cargo of LNG to be delivered hereunder,
Seller shall give, or cause the Master of the LNG Tanker to
give, to the Buyer at the Receiving Facility at which such
cargo is to be delivered, the following notices:
(i) A first notice, which shall be sent upon the
departure of the LNG Tanker from the Loading Port and
which shall set forth the time and date that loading
was completed, the volume, expressed in Cubic Meters,
of LNG loaded on board the LNG Tanker, and the
estimated time of arrival of the LNG Tanker at
Buyer's Unloading Port;
(ii) A second notice, which shall be sent ninety-six (96)
hours prior to the estimated time of arrival of the
LNG Tanker at the Unloading Port;
(iii) A third notice, which shall be sent forty-eight (48)
hours prior to the estimated time of arrival of the
LNG Tanker at the Unloading Port;
(iv) A fourth notice, which shall be sent twenty-four (24)
hours prior to the estimated time of arrival of the
LNG Tanker at the Unloading Port;
(v) A final notice, which shall be sent five (5) hours
prior to the estimated time of arrival of the LNG
Tanker at the Unloading Port; and
(vi) A Notice of Readiness, which shall be given at the
time prescribed in Section 4.4(b) below.
(b) Within thirty-six (36) hours after departure of each LNG
Tanker from the Loading Port, Seller shall notify Buyer, for
Buyer's information
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<PAGE> 19
only, of the following characteristics of the LNG comprising
its cargo as determined at the time of loading:
(i) the Gross Heating Value per unit, and
(ii) the molecular percentage of hydrocarbon components
and nitrogen.
4.3 Obligations of Buyers at Unloading Ports
Each Buyer shall cooperate with Seller's Transporters or their agents
and the Master of each LNG Tanker directed to an Unloading Port to
ensure the continuous and efficient delivery of LNG hereunder. Each
Buyer shall provide a safe berth for prompt berthing of LNG Tankers at
its Receiving Facility and shall operate the Receiving Facility, or
ensure that it is operated, so as to permit discharge of the cargo of
each LNG Tanker as quickly as possible. During discharge of each cargo
of LNG, Buyer shall return to the LNG Tanker natural gas in such
quantities as are necessary for the safe unloading of the LNG at such
rates, pressures and temperatures as may be required by the LNG Tanker
design.
4.4 Demurrage at Unloading Ports
(a) Subject to paragraph (c) below, in the event used laytime
exceeds allowed laytime in unloading an LNG Tanker, as
provided in paragraph (b) below ("Demurrage Event"), Buyer
shall pay to Seller, or for Seller's account if so directed by
Seller, demurrage at the daily rate in U.S. Dollars (which
shall be prorated for a portion of a day) determined in
accordance with the following formula:
TE (reduced to exclude
436,821,000 voyage costs) in effect
Demurrage rate = 0.14 x MMBTU's x on the day the
Demurrage Event occurs
--------------------------------------
365
(b) Laytime to be allowed at each Unloading Port at which the LNG
Tanker discharges LNG being delivered hereunder shall be
thirty-six (36) consecutive hours extended by any period of
delay which is caused by:
(i) reasons attributable to Seller, the LNG Tanker or its
Master, crew, owner or operator;
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<PAGE> 20
(ii) force majeure as defined in Article 15; provided,
however, that delays resulting from the application
of safety regulations or similar governmental action
shall not be considered as an event of force majeure
for the purposes hereof; or
(iii) "Adverse Weather Conditions", which for purposes
hereof means weather and/or sea conditions actually
experienced at the Unloading Port which are
sufficiently severe either: (A) to prevent all LNG
Tankers from proceeding to berth, discharging or
departing from berth in accordance with the weather
standards prescribed in the M.S.A. standard published
regulations, including the Safety Pledge Letters, or
(B) to cause an actual determination by the Master
that it is unsafe for the LNG Tanker to berth,
discharge or depart from berth. The period of delay
to an LNG Tanker caused by Adverse Weather Conditions
shall not be considered to extend past the time
during which such Adverse Weather Conditions actually
prevailed except where additional delay is caused by
the occupation of the berth by another LNG Tanker.
Upon arrival of each LNG Tanker at the agreed location off
each Unloading Port, and subject to any mutually agreed time
restrictions, the Master of the LNG Tanker or its agent shall
give Notice of Readiness to Buyer or its agent that such LNG
Tanker is ready to discharge LNG, berth or no berth. Laytime
shall commence upon receipt of Notice of Readiness and shall
continue to run until the LNG Tanker clears the Unloading Port
(i.e., when leaving the Unloading Port passes the agreed
position for tendering Notice of Readiness). From used
laytime calculated as above shall be deducted all Inward
Steaming Time and all Outward Steaming Time.
For the purpose of this paragraph (b):
(A) "Inward Steaming Time" shall mean the total time
elapsed between Notice of Readiness and "all fast" in
berth, minus the period of any delay or stoppage that
prevents the forward movement of the LNG Tanker to
the berth if and to the extent the total of all such
delays or stoppages exceeds six (6) hours, and
(B) "Outward Steaming Time" shall mean the total of all
hours between the disconnection of the discharge and
return lines and
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<PAGE> 21
the LNG Tanker clearing the Unloading Port, minus the
period(s) of any delay or stoppage that prevents the
outward movement of the LNG Tanker.
Any delay caused to an LNG Tanker by quarantine at an
Unloading Port (except that related to the presence aboard or
processing of refugees picked up by the LNG Tanker) shall
count as used laytime.
(c) If a Demurrage Event occurs, Seller shall take such actions
which are prudent and reasonable to prevent any modification
of the Ninety-Day Schedule and any other ninety-day schedule
of loadings at the Loading Port, including appropriate
direction of the LNG Tanker. In the event that the Demurrage
Event causes the LNG Tanker involved to be delayed in arriving
at the Loading Port so that it is unable to commence loading
on the scheduled loading date (in effect at the time of the
Demurrage Event) or such delay requires the modification of
the date of commencement of loading of any other LNG vessel,
any Seller's invoice to Buyer in accordance with the
provisions of Section 10.2 with respect to such Demurrage
Event shall remain in effect; otherwise, no payment for the
Demurrage Event shall be due and Seller shall notify Buyer
either that it is not invoicing Buyer or that it is canceling
any invoice already submitted to Buyer.
4.5 Effect of Unloading Port Delays; Excess Boil-Off
(a) Notwithstanding the provisions of Section 11.1, if the Gross
Heating Value of LNG to be delivered hereunder is higher than
the limits set forth in Section 11.1 by reason of boil-off
occurring during a delay in unloading an LNG Tanker of more
than forty-eight (48) hours after Notice of Readiness has been
given, such LNG shall be deemed to have met the quality
specifications of this Contract regarding Gross Heating Value.
(b) If an LNG Tanker is delayed in berthing and/or commencement of
unloading for a reason that would not result in an extension
of allowed laytime under Section 4.4(b), and if, as a result
thereof, the commencement of unloading is delayed beyond
thirty (30) hours after Notice of Readiness has been given,
then, for each full hour by which commencement of unloading is
delayed beyond such thirty-hour period, Buyer shall pay Seller
an amount, on account of excess boil-off, equal to the
Contract Sales Price multiplied by the number of MMBTU's per
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<PAGE> 22
hour by which such boil-off reduces the aggregate number of
BTU's of a full cargo at berth. The hourly BTU reduction rate
to be applied for such purpose shall be determined by actual
boil-off experience as determined at appropriate intervals.
4.6 Non-Utilization Cost
(a) If there is an event of force majeure pursuant to Section 15.1
affecting a Buyer ("Buyer Force Majeure") which results in an
LNG Tanker being less than fully utilized under this Contract,
then the Buyer so affected shall pay to Seller, with respect
to such period of Buyer Force Majeure, an amount in U.S.
Dollars calculated in accordance with the following formula
("Non-Utilization Cost"):
NUC = [(TN - VA) x BFM] - BFMS
where:
NUC = The Non-Utilization Cost to be paid
to Seller with respect to quantities
not taken and expected not to be
taken during a Fixed Quantity Period
as a result of a Buyer Force
Majeure;
TN = TE Non-Utilization which is the TE
in U.S.$/MMBTU in effect at the time
BFM is not taken and expected not to
be taken;
VA = Voyage Expenses Amount which is the
component of TN in U.S.$/MMBTU that
is attributable to voyage costs;
BFM = Buyer Force Majeure Quantities which
is the quantities not taken and
expected not to be taken during a
Fixed Quantity Period as a result of
a Buyer Force Majeure, such
quantities to be reduced to the
extent that an LNG Tanker undertakes
voyages to other Buyers or to other
LNG customers in order to deliver
cargoes that would have been
delivered to the affected Buyer but
for the Buyer Force Majeure; and
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<PAGE> 23
BFMS = Buyer Force Majeure Savings which is
the savings in U.S. Dollars, if any,
in transportation costs during the
period of Buyer Force Majeure,
calculated as the sum of:
BS + DS
where:
BS = Burmah Savings which is the
reduction in payments by
Seller resulting from the
lay-up of a Burmah Vessel or
a Substitute LNG Tanker
during the period of Buyer
Force Majeure or pursuant to
any provision of Seller's
Transportation Arrangements
for such vessels applicable
to such period of Buyer Force
Majeure; and
DS = Dwiputra Savings which is,
if the Dwiputra is in lay-up
due to the Buyer Force
Majeure, an amount equal to
the reduction in the Burmah
Vessel daily Hire Rate
applicable if a Burmah Vessel
were laid up for the same
number of days (as
established pursuant to
paragraph 2.5.3(b) of
Schedule III of the
Charters), multiplied by the
number of days the Dwiputra
is in lay-up.
(b) During a period of Buyer Force Majeure, Seller and Buyers will
consult on whether an LNG Tanker should be laid up and/or
placed in non-utilization status, and Seller agrees to give
preference to first removing a Burmah Vessel from providing
transportation under this Contract before removing any other
LNG Tanker.
(c) Seller shall invoice the affected Buyer for amounts due under
this Section 4.6 periodically so as to ensure Seller receives
Non-Utilization Cost payments at generally the same time it
would have received the Transportation Element for quantities
not taken and expected not to be taken as a result of the
Buyer Force Majeure. Buyer shall pay such invoice in
accordance with the terms of Section 10.2. In connection with
the determination of Non-Utilization Cost, Seller shall
furnish to the
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<PAGE> 24
affected Buyer such available estimates, accounting and other
data as may reasonably be required by such Buyer to establish
the basis upon which and the manner in which such
Non-Utilization Cost is calculated. If in fact a BFM cargo is
actually taken by the end of the applicable Fixed Quantity
Period, that part of the invoice for such cargo relating to
the Transportation Element shall be reduced by the amount of
Non-Utilization Cost previously paid with respect thereto.
(d) In the event Seller terminates a Charter for a Burmah Vessel
as a result of a Buyer Force Majeure, Seller shall invoice the
affected Buyer promptly and such Buyer shall pay the amount of
the Required Termination Payment under the Charter (excluding
any amount under item (D) of BE of Section 8.3(a)(i)) to
Seller in lump sum amount in accordance with the terms of
Section 10.2. Upon such termination, the affected Buyer shall
have no further obligation to pay Non-Utilization Cost other
than payments due with respect to periods prior to the
effective date of such termination. If Seller decides for its
own reasons not to terminate the non-utilized LNG Tanker,
Seller and the affected Buyer will determine whether the
affected Buyer has any further obligation to make payments
under this Section 4.6 based on the benefits to be received by
such Buyer if the Charter for the non-utilized LNG Tanker is
continued.
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<PAGE> 25
ARTICLE 5 - ONSHORE FACILITIES
5.1 Receiving Facilities
Each Buyer shall ensure, at no cost to Seller, that its Receiving
Facilities shall be compatible with the general specifications of the
Extension Fleet and shall include the following:
A. Berthing facilities capable of receiving LNG Tankers having an
overall length of up to 950 feet, a beam of up to 150 feet and
a draft of up to 36 feet 6 inches, which the LNG Tankers can
always safely reach, fully laden, and safely depart, and at
which the LNG Tankers can lie safely berthed and discharge
safely afloat at all times;
B. Unloading facilities capable of receiving LNG at a rate which
will permit the discharging of cargo from a fully loaded LNG
Tanker within twelve (12) hours of pumping time at the full
pumping rate specified by the LNG Tanker design;
C. A vapor return line system of sufficient capacity to transfer
to the LNG Tankers quantities of natural gas necessary for the
safe unloading of LNG at such rates, pressures and
temperatures as may be required by the LNG Tanker design;
D. Systems for timely provision of the LNG Tankers with adequate
fresh water and bunker oil, if necessary;
E. Facilities allowing access to the LNG Tankers from onshore
adequate for the handling and delivery of ship's stores,
provisions and spare parts to the LNG Tankers;
F. Shore-based tanks and loading lines for liquid nitrogen
adequate to service the LNG Tankers;
G. LNG storage tanks of adequate capacity to receive and store a
full cargo of LNG upon each scheduled arrival of an LNG
Tanker;
H. Appropriate systems for necessary radio communications with
LNG Tankers; and
I. Regasification plant.
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<PAGE> 26
5.2 Badak Facility
Seller shall ensure, at no cost to Buyers, that the Badak Facility
shall include the following:
A. Natural Gas transmission pipelines for the delivery to the
liquefaction plants of Natural Gas for processing into LNG;
B. LNG processing facilities of sufficient capacity to process
Natural Gas into the LNG to be sold and delivered hereunder;
C. LNG storage tanks of adequate capacity for the storage of
quantities of LNG for subsequent loading on to LNG Tankers;
D. Berthing facilities capable of receiving LNG Tankers having an
overall length of up to 950 feet, a beam of up to 150 feet and
a draft of up to 36 feet 6 inches, which the LNG Tankers can
always safely reach, fully laden, and safely depart, and at
which the LNG Tankers can lie safely berthed and load safely
afloat at all times;
E. Loading facilities capable of loading LNG at a rate which will
permit the full loading of an LNG Tanker within twelve (12)
hours of pumping time;
F. Facilities allowing access to the LNG Tankers from onshore
adequate for the handling and delivery of ship's stores,
provisions, liquid nitrogen and spare parts to the LNG
Tankers; and
G. Appropriate systems for necessary radio communications with
LNG Tankers.
5.3 Compatibility of Receiving Facilities and LNG Tankers
(a) Seller shall ensure, at no cost to Buyers, that the Dwiputra
is compatible with the Receiving Facilities existing as of the
date hereof.
(b) Seller shall ensure that each Substitute LNG Tanker is
compatible with the Receiving Facilities, and any costs
necessary to ensure such compatibility shall be included in S
under Section 8.3(a)(i).
(c) Buyers shall ensure, at no cost to Seller, that the
construction or modification of any Receiving Facility (other
than the Receiving
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<PAGE> 27
Facilities existing as of the date hereof) is compatible with
the Extension Fleet.
(d) With respect to paragraphs (a) through (c) above, Seller and
Buyers shall consult to determine the most effective manner to
achieve the required compatibility.
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<PAGE> 28
ARTICLE 6 - DURATION OF CONTRACT
The terms of this Contract shall continue in effect until the expiration of the
parties' respective obligations hereunder with respect to the sale and purchase
of LNG or the earlier termination of this Contract pursuant to Section 10.5.
If Seller and any Buyer or Buyers so agree at least seven (7) years before the
time this Contract would otherwise expire, the term of this Contract may, as to
such Buyer or Buyers, be extended on such terms and conditions as may be
mutually agreed.
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<PAGE> 29
ARTICLE 7 - QUANTITIES
7.1 Required Deliveries
During each calendar year or portion thereof specified below (each
such period being called a "Fixed Quantity Period"), Seller shall sell
and deliver to each Buyer, and each Buyer shall purchase, receive and
pay for, or pay for if not taken, at the Contract Sales Price, a
quantity of LNG having a heating value as specified for such Buyer for
such Fixed Quantity Period (each such quantity being called a "Fixed
Quantity") as follows:
<TABLE>
<CAPTION>
CALENDAR FIXED QUANTITY FIXED QUANTITIES FOR EACH BUYER
YEAR PERIOD (BILLIONS OF BTU'S)
-------- ------------ -----------------------------------------------------------------
CHUBU KANSAI KYUSHU NIPPON OSAKA TOHO TOTAL
ELECTRIC ELECTRIC ELECTRIC STEEL GAS GAS
-------- -------- -------- ------ ----- ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1977 OCT 18-DEC 31 6,079.70 1,957.78 1,641.03 1,547.77 7,081.48 - 18,307.76
1978 FULL YEAR 54,792 29,389 37,149 29,387 39,741 - 190,458
1979 FULL YEAR 71,650 67,459 69,063 30,293 45,801 - 284,266
1980 FULL YEAR 87,848 108,520 77,516 31,004 54,260 - 359,148
1981 FULL YEAR 87,850 124,023 77,515 31,006 59,427 - 379,821
1982 FULL YEAR 87,850 124,023 77,515 31,006 67,179 - 387,573
1983 FULL YEAR 117,050 141,543 83,355 31,006 67,179 - 440,133
1984-1986 EACH FULL YEAR 117,050 132,783 86,275 31,006 67,179 - 434,293
1987-1999 EACH FULL YEAR 111,210 132,783 80,435 28,066 67,179 2,940 422,613
2000-2010 EACH FULL YEAR 111,210 132,783 80,435 32,251 67,179 12,963 436,821
</TABLE>
The above Fixed Quantities are subject to adjustment as provided in
Section 7.3(a). After giving effect to any such adjustment, the term
"Fixed Quantity" shall mean the applicable Fixed Quantity as so
adjusted, and the respective obligations of Seller to sell and
deliver, and of each Buyer to purchase, receive and pay for, or pay
for if not taken, Fixed Quantities of LNG in any Fixed Quantity Period
shall apply to the applicable Fixed Quantities as so adjusted.
7.2 Single-Port Cargoes; Reallocation of Cargoes; Rate of Deliveries
(a) All deliveries of LNG by Seller and receipt thereof by a Buyer
shall be made in fully loaded LNG Tanker lots and, except as
provided in paragraph (c) below, each LNG Tanker shall be
unloaded at a single Receiving Facility in Japan.
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<PAGE> 30
(b) Each Buyer, upon appropriate notice to Seller, may reallocate
all of an LNG Tanker cargo from one Buyer to another Buyer
and/or from one Receiving Facility to another, and also may
reallocate any part of an LNG Tanker cargo from one Buyer to
another within one Receiving Facility.
In case of such reallocation, the ownership of such cargo or
part thereof shall be transferred directly from Seller to the
new Buyer in place of the original Buyer, but the respective
Fixed Quantities of the Buyers concerned shall not be changed
and the cargo in question shall be deemed to be received by
the original Buyer in connection with its take or pay
obligations under Section 7.3(a).
Each such reallocation shall be documented in a form to be
established by Seller and Buyers, executed by the original
Buyer and the Buyer which will actually receive the cargo,
which document will provide that the receiving Buyer will
assume and be responsible to Seller for performance of the
obligations of the original Buyer in respect of such cargo,
and that such cargo is deemed to be taken by the original
Buyer in connection with its take or pay obligations under
Section 7.3(a).
Buyers will exercise the right to reallocate cargoes in a
manner that will not materially disrupt the shipping
schedules.
(c) In addition to paragraph (b) above, upon reasonable advance
notice to Seller from the Buyer concerned, in case of
emergency, Seller and Buyers may reallocate all or any part of
an LNG Tanker cargo from one Receiving Facility to another, if
such change would not materially disrupt the shipping
schedules.
(d) Within each Fixed Quantity Period, the quantities to be
delivered by Seller and received by each Buyer shall be
delivered at rates and intervals and in quantities which are
reasonably constant over the course of such Fixed Quantity
Period and give effect to the maintenance, downtime and
shipping schedules provided for in Article 12, so as to
assure, as nearly as possible, continuous full utilization of
the LNG Tankers, an even production rate at the Badak
Facility, and even rates of deliveries at each Buyer's
Receiving Facility.
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<PAGE> 31
7.3 Buyer's Obligation to Take or Pay
(a) If, during any Fixed Quantity Period, any Buyer should fail to
take the full Fixed Quantity applicable thereto, such Buyer
shall pay Seller, at the Contract Sales Price (reduced to
exclude that portion of the Transportation Element related to
voyage costs) in effect as of the last day of such Fixed
Quantity Period, for the quantities of LNG required to be
purchased but which were not taken by such Buyer during such
Fixed Quantity Period (any such quantity deficiency being
called a "Quantity Deficiency"), subject, however, to
paragraphs (b), (c) and (d) below and the following:
(i) If, after taking into account all adjustments
provided for in this Section 7.3 including any
Allowance that has been exercised, there remains a
Quantity Deficiency for a Buyer at the end of any
Fixed Quantity Period, such Buyer may carry forward
and add to the Fixed Quantity for the next succeeding
Fixed Quantity Period:
(A) the full amount when such Quantity Deficiency
amounts to less than a full LNG Tanker cargo
lot; or
(B) any fractional portion of a cargo when the
Quantity Deficiency exceeds one full LNG
Tanker cargo lot.
Amounts so carried forward shall not be included in
such Quantity Deficiency.
(ii) If, at the end of any Fixed Quantity Period, a Buyer
has purchased and received quantities of LNG
hereunder in excess of the Fixed Quantity of such
Buyer for such Fixed Quantity Period other than
Make-Up LNG, Make-Good LNG, or Restoration
Quantities, the excess shall be applicable to reduce
the Fixed Quantity of such Buyer for the next
succeeding Fixed Quantity Period.
(b) The obligation (set forth in paragraph (a) above) of each
Buyer with regard to any Fixed Quantity Period to pay for
Fixed Quantities not taken shall be reduced by the quantity of
LNG which such Buyer was unable to purchase because of an
event of force majeure as defined in Article 15 affecting
either Seller or such Buyer or because of Seller's
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<PAGE> 32
failure for any other reason to make such quantity available
for sale in accordance with this Contract.
(c) In calculating the quantity of LNG delivered by Seller and
purchased by a Buyer for each Fixed Quantity Period,
quantities delivered and purchased within the first seven (7)
days of the next following Fixed Quantity Period shall be
included, provided such quantities were scheduled in the
Annual Program for the Fixed Quantity Period with respect to
which the calculation is being made.
(d) The obligation of a Buyer pursuant to paragraph (a) above to
pay for quantities not taken may be reduced by the exercise of
an Allowance as follows:
(i) Each Allowance must be exercised by notice in writing
given to Seller by Buyers' Coordinator, which will
act as agent for Buyers in connection with the
exercise of all Allowances. A notice of the exercise
of an Allowance given by Buyers' Coordinator shall be
deemed to have both the authority of the Buyer on
whose behalf it is expressed to be given (the
"Exercising Buyer") and the consent of all other
Buyers. No purported direct exercise of an Allowance
by a Buyer shall be valid. A notice of exercise of
an Allowance must be received by Seller on or before
January 12 of the year following the Fixed Quantity
Period in respect of which such Allowance is
exercised.
(ii) Each notice of exercise of an Allowance shall specify
the Exercising Buyer and the quantity of LNG by which
such Buyer's obligation to take and/or pay during the
relevant Fixed Quantity Period is to be reduced.
(iii) No Allowance can be exercised which would result in
the aggregate Allowances then outstanding for all
Buyers during any Fixed Quantity Period being in
excess of 21,841 billion BTU's. Subject to the
provisions of subparagraph (viii) below, an Allowance
(or portion thereof) is outstanding until either the
Make-Good Obligation pursuant to subparagraph (iv)
below is satisfied, or payment in respect thereof is
made pursuant to subparagraph (vi) below.
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<PAGE> 33
(iv) Each Allowance shall be made good in full (even if it
amounts to a fractional portion of a full cargo lot)
by the purchase of an equal quantity of LNG in excess
of Fixed Quantities ("Make-Good LNG") within a
period commencing January 1 of the year following the
Fixed Quantity Period in relation to which such
Allowance was exercised and ending with the earlier
of the expiration of five (5) calendar years or March
31, 2011 ("Allowance Restoration Period"). Any
Make-Good LNG purchased after the expiration of the
last Fixed Quantity Period but prior to March 31,
2011 shall be paid for at the LNG Element in effect
as of the date of delivery plus the actual
transportation costs incurred in delivering the
Make-Good LNG. No Buyer may satisfy a Make-Good
Obligation or any part thereof during a Fixed
Quantity Period until it shall first have taken its
Fixed Quantity for such Fixed Quantity Period. If a
Buyer has more than one Allowance outstanding, the
Make-Good Obligations in respect thereof shall be
satisfied in the same chronological order in which
such Allowances were exercised. One or more Buyers
may satisfy the Make-Good Obligation with respect to
an Allowance exercised by another Buyer.
(v) Every request for Make-Good LNG shall be made by
Buyers' Coordinator on behalf of a named Buyer in
accordance with Section 12.1 and shall specify the
Allowance to which it relates. Each such request
shall be deemed to have the authority of the named
Buyer and, if the named Buyer is not the Exercising
Buyer, of the Exercising Buyer.
(vi) If, at the expiration of the Allowance Restoration
Period, a Make-Good Obligation has not been satisfied
in full, the Exercising Buyer (whether or not a Buyer
other than the Exercising Buyer was named in any
relevant request for Make-Good LNG) shall pay for any
unsatisfied portion of the Make-Good Obligation at
the Contract Sales Price (reduced to exclude that
portion of the Transportation Element related to
voyage costs) in effect as of the last day of such
Allowance Restoration Period. The Buyer shall have
the right to request Make-Up LNG pursuant to Section
7.5 with respect to any such payment.
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(vii) Seller shall not be obligated to reserve any LNG
production or shipping capacity for the purposes of
permitting Buyers to satisfy Make-Good Obligations.
(viii) In the event that Buyers' Coordinator requests
quantities of LNG to satisfy a Make-Good Obligation
on behalf of a Buyer or Buyers which Seller is unable
to make available for any reason, including force
majeure, the following provisions shall apply:
(A) The Exercising Buyer shall be relieved from
the obligation pursuant to subparagraph (vi)
above to pay for such requested quantities as
of the expiration of the Allowance
Restoration Period relating thereto, except
in the case where subparagraph (viii)(C)
below requires such payment;
(B) Such requested quantities shall be deemed not
outstanding for the purposes of subparagraph
(iii) above until Seller shall (whether
during or after the Allowance Restoration
Period) have offered the same to such Buyer
but shall then be outstanding if such Buyer
does not accept such offer; any change in the
quantity outstanding due to a failure to
accept such an offer shall not result in an
acceleration of any then outstanding
Make-Good Obligations; and
(C) Such requested quantities shall be scheduled
for delivery at any time prior to March 31,
2011 as mutually agreed by Seller and the
Buyer having the Make-Good Obligation. If
such requested quantities have not been
scheduled as of the end of the last Fixed
Quantity Period and should Seller be unable
to deliver such requested quantities during
the three (3) months following the last Fixed
Quantity Period, Buyer shall have no further
obligation in respect thereof. If Seller
gives Buyer reasonable notice that such
requested quantities are available during
such three-month period but Buyer does not
take such quantities, Buyer shall then make
the payment required under subparagraph (vi)
above.
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<PAGE> 35
7.4 Allocation of Deliveries between Buyers and Other Purchasers
(a) Whenever deliveries of LNG by Seller under this Contract must
be reduced by reason of an event or circumstance of force
majeure as defined in Article 15 affecting Seller's ability to
produce or load LNG from the Badak Facility, an allocation of
quantities then available for sale at the Badak Facility will
be made between Buyers and other purchasers of LNG from the
Badak Facility. At such times the total quantities available
for sale from the Badak Facility shall be allocated among the
purchasers therefrom (including Buyers) pro rata in the ratio
of their respective quantities which are eligible for
allocation as provided below. The quantities eligible for such
allocation shall, as to Buyers, be the portion of the Fixed
Quantities to be purchased hereunder during the period of such
force majeure and, as to other purchasers, be those fixed or
contract quantities of LNG which are committed for sale from
the Badak Facility during the period of such force majeure in
satisfaction of Seller's contracts with other purchasers which
provide for sales of LNG over a term of at least fifteen (15)
years.
(b) If such an event of force majeure does not preclude full
production and loading of all Fixed Quantities under the
allocation formula described in paragraph (a) above, but is of
such an extent as to prevent Seller from producing and loading
all Make-Up LNG, Make-Good LNG and Restoration Quantities
scheduled for delivery from the Badak Facility to Buyers and
equivalent quantities scheduled for delivery from the Badak
Facility to other purchasers under LNG sales contracts
providing for deliveries over a term of at least fifteen (15)
years, quantities of such LNG as are available shall be
allocated between Buyers and such other purchasers in
proportion to the respective quantities so scheduled.
7.5 Take-or-Pay Make-Up
If, pursuant to Section 7.3(a) or Section 7.3(d)(vi), a Buyer shall
have paid for any quantity of LNG which was not taken by such Buyer
("Take-or-Pay Quantity"), then, in any subsequent year, the said Buyer
may purchase up to an equal quantity of LNG from Seller as make-up LNG
("Make-Up LNG") (to the extent not previously made up). A Buyer may
request Make-Up LNG by giving written notice to Seller as provided in
Section 12.1. If, during any year for which Make-Up LNG has been
requested, (i) Seller has uncommitted quantities of LNG available for
such purpose, (ii) Seller has available LNG Tanker capacity which may
be used to transport such Make-Up LNG, and (iii) such Buyer shall have
first taken and paid for its Fixed Quantity for such year, then
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Seller shall sell and deliver to such Buyer the quantity of Make-Up
LNG requested; provided, however, that after the expiration of three
(3) months following the end of the last Fixed Quantity Period such
Make-Up LNG shall only be made available if either Seller has at the
time uncommitted shipping capacity available for the purpose or the
Buyer provides transportation. A Buyer's right to purchase Make-Up LNG
under this Section 7.5 shall expire on December 31, 2011 unless such
Buyer shall have requested Make-Up LNG during the year 2011 and Seller
shall have had insufficient uncommitted LNG to meet such request. In
such circumstances, the parties shall consult to agree upon a deferred
schedule for Buyer to take delivery of any outstanding balance of
Take-or-Pay Quantity not made up by December 31, 2011. Each Buyer
shall pay for Make-Up LNG at the Contract Sales Price in effect as of
the date of delivery, reduced by the amount previously paid on account
of all or that part of the Take-or-Pay Quantity being made up by such
sale; provided, however, that any Make-Up LNG delivered after the end
of the last Fixed Quantity Period shall be paid for at the LNG Element
in effect as of the date of delivery (reduced by the amount previously
paid as the LNG Element on account of all or that part of the
Take-or-Pay Quantity being made up by such sale) plus the actual
transportation costs incurred in delivering the Make-Up LNG.
Take-or-Pay Quantities shall be made up, and prior payments applicable
thereto applied, in the same chronological order in which such
quantities accrued.
7.6 Force Majeure Deficiency
(a) If, during any Fixed Quantity Period or Fixed Quantity
Periods, all or any portion of the Fixed Quantity of LNG
required to be taken by any Buyer therein is not delivered by
Seller or taken by such Buyer by reason of force majeure as
defined in Article 15 (any such quantity not taken for such
reason being called a "Force Majeure Deficiency"), Seller and
the Buyer or Buyers concerned shall each make best efforts to
restore the Force Majeure Deficiency in full by Seller selling
and the Buyer or Buyers purchasing such quantities of LNG
prior to the expiration of the last Fixed Quantity Period. The
restoration quantities so agreed ("Restoration Quantities")
will be scheduled for delivery pursuant to Article 12 at the
mutual convenience of the parties. As between a Force Majeure
Deficiency resulting from force majeure affecting Seller and a
Force Majeure Deficiency resulting from force majeure
affecting a Buyer or Buyers, the Restoration Quantities
applicable thereto shall be scheduled in the chronological
order in which the force majeure events arose, but shall be
subordinate to Make-Good LNG requested pursuant to Section
7.3(d) and Make-Up LNG requested
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<PAGE> 37
pursuant to Section 7.5. Each Buyer shall pay for Restoration
Quantities at the Contract Sales Price in effect as of the
date of delivery. In the case of Restoration Quantities
arising from an event of force majeure affecting a Buyer, that
part of the invoice relating to the Transportation Element
will be reduced by the amount of any Non-Utilization Cost
previously paid by such Buyer under Section 4.6 on account of
all or that part of the quantities being restored.
(b) If an event of force majeure prevents or delays the
performance by any Buyer of its obligations under this
Contract and causes a reduction in deliveries of LNG and
Seller sells to third parties quantities of LNG which Buyers
are unable to purchase, then the Force Majeure Deficiency
shall be reduced by the amount, if any, that the Seller's Gas
Supply Obligation (including amounts so sold to third parties)
exceeds the estimate of Proved Remaining Recoverable Reserves
stated in the most recent Certificate as a result of such
sales.
7.7 Allocation for Make-Good LNG, Make-Up LNG and Restoration Quantities
Whenever Make-Good LNG is requested under Section 7.3(d), Make-Up LNG
is requested under Section 7.5 and/or Restoration Quantities are
requested under Section 7.6(a) by a Buyer or Buyers, and quantities
are requested for similar purposes by other purchasers from the Badak
Facility under contracts which provide for sales of LNG over a term of
at least fifteen (15) years, and uncommitted quantities of LNG are not
available from the Badak Facility to meet all such requests, then the
quantities of LNG which are available from the Badak Facility for such
purposes shall be allocated, as between such Buyer or Buyers on the
one hand and such other purchasers on the other hand, based on the
proportion of the contract quantities of each requesting purchaser to
the total of the contract quantities of all of the requesting
purchasers.
7.8 Order of Priority of Make-Good LNG and Make-Up LNG
Make-Good LNG requested under Section 7.3(d) and Make-Up LNG requested
under Section 7.5 shall be delivered in the priority specified by
Buyers' Coordinator.
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<PAGE> 38
ARTICLE 8 - CONTRACT SALES PRICE
8.1 Contract Sales Price
The contract sales price applicable to the quantities of LNG to be
sold and delivered at the Delivery Point and to any quantities of LNG
required to be taken but which are not taken and are required to be
paid for by a Buyer hereunder, expressed in United States Dollars per
million British Thermal Units (U.S.$/MMBTU), ("Contract Sales Price")
shall comprise an LNG element ("LNG Element" or "LE") and a
transportation element ("Transportation Element" or "TE") and shall
be determined in accordance with the following provisions of this
Article 8.
The LNG Element and the Transportation Element are subject to
adjustment from time to time according to the following provisions of
this Article 8 and the sum thereof as adjusted and in effect at any
time shall be the Contract Sales Price. The Contract Sales Price to be
applied to the BTU's comprising each cargo shall be that Contract
Sales Price in effect as of the date of completion of unloading of
such cargo.
8.2 LNG Element
(a) The LNG Element included in the Contract Sales Price, as
adjusted from time to time, shall be calculated according to
the following formula:
9 A 1 U.S.CPIn
LE = ---(Po x ----------)+ ---(Po' x --------) + C
10 U.S.$18.00 10 U.S.CPIo
where:
LE = the LNG Element (expressed in U.S.$/MMBTU);
Po = U.S.$ 3.06/MMBTU;
A = the arithmetic average of the realized export
prices per barrel in U.S. Dollars, f.o.b.
Indonesia, of all field classifications of
Indonesian crude oils then being sold and
exported by PERTAMINA, except premiums and
except such prices for spot sales;
Po' = U.S.$ 3.24/MMBTU;
U.S.CPIn = in respect of the applicable calendar year,
the average of the monthly values of U.S.CPI
for the twelve-month
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<PAGE> 39
period commencing with the month of November,
fourteen (14) months prior to the beginning
of the applicable calendar year, and ending
with the month of October, three (3) months
prior to the commencement of the applicable
calendar year;
U.S.CPIo = 143.8, being the arithmetic average of the
monthly values of U.S.CPI for the twelve-
month period, November 1992 through October
1993; and
C = U.S.$ 0.012/MMBTU.
(b) An adjustment of the LNG Element to reflect any change in
U.S.CPI shall be made on and shall be effective as of January
1 of each calendar year, and further adjustments of the LNG
Element shall be made as of each effective date on which:
(i) the realized export prices of more than one of the
field classifications of Indonesian crude oils sold
by PERTAMINA shall have changed from the respective
prices therefor included in the last preceding
determination of "A" made pursuant to Section 8.2
(a); or
(ii) two or more field classifications of such crude oils
shall have been added to or deleted from the crude
oils being sold by PERTAMINA since the date of the
last preceding determination of "A" made pursuant to
Section 8.2(a).
Procedures for verifying changes in the realized export prices
of all Indonesian crude oils and for determining the effective
date of any adjustment of the LNG Element shall be separately
agreed upon by Seller and Buyers.
(c) Seller and Buyers shall agree separate procedures for handling
corrections, revisions or changes in the calculation of
U.S.CPI. It is agreed that if at any time the U.S. Department
of Labor, Bureau of Labor Statistics discontinues publishing a
report on U.S.CPI values, then Seller and Buyers shall agree
upon an index method that reflects inflation in the United
States of America's consumer prices to replace the
discontinued U.S.CPI report.
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<PAGE> 40
8.3 Transportation Element
(a) Subject to Sections 8.4 and 8.5 below, the Transportation
Element included in the Contract Sales Price shall be
calculated for each twelve (12) month period effective as of
April 1 of each year (each such period being called a "TE
Period") in accordance with the following formula ("TE
Formula"):
TEn = The Transportation Element in U.S.$/MMBTU for the TE
Period n (commencing on April 1 of year n) calculated
as follows:
TC + A + RA
= -----------
AQ
TC (Transportation Costs), A (Adjustments) and AQ (Annual
Quantities) are estimates for the current calendar year based
on information available at the time of the calculation of
TEn; RA (Reconciliation Amount) is based on actual amounts for
the previous calendar year.
where:
(i) Transportation Costs
TC = B + D + V + S
where:
B = BHA - BE + BSA
where:
BHA = Burmah Hire Amount which is
the Net Payments in U.S.
Dollars to be made under
Seller's Transportation
Arrangements for the Burmah
Vessels during year n with
respect to:
(A) the Burmah's Cost
Component;
(B) the Operating Cost
Component (including
any prior year Over/
Under Adjustment
Amounts);
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<PAGE> 41
(C) the Additional Cost
Component;
(D) to the extent not
included in (B) above
any amount paid to
Seller's Transporter
for savings in respect
of change of registry
and recrewing; and
(E) any other amounts to
be paid to Seller's
Transporter under a
Charter for the
transportation of LNG
hereunder;
BE = Burmah Exclusions which is the
amount in U.S. Dollars to be
paid under Seller's
Transportation Arrangements
for the Burmah Vessels during
year n with respect to:
(A) Supplemental Costs
under paragraph 2.4 of
Schedule III of a
Charter;
(B) insurance for the
benefit of Seller
only, including costs
of Seller's entry as
time charterer under
paragraph 2(e) of
Schedule IV of a
Charter;
(C) costs in respect of
Seller's unexcused
failure to satisfy
its obligations under
Seller's Transportation
Arrangements,
including late payment
fees under section
8.7 of a Charter;
(D) amounts payable as
Additional Cost
Component that relate
to changes to the
vessel requested by
Seller for Seller's
sole benefit;
(E) Seller's share of
costs of a change of
registry (excluding
costs of a change of
registry requested by
Buyers) based on the
proportion of benefits
received by Seller; and
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<PAGE> 42
(F) amounts payable for a
Burmah Vessel when
on-hire but
unavailable due to the
gross negligence of
Seller;
(G) requisition
compensation payable
by Charterer under
Article 38 of a
Charter; and
(H) fifty percent (50%) of
costs included in BHA
relating to testing
and calibration of
measuring devices
provided by Seller
under Article 13;
BSA = SA x NBC
where:
SA = Sharing Amount which is
U.S.$315,000; and
NBC = Number of Burmah
Charters which is the number
of Charters for the Burmah
Vessels in effect during year
n (adjusted for a partial
year if a Charter for a
Burmah Vessel is terminated
during year n).
D = DCA + DNVOC - DOH
where:
DCA = Dwiputra Capital Amount
which is U.S.$19,108,000 );
and
BHAM - BE + BR
DNVOC = (--------------) - DLS
NBC
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<PAGE> 43
where:
BHAM = Burmah Hire Amount Modified
which is BHA modified to
exclude all amounts with
respect to the Burmah's Cost
Component (but not any
amounts included in BE);
BR = Burmah Reductions which is
the amount, in U.S. Dollars,
by which BHAM would be
increased if the following
deductions for year n had not
been taken into account:
(A) adjustments for
lay-up;
(B) adjustments for
Off-Hire or other
unavailability;
(C) adjustments due to
a vessel being a
Non-Utilized Vessel
under the Fleetwide
Agreement; and
(D) adjustments for
performance
compensation; and
DLS = Dwiputra Lay-up Savings
which is an amount equal to
the reduction in the Burmah
Vessel daily Hire Rate
applicable if a Burmah Vessel
were laid up for the same
number of days (as
established pursuant to
paragraph 2.5.3(b) of
Schedule III of the
Charters), multiplied by the
number of days the Dwiputra
is laid up.
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<PAGE> 44
DOHD
DOH = (DCA + DNVOC + DLS) x ----
365
where:
DOHD = Dwiputra Off-hire Days which is the
number of days the Dwiputra is
off-hire in year n.
DCA, DNVOC and DOH shall be adjusted for a partial
year if Seller's Transportation Arrangements for the
Dwiputra are terminated during year n.
PAA
V = --- x EV
BV
where:
PAA = Paying Agent Agreement Amount which
is the Net Payments in U.S. Dollars
to be made under the Paying Agent
Agreement during year n as Voyage
Expenses for voyages under this
Contract, taking into account the
prior year Voyage Over/Under Amount
for voyages under this Contract;
BV = Burmah Vessel Voyages which is the
total number of voyages under this
Contract of the Burmah Vessels and
any Alternate Vessels for year n;
and
EV = Extension Fleet Voyages which is the
total number of voyages under this
Contract of the Extension Fleet and
any Alternate Vessels for year n;
S = Substitute Tanker Costs which is any amount
in U.S. Dollars paid by Seller with respect
to use of a Substitute LNG Tanker (taking
into
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<PAGE> 45
account adjustments comparable to those
included in BE, and excluding any amount
already included in PAA); provided, however,
that with respect to a Substitute LNG Tanker
required as a result of a vessel in the
Extension Fleet being unavailable because of
an incident which would not have occurred but
for a voyage to a buyer other than Buyers,
amounts that are (on a daily basis) in excess
of the average Hire Rate of the Burmah
Vessels shall also be excluded.
(ii) Adjustments
A = BP - DP - AV - FM
where:
BP = BLP + BSP + BBP
where:
BLP = Burmah Loading
Performance Compensation
which is any amount in U.S.
Dollars in respect of a
failure in year n to meet the
loading undertaking pursuant
to section 16.4 of a Charter;
BSP = Burmah Speed
Performance Compensation
which is fifty percent (50%)
of any amount in U.S. Dollars
in respect of a failure in
year n to meet the speed
undertaking pursuant to
section 16.2 of a Charter;
and
BBP = Burmah Boil-off
Performance Compensation
which is the LE portion only
in U.S. Dollars of any amount
in respect of a failure in
year
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<PAGE> 46
n to meet the boil-off
undertaking pursuant to
Article 27 of a Charter.
DP = DDP + DSP
where:
DDP = Dwiputra Discharge
Performance Compensation
which is in relation to a
failure in year n to meet the
discharge undertaking
pursuant to Seller's
Transportation Arrangements
for the Dwiputra, an amount
in U.S. Dollars calculated by
taking the excess discharge
time in hours multiplied by
the average Hire Rate for the
Burmah Vessels for year n
divided by twenty-four (24);
and
DSP = Dwiputra Speed
Performance Compensation
which is in relation to a
failure in year n to meet the
speed undertaking pursuant to
Seller's Transportation
Arrangements for the
Dwiputra, fifty percent (50%)
of an amount in U.S. Dollars
calculated by applying
paragraph 4.1 of Schedule II
of a Burmah Vessel Charter to
the speed deficiency for the
applicable Dwiputra voyage.
AVD
AV = (TC-V) x ---
TVD
where:
AVD = Additional Voyage Days which
is the number of days used by
a vessel in the Extension
Fleet to complete a voyage
not pursuant to this
Contract, determined from the
time such vessel departs the
sea buoy at the Loading Port
prior to loading until it
again arrives at such sea
buoy upon completion of such
voyage or arrives at a
dry-dock port or place of
lay-up, minus the
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number of days an LNG Tanker
is unavailable (including,
without limitation, off-hire)
during any such voyage ; and
TVD = Total Voyage Days which is
the total number of voyage
days calculated as the number
of LNG Tankers performing
transportation under this
Contract multiplied by the
number of days in year n,
minus the number of days an
LNG Tanker is in dry-dock or
unavailable (including,
without limitation,
off-hire).
FMQ
FM = (TC +SFMS - V - AV) x ------------- - SFMS
AQ + FMQ + DQ
where:
SFMS = Seller Force Majeure Savings
which is the savings in U.S.
Dollars, if any, in
transportation costs during
the period of an event of
force majeure pursuant to
Section 15.1 hereunder
affecting Seller ("Seller
Force Majeure"), calculated
as the sum of:
SBS + SDS
where:
SBS = Seller Burmah Savings
which is the reduction in
payments by Seller
resulting from the lay-up
of a Burmah Vessel or a
Substitute LNG Tanker
during the period of
Seller Force Majeure or
pursuant to any
provision of Seller's
Transportation
Arrangements for such
vessels applicable to
such period of Seller
Force Majeure; and
SDS = Seller Dwiputra Savings
which is, if the
Dwiputra is in lay-up
due to a Seller Force
Majeure, an amount equal
to the reduction in the
Burmah
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<PAGE> 48
Vessel daily Hire Rate
applicable if a Burmah
Vessel were laid up for
the same number of days
(as established pursuant
to paragraph 2.5.3(b) of
Schedule III of the
Charters), multiplied by
the number of days the
Dwiputra is laid up.
FMQ = Force Majeure Quantities
which is the Fixed Quantities
not delivered during year n
as a result of a Seller Force
Majeure but excluding DQ and
quantities not delivered as a
result of an LNG Tanker being
off-hire;
DQ = Declined Quantities which is
Fixed Quantities not
delivered because Buyers did
not accept a proposed
Substitute LNG Tanker offered
by Seller during a period
subject to Section 15.1 I as
a result of an LNG Tanker
being on-hire and
unavailable; and
AQ = as defined in Section
8.3(a)(iv) below.
(iii) Reconciliation Amount
RA = (RTA - TEP + R) x I
where:
RTA = Recalculated Transportation
Amounts which is the sum in
U.S. Dollars of TC and A for
year n-1, recalculated using
actual amounts under this
Section 8.3, plus RA included
in the calculation for TE for
the year n-1;
TEP = TE Payments which is the sum
in U.S. Dollars of:
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(A) TE payments for
quantities delivered
in respect of year
n-1 Fixed Quantity
Period;
(B) TE payments for
Take-or-Pay Quantities
in respect of year n-1
Fixed Quantities;
(C) TE payments for excess
boil-off made pursuant
to Section 4.5(b) in
respect of year n-1
quantities; and
(D) the amount of
Non-Utilization Cost
under Section 4.6
hereof paid in respect
of year n-1 quantities;
R = Restoration Quantities
Amount which is, if
Restoration Quantities have
been delivered in respect of
year n-1, which restored a
Force Majeure Deficiency
resulting from a Seller's
Force Majeure, amounts in
U.S. Dollars of FM previously
excluded from the TE
calculation with respect to
the Force Majeure Deficiency
that was restored; and
I = Interest which is one
hundred and one percent
(101%) plus the arithmetic
average of LIBOR for year
n-1.
(iv) Annual Quantities
AQ = The sum (expressed in MMBTU) of the
following:
(A) quantities to be delivered in
respect of year n to Buyers
hereunder;
(B) any anticipated Take-or-Pay
Quantities for year n; and
(C) any quantities which would be
delivered hereunder in respect of
year n but for a Buyer Force
Majeure.
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<PAGE> 50
(b) Following the end of the calendar year 2000, and the end of
each Fixed Quantity Period thereafter, the actual
transportation costs for such year shall be determined. In
this regard, Seller and Buyers jointly shall employ
independent auditors to perform the audit pursuant to Seller's
Transportation Arrangements for the Burmah Vessels and
Substitute LNG Tankers and consultants to assist in the review
of costs for such vessels, and the cost of such audit and such
related consultancy fees shall be shared equally by Seller and
Buyers and be paid directly by each party.
(c) In connection with each annual adjustment of the
Transportation Element, Seller shall furnish to Buyers such
available estimates, accounting and other data as may
reasonably be required by Buyers to establish the basis upon
which and the manner in which such adjustment is calculated.
Subject to Section 4.1(b)(ii), Seller shall permit Buyers to
review the reasonableness of the current year estimated
transportation costs and prior year results in conjunction
with Seller's review as provided for in Seller's
Transportation Arrangements.
(d) Seller and Buyers intend that, except as noted in this Article
8 with respect to the Dwiputra and BSA, all costs for
transportation of LNG hereunder shall be passed through to
Buyers. Subject to the provisions of this Article 8, the TE
Formula shall be adjusted to ensure that Seller neither
profits nor loses under Seller's Transportation Arrangements
in providing transportation of LNG hereunder.
8.4 Transportation Element for First Calendar Quarter of 2000
The Transportation Element included in the Contract Sales Price for
the period January 1 to March 31, 2000 shall be calculated in
accordance with Section 8.3, taking into account adjustments to such
calculation as a result of the three (3) month period.
8.5 Final Settlement
(a) Within ninety (90) days after the delivery of the last cargo
of LNG to be sold and purchased hereunder, Seller and Buyers
shall determine the amount of the final reconciliation payment
("Final Settlement"). The Final Settlement shall be
determined utilizing the principles by which RA is calculated
annually pursuant to Section 8.3(a)(iii) (taking into
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consideration Section 8.3(d)) and shall be determined in
respect of the period from January 1, 2010 until delivery of
the last cargo of LNG to be sold and purchased hereunder.
(b) If any Fixed Quantities previously included in FMQ under
Section 8.3(a)(ii) as a result of the unavailability of an LNG
Tanker which remained on-hire while unavailable have not been
restored as Restoration Quantities at the end of the last
Fixed Quantity Period, Buyers shall pay to Seller as part of
the Final Settlement fifty percent (50%) of the amount of FM
determined under Section 8.3(a)(ii) that was previously
excluded from the TE calculation with respect to such
quantities.
(c) The Final Settlement will be payable by or paid to Buyers in
proportion to each Buyer's Fixed Quantities during the Fixed
Quantity Period 2010. After the amount of the Final Settlement
has been determined, Seller shall invoice Buyers, or Buyers
shall invoice Seller, in U.S. Dollars for amounts due under
this Section 8.5, and Buyers or Seller, as the case may be,
shall pay such invoice no later than twenty (20) calendar days
after the date of receipt thereof.
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ARTICLE 9 - TRANSFER OF TITLE
The LNG to be sold by Seller and purchased by each Buyer hereunder shall be
delivered to such Buyer into its Receiving Facility at an Unloading Port.
Delivery shall be deemed completed and title and risk of loss shall pass from
Seller to such Buyer as the LNG reaches the Delivery Point.
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ARTICLE 10 - INVOICES AND PAYMENT
10.1 Invoice and Cargo Documents
Promptly after completion of unloading of an LNG Tanker, Seller, or
its representative, shall furnish to the receiving Buyer, or its
representative, a certificate of volume unloaded together with such
other documents concerning the cargo as may be reasonably requested by
Buyers for the purpose of Japanese customs clearance. The receiving
Buyer shall complete a laboratory analysis to determine quality and
BTU content of the LNG as soon as possible but not later than
forty-eight (48) hours after the completion of unloading.
Promptly upon completion of such analysis, Seller or its
representative shall furnish by telex or telegram to the receiving
Buyer an invoice, stated in U.S. Dollars, in the amount of the
Contract Sales Price for the number of BTU's delivered. At the same
time Seller shall send to the receiving Buyer a signed copy of the
invoice together with relevant documents setting forth the basis for
the calculation thereof.
If the receiving Buyer has not completed the above mentioned quality
and BTU analysis within the forty-eight-hour period mentioned above,
Seller may furnish a provisional commercial invoice based upon the
typical BTU content and typical mole composition analysis of LNG then
being delivered to Buyer, and such provisional invoice shall be
payable on the due date specified in Section 10.3 subject only to any
later adjusting payment which may be called for when the aforesaid
analysis has been completed.
10.2 Other Invoices
In the event any amount is due from any Buyer to Seller, including,
without limitation, amounts payable pursuant to Section 7.3(a) on
account of Fixed Quantities of LNG required to be purchased but which
were not taken by such Buyer, Seller shall furnish or cause to be
furnished to such Buyer an invoice therefor and relevant documents
showing the basis for the calculation thereof. The procedure set
forth in Section 10.1 for sending a copy of such invoice by telex or
telegram may be followed.
10.3 Invoice Due Dates, etc.
Each invoice for LNG delivered to a Buyer referred to in Section 10.1
shall become due and payable by such Buyer on the fifth (5th) Business
Day in Japan after the date on which the telex/telegraphic copy of
such invoice has been received by such Buyer in Japan. For this
purpose a telex/telegraphic copy of an invoice shall be deemed
received by Buyer in Japan on the next
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Business Day in Japan following the day on which it was sent. Each
other invoice to Buyer referred to in Section 10.2 shall become due
and payable by such Buyer within twenty (20) calendar days after the
date of such Buyer's receipt of such invoice in Japan.
If any invoice due date is not a Business Day in Japan, such invoice
shall become due and payable on the next day which is a Business Day
in Japan.
In the event the full amount of any invoice is not paid when due, any
unpaid amount thereof shall bear interest from the due date until
paid, at an interest rate, compounded annually, two percent (2%)
greater than the Base Rate in effect from time to time during the
period of delinquency. Such interest rate shall be adjusted up or
down, as the case may be, to reflect any changes in the Base Rate as
of the dates of such changes in the Base Rate.
10.4 Payment
Each Buyer shall pay, or cause to be paid, in U.S. Dollars all amounts
which become due and payable by such Buyer pursuant to any invoice
issued hereunder to a bank account or accounts in the United States to
be designated by Seller. Buyer shall not be responsible for such
bank's disbursement of amounts remitted by Buyer to such bank, and
Buyer's deposit in immediately available funds of the full amount of
each invoice with such bank shall constitute full discharge and
satisfaction of the obligations hereunder for which such amounts were
remitted. Each payment by a Buyer of any amount owing hereunder shall
be in the full amount due without reduction or offset for any reason,
including, without limitation, Japanese taxes, exchange charges or
bank transfer charges.
Transfer of funds to the bank in the United States, effected from
Japan before the close of business in Japan on or before the due date
of any invoice, shall be deemed timely payment notwithstanding that
such U.S. bank cannot credit such transfer as ready funds for a period
of up to fourteen (14) hours by reason of the time difference between
Japan and the United States or for one or more days which are not
banking days in the United States.
10.5 Seller's Rights Upon Buyers' Failure to Make Payment
If payment of any invoice for quantities of LNG delivered hereunder or
for Fixed Quantities of LNG not taken and for which a Buyer is
obligated to pay hereunder is not made within sixty (60) days after
the due date thereof, Seller shall be entitled, upon giving thirty
(30) days' written notice to such Buyer, to suspend subsequent
deliveries to such Buyer until the amount of such invoice
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and interest thereon has been paid, and such Buyer shall not be
entitled to any make-up rights in respect of such suspended
deliveries. If any such invoice is not paid within one hundred and
twenty (120) days after the due date thereof, then, subject to the
further provisions of this Section 10.5, Seller shall have the right,
at Seller's election, upon not less than eighty (80) days' notice to
Buyer or Buyers, as the case may be, to exercise either of the
following options :
(i) Seller may terminate this Contract in respect of the
defaulting Buyer only, in which event this Contract shall
continue in effect between Seller and the other Buyers just as
though the defaulting Buyer had never been a party and the
quantities of LNG to be purchased and received by such
defaulting Buyer had never been included in this Contract; or
(ii) Seller may terminate this Contract in its entirety as to
Buyers unless, prior to such termination, arrangements shall
have been made which are satisfactory to Seller for the
payment of all amounts owed Seller by the defaulting Buyer and
for the assumption of the LNG quantity and other obligations
of the defaulting Buyer under this Contract by one or more
Buyer(s) not defaulting.
Termination by Seller under clause (i) or (ii) above shall become
effective upon receipt by each Buyer of notice from Seller to such
effect. Any such termination shall be without prejudice to any other
rights and remedies of Seller arising hereunder or by law or
otherwise, including the right of Seller to receive payment of all
obligations and claims which arose or accrued prior to such
termination or by reason of such default by a Buyer or Buyers.
10.6 Disputed Invoices
In the event of disagreement concerning any invoice, the Buyer shall
make provisional payment of the total amount thereof and shall
immediately notify Seller of the reasons for such disagreement, except
that :
(i) in the case of obvious error in computation, Buyer shall pay
the correct amount disregarding such error; and
(ii) in the case of any disputed invoice for demurrage incurred at
an Unloading Port, Buyer's provisional payment shall be ninety
percent (90%) thereof or such greater amount as is not
disputed by Buyer.
Invoices may be contested by Buyer or modified by Seller only if,
within a period of ninety (90) days after Buyer's receipt thereof,
Buyer serves on Seller
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notice questioning their correctness. If no such notice is served,
invoices shall be deemed correct and accepted by both parties.
Promptly after resolution of any dispute as to an invoice, the amount
of any overpayment or underpayment shall be paid by Seller or Buyer
to the other, as the case may be.
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ARTICLE 11 - QUALITY
11.1 Gross Heating Value
The LNG when delivered by Seller to Buyers shall have, in a gaseous
state, a Gross Heating Value of not less than 1070 BTU per Standard
Cubic Foot and not more than 1170 BTU per Standard Cubic Foot. The
expected range will be between 1110 and 1165 BTU per Standard Cubic
Foot.
11.2 Components
The LNG delivered by Seller to Buyers shall, in a gaseous state,
contain not less than eighty-five molecular percentage (85 MOL%) of
methane (CH4) and, for the components and substances listed below,
such LNG shall not contain more than the following :
A. Nitrogen (N2), 1.0 MOL %.
B. Butanes (C4) and heavier, 2.00 MOL %.
C. Pentanes (C5) and heavier, 0.10 MOL %.
D. Hydrogen sulfide (H2S), 0.25 grains per 100 Standard Cubic
Feet (0.25 grains/100 scf).
E. Total sulfur content, 1.3 grains per 100 Standard Cubic Feet
(1.3 grains/100 scf).
Although the LNG which Seller delivers to Buyers is permitted to
contain the sulfur concentrations shown in clauses D and E above,
under normal operating conditions at the Badak Facility, Seller would
expect such concentrations to be materially less.
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ARTICLE 12 - PROGRAMMING AND SHIPPING MOVEMENTS
12.1 Annual Program
(a) Not later than ninety (90) days prior to the beginning of each
calendar year, Seller shall give written notice to Buyers of
the anticipated quantities of LNG to be available for delivery
hereunder from the Badak Facility in each calendar quarter of
the next calendar year, taking into consideration the
projected capacity of the Badak Facility. On or before
October 15 of each year in which such notice is given, each
Buyer shall advise Seller in writing of the quantities such
Buyer wishes to take during each calendar quarter of the
following year, specifying the amount of any Make-Up LNG
requested pursuant to Section 7.5 and any Restoration
Quantities in excess of Fixed Quantities requested pursuant to
Section 7.6(a). In addition, by October 15 of each year,
Buyers' Coordinator shall request any Make-Good LNG pursuant
to Section 7.3(d).
Seller and Buyers shall thereupon consult together and agree
by December 1 of the same year upon a programming schedule of
quantities to be delivered to each Receiving Facility during
each calendar month during the following year (the "Annual
Program"), which shall take into consideration the anticipated
capacity of the parties' respective facilities, the
Coordinated Maintenance Schedule and the shipping schedules.
Such Annual Program and the Ninety-Day Schedules referred to
below (and any revisions thereof) are intended to assist the
parties in planning their respective operations during the
periods involved. The content of the Annual Program and
Ninety-Day Schedules shall not reduce the entitlement of any
party during any Fixed Quantity Period to sell, deliver and be
paid for, or to purchase and receive, as the case may be, the
quantities of LNG required under Article 7 to be sold,
delivered and paid for during such Fixed Quantity Period.
Seller and Buyers will each take all appropriate steps to
carry out each Annual Program and Ninety-Day Schedule.
(b) An Annual Program shall be amended to reflect a request for :
(i) Make-Good LNG relating to an Allowance exercised in
respect of the immediately preceding year;
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(ii) Make-Up LNG relating to a Take-or-Pay Quantity paid
for in respect of the immediately preceding year; or
(iii) Restoration Quantities relating to a Force Majeure
Deficiency arising in respect of the immediately
preceding year;
provided that the requested LNG and the necessary
transportation are available and such request is received by
Seller not later than January 15 of the year to which such
Annual Program relates.
12.2 Ninety-Day Schedules
Not later than the fifteenth (15th) day of each calendar month, Seller
shall, after discussion with each Buyer, deliver to each Buyer a
three-month forward plan of delivery (the "Ninety-Day Schedule"),
which follows the applicable Annual Program as nearly as practicable
and sets forth by voyages and the projected dates thereof the pattern
of shipments forecast for each of the next three (3) calendar months.
Each Ninety-Day Schedule shall reflect all adjustments, if any,
necessitated by deviation from prior Ninety-Day Schedules so as to
maintain as far as practicable the scheduled shipments forecast in the
Annual Program.
12.3 Maintenance and Inspection Coordination
Not later than ninety (90) days prior to the beginning of each
calendar year, Seller and Buyers shall consult and agree on a program
designed to coordinate the anticipated scheduled maintenance and
inspection downtime during that calendar year of the Receiving
Facilities of each Buyer, the anticipated scheduled downtime of the
Badak Facility and the maintenance schedules of the LNG Tankers.
Such program (the "Coordinated Maintenance Schedule") will be devised
so as to minimize the collective impact of such downtime and
maintenance periods on the continuous delivery of LNG hereunder.
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ARTICLE 13 - MEASUREMENTS AND TESTS
13.1 Parties to Supply Devices
Seller shall supply, operate and maintain, or cause to be supplied,
operated and maintained, suitable gauging devices, density, pressure
and temperature measuring devices, and any other measurement or
testing devices for the LNG tanks of the LNG Tankers, which are
incorporated in the structure of LNG Tankers or customarily maintained
on shipboard.
Each Buyer shall supply, operate and maintain, or cause to be
supplied, operated and maintained, devices required for collecting
samples and for determining quality and composition of the LNG and any
other measurement or testing devices which are incorporated in land
structures or customarily maintained at Receiving Facilities.
13.2 Selection of Devices
All devices provided for in this Article 13 shall be compatible with
the specifications of the LNG Tankers. Such devices shall be chosen
by mutual agreement of the parties and shall be such that at the time
of selection are the most accurate and reliable devices in their
practical application. The required degree of accuracy of such
devices selected shall be mutually agreed upon and verified by Buyers
and Seller, in advance of their use, and at the request of either
Buyer or Seller such degree of accuracy shall be verified by an
independent surveyor mutually agreed upon by such Buyer and Seller.
13.3 Units of Measurement and Calibration
The parties will cooperate closely in the design, selection, and
acquisition of devices to be used for measurements and tests under
this Article 13 in order that, to the maximum extent possible, all
measurements and tests may be conducted either in American units of
measurement or in metric units of measurement. In the event that it
becomes necessary to make measurements and tests using a new system of
units of measurement, the parties shall establish mutually agreeable
conversion tables, or, if they are unable to agree, such tables may be
established by the procedures provided for resolution of disputes on
measurement and testing in Section 13.11. Measurement devices shall
be calibrated as follows :
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<TABLE>
<CAPTION>
Measurement American Units Metric Units
----------- -------------- ------------
<S> <C> <C>
Volume Cubic feet Cubic Meters
Temperature Degrees Fahrenheit Degrees Centigrade
Pressure Pounds per square Kilograms per square
inch or inches of centimeter or
mercury millimeters of mercury
Length Feet Meters
Weight Pounds Kilograms
Density Pounds per cubic Kilograms per Cubic
foot Meter
</TABLE>
13.4 Tank Gauge Tables of LNG Tankers
Seller shall provide each Buyer, or cause each Buyer to be provided,
with a certified copy of tank gauge tables for each tank of each LNG
Tanker verified by the U.S. Bureau of Standards at Washington, D.C.,
the Nippon Kaiji Kentei Kyokai (Japan Marine Surveyors and Sworn
Measurers' Association) or other competent impartial authority
mutually agreed upon by the parties. Such tables shall include
correction tables for list, trim, tank construction and any other
items requiring such tables for accuracy of gauging. Seller and
Buyers shall each have the right to have representatives present at
the time each LNG tank on each LNG Tanker is volumetrically
calibrated. If the LNG tanks of any LNG Tanker suffer distortion of
such nature as to cause a prudent expert reasonably to question the
validity of the tank gauge tables described herein (or any subsequent
calibration provided for herein), any Buyer or Seller may require
recalibration of such LNG tanks during any period when the LNG Tanker
is out of service for scheduled inspection or repairs. Upon
recalibration of the LNG tanks of the LNG Tankers, the same procedures
used to provide the original tank gauge tables will be used to provide
revised tank gauge tables based upon the recalibration data. The
calibration of tanks provided for in this Section 13.4 shall
constitute the only calibration required for purposes of this
Contract.
13.5 Gauging and Measuring LNG Volumes Delivered
Volumes of LNG delivered pursuant to this Contract shall be determined
by gauging the LNG in the tanks of the LNG Tankers before and after
unloading.
Gauging the liquid in the tanks of the LNG Tankers and measuring of
liquid temperature, vapor temperature, vapor pressure and liquid
density in each LNG tank, trim and list of the LNG Tankers, and
atmospheric pressure shall be performed, or be caused to be performed,
by Seller before and after unloading.
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The first gauging and measurements shall be made immediately before
the commencement of unloading. The second gauging and measurements
shall take place immediately after completion of unloading.
Copies of gauging and measurement records shall be furnished to Buyer.
A. Gauging the Liquid Level of LNG
The level of the LNG in each LNG tank of the LNG Tanker shall
be gauged by means of the gauging device installed in the LNG
Tanker for that purpose. The level of the LNG in each tank
shall be logged or printed.
B. Determination of Temperature
The temperature of the LNG and of the vapor space in each
cargo tank shall be measured by Seller by means of a
sufficient number of properly located temperature measuring
devices, to permit the determination of average temperatures.
Temperatures shall be logged or printed.
C. Determination of Pressure
The pressure of the vapor in each LNG tank shall be determined
by means of pressure measuring devices installed in each LNG
tank of the LNG Tankers. The atmospheric pressure shall be
determined by readings from the standard barometer installed
in the LNG Tankers.
D. Determination of Density
Density of the LNG shall be determined by Seller either by
computation or by measurement, as mutually agreed to by the
parties. Initially, the density of the LNG will be computed by
the method described in Schedule A. Should any improved data,
method of calculation or direct measurement device become
available which is acceptable to both Buyers and Seller, such
improved data, method or device shall then be used. If
density is determined by measurements, the results shall be
logged or printed.
13.6 Samples for Quality Analysis
Representative samples of the LNG delivered shall be obtained, or be
caused to be obtained, in triplicate by each Buyer during the time of
unloading and delivery to such Buyer. The three (3) samples shall be
taken from an appropriate point on Buyer's receiving line as close as
possible to the unloading flanges and collected in the gaseous state
using the continuous gasification/collection method agreed by Buyers
and Seller. The method and
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devices for sampling and the quantity of the samples to be withdrawn,
shall be determined by agreement between Buyers and Seller to provide
for taking representative and adequate samples of the LNG delivered.
The samples obtained shall be distributed as follows :
First sample - for use of Buyer receiving the LNG shipment.
Second sample - for retention by such Buyer for an agreed
period, not to exceed twenty (20) days,
during which any dispute as to the accuracy
of any analysis shall be raised, in which
case the sample shall be further retained
until such Buyer and Seller agree to retain
it no longer.
Third sample - for use of Seller, if Seller so requests.
If representative samples cannot be obtained by Buyer, the data to be
determined by sample analysis in Section 13.7 shall be based upon the
analysis of the LNG loaded at the Loading Port and shall, after the
boil-off adjustment provided for below, be substituted for use in
determining composition of the cargo delivered. Such data obtained at
the Loading Port shall be adjusted for boil-off on the basis of the
arithmetic average of the boil-off experience during the one-way
voyage with regard to the last five (5) cargoes from the Loading Port
to the same Receiving Facility. For this purpose Seller shall utilize
devices comparable to those utilized at the Receiving Facility and
shall employ methods of taking and analyzing the samples at the
Loading Port comparable in accuracy to those employed at the Receiving
Facility.
13.7 Quality Analysis
The samples provided for in Section 13.6 shall be analyzed, or be
caused to be analyzed, by the Buyer receiving the LNG shipment to
determine the molar fraction of the hydrocarbon and other components
in the sample by gas chromatography in accordance with "G.P.A.
Standard 2261, Analysis for Natural Gas and Similar Gaseous Mixtures
by Gas Chromatography", published by G.P.A., current as of 1990. If
better standards for analysis are subsequently adopted by G.P.A. or
other recognized competent impartial authority, upon mutual agreement
of Buyers and Seller, they shall be
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substituted for the standards then in use, but such substitution shall
not take place retroactively.
Should it be necessary to obtain periodic samples, the composition of
the LNG unloaded from each LNG Tanker shall be the arithmetic average
of the results obtained by analysis of the samples obtained under
Section 13.6. A calibration of the chromatograph or other analytical
instrument used shall be performed by each Buyer immediately prior to
the analysis of the sample of LNG delivered. The Buyer intending to
conduct a calibration shall give advance notice thereof to Seller, and
Seller shall have the right to have a representative present at each
such calibration; provided, however, that the party performing the
calibration will not be obligated to defer or reschedule any
calibration in order to permit the representative of the other party
to be present.
The sample shall be analyzed, or be caused to be analyzed, by the
Buyer to determine the concentrations of hydrogen sulfide (2S) and
total sulfur referred to in Section 11.2 using the methods described
in Schedule A.
13.8 Operating Procedures
Prior to conducting operations for measurement, gauging and analysis
provided in Sections 13.5, 13.6 and 13.7 the party responsible for
such operations shall notify the appropriate representatives of the
other party, allowing such representative reasonable opportunity to be
present for all operations and computations; however, the absence of
the other party's representative after notification and opportunity to
attend shall not prevent any operations and computations from being
performed. At the request of either party, any measurement, gauging
and analysis provided for in Sections 13.5, 13.6 and 13.7 shall be
witnessed and verified by an independent surveyor mutually agreed upon
by the Buyer and Seller. The results of such surveyor's verifications
shall be made available promptly to each party. All records of
measurements and the computation results shall be preserved and
available to both parties for a period of not less than three (3)
years after such measurements and computation.
13.9 BTU Quantities Delivered
The quantity of BTU's of LNG delivered from LNG Tankers shall be
calculated by Seller following the procedures described in this
Section 13.9 and shall be verified by an independent surveyor mutually
agreed upon by Seller and Buyer.
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A. Determination of Gross Heating Value
The Gross Heating Value of the samples of the LNG shall be
determined by computation, in accordance with the method
described in Schedule A, on the basis of the molecular
composition determined pursuant to Section 13.7 and of the
molecular weights and heating values described in "G.P.A.
Publication 2145" published by G.P.A., current at the time of
computation.
If better constants or improved methods for determination of
heating value are subsequently adopted by G.P.A. or other
recognized competent impartial authority, they shall, upon
mutual agreement of Seller and Buyers, be substituted
therefor, but not retroactively. The Gross Heating Value of
the representative sample shall be the conclusive Gross
Heating Value for the purpose of determining quantities of
BTU's delivered.
B. Determination of Volume of LNG Unloaded
The LNG volume in the tanks of the LNG Tanker before and after
unloading shall be determined by gauging as provided in
Section 13.5 on the basis of the tank gauge tables provided
for in Section 13.4. The volume of LNG remaining in the tanks
of the LNG Tanker after unloading shall then be subtracted
from the volume before unloading and the resulting volume
shall be taken as the volume of the LNG delivered from the LNG
Tanker.
If failure of gauging and measuring devices of an LNG Tanker
should cause impossibility of determining the LNG volume, the
volume of LNG delivered shall be determined by gauging the
liquid level in Buyer's onshore LNG storage tanks immediately
before and after unloading the LNG Tanker and such volume
shall be increased by adding an estimated LNG volume, agreed
upon by the parties, for boil-off from such onshore LNG
storage tanks and related pipelines during the unloading of
LNG. Each Buyer shall provide Seller, or cause Seller to be
provided with, a certified copy of tank gauge tables for each
onshore LNG tank which is to be used for this purpose verified
by a competent impartial authority.
C. Determination of BTU Quantities Delivered
The quantities of BTU's delivered from LNG Tankers shall be
computed by Seller by means of the following formula :
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Q = V x D x P - Qr
where:
Q represents the quantity of the LNG delivered
in BTU's.
V represents the volume of the LNG unloaded,
stated in Cubic Meters, determined as
provided in Section 13.9 B.
D represents the density of the LNG unloaded,
stated in kilograms per Cubic Meter,
determined as provided in Section 13.5 D.
P represents the Gross Heating Value of the
LNG unloaded, stated in BTU's per kilogram.
Qr represents the quantity in BTU's of the vapor
which displaced the volume of LNG unloaded
from the LNG tanks of the LNG Tanker.
Physical constants, calculation procedures and examples of BTU
determination are provided in Schedule A.
13.10 Verification of Accuracy and Correction for Error
Accuracy of devices used shall be tested and verified at the request
of either party, including the request by a party to verify accuracy
of its own devices. Each party shall have the right to inspect at any
time the measurement devices installed by the other party, provided
that the other party be notified in advance. Testing shall be
performed only when both parties are represented, or have received
adequate advance notice thereof, using methods recommended by the
manufacturer or any other method agreed to by Seller and Buyers. At
the request of any party, any test shall be witnessed and verified by
an independent surveyor mutually agreed upon by Buyers and Seller.
Permissible tolerances shall be as defined in Schedule A. Inaccuracy
of a device exceeding the permissible tolerances shall require
correction of previous recordings, and computations made on the basis
of those recordings, to zero error with respect to any period which is
definitely known or agreed upon by the parties, as well as adjustment
of the device. In the event that the period of error is neither known
nor agreed upon, corrections shall be made for each delivery made
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during the last half of the period since the date of the most recent
calibration of the inaccurate device. However, the provisions of this
Section 13.10 shall not be applied to require the modification of any
invoice which has become final pursuant to Section 10.6.
13.11 Disputes
In the event of any dispute concerning the subject matter of this
Article 13, including, but not limited to, disputes over selection of
the type or the accuracy of measuring devices, their calibration, the
result of a measurement, sampling, analysis, computation or method of
calculation, such dispute shall be submitted to a competent impartial
authority mutually agreed upon by the parties or, if such authority
cannot be agreed upon within thirty (30) days of request by either
party, such dispute shall be decided by arbitration pursuant to
Article 16. All decisions of an authority acting under this Section
13.11 shall be binding on the parties. Expenses incurred in
connection with the services of such authority shall be shared equally
by the parties.
13.12 Costs and Expenses of Test and Verification
All costs and expenses for testing and verifying Seller's measurement
devices as provided for in this Article 13 shall be borne by Seller,
and all costs and expenses for testing and verifying a Buyer's
measurement devices shall be borne by such Buyer. The fees and
charges of independent surveyors for measurements and calculations as
provided for in Section 13.8 and 13.9 shall be borne equally by Seller
and Buyer. When the services of independent surveyors are required
and selected by mutual agreement pursuant to Section 13.10, then the
fees and charges of such surveyors shall be borne equally by Seller
and Buyers.
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ARTICLE 14 - DUTIES, TAXES AND CHARGES
Each Buyer shall pay (or reimburse Seller for payments made by it), and shall
indemnify and hold Seller harmless from, all taxes, royalties, duties or other
imposts levied or imposed by the Japanese Government, any subdivision thereof
or any other governmental authority in Japan on the transportation, sale and
import of LNG hereunder or on any income resulting therefrom, including income
resulting from payments made under this Article 14, and all port charges, taxes
and duties levied or imposed on the LNG Tankers in Japan with respect to the
transportation of LNG hereunder. To the extent that the foregoing taxes,
royalties, duties, other imposts or port charges are included in the
calculation of the Transportation Element paid or payable by Buyer, the parties
understand and confirm that Buyer shall not be required to also pay such
amounts under this Article 14. All payments or reimbursements required under
this Article 14 shall be made by Buyer within twenty (20) calendar days after
the date of Buyer's receipt of such invoice in Japan.
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ARTICLE 15 - FORCE MAJEURE
15.1 Events of Force Majeure
Neither Seller nor any Buyer shall be liable for any delay or failure
in performance hereunder if and to the extent such delay or failure in
performance results from any of the following :
A. Fire, flood, atmospheric disturbance, lightning, storm,
typhoon, tornado, earthquake, landslide, soil erosion,
subsidence, washout or epidemic;
B. War, riot, civil war, blockade, insurrection, act of public
enemies or civil disturbance;
C. Strike, lockout or other industrial disturbance;
D. Serious accidental damage to or other serious failure of
Seller's Facilities, unless such damage or failure is the
result of gross negligence on the part of Seller's management;
E. Serious accidental damage to or other failure of a Buyer's
Facilities, unless such damage or failure is the result of
gross negligence on the part of such Buyer's management;
F. The Proved Remaining Recoverable Reserves of Natural Gas in
the Gas Supply Area expressed in the then most recent
Certificate referred to in Section 3.2(a) which can be
economically produced have been fully depleted;
G. Act of government which directly affects the ability of a
party to perform any obligation hereunder other than the
obligation to remit payments as provided in Section 10.4 on
account of LNG delivered and taken or not taken but required
to be paid for under this Contract;
H. Delay in completion and testing of any stage of the expansion
of the Badak Facility contemplated by Seller in connection
with the performance of this Contract so as to prevent the
same from becoming operational on a continuing basis, which
delay is caused by delay in receiving major items of equipment
or materials from the manufacturer or vendor thereof, provided
that Seller shall have taken all steps reasonably available to
obtain timely delivery of such items including
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<PAGE> 70
the placing of purchase orders within such time as was prudent
under then existing circumstances; or
I. The removal of an LNG Tanker from service due to loss, serious
accidental damage or other serious failure, or other
unavailability of an LNG Tanker, unless such loss, damage,
failure or unavailability is the result of gross negligence on
the part of Seller.
Nothing herein shall relieve Buyers of their obligation to pay for LNG
delivered or to make any other payment which has become due and
payable under this Contract prior to the occurrence of any of the
events described above.
15.2 Notice, Resumption of Normal Performance, etc.
Immediately upon the occurrence of an event of force majeure, the
party affected shall give notice thereof to the other party describing
such event and the estimated period during which operations will be
suspended or reduced. The parties shall exercise reasonable diligence
to ensure resumption of normal performance under this Contract after
the occurrence of any event of force majeure, and, prior to resumption
of normal performance, the parties shall continue to perform their
obligations under this Contract to the extent not affected by such
event of force majeure.
15.3 Settlement of Industrial Disturbances
Settlement of strikes, lockouts or other industrial disturbances shall
be entirely within the discretion of the party experiencing such
situations and nothing herein shall require such party to settle
industrial disputes by yielding to demands made on it when it
considers such action inadvisable.
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<PAGE> 71
ARTICLE 16 - ARBITRATION
All disputes arising between any Buyer or Buyers, on the one hand, and Seller,
on the other hand, relating to this Contract or the interpretation or
performance hereof shall be finally settled by arbitration conducted in
accordance with the Rules of Arbitration of the International Chamber of
Commerce, effective at the time, by three (3) arbitrators appointed in
accordance with such Rules. Arbitration shall be conducted in the English
language and shall be held at Paris, France, unless another location is
selected by mutual agreement of the parties concerned. The award rendered by
the arbitrators shall be final and binding upon the parties concerned.
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<PAGE> 72
ARTICLE 17 - APPLICABLE LAW
This Contract shall be governed by and interpreted in accordance with the laws
of the State of New York, United States of America. The parties agree that the
United Nations Convention on Contracts for the International Sale of Goods and
the Convention on the Limitation Period in the International Sale of Goods
shall not apply to this Contract and the respective rights and obligations of
the parties hereunder.
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<PAGE> 73
ARTICLE 18 - BUYERS' COORDINATOR
Buyers will from time to time designate a Buyers' Coordinator to act on behalf
of each Buyer in performing the following:
A. Coordinating among each of Buyers, and between Seller and
Buyer or Buyers, and the handling of communications between
Seller and Buyer or Buyers in connection with performance of
this Contract, in particular the exercise of Allowances
pursuant to Section 7.3(d); and
B. Implementation of various operations of each Buyer or of
Buyers which are necessary in connection with the purchasing
of LNG hereunder.
Buyers shall notify Seller the name and address of the entity to act as Buyers'
Coordinator. Buyers have notified Seller that Japan Indonesia LNG Co., Ltd. is
presently acting as Buyers' Coordinator.
Seller shall be entitled to accept and rely upon any communication received
from Buyers' Coordinator as if received directly from one or more of Buyers,
and to give any communication to Buyers' Coordinator with the same effect as if
given directly to a Buyer or Buyers, if such notice or communication relates to
matters as to which Buyers' Coordinator is acting as described above pursuant
to this Article 18. No act of, or authorization to, Buyers' Coordinator shall
relieve any Buyer from performance of any obligation or payment of any
liability of such Buyer hereunder, each Buyer remaining primarily liable
therefor at all times.
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<PAGE> 74
ARTICLE 19 - CONFIDENTIALITY
No party to this Contract shall use or communicate to third parties the
contents of this Contract or other confidential information or documents which
may come into the possession of such party in connection with the performance
of this Contract without the prior agreement of the party or parties to which
such information or documents are confidential. This restriction shall not
apply to the contents of this Contract, or information or documents, which:
(i) have fallen into the public domain otherwise than through the act or
failure to act of the party that has obtained them; or
(ii) are communicated to:
(A) any of Seller's Suppliers, or any Affiliate (as defined
below), with the obligation of the receiving person to
maintain confidentiality;
(B) persons participating in the implementation of this project,
such as Seller's Transporters, Buyers' Coordinator, legal
counsel, accountants, other professional, business or
technical consultants and advisers, underwriters or lenders,
with the obligation of the receiving persons to maintain
confidentiality; or
(C) any governmental agency of the Republic of Indonesia or Japan,
or having jurisdiction over any of Seller's Suppliers or any
Affiliate or Seller's Transporters, provided that such agency
has authority to require such disclosure, and that such
disclosure is made in accordance with that authority.
As used before, the term "Affiliate" means a company that controls, is
controlled by, or is under common control with, a party to this Contract or any
of Seller's Suppliers.
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<PAGE> 75
ARTICLE 20 - NOTICES
All notices and other communications for purposes of this Contract shall be in
writing, which shall include transmission by telex, facsimile or telegraph,
except that notices given from LNG Tankers at sea may be by radio. Notices and
communications shall be directed as follows :
A. To Seller at the following mail address :
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
Attention : General Manager, Gas Marketing Department
P.O. Box 12 / JKT
Jalan Merdeka Timur No. 1A
Jakarta Pusat, Indonesia
And at the following telegraph, telex and facsimile addresses :
Telegraph : Telex :
PERTAMINA PERTAMINA
JAKARTA, INDONESIA 44302 or 44152
Attention : General Manager, Gas Marketing JAKARTA,
Department INDONESIA
Facsimile: 62-21-345-8312
B. To Buyers at the following mail, telegraph, telex and facsimile
addresses :
CHUBU ELECTRIC POWER CO., INC.
(Mail and telegraph address ) Attention : Fuels Department
1, Toshin-cho, Higashi-ku,
Nagoya, 461-91 Japan
(Telex address) 4444405 CHUDEN J
(Facsimile address) 81-52-951-6025
THE KANSAI ELECTRIC POWER CO., INC.
(Mail and telegraph address) Attention : LNG Group
Office of Purchasing
3-22, Nakanoshima 3-chome, Kita-ku,
Osaka, 530-70 Japan
(Telex address) 5248320 KEPCO J
(Facsimile address) 81-6-441-0283
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<PAGE> 76
KYUSHU ELECTRIC POWER CO., INC.
(Mail and telegraph address) Attention : Fuels Department
1-82,Watanabe-dori 2-chome,
Chuo-ku,
Fukuoka, 810 Japan
(Telex address) 725497KYUDEN J
(Facsimile address) 81-92-731-8719
NIPPON STEEL CORPORATION
(Mail and telegraph address) Attention : Coal & Fuel Dept.-1
Raw Materials Div.-1
6-3, Otemachi 2-chome,
Chiyoda-ku,
Tokyo, 100-71 Japan
(Telex address) 22291 NSC J
(Facsimile address) 81-3-3275-5990
OSAKA GAS CO., LTD.
(Mail and telegraph address) Attention : Gas Resources Department
1-2, Hiranomachi 4-chome,
Chuo-ku,
Osaka, 541 Japan
(Telex address) 5225275DAIGAS J
(Facsimile address) 81-6-222-2044
TOHO GAS CO., LTD.
(Mail and telegraph address) Attention : Raw Materials Department
19-18, Sakurada-cho,
Atsuta-ku,
Nagoya, 456 Japan
(Telex address) 4477651 TOHOGS J
(Facsimile address) 81-52-871-6967
The parties may designate additional addresses for particular communications as
required from time to time, and may change any addresses, by notice given
thirty (30) days in advance of such additions or changes. Immediately upon
receiving communications by telex, facsimile, telegraph or radio, a party shall
acknowledge receipt by the same means, and may request a repeat transmittal of
the entire communication or confirmation of particular matters. If the sender
receives no acknowledgment of receipt within twenty-four (24) hours, or
receives a request for repeat transmittal or confirmation, said party shall
repeat the transmittal or answer the particular request.
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<PAGE> 77
ARTICLE 21 - ASSIGNMENT
Neither this Contract nor any rights or obligations hereunder may be assigned
by any Buyer without the prior written consent of Seller, or by Seller without
the prior written consent of each Buyer. Any request by a Buyer for Seller's
consent to an assignment shall be accompanied by the written consent of each
other Buyer to the proposed assignment. Any purported assignment without the
aforesaid consent or consents in each case shall be null and void.
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<PAGE> 78
ARTICLE 22 - AMENDMENTS
This Contract may not be amended, modified, varied or supplemented except by an
instrument in writing signed by Seller and Buyers.
Performance of any condition or obligation to be performed hereunder shall not
be deemed to have been waived or postponed except by an instrument in writing
signed by the party who is claimed to have granted such waiver or postponement.
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<PAGE> 79
ARTICLE 23 - SEVERALTY
This Contract shall be binding upon each Buyer in accordance with its terms.
The liabilities of Buyers under this Contract are several and not joint, and
each Buyer shall be liable only for performance of the obligations of such
Buyer as provided in this Contract.
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<PAGE> 80
ARTICLE 24 - DETAILS OF PERFORMANCE
Details necessary for performance of this Contract shall be mutually agreed
upon by Seller and each Buyer separately or, when necessary and desirable, by
Seller and Buyers on a coordinated and mutually agreeable basis.
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<PAGE> 81
ARTICLE 25 - SCOPE
This Contract constitutes the entire agreement between the parties relating to
the subject matter hereof and supersedes and replaces any provisions on the
same subject contained in any other agreement between the parties, whether
written or oral, prior to the date of the original execution hereof.
Subsequent to the date of original execution of this Contract, various
agreements, manuals, procedures and details of performance relating to the
interpretation or implementation of the First A/R, or covering matters related
thereto, have been agreed between Seller and Buyers ("Ancillary Agreements").
It is agreed that no Ancillary Agreement or portion thereof, to the extent it
is in effect and capable of performance, shall be annulled, terminated or
revoked by reason of the execution of this Second A/R, except that :
(i) to the extent that there is any conflict between such Ancillary
Agreements and any specific amendment to the Contract incorporated in
this Second A/R, such specific amendment shall prevail;
(ii) the Ancillary Agreements (or identified portions thereof) that were
superseded by the First A/R (Section 25 (ii)) shall continue to be
without effect; and
(iii) the 1973 Extension MOA shall be terminated.
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<PAGE> 82
ARTICLE 26 - COUNTERPARTS
This Second A/R is executed in seven (7) identical counterparts, each of which
shall have the force and dignity of an original, and all of which shall
constitute but one and the same Second A/R.
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<PAGE> 83
ARTICLE 27 - EFFECTIVE DATE AND APPLICABILITY
This Second A/R shall be effective as of the date of execution stated below.
Notwithstanding the foregoing sentence, the provisions of the First A/R shall
continue to apply and shall take precedence over this Second A/R until January
1, 2000.
IN WITNESS WHEREOF, each of the parties has caused this Second A/R to be duly
executed and signed by its duly authorized officer as of August 3, 1995.
<TABLE>
<S> <C>
SELLER: BUYERS:
- ------ -----
PERUSAHAAN PERTAMBANGAN CHUBU ELECTRIC POWER CO., INC.
MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
By: /s/ HIROJI OTA
--------------------------------------------------
By: /s/ F. ABDA'OE Name: Hiroji Ota
--------------------------------------------- -------------------------------------------
Name: F. Abda'oe Title: President and C.E.O.
-------------------------------------- -------------------------------------------
Title: President Director
--------------------------------------
THE KANSAI ELECTRIC POWER CO., INC.
By: /s/ YOSHIHISA AKIYAMA
--------------------------------------------------
Name: Yoshihisa Akiyama
-------------------------------------------
Title: President and Director
-------------------------------------------
WITNESSES:
- ----------
JAPAN INDONESIA LNG CO., LTD. KYUSHU ELECTRIC POWER CO., INC.
By: /s/ MASUO SHIBATA By: /s/ SHIGERU OHNO
--------------------------------------------- --------------------------------------------------
Name: Masuo Shibata Name: Shigeru Ohno
-------------------------------------- -------------------------------------------
Title: President and Director Title: President
-------------------------------------- -------------------------------------------
NISSHO IWAI CORPORATION NIPPON STEEL CORPORATION
By: /s/ AKIRA NISHIO By: /s/ ROKURO SUEHIRO
--------------------------------------------- --------------------------------------------------
Name: Akira Nishio Name: Rokuro Suehiro
-------------------------------------- -------------------------------------------
Title: President Title: Executive Vice President
-------------------------------------- -------------------------------------------
OSAKA GAS CO., LTD.
By: /s/ SHIN-ICHIRO RYOKI
--------------------------------------------------
Name: Shin-ichiro Ryoki
-------------------------------------------
Title: President
-------------------------------------------
TOHO GAS CO., LTD.
By: /s/ SADAHIKO SHIMIZU
--------------------------------------------------
Name: Sadahiko Shimizu
-------------------------------------------
Title: President
-------------------------------------------
</TABLE>
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<PAGE> 84
SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
The following describes Schedule A to the Second Amended and Restated 1973 LNG
Sales Contract, which is omitted herein, but will be furnished upon request:
Schedule A - Testing and Methods
Part I - BTU Quantity Determination (setting forth a table of physical
constants and the formulae for LNG density determination, gross heating
value calculation and total BTUs delivered calculation)
Table I - Example of LNG Density Calculation
Table II - Molar Volumes of Individual Components
Table III - Correction C for Volume Reduction of Mixture
Table IV - Example of Gross Heating Value Calculation
Part II - Quality Determinations
Part III - Maximum Permissible Tolerances
<PAGE> 85
SIDE LETTER TO SECOND AMENDED AND RESTATED 1973 LNG SALES CONTRACT
August 3, 1995
CHUBU ELECTRIC POWER CO., INC.
THE KANSAI ELECTRIC POWER CO., INC.
KYUSHU ELECTRIC POWER CO., INC.
NIPPON STEEL CORPORATION
OSAKA GAS CO., LTD.
TOHO GAS CO., LTD.
Gentlemen,
This letter relates to the Second Amended and Restated 1973 LNG Sales Contract
entered into of even date herewith ("Second A/R") (terms defined therein having
the same meanings when used herein).
A. HNS CONVENTION
The International Maritime Organization is developing an International
Convention on Liability and Compensation for Damage in Connection with the
Carriage of Hazardous and Noxious Substances by Sea ("HNS Convention"). If it
becomes likely that the HNS Convention will apply to shipments of LNG under the
Second A/R, then Seller and Buyers shall engage in a process of mutual review
and consultation in order to determine how to allocate any payments Seller is
required to make under the HNS Convention relating to the Fixed Quantities.
B. OMNIBUS AGREEMENT
Seller believes that changing circumstances and increasing values at
the Badak Facility necessitate making changes to the Omnibus Agreement
regarding the required protection and indemnity insurance coverage in respect
of the LNG Tankers ("P&I Cover"). Seller and Buyers shall therefore engage
as soon as possible in a process of mutual review and consultation in order to
determine whether the P&I Cover should be increased to U.S.$300,000,000, as
proposed by Seller.
C. SOCIAL RESPONSIBILITY INSURANCE
Buyers and Seller shall meet during 1999 to determine whether Seller
should obtain Japanese Social Responsibility Insurance ("SRI") for the
Dwiputra. However, if the meetings on the HNS Convention contemplated under A
above occur prior to 1999, then SRI discussions shall be included within such
HNS Convention discussions. Any discussions on how to deal with the HNS
Convention shall also consider whether SRI should be continued for the Burmah
Vessels (and for the Dwiputra, if SRI has been obtained already for such
vessel).
D. DEFINITION OF BUSINESS DAY IN JAPAN
Seller and Buyers have not reached a conclusion regarding whether
December 31 should be considered a Business Day in Japan. Buyers are not able
to make payment to Seller on December 31 through a bank in Japan since December
31 is, by Japanese Government order, a non-banking day in Japan. However,
Seller believes the treatment of December 31 as a non-business day would cause
Seller to incur substantial financial losses and is not justified by the
difficulties faced by Buyers.
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<PAGE> 86
Seller and Buyers are willing to engage in a process of mutual review
and consultation on the exclusion of December 31 as a Business Day in Japan in
the context of considering such a change for all of Seller's sales contracts
with Japanese buyers.
E. PRICING
Article 8 of the Second A/R refers to realized export prices (except
premiums and except prices for spot sales) of field classifications of
Indonesian crude oils being sold and exported. The parties acknowledge that as
of the effective date of the Second A/R, the Indonesian Crude Price (ICP)
system establishes such realized export prices.
If at any time in the opinion of Seller or Buyers, based on their
independent studies, the prices of the field classifications used by Seller to
determine "A" in the formula in Section 8.2(a) are materially different from
the realized export prices, such party shall so notify the other stating the
basis for such opinion, and the parties shall consult promptly and jointly
review the matter with a view to determining whether such difference exists
and, if so, to establishing an alternative basis, to be adopted by Seller, for
determining (for the purposes of the Second A/R) such realized export prices
(except premiums and except prices for spot sales).
In such event the parties shall continue to administer and perform the
provisions of the Second A/R, and to determine the Contract Sales Price and
submit and pay invoices, on the basis provided for in the Second A/R, until the
parties shall have completed such joint review.
If, upon completion of such joint review, it is determined that such
difference exists, then Seller shall promptly take all measures to ensure
proper administration of the Second A/R at all times, including any necessary
recalculation of the Contract Sales Price.
F. EXCESS CAPACITY
Seller confirms that it places great importance on the mutual trust
and cooperation that exists with Buyers, and that no changes effected by the
Second A/R are intended to adversely effect the relationship between the
parties. Seller also fully appreciates the marketing opportunities for the
excess capacity of its LNG facilities provided by Buyers and will continue to
pursue such opportunities in the future.
It is Seller's policy to retain the right to dispose of the excess
capacity of its LNG facilities to such purchasers and upon such terms as it may
elect. Seller is therefore unable to grant any general reservations of its
excess capacity.
However, in view of the long term business relationship between Seller
and Buyers, Seller agrees that once a Buyer offers in writing to purchase a
specified quantity of LNG on terms to be agreed, then and to the extent Seller
determines that it has excess LNG production capacity and (if applicable)
shipping capacity available, then Seller will give preferential consideration
to such offer over future offers from other potential purchasers for a
reasonable period while good faith negotiations are being conducted with such
Buyer.
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<PAGE> 87
This Side Letter shall be effective as of the date of execution,
except the provisions of paragraph E and F above shall be effective as
of and from January 1, 2000. This Side Letter supersedes as of January
1, 2000 any prior written instrument between the parties with respect
to the subjects herein mentioned.
Very truly yours,
PERUSAHAAN PERTAMBANGAN
MINYAK DAN GAS BUMI
NEGARA (PERTAMINA)
By: /s/ F. ABDA'OE
-----------------------------
Name: F. Abda'oe
Title: President Director
AGREED AND ACCEPTED
CHUBU ELECTRIC POWER CO., INC. THE KANSAI ELECTRIC POWER CO., INC.
By: /s/ HIROJI OTA By: /s/ YOSHIHISA AKIYAMA
---------------------------------- ---------------------------------
Name: Hiroji Ota Name: Yoshihisa Akiyama
--------------------------- --------------------------
Title: President and C.E.O. Title: President and Director
--------------------------- --------------------------
KYUSHU ELECTRIC POWER CO., INC. NIPPON STEEL CORPORATION
By: /s/ SHIGERU OHNO By: /s/ ROKURO SUEHIRO
---------------------------------- ---------------------------------
Name: Shigeru Ohno Name: Rokuro Suehiro
--------------------------- --------------------------
Title: President Title: Executive Vice President
--------------------------- --------------------------
OSAKA GAS CO., LTD. TOHO GAS CO., LTD.
By: /s/ SHIN-ICHIRO RYOKI By: /s/ SADAHIKO SHIMIZU
---------------------------------- ---------------------------------
Name: Shin-ichiro Ryoki Name: Sadahiko Shimizu
--------------------------- --------------------------
Title: President Title: President
--------------------------- --------------------------
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<PAGE> 1
PACKAGE V SUPPLY AGREEMENT
FOR NATURAL GAS IN SUPPORT OF
THE 1973 LNG SALES CONTRACT EXTENSION
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
DATED: JUNE 16, 1995
EFFECTIVE: OCTOBER 6, 1994
<PAGE> 2
PACKAGE V SUPPLY AGREEMENT
FOR NATURAL GAS IN SUPPORT OF
THE 1973 LNG SALES CONTRACT EXTENSION
THIS SUPPLY AGREEMENT, made and entered into in Jakarta the 16th day
of June, 1995, by and between PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI
NEGARA ("PERTAMINA"), on the one hand, and VIRGINIA INDONESIA COMPANY ("VICO"),
LASMO SANGA SANGA LIMITED, OPICOIL HOUSTON, INC., UNION TEXAS EAST KALIMANTAN
LIMITED, UNIVERSE GAS & OIL COMPANY, INC., and VIRGINIA INTERNATIONAL COMPANY
(herein referred to collectively as "Contractors" and individually as
"Contractor"), on the other hand,
WITNESSETH:
A. WHEREAS, Contractors individually own or control all of
the interest of "Contractors" in that certain Amended and Restated Production
Sharing Contract, dated April 23, 1990, but effective as of August 8, 1968
(such contract as hereafter amended is herein referred to as the "Amended and
Restated Production Sharing Contract") and that certain Production Sharing
Contract dated April 23, 1990, but effective as of August 8, 1998 (such
contract as hereafter amended is herein referred to as the "Renewed
Production Sharing Contract"). The Amended and Restated Production Sharing
Contract and the Renewed Production Sharing Contract are herein referred to
collectively as the "Production Sharing Contracts" and the area covered thereby
is herein referred to as the "VICO Contract Area"; and
<PAGE> 3
B. WHEREAS, pursuant to the Production Sharing Contracts,
each of PERTAMINA and Contractors is entitled to take and receive, sell and
freely export its respective share of the Natural Gas produced and saved from
the VICO Contract Area (the percentage share of such Natural Gas to which each
of PERTAMINA and Contractors is entitled, as determined under the Production
Sharing Contracts, is herein referred to as the "Production Sharing Percentage"
of such party); and
C. WHEREAS, the reserves of Natural Gas in the VICO Contract
Area exceed the reserves of Natural Gas committed to be produced, supplied and
delivered by PERTAMINA and Contractors to meet a portion of PERTAMINA's
existing obligations under LNG sales contracts, LPG sales contracts, and
domestic gas sales contracts; and
D. WHEREAS, PERTAMINA, with assistance from Contractors, has
constructed and expanded and is further expanding the Natural Gas liquefaction
and related facilities located at Bontang Bay, on the east coast of Kalimantan,
Indonesia (herein referred to as the "Bontang Plant"); and
E. WHEREAS, funds for the expansion of the liquefaction
plant will be provided to PERTAMINA through financing of the cost of such
expansion on terms, mutually agreeable to PERTAMINA and Contractors, which
provide for the repayment of funds provided pursuant to such financing and the
cost of such funds (repayment of funds and the cost of such funds are
hereinafter referred to as "Financing Costs"); and
- 2 -
<PAGE> 4
F. WHEREAS, PERTAMINA and Contractors are parties to the
Amended and Restated Bontang Processing Agreement dated as of February 9, 1988
(as from time to time amended, the "Processing Agreement"), which provides for
the operation of the Bontang Plant and the payment of the costs of such
operation (such costs as determined in accordance with the Processing Agreement
are herein referred to as "Plant Operating Costs"); and
G. WHEREAS, PERTAMINA and Contractors have agreed to use the
Bontang Plant in part for the liquefaction of the VICO Contract Gas (as defined
in Section 2.2 hereof) and the Other Contract Gas (as defined in Section 2.3
hereof); and
H. WHEREAS, PERTAMINA, in collaboration with Contractors and
its production sharing contractors in other contract areas in East Kalimantan
(herein referred to as the "Other Contract Areas") has entered into that
certain Amended and Restated 1973 LNG Sales Contract dated as of January 1,
1990 (such contract as amended as of June 1, 1992 and as amended hereafter
being herein referred to as the "1973 Sales Contract") with Chubu Electric
Power Co., Inc., The Kansai Electric Power Co., Inc., Kyushu Electric Power
Co., Inc., Nippon Steel Corporation, Osaka Gas Co., Ltd., and Toho Gas Co.,
Ltd. (herein referred to collectively as "Buyers" and individually as "Buyer");
and
I. WHEREAS, by a Memorandum of Agreement effective as of
October 6, 1994 (the "1973 Extension MOA", and unless otherwise so stated, any
terms defined in the 1973 Extension MOA shall have the same meanings when used
herein), PERTAMINA and Buyers agreed, subject to fulfillment of certain
conditions, to execute a Second Amended and Restated
- 3 -
<PAGE> 5
1973 Sales Contract extending the 1973 Sales Contract for the period (the
"Extension Period") beginning on January 1, 2000 and ending on December 31,
2009 (quantities of LNG for the Extension Period sold pursuant to the 1973
Extension MOA herein referred to as the "Extension Quantities"); and
J. WHEREAS, arrangements for the transportation of the
Extension Quantities and for the payment of costs respecting such
transportation will be made on terms mutually agreeable to PERTAMINA and
Contractors (herein referred to as "Transportation Costs"); and
K. WHEREAS, the 1973 Extension MOA provides that the Natural
Gas to be processed into LNG and sold and delivered by PERTAMINA as Extension
Quantities is to be produced from the Bontang Gas Supply Area, which consists
of the VICO Contract Area and the Other Contract Areas; and
L. WHEREAS, PERTAMINA and each Contractor desire to supply
and deliver Natural Gas from the VICO Contract Area in support of the
performance by PERTAMINA of an agreed portion of its obligations to deliver
Extension Quantities under the 1973 Sales Contract; and
M. WHEREAS, each Contractor desires to dispose of its
Production Sharing Percentage of the VICO Contract Gas (as herein defined) in
accordance with the terms of this Supply Agreement,
- 4 -
<PAGE> 6
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1
EFFECTIVE DATE AND DURATION
This Supply Agreement shall be effective as of October 6, 1994, and
shall terminate on the date the 1973 Sales Contract terminates; provided,
however, that if the 1973 Extension MOA terminates as a result of acceptable
transportation arrangements not having been agreed upon on a timely basis, then
this Supply Agreement shall terminate on the date the 1973 Extension MOA
terminates.
ARTICLE 2
SUPPLY COMMITMENT AND QUANTITY
2.1 Net Gas Requirement. The total quantity of net Natural
Gas required to be supplied and delivered out of proved recoverable reserves of
Natural Gas in East Kalimantan for liquefaction and sale as Extension
Quantities is estimated to be 4.5403 trillion standard cubic feet ("t.s.c.f.").
Such quantity is herein referred to as the "1973 Extension Net Gas
Requirement". The 1973 Extension Net Gas Requirement is based on the Fixed
Quantities which Buyers have agreed to purchase under the 1973 Extension MOA.
- 5 -
<PAGE> 7
2.2 VICO Contract Gas. PERTAMINA and Contractors hereby
commit and agree to supply and deliver from proved economically recoverable
reserves of Natural Gas in specific fields within the VICO Contract Area
sufficient Natural Gas (and LNG resulting from the liquefaction thereof) to
meet a portion of the 1973 Extension Net Gas Requirement over the term of this
Supply Agreement consisting of 0.9805 t.s.c.f., or 21.5956% thereof. Such
quantities of net Natural Gas committed to be supplied pursuant to this Supply
Agreement are herein referred to as the "VICO Contract Gas", and the
above-stated percentage is herein referred to as the "Producers' Percentage".
The specific fields from which the VICO Contract Gas will be committed are
identified in the supplemental memorandum entered into among PERTAMINA,
Contractors and the production sharing contractors in the Other Contract Areas
pursuant to the Memorandum of Understanding Re: Supply Agreements and Package
V Sales dated October 5, 1994 (the "Package V Supplemental Memorandum"). The
VICO participating fields and the quantities in each field comprising the VICO
Contract Gas are as follows:
<TABLE>
<CAPTION>
Participating Fields Quantity of Gas (t.s.c.f.)
-------------------- --------------------------
<S> <C>
Badak 0.3241
Lampake 0.0277
Mutiara 0.1307
Nilam 0.3434
Pamaguan 0.0045
Semberah 0.1501
</TABLE>
- 6 -
<PAGE> 8
The quantities committed from each field are subject to revision from time to
time, as the reserves from the fields may be updated and as additional data,
from deliverability studies and otherwise, become available.
2.3 Other Contract Gas. To meet the balance of the 1973
Extension Net Gas Requirement, constituting 3.5598 t.s.c.f., or 78.4044%
thereof, sufficient Natural Gas (and LNG resulting from the liquefaction
thereof) will be committed for supply and delivery by PERTAMINA and its
production sharing contractors from proved recoverable reserves of Natural Gas
in the Other Contract Areas by separate supply agreements, similar hereto and
compatible herewith, executed and delivered concurrently herewith (such amounts
are herein collectively referred to as the "Other Contract Gas"). The specific
fields from which the Other Contract Gas will be committed are also identified
in the Package V Supplemental Memorandum.
2.4 DeGolyer and MacNaughton Certification. The amounts of
net Natural Gas constituting the VICO Contract Gas and the Other Contract Gas
are part of the estimates of proved recoverable reserves of Natural Gas as
certified by the independent consultant firm of DeGolyer and MacNaughton in
written statements based on data available on May 31, 1994.
The quantities for the VICO Contract Gas and the Other Contract Gas
set forth in Sections 2.2 and 2.3 hereof and the Producers' Percentage were
established by PERTAMINA at a meeting on May 29, 1995 of the East Kalimantan
Gas Reserves Management Committee.
- 7 -
<PAGE> 9
2.5 Reduction to Net Gas Requirement. Notwithstanding the
above, if, pursuant to paragraph 4 of the 1973 Extension MOA, the Extension
Quantities are reduced as a result of Financing not being arranged, PERTAMINA
and Contractors agree to amend this Supply Agreement to decrease the VICO
Contract Gas, such decrease to be based on the proportion of the VICO Contract
Gas to the 1973 Extension Net Gas Requirement. By separate amendments, similar
to and compatible with that entered into by PERTAMINA and Contractors, executed
and delivered concurrently therewith, the balance of any such decrease in the
1973 Extension Net Gas Requirement will be allocated to the Other Contract Gas
based on the proportion of the Other Contract Gas to the 1973 Extension Net Gas
Requirement.
ARTICLE 3
COORDINATION OF GAS SUPPLY
The VICO Contract Gas and the Other Contract Gas may be produced from
participating fields at times and production rates which may change from time
to time during the term hereof so as to secure the optimal ultimate recovery of
Natural Gas. The supply of Natural Gas from the VICO Contract Area and the
Other Contract Areas will be coordinated by PERTAMINA so as to conserve and
permit full utilization of such Natural Gas. The sources of supply, producing
rates, quality of gas, metering and related matters shall be matters for study
by the East Kalimantan Gas Reserves Management Committee, consisting of
representatives from PERTAMINA, VICO, TOTAL Indonesie and UNOCAL Indonesia
Company.
- 8 -
<PAGE> 10
ARTICLE 4
ADMINISTRATION, TITLE AND INSURANCE
4.1 LNG Sales Contract. PERTAMINA shall be responsible for
the due and prompt administration of the 1973 Sales Contract for the benefit of
PERTAMINA and Contractors. All matters which affect the 1973 Sales Contract or
the sale, transportation and delivery of LNG thereunder will be administered by
a representative to be appointed by PERTAMINA and the representative appointed
by Contractors under Article 7 hereof. It is understood, however, that it will
be necessary from time to time for PERTAMINA, as seller under the 1973 Sales
Contract, to take certain administrative and operational actions without prior
consultation where immediate action is required. Contractors will be promptly
advised of any such action.
4.2 Consultation. PERTAMINA and Contractors agree to consult
with each other freely on all matters relating to the 1973 Extension MOA and
the 1973 Sales Contract. PERTAMINA and Contractors shall confer and agree as
to any amendment to the 1973 Extension MOA or the 1973 Sales Contract or to any
permitted action or election thereunder which constitutes a material adjustment
in the quantities of LNG to be sold and delivered thereunder or a change in the
terms thereof. At the request of any party hereto, a memorandum evidencing any
such agreement shall be prepared as soon as feasible and signed by each party
hereto.
- 9 -
<PAGE> 11
4.3 Title. PERTAMINA will cause the LNG resulting from the
liquefaction of the VICO Contract Gas and the Other Contract Gas to be
delivered to Buyer at the Delivery Point. Title to each Contractor's share of
the LNG resulting from the liquefaction of the VICO Contract Gas shall pass to
PERTAMINA at the same time as the passage of title from PERTAMINA to Buyer.
4.4 Insurance. The interests of PERTAMINA and each
Contractor in each cargo of LNG transported by PERTAMINA from the Bontang Plant
shall be adequately insured pursuant to arrangements mutually agreed to by
PERTAMINA and each Contractor. PERTAMINA and each Contractor shall be entitled
to receive its Production Sharing Percentage of the Producers' Percentage of
any proceeds paid under a marine insurance policy covering a cargo of LNG being
transported from the Bontang Plant. Such proceeds shall be remitted by the
insurer directly to the bank designated as Trustee pursuant to Article 5
hereof.
4.5 Delivery and Invoicing. At the time of delivery of each
cargo of LNG to Buyer at the Delivery Point, PERTAMINA will furnish Contractors
with appropriate documentation to evidence the quantity and quality of LNG
delivered, together with copies of the invoices to Buyer covering such
shipment. PERTAMINA will also furnish Contractors with a copy of each invoice
or billing delivered to Buyer on account of interest or other payment
obligation of Buyer under the 1973 Sales Contract concurrently with its being
furnished to Buyer. Calculation of the Contract Sales Price, the amount of
sales invoices and other billings to Buyer, and any adjustments, shall be
reviewed and approved by PERTAMINA and Contractors prior to presentation to
Buyer.
- 10 -
<PAGE> 12
ARTICLE 5
PAYMENT
5.1 Contractor Entitlement. The amounts to be paid to each
Contractor for its share of the LNG resulting from the liquefaction of Natural
Gas to be supplied under this Supply Agreement shall be its Production Sharing
Percentage of the Producers' Percentage of the sum of:
(a) all amounts to be paid by Buyers to PERTAMINA for
Extension Quantities sold and delivered under the 1973 Sales Contract;
(b) all other amounts which a Buyer shall become obligated to
pay pursuant to the 1973 Sales Contract with regard to deliveries of Extension
Quantities, including, but not limited to:
(i) amounts payable by such Buyer for its failure to
take quantities it is obligated to purchase under the 1973 Sales
Contract;
(ii) any incremental payments applicable to make-up
deliveries; and
(iii) any interest accruing on overdue invoice payments;
- 11 -
<PAGE> 13
(c) amounts payable by insurers in respect of LNG resulting from
the liquefaction of the VICO Contract Gas and the Other Contract Gas; and
(d) interest earned on any of the amounts referred to in this
Section 5.1.
5.2 PERTAMINA Assignment of Contractor Percentage Share. In
order to arrange for the receipt by each Contractor of the payments to which
such Contractor is entitled under Section 5.1 hereof, PERTAMINA hereby assigns
to each Contractor that Contractor's Production Sharing Percentage of the
Producers' Percentage of all amounts referred to in Section 5.1 hereof.
5.3 Method of Payment. Throughout the term of this Supply
Agreement, all those payments referred to in Section 5.1 hereof shall be paid
in U.S. Dollars, directly to BankAmerica International in New York City (or
such other leading bank in the United States as shall be selected by PERTAMINA
and approved by Contractors) pursuant to a Trustee and Paying Agent Agreement,
the parties to which shall be PERTAMINA, Contractors, the production sharing
contractors in the Other Contract Areas and the Trustee thereunder. Amounts so
received by the Trustee shall be used for payment of (i) Financing Costs; (ii)
an agreed portion of Plant Operating Costs, (iii) Transportation Costs in
respect of LNG sold and delivered from the Bontang Plant, and (iv) other costs
approved by PERTAMINA and Contractors. Amounts received by the Trustee, to the
extent that they are not used for payment of the costs referred to in the
preceding sentence, shall, insofar as they are applicable to the
- 12 -
<PAGE> 14
VICO Contract Gas, be disbursed to PERTAMINA and each Contractor in accordance
with its Production Sharing Percentage at a bank or banks of its choice.
5.4 Contractors' Right to Payment.
(a) The right of Contractors to the payments provided for in this
Article 5 shall extend throughout the term of this Supply Agreement and shall
not, except in the event of an occurrence contemplated in Section 5.4(d), be
affected by the production rates or sources of Natural Gas supplied from the
VICO Contract Gas or the Other Contract Gas from time to time during the term
hereof.
(b) If the quantities of net Natural Gas produced from the
participating fields within the VICO Contract Area and delivered pursuant to
this Supply Agreement exceed in the aggregate the quantity of the VICO Contract
Gas, the Producers' Percentage (and the percentage of the revenues to be paid
to PERTAMINA and Contractors hereunder) will not be increased, except in the
event of an occurrence contemplated in Section 5.4(d), and Contractors,
together with PERTAMINA, will be credited with and have the right to receive
revenue from future marketing opportunities in respect of a quantity of net
Natural Gas from reserves in the Other Contract Areas equal to such excess
quantities.
(c) If the quantities of net Natural Gas produced from the
participating fields within the VICO Contract Area and delivered pursuant to
this Supply Agreement are in the aggregate less than the quantity of the VICO
Contract Gas, the Producers' Percentage (and the percentage
- 13 -
<PAGE> 15
of the revenues to be paid to PERTAMINA and Contractors hereunder) will not be
reduced, except in the event of an occurrence contemplated in Section 5.4(d),
and the production sharing contractors in the Other Contract Areas and any new
contract area, together with PERTAMINA, will be credited with and have the
right to receive revenue from future marketing opportunities in respect of a
quantity of net Natural Gas from reserves in the VICO Contract Area equal to
excess quantities delivered from sources within the Gas Supply Area.
(d) If an insufficiency of deliverable reserves of Natural Gas
shall occur which precludes the delivery from participating field(s) within the
VICO Contract Area or from participating field(s) within any of the Other
Contract Areas of the aggregate amount of Natural Gas committed therefrom
pursuant to this Supply Agreement or to any of the supply agreements referred
to in Section 2.3 hereof over the term thereof, then such insufficiency shall
be delivered from field(s), including but not limited to the participating
field(s) within the area(s) not then experiencing an insufficiency of
deliverable reserves, and the Producers' Percentage shall thereupon be adjusted
(together with a corresponding adjustment to the VICO Contract Gas) to reflect
the revised share of the net Natural Gas in support of PERTAMINA's obligations
under the 1973 Sales Contract which will be supplied and delivered from the
VICO Contract Area over the term hereof, such adjustment in the Producers'
Percentage to apply only to payments provided for in this Article 5 received
after the date thereof. The procedure for determining (i) an insufficiency in
deliverable reserves, (ii) the allocation of the right to supply such
insufficiency among the VICO Contract Area, the Other Contract Areas and any
new contract area and (iii) the calculation of the future Producers'
Percentage, shall be made in accordance with principles to be decided upon by
PERTAMINA.
- 14 -
<PAGE> 16
ARTICLE 6
ARBITRATION AND GOVERNING LAW
6.1 Arbitration. All disputes arising in connection with this
Supply Agreement shall be finally settled by arbitration conducted in the
English language in Paris, France, by three arbitrators under the Rules of
Arbitration of the International Chamber of Commerce. Judgment upon the award
rendered may be entered in any court having jurisdiction, or application may be
made to such court for a juridical acceptance of the award and an order of
enforcement, as the case may be.
6.2 Governing Law. This Supply Agreement shall be governed by
and interpreted in accordance with the laws of the State of New York, United
States of America.
ARTICLE 7
CONTRACTORS' REPRESENTATIVE
VICO is designated representative by Contractors for performance on
behalf of Contractors of their obligation under Section 4.1 hereof and for the
giving of notices, responses or other communications to and from Contractors
under this Supply Agreement. Such representative may be changed by written
notice to such effect from Contractors to PERTAMINA.
- 15 -
<PAGE> 17
ARTICLE 8
NOTICES
Any notices to the parties shall be in writing and sent by mail,
cable, telex or facsimile to the following addresses:
To PERTAMIN:
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
Jalan Medan Merdeka Timur 1 A
Jakarta, Indonesia
Attention: Head of BPPKA
Cable: PERTAMINA, Jakarta, Indonesia
Telex: PERTAMINA, 44134 Jakarta
Facsimil: 3846932
To Contractors:
VIRGINIA INDONESIA COMPANY (VICO)
6th Floor, Kuningan Plaza
South Tower
Jl. H.R. Rasuna Said Kav. C11-14
P.O. Box 2828
Jakarta Selatan, Indonesia
Attention: President - VICO Indonesia
Cable: VICO
Telex: 62458 or 62468
Facsimil: 523-6100
- 16 -
<PAGE> 18
cc: VIRGINIA INDONESIA COMPANY
One Houston Center
1221 McKinney
Suite 700
P.O. Box 1551
Houston, Texas 77251-1551
U.S.A.
Attention: Chairman
Telex: 166-100
Facsimile: (713) 754-6698
A party may change its address by written notice to the other parties.
ARTICLE 9
MISCELLANEOUS
9.1 Amendment. This Supply Agreement shall not be amended or
modified except by written agreement signed by the parties hereto.
9.2 Successors and Assigns. This Supply Agreement shall inure to
the benefit of, and be binding upon, PERTAMINA and each Contractor, their
respective successors and assigns, provided that this Supply Agreement shall be
assignable by a Contractor only if such Contractor concurrently assigns to the
same assignee an equal interest in the Production Sharing Contracts.
9.3 Exclusivity. The parties to this Supply Agreement shall be
the only persons or entities entitled to enforce the obligations hereunder of
the other parties hereto, and no persons
- 17 -
<PAGE> 19
or entities not parties to this Supply Agreement shall have the right to
enforce any of the obligations hereunder of any of the parties hereto.
9.4 Headings and Subheadings. The Article headings and
subheadings used herein are for convenience of reference only.
IN WITNESS WHEREOF, PERTAMINA and Contractors have caused their duly
authorized representatives to execute this Supply Agreement as of the day and
year first written above.
PERUSAHAAN PERTAMBANGAN MINYAK CONTRACTORS:
DAN GAS BUMI NEGARA (PERTAMINA) -----------
VIRGINIA INDONESIA COMPANY
BY /s/ F. ABDA'OE BY /s/ THOMAS W. ARMISTEAD
--------------------------------- -------------------------------------
LASMO SANGA SANGA LIMITED
BY /s/ IAN D. BROWN
-------------------------------------
OPICOIL HOUSTON, INC.
BY /s/ CHING-YUNG CHUNG
--------------------------------------
- 18 -
<PAGE> 20
UNION TEXAS EAST KALIMANTAN
LIMITED
BY /s/ J. E. KNIGHT
-------------------------------------------
J. E. Knight
Vice President
UNIVERSE GAS & OIL COMPANY, INC.
BY /s/ TOSHIO NORIMATSU
-------------------------------------------
VIRGINIA INTERNATIONAL COMPANY
BY /s/ IAN D. BROWN
-------------------------------------------
- 19 -
<PAGE> 1
FIRST AMENDMENT TO
UNION TEXAS PETROLEUM SAVINGS PLAN
FOR SALARIED EMPLOYEES
WHEREAS, UNION TEXAS PETROLEUM HOLDINGS, INC. (the "Company") and
other Employing Companies have heretofore adopted and maintained the UNION
TEXAS PETROLEUM SAVINGS PLAN FOR SALARIED EMPLOYEES (the "Plan") for the
benefit of their eligible employees; and
WHEREAS, the Company desires to amend the Plan on behalf of itself and
the Employing Companies;
NOW, THEREFORE, the Plan shall be amended as follows, effective as of
January 1, 1989:
1. Section 3.1(e) of the Plan shall deleted and the following shall
be substituted therefor:
"(e) In further restriction of the Members'
elections provided in Paragraphs (a), (b) and (c) above, it is
specifically provided that one of the 'actual deferral percentage'
tests set forth in section 401(k)(3) of the Code and the Treasury
Regulations thereunder must be met in each Plan Year. For purposes of
the actual deferral percentage tests, 'compensation' is defined as the
total of all amounts paid by the Company to or for the benefit of a
Member for services rendered or labor performed for the Company while
a Member, which are required to be reported on the Member's federal
income tax withholding statement or statements (Form W-2 or its
subsequent equivalent). If multiple use of the alternative limitation
(within the meaning of section 401(m)(9) of the Code and Treasury
Regulations Section 1.401(m)-2(b)) occurs during a Plan Year such
multiple use shall be corrected in accordance with the provisions of
Treasury Regulation Section 1.401(m)-2(c); provided, however, that if
such multiple use is not eliminated by making Employer Safe Harbor
Contributions, then the 'actual contribution percentages' of all
Highly Compensated Employees participating in the Plan shall be
reduced, and the excess contributions distributed, in accordance with
the provisions of Section 3.8(c) and Section 3.8(d), and applicable
Treasury Regulations so that there is no such multiple use."
2. Section 3.5 of the Plan shall deleted and the following shall be
substituted therefor:
"3.5 RESTRICTIONS ON COMPANY CONTRIBUTIONS. In restriction
of the Company Contributions hereunder, it is specifically provided
that one of the 'actual contribution percentage' tests set forth in
section 401(m) of the Code and the Treasury Regulations thereunder
must be met in each Plan Year. For purposes of the actual
contribution percentage tests, 'compensation' is defined as the total
of all amounts paid by the Company to or for the benefit
<PAGE> 2
of a Member for services rendered or labor performed for the Company
while a Member, which are required to be reported on the Member's
federal income tax withholding statement or statements (Form W-2 or
its subsequent equivalent). The Committee may elect, in accordance
with applicable Treasury Regulations, to treat Cash or Deferred
Contributions to the Plan as Company Matching Contributions for the
purposes of meeting this requirement.
3. Section 3.8(b) of the Plan shall be deleted and the following
shall be substituted therefor:
"(b) Anything to the contrary herein
notwithstanding, if, for any Plan Year, the aggregate Cash or Deferred
Contributions made by the Company on behalf of Highly Compensated
Employees exceeds the maximum amount of Cash or Deferred Contributions
permitted on behalf of such Highly Compensated Employees pursuant to
Section 3.1(e) (determined by first reducing the Cash or Deferred
Contributions made on behalf of the Highly Compensated Employees with
the highest 'actual deferral percentage' (as that term is defined in
section 401(k)(3)(B) of the Code and the Treasury Regulations
thereunder) to the extent necessary to satisfy the restrictions of
Section 3.1(e) or to cause such Highly Compensated Employees' actual
deferral percentage to equal the actual deferral percentage of the
Highly Compensated Employees with the next highest actual deferral
percentage and then continuing in such manner until the restrictions
set forth in Section 3.1(e) are satisfied), such excess shall be
distributed to the Highly Compensated Employees on whose behalf such
excess was contributed before the end of the next following Plan Year.
For purposes of this Paragraph, the determination and correction of
excess Cash or Deferred Contributions of a Member whose actual
deferral percentage is determined under the family aggregation rules
of sections 401(k) and 414(q) of the Code shall be made in accordance
with the provisions of such sections and the Treasury Regulations
thereunder based upon such Member's Cash or Deferred Contributions in
proportion to the total Cash or Deferred Contributions of all family
members used to determine the actual deferral percentage."
4. Section 3.8(g) of the Plan shall be deleted and the following
shall be substituted therefor:
"(c) Anything to the contrary herein
notwithstanding, if, for any Plan Year, the aggregate Company
Contributions allocated to the Accounts of Highly Compensated
Employees exceeds the maximum amount of such Company Contributions
permitted on behalf of such Highly Compensated Employees pursuant to
Section 3.5 (determined by first reducing the Company Contributions
made on behalf of the Highly Compensated Employees with the highest
'actual contribution percentage' (as that term is defined in section
401(m)(3) of the Code and Treasury Regulations thereunder) to the
extent necessary to satisfy the restrictions of Section 3.5 or to cause
such Highly Compensated Employees' contribution percentage to equal the
contribution percentage of the Highly Compensated Employees with the
next highest contribution percentage and then continuing
-2-
<PAGE> 3
in such manner until the restrictions set forth in Section 3.5 are
satisfied), such excess shall be distributed to the Highly Compensated
Employees on whose behalf such excess contributions were made (or, if
such excess contributions are forfeitable, they shall be forfeited)
before the end of the next following Plan Year. For purposes of this
Paragraph, the determination and correction of excess Company
Contributions allocated to the Accounts of a Member whose contribution
percentage is determined under the family aggregation rules of
sections 401(m) and 414(q) of the Code shall be made in accordance
with the provisions of such sections and the Treasury Regulations
thereunder based upon such Member's Company Contributions in
proportion to the total Company Contributions allocated to the
Accounts of all family members used to determine the actual
contribution percentage. Company Contributions shall be forfeited
pursuant to this Paragraph only if distribution of all vested Company
Contributions is insufficient to meet the requirements of this
Paragraph. If vested Company Contributions are distributed to a
Member and nonvested Company Contributions remain credited to such
Member's Accounts, such nonvested Company Contributions shall vest at
the same rate as if such distribution had not been made."
5. Section 17.2(d) of the Plan shall be deleted and the following
shall be substituted therefor:
"(d) In the case of a total or partial termination
of the Plan, and in the absence of a Plan amendment to the contrary,
the Trustee shall pay the balance of the Accounts of a Member for whom
the Plan is terminated to such Member, subject to the time of payment,
manner of payment and consent provisions of Article X; provided,
however, that any distribution under sections 401(k)(2)(B) and
401(k)(10) of the Code and the Treasury Regulations thereunder shall
be paid in a lump sum distribution."
6. The last sentence in Section 20.4 of the Plan shall be deleted.
7. As amended hereby, the Plan is specifically ratified and
reaffirmed.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed on this 28th day of April, 1995.
UNION TEXAS PETROLEUM HOLDINGS, INC.
/s/ A.C. Johnson
BY: ___________________________________
A.C. Johnson
Chairman and Chief Executive Officer
-3-
<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 October 24, 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
October 24, 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 SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 21,653
<SECURITIES> 0
<RECEIVABLES> 61,558
<ALLOWANCES> 1
<INVENTORY> 40,850
<CURRENT-ASSETS> 169,432
<PP&E> 2,851,286
<DEPRECIATION> 1,262,527
<TOTAL-ASSETS> 1,880,643
<CURRENT-LIABILITIES> 315,294
<BONDS> 614,055
<COMMON> 4,391
0
0
<OTHER-SE> 416,415
<TOTAL-LIABILITY-AND-EQUITY> 1,880,643
<SALES> 637,237
<TOTAL-REVENUES> 654,977
<CGS> 224,674
<TOTAL-COSTS> 378,962
<OTHER-EXPENSES> 59,905
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,616
<INCOME-PRETAX> 196,494
<INCOME-TAX> 117,993
<INCOME-CONTINUING> 78,501
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,501
<EPS-PRIMARY> .89
<EPS-DILUTED> 0
</TABLE>
