<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 MARCH 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 April 18, 1997, there were 84,635,323 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>
MARCH 31, DECEMBER 31,
1997 1996
---------- ------------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,380 43,574
Accounts and notes receivable, less allowance for doubtful accounts . . . . . 91,178 96,687
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,714 39,721
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . 32,536 23,560
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 182,808 203,542
Equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,050 93,262
Property, plant and equipment, at cost, less accumulated
depreciation, depletion and amortization* . . . . . . . . . . . . . . . . . . 1,557,673 1,632,423
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,400 12,777
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,845,931 $1,942,004
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . $ 2,290 $ 2,290
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,462 103,225
Taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,761 126,813
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 50,927 48,511
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 243,440 280,839
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 517,485 558,463
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373,743 391,534
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,180 125,146
---------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,255,848 1,355,982
---------- ----------
Stockholders' equity:
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,391 4,391
Paid in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,727 18,863
Cumulative foreign exchange translation adjustment and other . . . . . . . . (44,984) (21,955)
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 673,826 614,376
Common stock held in treasury, at cost:
3,206,366 shares at March 31, 1997 and 1,490,322 shares at
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . (61,877) (29,653)
---------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . 590,083 586,022
---------- ----------
Total liabilities and stockholders' equity . . . . . . . . . . . . . . . $1,845,931 $1,942,004
========== ==========
</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
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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 MARCH 31,
----------------------------
1997 1996
-------- ---------
<S> <C> <C>
Revenues:
Sales and operating revenues . . . . . . . . . . . . . . . . . . . . . . . $282,021 $258,178
Interest income and other revenues . . . . . . . . . . . . . . . . . . . . 2,555 165
Net earnings of equity investees . . . . . . . . . . . . . . . . . . . . . 7,854 9,213
-------- --------
292,430 267,556
Costs and other deductions:
Product costs and operating expenses . . . . . . . . . . . . . . . . . . . 81,360 80,064
Exploration expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,420 14,207
Depreciation, depletion and amortization . . . . . . . . . . . . . . . . . 59,225 54,855
Selling, general and administrative expenses . . . . . . . . . . . . . . . 4,788 5,751
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,984 7,848
-------- --------
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 132,653 104,831
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,883 57,270
-------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,770 $ 47,561
======== ========
Earnings per share of common stock . . . . . . . . . . . . . . . . . . . . . . $ .74 $ .54
======== ========
Dividends per share of common stock . . . . . . . . . . . . . . . . . . . . . . $ .05 $ .05
======== ========
Weighted average number of shares outstanding (000's) . . . . . . . . . . . . . 85,863 87,598
======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
2
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FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1997 1996
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,770 $ 47,561
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization . . . . . . . . . . . . . . . . . . . 59,225 54,855
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,954) (7,700)
Net income of equity investees . . . . . . . . . . . . . . . . . . . . . . . . (7,854) (9,213)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,247 2
-------- --------
Net cash provided by operating activities before changes in other
assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 109,434 85,505
Decrease in accounts and notes receivable . . . . . . . . . . . . . . . . . . . 4,571 4,350
Decrease in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,493 518
(Increase) decrease in prepaid expenses and other assets . . . . . . . . . . . (9,243) 3,144
Decrease in accounts payable and other liabilities . . . . . . . . . . . . . . (16,613) (9,047)
(Decrease) increase in income taxes payable . . . . . . . . . . . . . . . . . . (9,911) 10,930
-------- --------
Net cash provided by operating activities . . . . . . . . . . . . . . . . . 82,731 95,400
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment . . . . . . . . . . . . . . . . . . . . (36,055) (32,044)
Cash provided by equity investee . . . . . . . . . . . . . . . . . . . . . . . . 8,066 12,050
-------- --------
Net cash required by investing activities . . . . . . . . . . . . . . . . . . . (27,989) (19,994)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . 8,160 12,869
Net payments under the credit facilities . . . . . . . . . . . . . . . . . . . . . ( 7,000)
Net payments on money market lines of credit . . . . . . . . . . . . . . . . . . . (44,673) (75,942)
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,320) (4,380)
Proceeds from issuance of treasury stock . . . . . . . . . . . . . . . . . . . . . 1,202 911
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34,305) (1,073)
-------- --------
Net cash required by financing activities . . . . . . . . . . . . . . . . . . . (73,936) (74,615)
-------- --------
Net (decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . (19,194) 791
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . 43,574 11,069
-------- --------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . $ 24,380 $ 11,860
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) . . . . . . . . . . . . . . . . . . . . . $ 820 $ 4,679
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,944 56,909
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
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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 1996 annual report on Form
10-K. In the opinion of management, the accompanying unaudited consolidated
financial statements reflect all adjustments, consisting only of normal
adjustments, necessary to present fairly the financial position of Union Texas
Petroleum Holdings, Inc. and its consolidated subsidiaries at March 31, 1997,
and the results of operations and cash flows for the three months ended March
31, 1997 and 1996. The results of operations for the three months ended March
31, 1997, should not necessarily be taken as indicative of the results of
operations that may be expected for the entire year 1997.
NOTE 2 - CREDIT FACILITIES - The Company had two unsecured bank credit
facilities (the "Credit Facilities") at March 31, 1997. One of the Credit
Facilities is a $100 million revolver that provides for conversion of amounts
outstanding on March 10, 1998 to a one-year term loan maturing March 9, 1999.
Another Credit Facility is a $450 million revolver that reduces quarterly by
$35 million beginning June 30, 2001, with a final maturity of March 31, 2002.
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.
NOTE 3 - 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.
4
<PAGE> 6
UNION TEXAS PETROLEUM HOLDINGS, INC.
With respect to the unaudited consolidated financial information of Union Texas
Petroleum Holdings, Inc. for the three- month periods ended March 31, 1997 and
1996, 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 April 22, 1997 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.
INDEPENDENT ACCOUNTANT'S REPORT
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 March 31, 1997 and
the related consolidated statements of operations and of cash flows for the
three month periods ended March 31, 1997 and 1996. 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, 1996, 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
February 14, 1997 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, 1996, 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
April 22, 1997
5
<PAGE> 7
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
1996 annual report on Form 10-K, and condensed financial statements and notes
contained in this report.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1996
Net income for the three months ended March 31, 1997, was $64 million, or $.74
per share as compared to net income of $48 million, or $.54 per share reported
for the same period in 1996. The current quarter was favorably impacted by
higher worldwide oil prices, higher LNG and gas prices, higher U.K. oil volumes
and lower interest expense partially offset by lower LNG volumes.
Sales and operating revenues for the three months ended March 31, 1997, were
$282 million, as compared to $258 million for the first quarter of 1996.
International revenues totaled $234 million as compared to $217 million for the
first quarter of 1996. In the U.K., sales and operating revenues increased by
$16 million due to higher crude oil prices and increased sales volumes,
including higher gas takes from the Sean fields. In Indonesia, sales decreased
$2 million due to lower LNG and oil volumes partially offset by higher prices.
For the full year, LNG sales volumes are expected to be approximately 15% below
1996 levels. In Pakistan, sales were $3 million above 1996 primarily due to
higher crude oil and gas prices.
Average prices received and volumes sold by the Company's major operations
during the first quarter of 1997 and 1996, respectively, were as follows:
<TABLE>
<CAPTION>
PRICES VOLUMES
(000S PER DAY)
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Crude oil (barrels):
U.K. $19.17 $18.09 47 46
Pakistan 19.15 16.17 7 6
Indonesia 21.79 18.34 6 8
Indonesian LNG (Mcf) 4.02 3.30 194 241
Pakistan natural gas (Mcf) 1.71 1.29 38 43
U.K. natural gas (Mcf) 3.00 2.50 79 59
U.S. ethylene (pounds) .25 .18 1,168 1,180
</TABLE>
Petrochemical revenues totaled $48 million as compared to $41 million in the
first quarter of 1996, while operating profit was $1 million as compared to $4
million in the prior period. The revenue increase was principally due to
higher ethylene sales prices, however, higher feedstock cost and pipeline
maintenance expense offset the revenue increase.
Interest expense in the first quarter of 1997 was lower than the same period of
1996 due to a reduction in the Company's debt level. Lower exploration
expenses were primarily due to reduced exploration costs in Alaska.
6
<PAGE> 8
FINANCIAL CONDITION
Cash flow from operations: Net cash provided by operating activities was $83
million in the first quarter of 1997, a decrease of $13 million from the same
period in the prior year. The decline was due mainly to the timing of U.K. tax
payments and lower Indonesian LNG volumes, partially offset by higher product
prices.
Capital resources: Capital expenditures for the first quarter of 1997 were $33
million including capitalized interest of $8 million. Capital expenditures for
the first quarter of 1996 were $45 million including capitalized interest of $6
million. The current quarter decrease was due to lower Alaska exploration
drilling and reduced development costs for the Britannia field in the U.K.
North Sea.
Financing activities: The Company had two unsecured credit facilities (the
"Credit Facilities") at March 31, 1997. One of the Credit Facilities is a $100
million revolver that provides for conversion of amounts outstanding on March
10, 1998 to a one-year term loan maturing March 9, 1999. This facility replaced
a $100 million unsecured credit agreement that matured on March 15, 1997. The
other Credit Facility is a $450 million revolver that reduces quarterly by $35
million beginning June 30, 2001, with a final maturity of March 31, 2002. At
March 31, 1997, no amounts were outstanding under the Credit Facilities. The
$450 million revolver allows the Company to borrow up to $300 million in U.S.
dollar loans at interest rates 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. 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 or
decrease in certain events. 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
stockholders' equity, as adjusted, at $350 million. Under the terms of the
Credit Facilities, the Company may pay dividends and make stock repurchases
provided that such level of minimum stockholders' equity is maintained and the
Company complies with certain other covenants in the Credit Facilities. At
March 31, 1997, the Company's adjusted stockholders' equity was approximately
$635 million. The Credit Facilities provide the Company with the ability to
borrow on a long-term basis.
The Company has established short-term, uncommitted and unsecured lines of
credit with several banks in both U.S. dollars and pounds sterling. These money
market borrowings, which have a short-term maturity, have been classified as
long-term debt based on the Company's ability to refinance them on a long-term
basis through its Credit Facilities. At March 31, 1997, $13 million was
outstanding under these money market lines. As of March 31, 1997, the Company
had approximately $537 million of available financing under the Credit
Facilities.
The Company's indirect subsidiary, Union Texas Britannia Limited ("UTBL"), has
a 150 million pounds sterling secured financing from a syndicate of banks. The
financing is used to fund the Company's share of the cost of developing the
Britannia field to production. At March 31, 1997, 63 million pounds sterling
($103 million) was outstanding under UTBL's financing which bore interest at a
weighted average rate of 7.0% per annum.
In 1994, the Company's Board of Directors authorized the repurchase of up to
2,000,000 shares of the Company's common stock, all of which were repurchased
by the end of 1996. In October, 1996, the Company's Board of Directors
authorized the repurchase of up to an additional 2,000,000 shares of the
Company's common stock, all of which were repurchased by March 31, 1997.
During the first quarter of 1997, the Company repurchased a total of 1,821,264
shares at an average price of $18.84 per share. The repurchased stock will be
used for general corporate purposes, including fulfilling employee benefit
program obligations. At March 31, 1997, 3,206,366 shares of common stock were
held, at cost, as treasury shares.
Financial condition: In the first quarter of 1997 the Company declared and paid
a dividend of approximately $4.3 million on its common stock. On April 16, 1997
the Company announced a dividend on its common stock of $.05 per share to
stockholders of record as of April 30, 1997, payable on May 15, 1997.
7
<PAGE> 9
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 statements of the Company. (See Item 3 in the Company's 1996
annual report on Form 10-K.)
ITEM 5 - OTHER INFORMATION
Indonesia. The Company's Indonesian activities consist primarily of its 37.81%
working interest in an East Kalimantan joint venture that supplies natural gas
to a liquefied natural gas ("LNG") plant at Bontang Bay owned by Pertamina, the
Indonesian national oil company. In March 1997, a $1,127 million financing was
signed for the eighth train (Train H), an additional LNG storage tank, an
additional natural gas pipeline from the Badak field to the LNG plant, and a
debottlenecking project for Trains A through F. The financing was provided by
a combination of Taiwanese and Japanese sources and a group of international
banks through arrangements similar to those used to finance the seventh train
(Train G). The financing provides for initial advances of up to $150 million,
with further advances being conditioned upon the execution and delivery of the
marine transportation agreement associated with the Badak VI Sales Contract.
Construction is expected to begin in 1997. Revenues from the Badak V Sales
Contract with Korea Gas Corporation and the Badak VI Sales Contract with
Chinese Petroleum Corporation will be the primary sources of repayment for this
financing. Financing for the eighth train is nonrecourse to both Pertamina and
the joint venture.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
10.1 First Amendment Agreement dated as of March 11, 1997
to the Second Amended and Restated Credit Agreement
dated as of March 29, 1996, among Union Texas
Petroleum Holdings, Inc., the Banks and Co-Agents
listed therein and NationsBank of Texas, N.A., as
Agent.
10.2 Credit Agreement dated as of March 11, 1997 among
Union Texas Petroleum Holdings, Inc., the Banks and
Co-Agents listed therein and NationsBank of Texas,
N.A., as Agent.
10.3 $1,127,000,000 Bontang VI Loan Agreement, dated as of
March 4, 1997, among Bank of America National Trust
and Savings Association, as Trustee under the Bontang
VI Trustee and Paying Agent Agreement, as Borrower,
Bank of Taiwan New York Agency as Lead Arranger,
Bontang LNG Train-H Investment Co., Ltd. as Co-Lead
Arranger, The Chase Manhattan Bank as Agent, Co-Agent
and Co-Arranger, and the Co-Agents, Co-Arrangers and
Lenders named therein.
10.4 Bontang VI Producers Agreement, dated as of March 4,
1997, by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara ("Pertamina"), Total Indonesie, Virginia
Indonesia Company, Union Texas East Kalimantan
Limited, Lasmo Sanga Sanga Limited, Virginia
International Company, Opicoil Houston, Inc., Universe
Gas & Oil Company, Inc., Indonesia Petroleum, Ltd.,
Unocal Indonesia Company (collectively, the
"Producers"), in favor of Bank of Taiwan New York
Agency, as Lead Arranger, Bontang LNG Train-H
Investment Co., Ltd. as Co-Lead Arranger, The Chase
Manhattan Bank as Agent, Co-Agent and Co-Arranger, and
the Co-Agents, Co-Arrangers and Lenders named therein.
8
<PAGE> 10
10.5 Bontang VI Trustee and Paying Agent Agreement, dated
as of March 4, 1997, among the Producers and Bank of
America National Trust and Savings Association, as
Trustee and Paying Agent.
10.6 Letter Agreement Amendment to Facility Agreement dated
May 26, 1995 between Union Texas Brittania Limited as
Borrower and The Chase Manhattan Bank as Arranger,
NationsBank, N.A. as Facility Agent and the Technical
Agents, Funding Agent, Account Bank and the other
financial institutions named therein.
10.7 Amendment No. 2 to Bontang III Loan Agreement, dated
as of March 4, 1997 among BankAmerica 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.
15 Independent Accountant's Awareness Letter.
27.1 Financial Data Schedule for the three-month period
ended March 31, 1997.
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K since the
quarterly period ended December 31, 1996:
The Company filed a Form 8-K dated January 24, 1997 to report on
the resignation of Saul A. Fox, a director, and to attach press
releases announcing the Company's 1996 year-end and fourth quarter
results, the Company's 1997 capital spending budget and two oil
discoveries in the Sindh Province in southeastern Pakistan.
The Company filed a Form 8-K dated February 13, 1997 to report the
results of an exploration well and to attach a press release
reporting formation of new exploration ventures in Bolivia, Yemen,
Jordan, Greece and Papua New Guinea.
The Company filed a Form 8-K dated April 23, 1997 to attach a press
release announcing the Company's first quarter earnings.
9
<PAGE> 11
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: April 25, 1997 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)
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
10.1 First Amendment Agreement dated as of March 11, 1997 to
the Second Amended and Restated Credit Agreement dated as
of March 29, 1996, among Union Texas Petroleum Holdings,
Inc., the Banks and Co-Agents listed therein and
NationsBank of Texas, N.A., as Agent.
10.2 Credit Agreement dated as of March 11, 1997 among Union
Texas Petroleum Holdings, Inc., the Banks and Co-Agents
listed therein and NationsBank of Texas, N.A., as Agent.
10.3 $1,127,000,000 Bontang VI Loan Agreement, dated as of
March 4, 1997, among Bank of America National Trust and
Savings Association, as Trustee under the Bontang VI
Trustee and Paying Agent Agreement, as Borrower, Bank of
Taiwan New York Agency as Lead Arranger, Bontang LNG
Train-H Investment Co., Ltd. as Co-Lead Arranger, The
Chase Manhattan Bank as Agent, Co-Agent and Co- Arranger,
and the Co-Agents, Co-Arrangers and Lenders named
therein.
10.4 Bontang VI Producers Agreement, dated as of March 4,
1997, by Perusahaan Pertambangan Minyak Dan Gas Bumi
Negara ("Pertamina"), Total Indonesie, Virginia Indonesia
Company, Union Texas East Kalimantan Limited, Lasmo Sanga
Sanga Limited, Virginia International Company, Opicoil
Houston, Inc., Universe Gas & Oil Company, Inc.,
Indonesia Petroleum, Ltd., Unocal Indonesia Company
(collectively, the "Producers"), in favor of Bank of
Taiwan New York Agency, as Lead Arranger, Bontang LNG
Train-H Investment Co., Ltd. as Co-Lead Arranger, The
Chase Manhattan Bank as Agent, Co-Agent and Co-Arranger,
and the Co-Agents, Co-Arrangers and Lenders named
therein.
10.5 Bontang VI Trustee and Paying Agent Agreement, dated as
of March 4, 1997, among the Producers and Bank of America
National Trust and Savings Association, as Trustee and
Paying Agent.
10.6 Letter Agreement Amendment to Facility Agreement dated
May 26, 1995 between Union Texas Brittania Limited as
Borrower and The Chase Manhattan Bank as Arranger,
NationsBank, N.A. as Facility Agent and the Technical
Agents, Funding Agent, Account Bank and the other
financial institutions named therein.
10.7 Amendment No. 2 to Bontang III Loan Agreement, dated as
of March 4, 1997 among BankAmerica 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.
15 Independent Accountant's Awareness Letter.
27.1 Financial Data Schedule for the three-month period ended
March 31, 1997.
</TABLE>
1
<PAGE> 1
FIRST AMENDMENT AGREEMENT
This First Amendment Agreement dated as of March 11, 1997 (this
"Amendment") is by and among (i) Union Texas Petroleum Holdings, Inc., a
Delaware corporation ("Company"), (ii) the undersigned lenders ("Banks") which
are parties to the Second Amended and Restated Credit Agreement dated as of
March 29, 1996 (the "Agreement") among the Company, the such lenders,
NationsBank of Texas, N.A., as agent ("Agent"), and the Co-Agents named
therein, (iii) the Agent and (iv) the Co-Agents. In consideration of the
mutual covenants contained herein, the Company, the Banks, the Co-Agents and
the Agent agree as set forth herein.
SECTION 1. Amendments to Credit Agreement. The Agreement is
hereby amended as follows:
1.1. Section 1.01. The following respective definitions set
forth in Section 1.01 of the Agreement are hereby amended to read as follows:
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages of the
First Amendment (or, if such Bank is an Assignee and its name is not
set forth on the signature pages of the First Amendment, the amount of
its Commitment as set forth in the Assignment pursuant to which it
became a Bank), as such amount may be reduced from time to time
pursuant to Sections 2.09 and 2.10 or reduced or increased from time
to time pursuant to any Assignment to which it is a party.
"Excluded Subordinated Debt" means Debt that (i) is
subordinate and junior, on terms reasonably satisfactory to the Agent,
to the Loans in all respects and (ii) has no requirement, absent a
default under such Debt, that any principal thereof be paid,
purchased, redeemed, defeased, acquired, exchanged or converted (other
than exchange for or conversion to common stock of the Company) prior
to March 31, 2003.
"Restricted Preferred Stock" means (i) all preferred stock
which (a) is subject to purchase, retirement, redemption, exchange or
conversion (other than exchange for or conversion to common stock of
the Company), in whole or in part under any circumstance whatsoever
(other than purchase, retirement, redemption, exchange or conversion
by the issuer thereof, at the sole option of such issuer, if failure
to exercise such option would not have an adverse effect on the
Company or any Subsidiary pursuant to the terms of any such preferred
stock or any documents related thereto) and (b) provides for dividends
materially in excess of the generally prevailing market dividend rate
(at the time of issuance of such preferred stock) for preferred stock
of comparable risk and maturity, and (ii) the portion of all other
<PAGE> 2
preferred stock which is subject to purchase, retirement, redemption,
exchange or conversion (other than exchange for or conversion to
common stock of the Company) at any date or dates on or prior to March
31, 2003 under any circumstance whatsoever (other than purchase,
retirement, redemption, exchange or conversion by the issuer thereof,
at the sole option of such issuer, if failure to exercise such option
would not have an adverse effect on the Company or any Subsidiary
pursuant to the terms of any such preferred stock or any documents
related thereto). For avoidance of doubt, to the extent that any
shares of Restricted Preferred Stock are exchanged for or converted to
common stock of the Company and as a consequence such shares of
Restricted Preferred Stock are cancelled, such shares shall no longer
constitute Restricted Preferred Stock.
"Short-Term Credit Agreement" means the Credit Agreement dated
as of March 11, 1997 among the Company, NationsBank of Texas, N.A., as
agent, and the co-Agents and the banks parties thereto, providing a
$100,000,000 credit facility to the Company, as may be amended or
otherwise modified from time to time.
"Termination Date" means March 31, 2002, or, if such day is
not a Euro-Dollar Business Day, the Termination Date shall be the next
preceding Euro-Dollar Business Day.
Section 1.01 of the Agreement is hereby further amended by deleting
therefrom the definition of "Company's 1995 Form 10-K" and by adding the
following new definitions in the appropriate alphabetical order:
"Company's 1996 Form 10-K" means the Company's annual report
on Form 10-K for 1996, as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934.
"First Amendment" means the First Amendment Agreement dated as
of March 11, 1997 executed by the Company, the Agent, the Co-Agents
and the Banks.
1.2. Section 4.04. Section 4.04 of the Agreement is
hereby amended by replacing both (i) the reference in subsection (a) to the
date "December 31, 1995" with the date "December 31, 1996", and (ii) each
reference in subsections (a) and (c) to the term "Company's 1995 Form 10-K"
with the term "Company's 1996 Form 10-K".
1.3. Section 4.11. The first sentence of Section 4.11 of
the Agreement is hereby amended by changing the date "December 31, 1989"
therein to "December 31, 1992".
1.4. Section 9.06. The last sentence of Section 9.06(c)
of the Agreement is hereby amended by changing the date "March 29, 1998"
therein to "March 1, 1999".
-2-
<PAGE> 3
1.5. Schedule I. Schedule I to the Agreement is hereby
replaced with Schedule I hereto.
1.6. Schedule V. Schedule V to the Agreement is hereby
replaced with Schedule V hereto.
1.7. Schedule VIII. Schedule VIII to the Agreement is
hereby replaced with Schedule VIII hereto.
SECTION 2. Effectiveness. The effectiveness of this Amendment
is subject to the receipt by the Agent of:
2.1. counterparts of this Amendment signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation
from such party of execution of a counterpart hereof by such party);
2.2. the promissory notes (the "New Notes"), duly executed
by the Company, substantially in the form of Exhibit A to the
Agreement, one such New Note payable to the order of each Bank;
2.3. an opinion of Alan R. Crain, Jr., Vice President and
General Counsel of the Company, substantially in the form of Exhibit A
hereto;
2.4. an opinion of Andrews & Kurth L.L.P., special counsel
for the Company, substantially in the form of Exhibit B hereto;
2.5. an opinion of Bracewell & Patterson, L.L.P., special
counsel for the Agent, substantially in the form of Exhibit C hereto;
and
2.6. all documents which the Agent may reasonably request
relating to the existence of the Company, the corporate authority for
and the validity of this Amendment and the New Notes and any other
matters relevant thereto, all in form and substance satisfactory to
the Agent.
SECTION 3. Miscellaneous.
3.1. Amendments, Etc. No amendment or waiver of any
provision of this Amendment, nor consent to any departure by the Company
therefrom, shall in any event be effective unless effected in accordance with
Section 9.05 of the Agreement.
-3-
<PAGE> 4
3.2. Governing Law. This Amendment and the Agreement as
amended hereby shall be construed in accordance with and governed by the laws
of the State of Texas.
3.3. Preservation. Except as specifically modified by the
terms of this Amendment, all of the terms, provisions, covenants, warranties
and agreements contained in the Agreement (including, without limitation,
exhibits thereto) or any other Financing Document (excluding the Note
previously issued by the Company to each Bank upon such Bank's receipt of the
New Note issued by the Company to the order of such Bank in the amount of such
Bank's Commitment effected by this Amendment) remain in full force and effect.
Undefined capitalized terms used herein are used herein as defined in the
Agreement as amended hereby.
3.4. Execution in Counterparts. This Amendment may be
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
3.5. Representations and Warranties. The Company hereby
represents and warrants to the Banks, the Co- Agent and the Agent that (i) the
representations and warranties contained in Article IV of the Agreement are
correct on and as of the date hereof as though made on and as of the date
hereof, with this Amendment, the Agreement as amended hereby, and the New Notes
constituting "Financing Documents" for purposes thereof, and (ii) no event has
occurred and is continuing which constitutes a Default or an Event of Default.
3.6. Default. Without limiting any other event which may
constitute an Event of Default, in the event that any representation or
warranty set forth herein shall be incorrect or misleading in any material
respect when made, such event shall constitute an "Event of Default" under the
Agreement, as amended hereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: /s/ M.N. MARKOWITZ
-------------------------------------
M.N. Markowitz
Vice President and Treasurer
-4-
<PAGE> 5
Commitments
- -----------
$34,772,727.31 NATIONSBANK OF TEXAS, N.A.
By: /s/ MARION B. LEMAN
-------------------------------------
Authorized Officer
$26,590,909.09 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ RICHARD D. BLUTH
-------------------------------------
Authorized Officer
$26,590,909.09 UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
By: /s/ KELLY BOOTS
-------------------------------------
Authorized Officer
By: /s/ J. GEORGE KUBOVE
-------------------------------------
Authorized Officer
$20,454,545.45 THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
-------------------------------------
Authorized Officer
$20,454,545.45 THE BANK OF TOKYO-MITSUBISHI,
LTD., HOUSTON AGENCY
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
-5-
<PAGE> 6
Commitments
- -----------
$20,454,545.45 THE CHASE MANHATTAN BANK
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
$20,454,545.45 CITIBANK, N.A.
By: /s/ AREZOO JAFARI
-------------------------------------
Authorized Officer
$20,454,545.45 CREDIT LYONNAIS NEW YORK
BRANCH
By: /s/ PASCAL POUPELLE
-------------------------------------
Authorized Officer
$20,454,545.45 THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
$20,454,545.45 LTCB TRUST COMPANY
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
-6-
<PAGE> 7
Commitments
- -----------
$20,454,545.45 MELLON BANK, N.A.
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
$20,454,545.45 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
$20,454,545.45 NATIONAL WESTMINSTER BANK PLC
NEW YORK BRANCH
By: /s/ PAUL K. CARTER
-------------------------------------
Authorized Officer
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ PAUL K. CARTER
-------------------------------------
Authorized Officer
$20,454,545.45 SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
-7-
<PAGE> 8
Commitments
- -----------
$18,409,090.91 BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By: /s/ MARK A. HARRINGTON
-------------------------------------
Authorized Officer
By: /s/ ERIC DITGES
-------------------------------------
Authorized Officer
$18,409,090.91 THE YASUDA TRUST AND BANKING
COMPANY, LIMITED, NEW YORK
BRANCH
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
$14,318,181.82 BANK OF TAIWAN, NEW YORK AGENCY
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
$14,318,181.82 BANQUE NATIONALE DE PARIS,
HOUSTON AGENCY
By: /s/ MIKE SHRYOCK
-------------------------------------
Authorized Officer
-8-
<PAGE> 9
Commitments
- -----------
$14,318,181.82 BANQUE PARIBAS, HOUSTON AGENCY
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
By: /s/ [ILLEGIBLE]
-------------------------------------
Authorized Officer
$14,318,181.82 CHRISTIANIA BANK
By: /s/ WILLIAM S. PHILLIPS
-------------------------------------
Authorized Officer
By: /s/ JUSTIN F. McCARTY, III
-------------------------------------
Authorized Officer
$14,318,181.82 DEN NORSKE BANK ASA
By: /s/ J. MORTEN KRUETZ
-------------------------------------
Authorized Officer
By: /s/ WILLIAM V. MOYER
-------------------------------------
Authorized Officer
-9-
<PAGE> 10
Commitments
- -----------
$14,318,181.82 DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ MICHAEL E. TERRY
------------------------------------
Authorized Officer
By: /s/ LAWRENCE E. JONES
------------------------------------
Authorized Officer
$14,318,181.82 THE MITSUBISHI TRUST & BANKING
CORPORATION
By: /s/ MR. AAKI YAMAGISHI
------------------------------------
Authorized Officer
Total Commitments: $450,000,000
================================
NATIONSBANK OF TEXAS, N.A., as Agent
By: /s/ MARION B. LEMAN
------------------------------------
Marion B. Leman
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Co-Agent
By: /s/ RICHARD D. BLUTH
------------------------------------
Authorized Officer
-10-
<PAGE> 11
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY, as Co-Agent
By: /s/ KELLY BOOTS
-------------------------------------
Authorized Officer
By: /s/ J. GEORGE KUBOVE
-------------------------------------
Authorized Officer
-11-
<PAGE> 12
SCHEDULE I
COMMITMENT REDUCTION SCHEDULE
<TABLE>
<CAPTION>
Date Maximum Aggregate Commitments
---- -----------------------------
<S> <C>
June 30, 2001 $415,000,000
September 30, 2001 380,000,000
December 31, 2001 345,000,000
March 31, 2002 -0-
</TABLE>
<PAGE> 13
FIRST AMENDMENT AGREEMENT DATED MARCH 11, 1997
SCHEDULE OF EXHIBITS
The following describes the Schedules and Exhibits to the Credit Agreement,
which are omitted herein, but which will be furnished upon request:
Schedule V Sets forth the Joint Venture Debt Agreements.
Schedule VIII Sets forth the Facility Fee and Applicable Margin at various
Rating Levels.
Exhibit A Form of Opinion of General Counsel to the Company
Exhibit B Form of Opinion of Special Counsel to the Company
Exhibit C Form of Opinion of Special Counsel to the Agent
<PAGE> 1
- --------------------------------------------------------------------------------
$100,000,000
CREDIT AGREEMENT
dated as of
March 11, 1997
among
UNION TEXAS PETROLEUM HOLDINGS, INC.
The BANKS Listed Herein
and
NATIONSBANK OF TEXAS, N.A.
as Agent
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
UNION BANK OF SWITZERLAND, HOUSTON AGENCY
as Co-Agents
THE INDEMNIFICATION PROVISIONS OF SECTIONS 7.06 AND 9.03(b) OF THIS
AGREEMENT INCLUDE INDEMNIFICATION FROM THE CONSEQUENCES OF THE
NEGLIGENCE OF THE PERSONS INDEMNIFIED THEREBY TO THE EXTENT SET FORTH
THEREIN
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . 19
SECTION 1.03. Types of Borrowings . . . . . . . . . . . . . . . . . 20
SECTION 1.04. Miscellaneous . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.05. Unimar. . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 1.06. Ratings. . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend . . . . . . . . . . . . . . . . . 21
SECTION 2.02. Notice of Borrowings . . . . . . . . . . . . . . . . 21
SECTION 2.03. Conversions . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.04. Notice to Banks; Funding of Loans . . . . . . . . . . 23
SECTION 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 2.06. Maturity of Loans . . . . . . . . . . . . . . . . . . 24
SECTION 2.07. Interest Rates . . . . . . . . . . . . . . . . . . . 25
SECTION 2.08. Facility Fees . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.09. Optional Termination or Reduction of Commitments . . 26
SECTION 2.10. Mandatory Termination or Reduction of Commitments . . 26
SECTION 2.11. Optional Prepayments . . . . . . . . . . . . . . . . 27
SECTION 2.12. General Provisions as to Payments . . . . . . . . . . 27
SECTION 2.13. Funding Losses . . . . . . . . . . . . . . . . . . . 28
SECTION 2.14. Computation of Interest and Fees . . . . . . . . . . 28
SECTION 2.15. Chapter 15 . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.16. Maximum Interest Rate . . . . . . . . . . . . . . . . 28
SECTION 2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE III
CONDITIONS
SECTION 3.01. Initial Borrowing . . . . . . . . . . . . . . . . . . 32
SECTION 3.02. All Borrowings . . . . . . . . . . . . . . . . . . . 33
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . 34
SECTION 4.02. Corporate and Governmental Authorization;
Contravention . . . . . . . . . . . . . . . . . . 34
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . 34
SECTION 4.04. Information . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.05. Litigation . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.06. Compliance with ERISA . . . . . . . . . . . . . . . . 36
SECTION 4.07. Environmental Matters . . . . . . . . . . . . . . . . 36
SECTION 4.08. Subsidiaries . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.09. Ownership of Restricted Subsidiaries . . . . . . . . 36
SECTION 4.10. Title to Properties . . . . . . . . . . . . . . . . . 37
SECTION 4.11. Taxes and Other Obligations . . . . . . . . . . . . . 37
SECTION 4.12. Regulation U . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.13. Certain Obligations . . . . . . . . . . . . . . . . . 38
SECTION 4.14. United Kingdom Assets . . . . . . . . . . . . . . . . 38
ARTICLE V
COVENANTS
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.02. Affirmative Covenants . . . . . . . . . . . . . . . . 42
SECTION 5.03. Primary Business . . . . . . . . . . . . . . . . . . 43
SECTION 5.04. Insurance . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.05. Debt . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.06. Restricted Payments . . . . . . . . . . . . . . . . . 44
SECTION 5.07. Negative Pledge . . . . . . . . . . . . . . . . . . . 44
SECTION 5.08. Consolidations and Mergers . . . . . . . . . . . . . 45
SECTION 5.09. Use of Proceeds . . . . . . . . . . . . . . . . . . . 46
SECTION 5.10. Addition of Guarantors . . . . . . . . . . . . . . . 46
SECTION 5.11. Restrictions on Dividends, Intercompany Loans,
or Investments . . . . . . . . . . . . . . . . . . 46
SECTION 5.12. Loans and Advances . . . . . . . . . . . . . . . . . 46
SECTION 5.13. Cross-Default . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.14. Subsidiaries . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.15. Adjusted Equity and Interest Coverage . . . . . . . . 48
SECTION 5.16. Excluded Subordinated Debt and Preferred Stock . . . 48
SECTION 5.17. Certain Obligations . . . . . . . . . . . . . . . . . 48
SECTION 5.18. Restrictions on Asset Sales . . . . . . . . . . . . . 48
SECTION 5.19. Conversion to Unrestricted Subsidiary . . . . . . . . 48
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . 49
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . 51
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization . . . . . . . . . . . . 52
SECTION 7.02. Agent and Affiliates . . . . . . . . . . . . . . . . 52
SECTION 7.03. Action by Agent . . . . . . . . . . . . . . . . . . . 52
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . . . 52
SECTION 7.05. Liability of Agent . . . . . . . . . . . . . . . . . 52
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . 53
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . . . 53
SECTION 7.08. Successor Agent . . . . . . . . . . . . . . . . . . . 53
SECTION 7.09. Agent's Fees . . . . . . . . . . . . . . . . . . . . 53
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . . . 55
SECTION 8.04. Base Rate Loans Substituted for Affected
Euro-Dollar Loans . . . . . . . . . . . . . . . . . 56
SECTION 8.05. Substitution of Bank . . . . . . . . . . . . . . . . 57
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.03. Expenses; Indemnification . . . . . . . . . . . . . . 58
SECTION 9.04. Sharing of Set-Offs, Etc. . . . . . . . . . . . . . . 59
SECTION 9.05. Amendments and Waivers . . . . . . . . . . . . . . . 59
SECTION 9.06. Successors and Assigns . . . . . . . . . . . . . . . 60
SECTION 9.07. Collateral . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.08. Texas Law . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 9.09. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . 62
SECTION 9.10. Counterparts . . . . . . . . . . . . . . . . . . . . 62
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C> <C>
SECTION 9.11. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . 62
SECTION 9.12. COMPLETE AGREEMENT . . . . . . . . . . . . . . . . . 62
SECTION 9.13. Liability of Co-Agents and Arranger . . . . . . . . . 63
SECTION 9.14. Termination of 1996 Short-Term Commitments . . . . . 63
</TABLE>
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<PAGE> 6
Schedule I - Facility Fees and Applicable Margins
Schedule II - Existing Subsidiaries
Schedule III - Existing Liens
Schedule IV - Existing Restrictions
Schedule V - Joint Venture Debt Agreements
Schedule VI - Outstanding Options
Exhibit A - Form of Note
Exhibit B - Form of Assignment and Assumption Agreement
Exhibit C - Opinion of General Counsel of the Company
Exhibit D - Opinion of Special Counsel for the Company
Exhibit E - Opinion of Special Counsel for the Agent
-v-
<PAGE> 7
CREDIT AGREEMENT
Credit Agreement dated as of March 11, 1997 among Union Texas
Petroleum Holdings, Inc., the Banks party hereto, NationsBank of Texas, N.A.,
as Agent, and Bank of America National Trust and Savings Association and Union
Bank of Switzerland, Houston Agency, as Co-Agents.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used herein, have
the following meanings:
"Acceptable Engineer" means DeGolyer & MacNaughton or such other
independent engineering firm that is mutually acceptable to the Agent and the
Company.
"Adjusted Equity" means the consolidated stockholders equity of the
Company and its Consolidated Subsidiaries, as determined on a consolidated
basis in accordance with generally accepted accounting principles, adjusted to
exclude (i) any cumulative foreign exchange translation adjustments, (ii) any
non-cash write-up or writedown of any assets of the Company and its
Consolidated Subsidiaries made after March 31, 1995 in accordance with
generally accepted accounting principles, and (iii) the non-cash effect of the
adoption of any change after March 31, 1995 required by generally accepted
accounting principles.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form requested by the Agent submitted to
the Agent (with a copy to the Company) duly completed by such Bank.
"Affiliate" means (i) any Person holding 5% or more of any class of
capital stock of the Company, and (ii) any Person (other than the Company, a
Subsidiary or a Partnership) directly or indirectly controlling, controlled by
or under common control with any Person described in clause (i). As used in
this definition of "Affiliate", the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
<PAGE> 8
"Agent" means NationsBank in its capacity as agent for the Banks
hereunder and any successor in such capacity.
"Agreement" means this Credit Agreement dated as of March 11, 1997
among the Company, the Banks, the Agent and the Co-Agents, as amended from time
to time in accordance with the terms hereof.
"Applicable Lending Office" means, with respect to any Bank, (i) in
the case of its Base Rate Loans, its Domestic Lending Office, and (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Applicable Margin" means, for any Interest Period for each
Euro-Dollar Loan, the rate per annum applicable to such Euro-Dollar Loan during
such Interest Period, as shown on Schedule I and based on the Rating Level in
effect on the first day of such Interest Period.
"Arranger" means NationsBanc Capital Markets, Inc.
"Asset Sale" means any sale, lease, transfer or other disposition of
any Restricted Asset by the Company or any Restricted Subsidiary, whether such
sale, lease, transfer or other disposition is direct or indirect (such as by
selling capital stock of the Subsidiary that owns such Restricted Asset, but
excluding sales of capital stock of the Company), other than (i) farm-outs in
the ordinary course of business of properties containing substantially no
proved reserves at the time of the farm-out, (ii) sales in the ordinary course
of business of Hydrocarbons after severance, (iii) sales, transfers, leases or
other dispositions of inventory and obsolete or surplus equipment in the
ordinary course of business, and (iv) sales, transfers, leases or other
dispositions to the Company or any Restricted Subsidiary if no Default then
exists or would result therefrom.
"Assignee" has the meaning set forth in Section 9.06(c).
"Assignment" means an Assignment and Assumption Agreement in
substantially the form of Exhibit B hereto.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.06(c), and their respective
successors.
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Corporate Base Rate for such day and (ii) the sum of 1/2 of 1% plus
the Federal Funds Rate for such day.
-2-
<PAGE> 9
"Base Rate Loan" means a Loan which bears interest as provided in
Section 2.07(a).
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrowing" has the meaning set forth in Section 1.03.
"Cash Interest Expense" means, for any period, the sum of (i) the
aggregate amount accrued during such period by the Company and its Consolidated
Subsidiaries for interest determined on a consolidated basis, but excluding
interest on Non-Recourse Debt and interest on Debt of Unrestricted Subsidiaries
to the extent such Debt does not constitute Debt of the Company or any
Restricted Subsidiary plus (ii) the aggregate amount paid during such period by
the Company and its Consolidated Subsidiaries for dividends on Restricted
Preferred Stock, determined on a consolidated basis.
"Co-Agents" means Bank of America National Trust and Savings
Association and Union Bank of Switzerland, Houston Agency in their capacities
as Co-Agents hereunder.
"Commitment" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature pages hereof (or, if such Bank
is an Assignee and its name is not set forth on the signature pages hereof, the
amount of its Commitment as set forth in the Assignment pursuant to which it
became a Bank), as such amount may be reduced from time to time pursuant to
Sections 2.09 and 2.10 or reduced or increased from time to time pursuant to
any Assignment to which it is a party.
"Company" means Union Texas Petroleum Holdings, Inc., a Delaware
corporation.
"Company's 1996 Form 10-K" means the Company's annual report on Form
10-K for 1996, as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Consolidated Debt" means, at any date, an amount equal to (a) the sum
(without duplication) of (i) the aggregate amount of Debt (other than Defeased
Debt, Excluded Subordinated Debt not exceeding $100,000,000 and Debt that would
not constitute Debt of the Company or any of its Consolidated Subsidiaries if
clause (viii) were not included in the definition herein of Debt) of the
Company and its Consolidated Subsidiaries, determined on a consolidated basis
as of such date, plus (ii) the Unimar Percentage at such date of the aggregate
Debt (other than Defeased Debt and Debt that would not constitute Debt of
Unimar or any of the Unimar Restricted Subsidiaries if clause (viii) were not
-3-
<PAGE> 10
included in the definition herein of Debt) of Unimar and the Unimar Restricted
Subsidiaries, determined on a consolidated basis as of such date, plus (iii)
the Excess Letter of Credit/Guarantee Amount at such date, minus (b) the sum
(without duplication and only to the extent that any of the following are
included in the foregoing clause (a)) at such date of (1) Debt of Unrestricted
Subsidiaries to the extent such Debt does not constitute Debt of the Company or
any Restricted Subsidiary plus (2) Non-Restricted Asset Non-Recourse Debt plus
(3) Existing Pakistan Non-Recourse Debt.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which would be consolidated with those of the Company in
its consolidated financial statements as of such date.
"Convert", "Conversion" and "Converted" each refers to (i) the change
of Loans of one Type into Loans of the other Type pursuant to Section 2.03 or
Article VIII, (ii) the continuation of all Euro-Dollar Loans comprising the
same Borrowing as such for an additional Interest Period pursuant to Section
2.03, and (iii) an election to change, pursuant to Section 2.03, the Interest
Period applicable to all Euro-Dollar Loans comprising the same Borrowing prior
to the end of the Interest Period then applicable thereto.
"Corporate Base Rate" means a fluctuating interest rate per annum as
shall be in effect from time to time equal to the rate of interest publicly
announced by NationsBank as its base rate, whether or not the Company has
notice thereof. Such rate is set by NationsBank as a general reference rate of
interest, taking into account such factors as NationsBank may deem appropriate,
it being understood that many of NationsBank's commercial or other loans are
priced in relation to such rate, that it is not necessarily the lowest or best
rate actually charged to any customer and that NationsBank may make various
commercial or other loans at rates of interest having no relationship to such
rate.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except accrued expenses, trade accounts payable and taxes
payable arising in the ordinary course of business, (iv) the present value,
determined in accordance with generally accepted accounting principles, of the
obligations of such Person to make payments under capital leases, (v) all
obligations of such Person which shall have been outstanding for more than five
days owed to a bank or other Person in respect of amounts theretofore paid
under a letter of credit or similar instrument, (vi) all Debt of others secured
by a Lien on any asset owned by such Person whether or not such Debt is assumed
by such Person (except that Joint Venture Debt shall for purposes of this
Agreement be deemed to be Debt of Pertamina and not of the Company or a
Subsidiary), (vii) all Restricted Preferred Stock issued by such Person or as
to which such Person is otherwise liable, (viii) all Debt of others Guaranteed
by such Person, to the extent of such
-4-
<PAGE> 11
Guarantee, and (ix) all obligations of such Person which have been outstanding
for more than five days to pay any margin call (or similar requirement) on any
Derivative Transaction (excluding, in the case of the Company and its
Subsidiaries, such obligations not exceeding $5,000,000 in the aggregate);
provided that, neither Debt nor Guarantee includes (a) obligations under leases
other than capital leases and under bona fide Derivative Transactions (except
as provided in clause (ix) above) and obligations with respect to take-or-pay
payments theretofore received which remain subject to cash settlement or make-
up; (b) Debt of the Company or a Subsidiary owing to the Company or a
Subsidiary, except for Debt not eliminated in consolidation pursuant to the
proviso in Section 1.02; (c) obligations under the Indonesian Participating
Units; (d) any preferred stock that does not constitute Restricted Preferred
Stock; and (e) the existing agreements relating to Joint Venture Debt set forth
in the contracts described on Schedule V of the parties thereto as to
allocation of responsibility for damages caused by reason of an act or failure
to act by, or otherwise related to, any such party, or any similar agreement
hereafter entered into providing for a similar allocation of liability in
respect of similar actions or failures to act. The amount of Debt attributable
to any Restricted Preferred Stock shall be the maximum consideration required
to be paid upon the purchase, retirement, redemption, exchange, or conversion
of the portion thereof constituting Debt (such consideration, if other than
cash, to be valued at the fair market value thereof); provided that, in
computing such consideration there shall be excluded (A) any consideration
payable solely in common stock of the Company; (B) dividends to the extent such
dividends do not materially exceed the generally prevailing market rate (at the
time of issuance of such Restricted Preferred Stock) on preferred stock of
comparable risk and maturity; and (C) any premium payable upon any such
purchase, retirement, redemption, exchange or conversion only as a result of
the exercise by the issuer of a call provision exercisable only at the option
of the issuer, if failure to exercise such option would not have an adverse
effect on the Company or any Subsidiary pursuant to the terms of any such
Restricted Preferred Stock or any documents related thereto.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Defeased Debt" means any Debt of the Company or any Subsidiary (i)
which has been defeased in accordance with the terms of the applicable Debt
instruments, (ii) which is deemed to be extinguished under generally accepted
accounting principles applicable to the Company or such Subsidiary, and (iii)
with respect to which the Agent has received a certificate of an officer of the
Company or such Subsidiary to the effect that the requirements of clauses (i)
and (ii) of this definition have been met as to such Debt and such evidence, if
any, in support of such certificate as the Agent may reasonably request.
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<PAGE> 12
"Derivative Transactions" means foreign exchange transactions and
commodity, currency and interest rate swaps, floors, caps, collars, forward
sales, options, other similar transactions and combinations of the foregoing.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City, San Francisco or Houston
are authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office located
at its address set forth in its Administrative Questionnaire (or identified in
its Administrative Questionnaire as its Domestic Lending Office) or such other
office as such Bank may hereafter designate as its Domestic Lending Office by
notice to the Company and the Agent.
"EBITDA" means, for any period, the sum of (i) the consolidated net
income of the Company and its Consolidated Subsidiaries for such period before
non-cash non-recurring items, gains or losses on dispositions of assets and the
cumulative effect of changes in accounting principles plus (ii) to the extent
included in the determination of such income, the consolidated charges for such
period for interest, depreciation, depletion and amortization plus (or, if
there is a benefit from income taxes, minus) (iii) to the extent included in
the determination of such income, the amount of the provision for or benefit
from income taxes; provided that in determining such consolidated net income,
such consolidated charges and such provision for or benefit from income taxes,
there shall be excluded therefrom (to the extent otherwise included therein)
(a) the net income (or loss) of, charges for interest, depreciation, depletion
and amortization of, and such provision for or benefit from income taxes of,
any Person acquired by the Company or a Subsidiary in a pooling-of-interest
transaction for any period prior to the date of such transaction, and (b) the
net income (but not loss) of, charges for interest, depreciation, depletion and
amortization of, and such provision for (but not benefit from) income taxes of,
any Person which is subject to any contractual restriction which prevents the
payment of dividends or the making of distributions on the capital stock or
other ownership interests of such Person to the extent of such contractual
restrictions.
"Effective Date" means the date of this Agreement, which is March 11,
1997.
"Engineering Report" means a report of an Acceptable Engineer
providing an estimate of the proved reserves of Hydrocarbons attributable to
the properties of the Company and the Restricted Subsidiaries.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants,
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<PAGE> 13
contaminants, petroleum or petroleum products, chemicals or industrial, toxic
or hazardous substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes or the clean-up or other remediation thereof, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act, the Resource Conservation and Recovery Act, the Oil Pollution
Act, and their state analogs, in each case as they have been or may be amended.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Company, are treated as a single
employer under Section 414 of the Internal Revenue Code.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Euro-
Dollar Lending Office) or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Euro-Dollar Lending Office by notice to
the Company and the Agent.
"Euro-Dollar Loan" means a Loan which bears interest as provided in
Section 2.07(b).
"Event of Default" has the meaning set forth in Section 6.01.
"Excess Letter of Credit/Guarantee Amount" means, at any date, the
excess of (a) the sum of (i) the aggregate undrawn amount, at such date, of all
letters of credit as to which the Company or any Restricted Subsidiary (other
than Unimar and the Unimar Restricted Subsidiaries) is the account party or in
respect of which the Company or any Restricted Subsidiary (other than Unimar
and the Unimar Restricted Subsidiaries) has Guaranteed payment plus the unpaid
drawn portions, at such date, of all such letters of credit to the extent such
drawn portions do not constitute Debt of the Company or a Restricted Subsidiary
(other than Unimar and the Unimar Restricted Subsidiaries), plus (ii) the
Unimar Percentage of the aggregate undrawn amount, at such date, of all letters
of credit as to which Unimar or any of the Unimar Restricted Subsidiaries is
the account party or in respect of
-7-
<PAGE> 14
which Unimar or any of the Unimar Restricted Subsidiaries has Guaranteed
payment plus the unpaid drawn portions, at such date, of such letters of credit
to the extent such drawn portions do not constitute Debt of Unimar or any of
the Unimar Restricted Subsidiaries, plus (iii) Debt that constitutes Debt of
the Company or any Restricted Subsidiary (other than Unimar or any Unimar
Restricted Subsidiary) pursuant to clause (viii) of the definition herein of
Debt, plus (iv) the Unimar Percentage at such date of Debt that constitutes
Debt of Unimar or any of the Unimar Restricted Subsidiaries pursuant to clause
(viii) of the definition herein of Debt, over (b) $50,000,000.
"Excess Net Sales Proceeds" means
(i) with respect to any Asset Sale involving, directly or indirectly, a UK
Asset (a "UK Asset Sale"),
(a) if, after giving effect to such Asset Sale, the aggregate Net
Sales Proceeds from all UK Asset Sales since December 31, 1993
would be less than or equal to $50,000,000 and the aggregate Net
Sales Proceeds from all Asset Sales since such date would be less
than or equal to $100,000,000, zero; or
(b) if, after giving effect to such Asset Sale, the aggregate Net
Sales Proceeds from all UK Asset Sales since December 31, 1993
("UK Aggregate Amount") would be greater than $50,000,000 or the
aggregate Net Sales Proceeds from all Asset Sales since such date
("Total Aggregate Amount") would be greater than $100,000,000, the
lesser of (1) the greater of the amount by which the UK Aggregate
Amount exceeds $50,000,000 or the amount by which the Total
Aggregate Amount exceeds $100,000,000 or (2) the Net Sales
Proceeds from such Asset Sale; and
(ii) with respect to any Asset Sale not involving, directly or
indirectly, a UK Asset,
(a) if, after giving effect to such Asset Sale, the aggregate Net
Sales Proceeds from all Asset Sales since December 31, 1993 would
be less than or equal to $100,000,000, zero; or
(b) if, after giving effect to such Asset Sale, the aggregate Net
Sales Proceeds from all Asset Sales since December 31, 1993 would
be greater than $100,000,000, the lesser of (1) the amount by
which such aggregate Net Sales Proceeds exceeds $100,000,000 or
(2) the Net Sales Proceeds from such Asset Sale.
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<PAGE> 15
"Excluded Subordinated Debt" means Debt that (i) is subordinate and
junior, on terms reasonably satisfactory to the Agent, to the Loans in all
respects and (ii) has no requirement, absent a default under such Debt, that
any principal thereof be paid, purchased, redeemed, defeased, acquired,
exchanged or converted (other than exchange for or conversion to common stock
of the Company) prior to March 31, 2003.
"Existing Pakistan Non-Recourse Debt" means the Debt, not exceeding
the principal amount of $9,500,000, evidenced by that certain promissory note
dated December 20, 1988, issued by UT Pakistan in the original principal amount
of $21,250,000, the related Finance Agreement between UT Pakistan and the
Overseas Private Investment Corporation ("OPIC") and the related Issuing and
Paying Agency Agreement among First Trust New York National Association (as
successor to Morgan Guaranty Trust Company of New York) as issuing and paying
agent, OPIC and UT Pakistan.
"Fair Market Value" means with respect to any asset of the Company or
any Subsidiary at any date the open market cash purchase price that an informed
and willing purchaser would pay for such asset in an arm's length transaction
to a willing and informed owner under no compulsion to sell, all as reasonably
determined in good faith by the Company.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day, as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to NationsBank on such day on
such transactions as determined by the Agent.
"Financing Documents" means this Agreement and the Notes.
"Guarantee" by any Person means any obligation, contingent or
otherwise (including, without limitation, any obligation to repay to a payor or
creditor of a payor amounts previously paid to such Person by such payor), of
such Person directly or indirectly guaranteeing any Debt of any other Person or
otherwise incurred for the purpose of assuring the holder of payment of any
such Debt; provided that (i) the obligations of any Person in respect of Debt
of any Partnership in which such Person is a general partner shall not
constitute a Guarantee of such Debt so long as substantially all assets of such
Person are comprised of its Investment in such Partnership, (ii) the obligation
of a Person to transfer or
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<PAGE> 16
restore cash to the account of a Partnership, Subsidiary or Affiliate pursuant
to periodic settlements or adjustments under cash management practices of such
Persons shall not constitute a Guarantee, (iii) the contractual obligation of a
Person to assure that a Subsidiary, Partnership or Affiliate conducts its
operations as a prudent operator shall not constitute a Guarantee of
indebtedness of the Subsidiary, Partnership or Affiliate, (iv) the obligation
of a Person to cause net amounts of cash owned by a Subsidiary, Partnership or
Affiliate to be applied to payment of indebtedness of such Subsidiary,
Partnership or Affiliate shall not constitute a Guarantee of such indebtedness
and (v) the reaffirmation to or for the benefit of a lender of contractual
obligations (as, for example, those set forth in the Production Sharing
Contracts) previously entered into in good faith and not in contemplation of
the incurrence of Debt shall not constitute a Guarantee so long as the other
arrangements entered into in connection with such reaffirmation do not increase
the likelihood that additional funds will be required to meet such obligations
(as would be the case, for example, if revenues otherwise available to meet
such obligations were dedicated to such lender).
"HPG Plant" means the five-twelfths interest in the Geismar, Louisiana
olefins plant owned by UTPC and its subsidiaries, the supply and distribution
assets related to such plant and all other operating assets of UTPC and its
subsidiaries as of December 31, 1993.
"Hydrocarbons" means crude oil, including all kinds of hydrocarbons
and bitumens in solid or liquid form, and natural gas, including all gaseous
hydrocarbons produced from wells, and liquefied natural gas and liquefied
petroleum gases.
"Indonesian Participating Units" means the Indonesian Participating
Units issued by Unimar pursuant to the Indenture dated as of September 24, 1984
between Unimar and Irving Trust Company, Trustee, as amended and in effect on
May 13, 1994, and as thereafter amended to the extent such subsequent
amendments do not change the term thereof, provide additional security
therefor, or increase the payments to be made to holders thereof.
"Interest Period" means, with respect to each Euro-Dollar Loan
comprising part of the same Borrowing, the period commencing on the date of
such Loan or the date of the Conversion of any Base Rate Loan into such Euro-
Dollar Loan and ending on the last day of the period selected by the Company
pursuant to the provisions below and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest Period (or on
any other date selected by the Company pursuant to Section 2.03) and ending on
the last day of the period selected by the Company pursuant to the provisions
below and Section 2.03. The duration of each such Interest Period shall be 1,
2, 3 or 6 months or (subject to Section 2.02(b)) 9 or 12 months, in each case
as the Company may, upon notice received by the Agent not later than 10:00 A.M.
(Houston time) on the third Euro-Dollar Business Day prior to the first day of
such Interest Period, select; provided that:
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<PAGE> 17
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Euro-Dollar Business Day of a calendar month;
(c) the Company may not select an Interest Period for any Loan if the
last day of such Interest Period would be after March 9, 1999; and
(d) Interest Periods for all Loans comprising the same Borrowing shall
commence on the same date and shall be of the same duration.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means any investment in any Person, whether by means of
share purchase, capital contribution, loan, advance, Guarantee or otherwise.
It is understood that a joint operating agreement or similar arrangement with
respect to Hydrocarbon properties or the HPG Plant does not constitute a Person
and hence that payments in respect of the acquisition or maintenance of an
interest in such Hydrocarbon properties or the HPG Plant do not constitute an
Investment.
"Joint Venture Debt" means obligations secured by a Lien on the
interests of the Company or a Subsidiary, as the case may be, arising under
either of the Production Sharing Contracts or any related supply contracts, if
such Lien covers ratably the interests of Pertamina and all production sharing
contractors thereunder.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
(including, without limitation, any production payment, advance payment or
similar arrangement with respect to minerals in place), whether or not filed,
recorded or otherwise perfected under applicable law. For the purposes of this
Agreement, the Company or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset. The right of set-off,
whether by operation of law or by
-11-
<PAGE> 18
contract, does not constitute a Lien unless there is a related obligation to
maintain a deposit of cash or other assets in respect of which such right of
set-off may be exercised.
"Loan" means a loan made by a Bank to the Company pursuant to section
2.01 and refers to a Base Rate Loan or a Euro-Dollar Loan (each of which shall
be a "Type" of Loan), and "Loans" means Base Rate Loans or Euro-Dollar Loans or
any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in Section
2.07(b).
"material" means, with respect to any matter so characterized herein,
that such matter would reasonably be expected to be significant to a Bank in
determining whether to enter into this Agreement or to extend credit hereunder.
"Material Debt" means Debt of the Company and/or any one or more
Restricted Subsidiaries (other than Non-Recourse Debt) in an aggregate
principal amount equal to or greater than $15,000,000, whether incurred under
one or more related or unrelated documents or instruments.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $15,000,000.
"Moody's" means Moody's Investors Service, Inc. or any successor to
its debt ratings business.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"NationsBank" means NationsBank of Texas, N.A., a national banking
association.
"Net Sales Proceeds" means, with respect to any Asset Sale, the Fair
Market Value of the Restricted Asset that is sold, leased, transferred or
otherwise disposed of in such Asset Sale, minus the sum of (i) all reasonable
fees, commissions and expenses incurred by the Company or any Subsidiary as a
result of or in connection with such Asset Sale and (ii) all taxes required to
be paid by the Company or any Subsidiary as a result of such Asset Sale.
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"Non-Recourse Debt" means, at any date, (a) the aggregate amount at
such date of Debt of the Company or a Subsidiary (other than Unimar and each
Unimar Subsidiary) and (b) the Unimar Percentage of the aggregate amount at
such date of all Debt of each of Unimar and each Unimar Subsidiary, in respect
of which in the case of either (a) or (b) (i) the recourse of the holder of
such Debt, whether direct or indirect and whether contingent or otherwise,
shall be effectively limited to Non-Restricted Assets (or, in the case of the
Existing Pakistan Non-Recourse Debt, the assets described in Schedule III) and
(ii) in the case of any such Debt incurred after the date of this Agreement,
the Company shall have, at or prior to the time of incurrence thereof, notified
the Agent of such incurrence and delivered to the Agent a certificate of an
officer of the Company certifying that such Debt constitutes Non-Recourse Debt
(or that such Debt will be converted into Non-Recourse Debt at some specified
time or upon the occurrence of some specified event); provided that, if any
such Debt is secured by any interest in a license, concession, production
sharing contract or other right and any of the Restricted Assets consists of an
interest in such license, concession, production sharing contract or other
right, then the agreements evidencing such Debt must provide that default under
such Debt will not impair or affect such license, concession, production
sharing contract or other right. In the case of any Non-Recourse Debt incurred
after the date of this Agreement, such limitation on recourse (i) must be set
forth in the instrument evidencing such Debt, and (ii) must be on terms
acceptable to the Agent as evidenced by the written approval thereof by the
Agent (which approval will not be unreasonably withheld, and in deciding
whether to approve such terms the Agent will, if requested by the Company, take
into account what terms are usual and customary in non-recourse financings) and
in any event must provide that the holder of such Debt waives, to the extent
such holder may effectively do so, such holder's right to elect recourse
treatment under 11 U.S.C. Section 1111(b) unless such holder obtains the prior
written consent of the Required Banks. For avoidance of doubt, (a) if any such
Debt is Guaranteed by the Company or a Restricted Subsidiary in a limited
amount, the excess over such amount (but only the excess) constitutes Non-
Recourse Debt, and (b) Debt shall not be determined to not be Non-Recourse Debt
solely as a result of the existence of either of the following: (i) an
agreement by a direct or indirect parent corporation to repay to a subsidiary
amounts received by such parent corporation from such subsidiary in the event
such subsidiary has a need for such amounts in future periods or (ii) an
agreement by a direct or indirect parent corporation to cause a subsidiary to
comply with such subsidiary's contractual obligations so long as the parent
corporation is not obligated to contribute funds to the subsidiary to enable it
to comply with such contractual obligations and has not otherwise Guaranteed
such obligations.
"Non-Restricted Asset Non-Recourse Debt" means, at any date, the
aggregate amount at such date of Non-Recourse Debt as to which the recourse of
the holder is limited exclusively to Non-Restricted Assets as contemplated by
clause (i) of the first sentence of the definition of Non-Recourse Debt.
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"Non-Restricted Assets" means all assets of the Company and its
Subsidiaries other than Restricted Assets.
"Non-UK Asset" means any Restricted Asset other than a UK Asset.
"Notes" means promissory notes of the Company, substantially in the
form of Exhibit A hereto, evidencing the obligation of the Company to repay the
Loans made to it, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" has the meaning specified in Section 2.02.
"Operating Cash Flow" means, with respect to any period, an amount
equal to
(i) the "net cash (required) provided by operating activities before
changes in other assets and liabilities" of the Company and its
Consolidated Subsidiaries for such period, that should be reflected in
the consolidated statement of cash flows of the Company and its
Consolidated Subsidiaries for such period prepared in accordance with
generally accepted accounting principles on substantially the same
basis as the consolidated statement of cash flows of the Company and
its Consolidated Subsidiaries for the year ended December 31, 1996 as
set forth in the Company's 1996 Form 10-K; provided that in
determining such "net cash (required) provided by operating activities
before changes in other assets and liabilities" there shall be
excluded therefrom (to the extent otherwise included therein) (a) the
portion of such net cash provided by assets securing any Non-Recourse
Debt other than the Existing Pakistan Non-Recourse Debt, (b) the net
cash provided or required by operating activities before changes in
other assets and liabilities of any Person acquired by the Company or
a Subsidiary in a pooling-of-interest transaction for any period prior
to the date of such transaction, and (c) the net cash provided by
operating activities before changes in other assets and liabilities of
any Person which is subject to any contractual restriction which
prevents the payment of dividends or the making of distributions on
the capital stock or other ownership interests of such Person to the
extent of such contractual restrictions,
plus (ii) to the extent included in the determination of the "net cash
(required) provided by operating activities before changes in other
assets and liabilities" for such period in accordance with the
foregoing clause (i), exploration expenses incurred by the Company or
any Consolidated Subsidiary during such period other than (a)
exploration expenses incurred in connection with assets securing any
Non-Recourse Debt other than the Existing Pakistan Non-
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Recourse Debt, (b) the exploration expenses of any Person acquired
by the Company or a Subsidiary in a pooling-of-interest transaction
for any period prior to the date of such transaction, and (c) the
exploration expenses of any Person which is subject to any contractual
restriction which prevents the payment of dividends or the making of
distributions on the capital stock or other ownership interests of
such Person to the extent of such contractual restrictions,
plus(or, if cash is required by equity investee, minus) (iii) the
amount of the "cash (required) provided by equity investee" of the
Company and its Consolidated Subsidiaries for such period, that should
be reflected in the consolidated statement of cash flows of the
Company and its Consolidated Subsidiaries for such period prepared in
accordance with generally accepted accounting principles on
substantially the same basis as the consolidated statement of cash
flows of the Company and its Consolidated Subsidiaries for the year
ended December 31, 1996 as set forth in the Company's 1996 Form 10-K,
excluding the effect of any cash required by such equity investee for
the payment of the principal of its Debt and any cash provided by such
equity investee from incurrence of its Debt,
minus (iv) dividends on preferred stock paid during such period by the
Company or any Consolidated Subsidiary, determined on a consolidated
basis.
"Other Credit Agreement" means the Second Amended and Restated Credit
Agreement dated as of March 29, 1996 among the Company, NationsBank, as agent
thereunder, and the co-agents and the banks parties thereto, as amended or
otherwise modified from time to time, providing a $450,000,000 credit facility
to the Company.
"Other Credit Agreement Commitments" means the "Commitments" as
defined in the Other Credit Agreement.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.06(b).
"Partnership" means any general or limited partnership which is
accounted for on the equity method in the Company's consolidated financial
statements and in which the Company or a Subsidiary is a general partner.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
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"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
It is understood that a joint operating agreement or similar arrangement with
respect to Hydrocarbon properties or the HPG Plant does not constitute a
Person.
"Plan" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person
which was at such time a member of the ERISA Group for employees of any Person
which was at such time a member of the ERISA Group.
"Production Sharing Contracts" means the production sharing contracts
pertaining to certain operations in Indonesia filed as Exhibits 10.102 and
10.103 to the Company's quarterly report on Form 10-Q for the quarter ending
June 30, 1990, as filed with the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934.
"Rating Level" means the applicable category of rating level contained
in Schedule I (subject, however, to the footnotes on Schedule I), based on the
ratings of the senior unsecured long-term debt of the Company by S&P or Moody's
or both.
"Reference Banks" means the principal London offices of NationsBank,
Bank of America National Trust and Savings Association and Union Bank of
Switzerland and such substitute Bank or Banks as may be mutually agreed to by
the Company and the Agent, and "Reference Bank" means any one of such Reference
Banks.
"Regulation G" means Regulation G of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least 51% of the aggregate unpaid
principal amount of the Loans.
"Restricted Assets" means (1) all proved reserves of the Company and
the Subsidiaries as of December 31, 1993 in Indonesia, the United Kingdom
(including the United Kingdom Sector of the North Sea) and Pakistan, (2) all
licenses, concessions,
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production sharing contracts and other rights pertaining to any such proved
reserves (excluding the portion thereof that does not pertain to any of such
proved reserves, if such portion can be severed without material adverse
consequences on the portion pertaining to such proved reserves), (3) equipment
used in the production of any such proved reserves or in the transportation of
production from any such proved reserves if such equipment is a fixture or
otherwise attached to realty, constitutes all or a part of any pipeline or
related equipment, is all or part of a production platform or related equipment
or is equipment similar to any of the foregoing or used for a similar purpose,
and (4) the HPG Plant.
"Restricted Payment" means (i) any dividend or other distribution on
any shares of the Company's capital stock (except dividends payable solely in
shares of its common stock), or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (a) any shares of the Company's
capital stock or (b) any option, warrant or other right to acquire shares of
the Company's capital stock (except any such payment made solely in shares of
its common stock); provided that payments of stock-related and other employee
benefits (including purchases by the Company of its common stock in connection
with the payment of such benefits) in the ordinary course of business to
employees of the Company or a Subsidiary shall not be deemed Restricted
Payments.
"Restricted Preferred Stock" means (i) all preferred stock which (a)
is subject to purchase, retirement, redemption, exchange or conversion (other
than exchange for or conversion to common stock of the Company), in whole or in
part under any circumstance whatsoever (other than purchase, retirement,
redemption, exchange or conversion by the issuer thereof, at the sole option of
such issuer, if failure to exercise such option would not have an adverse
effect on the Company or any Subsidiary pursuant to the terms of any such
preferred stock or any documents related thereto) and (b) provides for
dividends materially in excess of the generally prevailing market dividend rate
(at the time of issuance of such preferred stock) for preferred stock of
comparable risk and maturity, and (ii) the portion of all other preferred stock
which is subject to purchase, retirement, redemption, exchange or conversion
(other than exchange for or conversion to common stock of the Company) at any
date or dates on or prior to March 31, 2003 under any circumstance whatsoever
(other than purchase, retirement, redemption, exchange or conversion by the
issuer thereof, at the sole option of such issuer, if failure to exercise such
option would not have an adverse effect on the Company or any Subsidiary
pursuant to the terms of any such preferred stock or any documents related
thereto). For avoidance of doubt, to the extent that any shares of Restricted
Preferred Stock are exchanged for or converted to common stock of the Company
and as a consequence such shares of Restricted Preferred Stock are cancelled,
such shares shall no longer constitute Restricted Preferred Stock.
"Restricted Subsidiaries Recourse Debt" means, at any date, the sum of
(a) the aggregate amount of all Debt (other than (i) Non-Recourse Debt, (ii)
any Guarantee of Debt of the Company (including the Loans) and (iii) the
amount, if any, by which the Guarantees
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of the Restricted Subsidiaries (other than Unimar and the Unimar Restricted
Subsidiaries) included in the determination of Excess Letter of
Credit/Guarantee Amount exceeds the Excess Letter of Credit/Guarantee Amount)
of each Restricted Subsidiary (other than Unimar and the Unimar Restricted
Subsidiaries), determined on a consolidated basis as of such date, and (b) the
Unimar Percentage of the aggregate amount of all Debt (other than (i) Non-
Recourse Debt, (ii) any Guarantee of Debt of the Company and (iii) the amount,
if any, by which the Unimar Percentage of the Guarantees of Unimar and the
Unimar Restricted Subsidiaries included in the determination of Excess Letter
of Credit/Guarantee Amount exceeds the Excess Letter of Credit/Guarantee
Amount) of Unimar and the Unimar Restricted Subsidiaries, determined on a
consolidated basis as of such date.
"Restricted Subsidiary" means each Person listed in Part B of Schedule
II hereto and each Subsidiary that owns directly or indirectly any interest in
any Restricted Assets or any Restricted Subsidiary; provided that a Restricted
Subsidiary shall cease to be such at such time as it is converted to an
Unrestricted Subsidiary pursuant to Section 5.19 or ceases to be a Subsidiary
as a result of a transaction permitted by Section 5.14.
"Restricted Transfer" means (i) any Investment in an Affiliate, any
Unrestricted Subsidiary or any subsidiary of an Unrestricted Subsidiary, but
excluding to the extent otherwise included in the foregoing, Investments in
Unimar and the Unimar Subsidiaries, or (ii) any payment by the Company or any
Subsidiary, directly or indirectly, in respect of Non-Recourse Debt to the
extent such Person is not legally obligated to make such payment by the terms
of such Debt, or solely in the case of Unimar, Unistar, Inc. or any of the
Unimar Subsidiaries, to the extent such Person is not legally obligated to fund
such payment under the terms of the Unimar Partnership Agreement.
"Revolving Credit Period" means the period from and including the
Effective Date to but not including the Termination Date.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. or any successor to its debt rating business.
"Subsidiary" means (a) Unimar and the Unimar Subsidiaries (except at
such times as the Company does not own, directly or indirectly, any of the
ownership interest in Unimar) and (b) any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company, it being
understood that the power to elect exactly 50% of the board of directors or
such other persons does not constitute a "majority" as used herein.
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"Termination Date" means March 10, 1998, or, if such day is not a
Euro-Dollar Business Day, the Termination Date shall be the next preceding
Euro-Dollar Business Day.
"Type" has the meaning specified in the definition of Loan.
"UK Assets" means all Restricted Assets of UTPL as of December 31,
1993.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the present value of all benefits under such
Plan as determined by such Plan's actuary exceeds (ii) the fair market value of
all Plan assets allocable to such benefits (excluding any accrued but unpaid
contributions), all determined as of the then most recent valuation date for
such Plan, but only to the extent that such excess represents a potential
liability of a member of the ERISA Group to the PBGC or any other Person under
Title IV of ERISA if such Plan terminated as of such date.
"Unimar" means Unimar Company, a partnership organized and existing
under the laws of Texas.
"Unimar Partnership Agreement" means the Amended and Restated
Agreement of General Partnership of Unimar dated as of September 11, 1990
between Unistar, Inc. and LASMO (USTAR) Inc. (formerly Ultrastar, Inc.), as
amended from time to time.
"Unimar Percentage" means, at any date, the aggregate percentage
ownership interest in Unimar owned at such date by the Company and the
Subsidiaries.
"Unimar Restricted Subsidiary" means any Unimar Subsidiary that is
also a Restricted Subsidiary at the relevant date.
"Unimar Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by Unimar, it being
understood that the power to elect exactly 50% of the board of directors or
such other persons does not constitute a majority as used herein.
"Unrestricted Subsidiary" means any Subsidiary which is not a
Restricted Subsidiary.
"UT Pakistan" means Union Texas Pakistan, Inc., a Delaware
corporation.
"UTPC" means Union Texas Products Corporation, a Delaware corporation.
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"UTPL" means Union Texas Petroleum Limited, an English company.
SECTION 1.02. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time,
applied on a basis consistent with the most recent audited consolidated
financial statements of the Company and its Consolidated Subsidiaries delivered
to the Banks (except for changes concurred in by the Company's independent
public accountants); provided that in any determination of Consolidated Debt if
(i) the Company or any Restricted Subsidiary owes any Debt to an Unrestricted
Subsidiary which would otherwise be eliminated in such determination of
Consolidated Debt (the "intercompany Debt") (other than Debt in an amount not
exceeding $10,000,000 in the aggregate at any time and representing advances by
the Unrestricted Subsidiaries to the Company or a Restricted Subsidiary made in
the ordinary course of the cash management practices of the Company and its
Subsidiaries) and (ii) such Unrestricted Subsidiary owes, at the date of
determination, any Debt for borrowed money to a Person other than the Company
or a Subsidiary (the "third party Debt") (other than any such Debt that also
constitutes Debt of the Company or a Restricted Subsidiary), then an amount
equal to the lesser of (1) such intercompany Debt and (2) such third party
Debt, shall not be eliminated in such determination of Consolidated Debt.
SECTION 1.03. Types of Borrowings. The term "Borrowing" denotes the
aggregate of Loans made by Banks to the Company pursuant to Article II on a
single date, of a single Type and, if such Loans are Euro-Dollar Loans, for a
single Interest Period. Borrowings are classified for purposes of this
Agreement by reference to the pricing of Loans comprising such Borrowing (e.g.,
a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans).
SECTION 1.04. Miscellaneous. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule and Exhibit references are to
Articles and Sections of and Schedules and Exhibits to this Agreement, unless
otherwise specified. The term "including" as used herein means "including
without limitation". Definitions of terms defined herein shall be applicable
to both the singular and plural forms of the terms defined as appropriate.
References to "directly or indirectly" in respect of ownership of any interest
in any assets shall include, without limitation, direct ownership, indirect
ownership through capital stock or other ownership interest (whether through
one or more levels of subsidiaries, affiliates or other Persons) and any other
direct or indirect ownership arrangement.
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SECTION 1.05. Unimar. To the extent this Agreement or any other
Financing Document obligates the Company or a Subsidiary to cause Unimar and
the Unimar Subsidiaries to take any action, such obligation shall be satisfied
if (a) the Company votes (or causes a Subsidiary to vote) the Unimar Percentage
in a manner consistent with the obligations of the Company and the Subsidiaries
under the Financing Documents and (b) any representative of the Company sitting
on any management board or board of directors of Unimar or any of the Unimar
Subsidiaries votes, as a member of such management board or board of directors,
in a manner consistent with the obligations of the Company and the Subsidiaries
under the Financing Documents.
SECTION 1.06. Ratings. A rating, whether public or private, by S&P
or Moody's shall be deemed to be in effect on the date of announcement or
publication by S&P or Moody's, as the case may be, of such rating or, in the
absence of such announcement or publication, on the effective date of such
rating and will remain in effect until the effective date of any change in such
rating. In the event the standards for any rating by S&P or Moody's are
revised, or such rating is designated differently (such as by changing letter
designations to numerical designations), then the references herein to such
rating shall be changed to the revised or redesignated rating for which the
standards are closest to, but not lower than, the standards at the date hereof
for the rating which has been revised or redesignated, all as determined by the
Agent in good faith. Long-term debt supported by a letter of credit, guaranty
(other than guaranties of Subsidiaries) or other similar credit enhancement
mechanism shall not be considered as senior unsecured long-term debt.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments to Lend. During the Revolving Credit
Period each Bank severally agrees, on the terms and conditions set forth in
this Agreement, to make loans to the Company pursuant to this Section from time
to time in amounts such that the aggregate principal amount of Loans by such
Bank at any one time outstanding to the Company shall not exceed the amount of
such Bank's Commitment at such time. Each Borrowing under this Section shall
be in an aggregate principal amount of $10,000,000 or any larger multiple of
$1,000,000 (except that any such Borrowing may be, subject to the other terms
hereof, in the aggregate amount of the remaining unused Commitments) and shall
be made from the several Banks ratably in proportion to their respective
Commitments. Within the foregoing limits, the Company may borrow under this
Section, repay (whether pursuant to Section 2.10 or otherwise), or to the
extent permitted by Section 2.11, prepay Loans and reborrow at any time during
the Revolving Credit Period under this Section.
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SECTION 2.02. Notice of Borrowings. (a) The Company shall give the
Agent notice (a "Notice of Borrowing") not later than 10:00 A.M. (Houston time)
on (x) the date of each Base Rate Borrowing, and (y) the third Euro-Dollar
Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business Day
in the case of a Base Rate Borrowing or a Euro-Dollar Business Day in the
case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be Base
Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
initial Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
Notwithstanding the foregoing, not more than ten Euro-Dollar Borrowings shall
be outstanding at any one time, and any Borrowing which would exceed such
limitation shall be made as a Base Rate Borrowing.
(b) If requested to do so by the Company through the Agent at least
ten Euro-Dollar Business Days before the first day of a proposed Interest
Period for Euro-Dollar Loans, each Bank will advise the Agent before 10:00 A.M.
(Houston time) on the sixth Euro-Dollar Business Day preceding the date of such
proposed Interest Period as to whether, if the Company selects a specified
duration of nine or twelve months for such Interest Period, such Bank expects
that deposits in dollars with a corresponding term will be available to it in
the relevant market on the first day of such Interest Period in the amount
required to fund its Loan to which such Interest Period would apply. Unless a
Bank responds by such time to the effect that it expects such deposits will not
be available to it, the Company shall be entitled to select such proposed
duration for such Interest Period.
SECTION 2.03. Conversions. (a) The Company may on any Euro-Dollar
Business Day, upon notice given to the Agent no later than 10:00 A.M. (Houston
time) on the third Euro-Dollar Business Day prior to the date of the proposed
Conversion and subject to the provisions of Section 2.02 and Article VIII and
the other provisions hereof, Convert all Loans comprising one or more
Borrowings; provided that (i) Loans comprising a Borrowing may not be Converted
if after giving effect to such Conversion, such Borrowing would be a Euro-
Dollar Borrowing and the outstanding principal amount of such Borrowing would
be less than $10,000,000 and (ii) no Conversion (other than changing Euro-
Dollar Loans into Base Rate Loans) may be made if any Event of Default is then
existing. Each
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such notice of a Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Loans to be Converted, (iii)
if after giving effect to such Conversion, such Borrowing would be a
Euro-Dollar Borrowing, the commencement date and duration of the proposed
Interest Period for each Loan comprising such Borrowing, and (iv) the nature of
such Conversion (i.e., whether such Conversion is a change of Loans of one Type
into another Type, a continuation of Euro-Dollar Loans as such for an
additional Interest Period or an election to change an Interest Period). Each
such notice shall be irrevocable.
(b) If the aggregate unpaid principal amount of Euro-Dollar Loans
comprising any Borrowing shall be reduced by payment or prepayment or
otherwise, to less than $10,000,000, such Loans shall automatically, on the
last day of the then existing Interest Period therefor, Convert into Base Rate
Loans.
(c) If the Company shall fail to select the duration of any Interest
Period for any Euro-Dollar Loans in accordance with the provisions contained in
the definition of "Interest Period" in Section 1.01, or if there shall be any
Event of Default, such Loans will automatically on the last day of the then
existing Interest Period therefor, Convert into Base Rate Loans.
SECTION 2.04. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Agent shall promptly,
(by no later than 10:30 A.M. (Houston time) by telephone or facsimile
transmission) notify each Bank of the contents thereof and of such Bank's share
of such Borrowing and such Notice of Borrowing shall not thereafter be
revocable by the Company.
(b) Not later than 12:00 Noon (Houston time) on the date of each
Borrowing, each Bank shall (except as provided in subsection (c) of this
Section) make available its share of such Borrowing, in Federal or other funds
immediately available in Houston, to the Agent at its address specified in or
pursuant to Section 9.01. Unless the Agent determines that any applicable
condition specified in Article III has not been satisfied, the Agent will make
the funds so received from the Banks available to the Company at the Agent's
aforesaid address.
(c) If any Bank makes a new Loan hereunder to the Company on a day on
which the Company is to repay all or any part of an outstanding Loan from such
Bank, such Bank shall apply the proceeds of its new Loan to make such repayment
and only an amount equal to the difference (if any) between the amount being
borrowed by the Company and the amount being repaid shall be made available by
such Bank to the Agent as provided in subsection (b), or remitted by the
Company to the Agent as provided in Section 2.12, as the case may be.
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(d) Unless the Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Agent
such Bank's share of such Borrowing, the Agent may assume that such Bank has
made such share available to the Agent on the date of such Borrowing in
accordance with subsections (b) and (c) of this Section 2.04 and the Agent may,
in reliance upon such assumption, make available to the Company on such date a
corresponding amount. If and to the extent that such Bank shall not have so
made such share available to the Agent, such Bank and the Company severally
agree to repay to the Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Company until the date such amount is repaid to the Agent, at
(i) in the case of the Company, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto pursuant to Section
2.07 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank
shall repay to the Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement.
SECTION 2.05. Notes.
(a) The Loans of each Bank to the Company shall be evidenced by a single Note
of the Company payable to the order of such Bank for the account of its
Applicable Lending Office in an amount equal to the aggregate unpaid principal
amount of such Bank's Loans to the Company.
(b) Each Bank may, by notice to the Company and the Agent, request
that its Loans of a particular Type payable to such Bank (or such lending
office, agency or branch of such Bank as such Bank may specify in such request)
be evidenced by a separate Note of the Company in an amount equal to the
aggregate unpaid principal amount of such Loans. Each such Note shall be in
substantially the form of Exhibit A hereto with appropriate modifications to
reflect the fact that it evidences solely Loans of the relevant Type. Any Bank
that receives multiple Notes pursuant to this Section 2.05(b) agrees that: (1)
the aggregate principal amount payable by the Company under such Notes shall
never exceed the aggregate principal amount of the Loans owed to such Bank
(including, if applicable, the separate lending offices, agencies or branches
of such Bank) and (2) the payees of the Notes issued at the request of such
Bank shall enjoy no greater rights (voting or otherwise) than such Bank would
enjoy in the absence of such request and such payees (including, if applicable,
the separate lending offices, agencies or branches of such Bank) shall be
considered a single Bank for purposes of this Agreement. Each reference in
this Agreement to the "Note" of such Bank shall be deemed to refer to and
include any or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.01(b), the
Agent shall mail or send by private delivery service such Note to such Bank.
Each Bank shall record the date, amount and Type of each Loan made by it to the
Company and the date and amount of each payment of principal made with respect
thereto, and prior to any transfer
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of its Note shall endorse on the schedule forming a part thereof appropriate
notations to evidence the foregoing information with respect to each such Loan
then outstanding; provided that the failure of any Bank to make any such
recordation or endorsement shall not affect the obligations of the Company
under any of the Financing Documents. Each Bank is hereby irrevocably
authorized by the Company so to endorse any Note and to attach to and make a
part of any Note a continuation of any such schedule as and when required.
SECTION 2.06. Maturity of Loans. Each Loan shall mature, and the
principal amount thereof shall be due and payable, on March 9, 1999.
SECTION 2.07. Interest Rates. The Company shall pay interest on the
unpaid principal amount of each Loan from the date of such Loan until such
principal amount shall be paid in full, at the following rates per annum:
(a) If such Loan is a Base Rate Loan, for each day that such Loan is
a Base Rate Loan, at a rate per annum equal to the sum of (i) the Base Rate for
such day plus (ii) at such times as any Event of Default exists, 1%. Such
interest shall be payable quarterly on each March 31, June 30, September 30 and
December 31 and on the date such Base Rate Loan is Converted or paid in full.
Any overdue interest on any Base Rate Loan shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to the sum of 1% plus
the otherwise applicable rate for such day.
(b) If such Loan is a Euro-Dollar Loan, at a rate per annum equal at
all times during any Interest Period for such Loan to the sum of (i) the
applicable London Interbank Offered Rate plus (ii) the Applicable Margin for
such Interest Period plus (iii) at such times as any Event of Default exists,
1%; provided that any overdue principal of or interest on any Euro-Dollar Loan
shall bear interest, payable on demand, for each day from and including the
date payment thereof was due to but excluding the date of actual payment, at a
rate per annum equal to the sum of 1% plus the higher of (x) the sum of the
London Interbank Offered Rate applicable to such Loan plus the Applicable
Margin applicable to an Interest Period of a Euro-Dollar Loan if such Euro-
Dollar Loan were to commence on such day and (y) the sum of (1) the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the respective
rates per annum at which one day (or, if such amount due remains unpaid more
than three Euro-Dollar Business Days, then for such other period of time not
longer than three months as the Agent may select) deposits in dollars in an
amount approximately equal to such overdue payment due to each of the Reference
Banks are offered to such Reference Bank in the London interbank market for the
applicable period determined as provided above plus (2) the Applicable Margin
applicable to an Interest Period of a Euro-Dollar Loan if such Euro-Dollar Loan
were to commence on such day (or, if the circumstances described in clause (a)
or (b) of Section 8.01 shall exist, at a rate per annum equal to the sum of 1%
plus the rate applicable to Base Rate Loans for such day). Such
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interest shall be payable for each Interest Period on the last day thereof and,
if such Interest Period is longer than three months, at intervals of three
months after the first day thereof.
The "London Interbank Offered Rate" applicable to any Interest Period
means the arithmetic average (rounded upward, if necessary, to the next higher
1/16 of 1%) of the respective rates per annum at which deposits in dollars are
offered to each of the Reference Banks in the London interbank market at
approximately 11:00 A.M. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Reference Bank to which such
Interest Period is to apply and for a period of time comparable to such
Interest Period.
(c) The Agent shall determine each interest rate applicable to the
Loans hereunder. The Agent shall give prompt notice to the Company and the
participating Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
Upon request of the Company, the Agent shall furnish to it such information as
to its determinations hereunder as the Company may reasonably request.
(d) Each Reference Bank agrees to use its best efforts to furnish
quotations to the Agent as contemplated by this Section. If any Reference Bank
does not furnish a timely quotation, the Agent shall determine the relevant
interest rate on the basis of the quotation or quotations furnished by the
remaining Reference Bank or Banks or, if none of such quotations is available
on a timely basis, the provisions of Section 8.01 shall apply.
(e) This Section 2.07 and each other provision in any of the Financing
Documents or in any other agreement executed in connection herewith are
specifically made subject to Section 2.16.
SECTION 2.08. Facility Fees.
(a) The Company shall pay to the Agent for the account of the Banks
ratably a facility fee at the rate per annum for each calendar quarter
determined as provided in Schedule I based on the Rating Level in effect on the
first day of such quarter. Such facility fee shall accrue (i) from and
including the date of this Agreement to but excluding the earlier of the
Termination Date or the date the Commitments are otherwise terminated, on the
daily average aggregate amount of the Commitments (whether used or unused) and
(ii) from and including the earlier of the Termination Date or the date the
Commitments are otherwise terminated to but excluding the date the Loans shall
be repaid in their entirety, on the daily average aggregate outstanding
principal amount of the Loans.
(b) Payments. Accrued fees under this Section 2.08 shall be payable
quarterly on each March 31, June 30, September 30 and December 31 and upon the
date of
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termination of the Commitments in their entirety (and, if later, the date the
Loans shall be repaid in their entirety).
SECTION 2.09. Optional Termination or Reduction of Commitments. The
Company may, upon at least three Domestic Business Days' notice to the Agent,
(i) terminate the Commitments at any time, if no Loans are outstanding at such
time, or (ii) ratably reduce from time to time by an aggregate amount of
$10,000,000 or any larger multiple of $5,000,000 the aggregate amount of the
Commitments in excess of the aggregate outstanding principal amount of the
Loans.
SECTION 2.10. Mandatory Termination or Reduction of Commitments.
(a) The Commitments shall terminate on the Termination Date.
(b) On the fifth Domestic Business Day following any Asset Sale that
results in positive Excess Net Sales Proceeds, (i) the Company will deliver to
each of the Banks a certificate of the chief financial officer, the chief
accounting officer or the treasurer of the Company certifying the amount of
such Excess Net Sales Proceeds from such Asset Sale, (ii) the Commitments shall
be automatically reduced ratably by an amount equal to (a) 100% of the amount
of such Excess Net Sales Proceeds minus (b) the amount, if any, by which the
Other Credit Agreement Commitments are reduced pursuant to Section 2.10(d)(ii)
of the Other Credit Agreement as a result of such Excess Net Sales Proceeds
from such Asset Sale, and (iii) the Company shall be obligated to repay such
principal amount (together with accrued interest thereon) of each Bank's
outstanding Loans, if any, as may be necessary so that after such repayment the
aggregate outstanding principal amount of such Bank's Loans does not exceed the
amount of such Bank's Commitment as then reduced.
SECTION 2.11. Optional Prepayments.
(a) The Company may, upon at least one Domestic Business Day's notice
to the Agent, prepay any Borrowing in whole at any time, or from time to time in
part in amounts aggregating $10,000,000 or any larger multiple of $1,000,000, by
paying the principal amount to be prepaid together with accrued interest thereon
to the date of prepayment; provided that no partial prepayment of a Euro-Dollar
Borrowing shall be made if after giving effect thereto the principal amount of
such Borrowing would be less than $10,000,000. Each such optional prepayment
shall be applied to prepay ratably the Loans of the several Banks included in
such Borrowing.
(b) Upon receipt of a notice of prepayment pursuant to this Section,
the Agent shall promptly notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment and such notice shall not
thereafter be revocable by the Company.
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SECTION 2.12. General Provisions as to Payments.
(a) The Company shall make each payment of principal of, and interest
on, the Loans and of fees hereunder, not later than 12:00 Noon (Houston time)
on the date when due, in Federal or other funds immediately available in
Houston, to the Agent at its address referred to in Section 9.01. The Agent
will promptly distribute to each Bank its ratable share of each such payment
received by the Agent for the account of the Banks. Whenever any payment of
principal of, or interest on, the Base Rate Loans or of fees shall be due on a
day which is not a Domestic Business Day, the date for payment thereof shall be
extended to the next succeeding Domestic Business Day. Whenever any payment of
principal of, or interest on, the Euro-Dollar Loans shall be due on a day which
is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such Euro-
Dollar Business Day falls in another calendar month, in which case the date for
payment thereof shall be the next preceding Euro-Dollar Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the Company prior
to the date on which any payment is due from the Company to the Banks hereunder
that the Company will not make such payment in full, the Agent may assume that
the Company has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent that the Company shall not have so made such payment, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Company makes any payment of
principal with respect to any Euro-Dollar Loan (pursuant to Article II, VI or
VIII or otherwise) on any day other than the last day of an Interest Period
applicable thereto, or the end of an applicable period fixed pursuant to the
proviso to Section 2.07(b), or if the Company fails to borrow any Euro-Dollar
Loan after notice has been given to any Bank in accordance with Section
2.04(a), or if any Conversion of any Euro-Dollar Loan occurs on any day other
than the last day of an Interest Period applicable thereto, the Company shall
reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it (or by an existing or prospective Participant in the
related Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin from the period after any such payment or failure to borrow; provided
that such Bank shall have delivered to the Company a certificate as to the
amount of such loss or expense, which certificate shall be conclusive in the
absence of manifest error.
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SECTION 2.14. Computation of Interest and Fees. Interest based on
the Base Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. Chapter 15. In no event shall the provisions of
Article 5069, Chapter 15 of the Revised Civil Statutes of Texas (which
regulates certain revolving credit loan accounts and revolving tri-party
accounts) apply to any Loan made hereunder.
SECTION 2.16. Maximum Interest Rate.
(a) Nothing contained in this Agreement or the Notes shall require the
Company to pay interest at a rate exceeding the maximum rate permitted without
penalty by applicable law. Each provision in the Financing Documents and any
other agreement executed in connection herewith is expressly limited so that in
no event whatsoever shall the amount paid thereunder, or otherwise paid, by the
Company for the use, forbearance or detention of the money to be loaned under
this Agreement, exceed that amount of money which would cause the effective
rate of interest thereon to exceed the maximum rate of interest permitted
without penalty under applicable law, and all amounts payable under the
Financing Documents or any other agreement executed in connection herewith, or
otherwise payable in connection therewith, shall be subject to reduction so
that such amounts paid or payable for the use, forbearance or detention of
money to be loaned under this Agreement shall not exceed that amount of money
which would cause the effective rate of interest thereon to exceed the maximum
rate of interest permitted without penalty under applicable law.
(b) If the amount of interest payable for the account of any Bank on
any interest payment date in respect of the immediately preceding interest
computation period, computed pursuant to Section 2.07, would exceed the maximum
amount permitted without penalty by applicable law to be charged by such Bank,
the amount of interest payable for its account on such interest payment date
shall be automatically reduced to such maximum permissible amount.
(c) If the amount of interest payable for the account of any Bank in
respect of any interest computation period is reduced pursuant to clause (b) of
this Section and the amount of interest payable for its account in respect of
any subsequent interest computation period, computed pursuant to Section 2.07,
would be less than the maximum amount permitted without penalty by applicable
law to be charged by such Bank, then the amount of interest payable for its
account in respect of such subsequent interest computation period shall be
automatically increased to such maximum permissible amount; provided that at no
time shall the aggregate amount by which interest paid for the account of any
Bank has
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been increased pursuant to this clause (c) exceed the aggregate amount by which
interest paid for its account has theretofore been reduced pursuant to clause
(b) of this Section.
(d) In the event that maturity of the Loans is accelerated for any
reason, or in the event of any required or permitted prepayment of the Loans,
then such consideration that constitutes interest payable for the account of
any Bank shall never include more than the maximum amount allowed without
penalty by applicable law to be charged by such Bank and excess interest, if
any, payable for the account of such Bank pursuant to its Note, this Agreement
or otherwise shall be cancelled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
Loans of such Bank (or, to the extent in excess of such Loans, refunded by such
Bank to the Company).
(e) It is further agreed that, without limitation of the foregoing,
all calculations of the rate of interest contracted for, charged or received
for the account of any Bank under the Note held by it, under this Agreement,
under any other agreement executed in connection herewith or otherwise in
connection with the Loans or the Commitment of such Bank for the purpose of
determining whether such rate exceeds the maximum nonusurious interest rate
applicable to such Bank, shall be made, to the extent permitted by usury laws
applicable to such Bank (now or hereafter enacted), by amortizing, prorating
and spreading in equal parts during the period of the full stated terms of the
Loans evidenced by such Note all interest at any time contracted for, charged
or received by such Bank in connection therewith.
(f) To the extent that any Bank may be subject to Texas law limiting
the amount of interest payable for its account, such Bank shall utilize the
indicated (weekly) rate ceiling from time to time in effect as provided in
Article 5069-1.04 of the Revised Civil Statutes of Texas, as amended.
SECTION 2.17. Taxes.
(a) Any and all payments by the Company hereunder or under the Notes
shall be made, in accordance with Section 2.12, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges and withholdings, and all liabilities with respect thereto, excluding
(i) in the case of the Agent, each Co-Agent and each Bank, United States
federal income taxes and, without duplication, any taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction under the laws of which
the Agent, such Co-Agent or such Bank, as the case may be, is organized or any
political subdivision thereof and (ii) in the case of each Bank, taxes imposed
on its income, and franchise taxes imposed on it, by the jurisdiction of such
Bank's Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If the Company shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Bank, any Co-Agent or the Agent, (i) the sum
payable
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shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.17) such Bank, such Co-Agent or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions and (iii) the
Company shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Company agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, assessments, charges
or similar levies which arise from any payment made hereunder or under the
Notes or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any of the Notes (hereinafter referred to as
"Other Taxes").
(c) The Company will indemnify each Bank, each Co-Agent and the Agent for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.17) paid by such Bank, such Co-Agent or the Agent (as the case may
be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Payments under any indemnification
provided for in this Section 2.17(c) shall be made within 30 days from the date
such Bank, such Co-Agent or the Agent (as the case may be) makes written demand
therefor.
(d) Within 30 days after the date of any payment of Taxes, the Company
will furnish to the Agent, at its address referred to in Section 9.01, the
original or a certified copy of a receipt evidencing payment thereof. Should
any Bank, any Co-Agent or the Agent ever receive any refund, credit or
deduction from any taxing authority to which such Bank, such Co-Agent or the
Agent, as the case may be, would not be entitled but for the payment by the
Company of Taxes as required by this Section 2.17 (it being understood that the
decision as to whether or not to claim, and if claimed, as to the amount of any
such refund, credit or deduction shall be made by such Bank, such Co-Agent or
the Agent, as the case may be, in its sole discretion), such Bank, such
Co-Agent or the Agent, as the case may be, thereupon shall repay to the Company
an amount with respect to such refund, credit or deduction equal to any net
reduction in taxes actually obtained by such Bank, such Co-Agent or the Agent,
as the case may be, and reasonably determined by such Bank, such Co-Agent or
the Agent, as the case may be, to be attributable to such refund, credit or
deduction.
(e) Each Bank represents that it is either (i) a corporation, association
or other entity organized under the laws of the United States or any state
thereof or (ii) entitled to complete exemption from United States withholding
tax imposed on or with respect to any payments, including fees, to be made to
it pursuant to this Agreement or the Notes. Each Bank that is not organized
under the laws of the United States or any state thereof (a "Foreign Bank")
agrees to provide to the Company and the Agent, on or prior to the date of
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this Agreement in the case of each Foreign Bank signatory hereto, and on the
date of the Assignment pursuant to which it became a Bank in the case of each
other Foreign Bank, two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224, certifying in either case that such Foreign Bank is
entitled to receive payments from the Company under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Foreign Bank which so delivers a Form 1001 or 4224 further
undertakes to deliver to each of the Company and the Agent two additional
copies of such form (or a successor form) on or before the date that such form
expires or becomes obsolete or after the occurrence of any event requiring a
change in the most recent form so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Company
or the Agent, in each case certifying that such Foreign Bank is entitled to
receive payments from the Company under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes, unless an
event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Foreign Bank from duly completing and delivering any such form with respect to
it and such Foreign Bank advises the Company and the Agent that it is not
capable of receiving such payments without any deduction or withholding of
United States federal income tax. Each Bank agrees to indemnify and hold the
Company and the Agent harmless from any United States taxes, penalties,
interest and other expenses, costs and losses incurred or payable by them as a
result of either (a) such Bank's failure to submit any form that it is required
to provide pursuant to this Section 2.17(e) or (b) the Agent's and the
Company's reliance on any such form which such Bank has provided to them, or on
the representation of such Bank made to them pursuant to this Section 2.17(e).
(f) If any Taxes are paid by the Company pursuant to this Section 2.17 in
respect of the Applicable Lending Office of any Bank, such Bank will, if
requested to do so by the Company, designate a different Applicable Lending
Office if such designation will avoid the need to pay, or reduce the amount of,
such Taxes and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank.
ARTICLE III
CONDITIONS
SECTION 3.01. Initial Borrowing. The obligation of any Bank to make
a Loan on the occasion of the initial Borrowing is subject to the satisfaction
(or waiver in accordance with Section 9.05) of each of the following
conditions:
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(a) receipt by the Agent of counterparts hereof signed by each of the
parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, receipt by the Agent in form
satisfactory to it of telegraphic, telex or other written confirmation from
such party of execution of a counterpart hereof by such party);
(b) receipt by the Agent for the account of each Bank of a duly
executed Note of the Company dated on the date of this Agreement complying
with the provisions of Section 2.05;
(c) receipt by the Agent of an opinion of Alan R. Crain, Jr., Vice
President and General Counsel of the Company, substantially in the form of
Exhibit C hereto;
(d) receipt by the Agent of an opinion of Andrews & Kurth L.L.P.,
special counsel for the Company, substantially in the form of Exhibit D
hereto;
(e) receipt by the Agent of an opinion of Bracewell & Patterson,
L.L.P., special counsel for the Agent, substantially in the form of Exhibit
E hereto;
(f) receipt by the Agent of all documents it may reasonably request
relating to the existence of the Company, the corporate authority for and
the validity of each of the Financing Documents, and any other matters
relevant thereto, all in form and substance satisfactory to the Agent;
(g) receipt by the Agent of a certificate of an officer of the Company
stating the rating by S&P and Moody's of all senior unsecured long-term
debt of the Company as in effect on the date of this Agreement; and
(h) receipt by the Agent of a certificate of the chief financial
officer, the chief accounting officer or the treasurer of the Company
certifying, as of the Effective Date, that no Default exists.
SECTION 3.02. All Borrowings. The obligation of any Bank to make a
Loan on the occasion of any Borrowing is subject to the satisfaction of the
following conditions (in addition to the conditions set forth in Section 3.01):
(a) receipt by the Agent of a Notice of Borrowing as required by
Section 2.02;
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(b) the fact that immediately prior to and immediately after such
Borrowing, no Default shall have occurred and be continuing; and
(c) the fact that the representations and warranties of the Company
contained in this Agreement (except, in the case of any Borrowing
subsequent to the first Borrowing, the representations and warranties set
forth in Section 4.04(a) or (c)) shall be true and correct in all material
respects on and as of the date of such Borrowing.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Company on the date of such Borrowing as to the facts specified in this
Section.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to own its assets and to carry on its business as now conducted and is duly
qualified as a foreign corporation in good standing in each jurisdiction where
the nature of its business or the ownership or leasing of its properties
requires such qualification and where the failure so to qualify could have a
material adverse effect on the business, financial position, results of
operations or prospects of the Company and its Subsidiaries, taken as a whole.
Neither the Company nor any Subsidiary or Affiliate is subject to regulation
under the Public Utility Holding Company Act of 1935, the Investment Company
Act of 1940, the Interstate Commerce Act or any other law or regulation which
limits the incurrence by the Company or any Subsidiary of Debt, including, but
not limited to, laws relating to common or contract carriers or the sale of
electricity, gas, steam, water or other public utility services.
SECTION 4.02. Corporate and Governmental Authorization;
Contravention. The execution, delivery and performance by the Company of each
Financing Document to which it is shown as being a party are within the
Company's corporate powers, have been duly authorized by all necessary
corporate action, and do not contravene, or constitute a default under, any
provision of applicable law or regulation (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System) or the certificate of incorporation, by-laws or other charter documents
of the Company or of any instrument or agreement evidencing or governing Debt
or any other material agreement,
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judgment, injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any material Lien on any
asset of the Company or any Subsidiary. All authorizations, consents and
approvals of governmental bodies, agencies or officials required in connection
with the execution, delivery and performance by the Company of the Financing
Documents to which it is shown as being a party have been obtained and are in
full force and effect.
SECTION 4.03. Binding Effect. This Agreement and each of the Notes
have been duly executed and delivered by the Company and constitute legal,
valid and binding agreements of the Company.
SECTION 4.04. Information.
(a) The consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of December 31, 1996 and the related consolidated statements of
operations, cash flows and common stock and other shareholders' equity for the
fiscal year then ended, reported on by Price Waterhouse LLP and set forth in
the Company's 1996 Form 10-K, a copy of which has been delivered to each of the
Banks, fairly present, in conformity with generally accepted accounting
principles, the consolidated financial position of the Company and its
Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(b) To the best knowledge of the Company, there are no statements or
conclusions in any Engineering Report delivered pursuant hereto which are based
upon or include misleading information or fail to take into account material
information regarding the matters reported therein, it being understood that
such statements and conclusions are necessarily based upon professional
opinions, estimates and forecasts, and the Company does not warrant that such
opinions, estimates and forecasts will ultimately prove to have been accurate.
(c) The Company's 1996 Form 10-K does not contain any untrue statement
of material fact or omit to state a material fact necessary in order to make
the statements contained therein not misleading as of the date thereof. Except
for matters of general public knowledge with respect to the oil and gas
industry, the Company has disclosed to the Banks in writing any and all facts
which materially and adversely affect or may be reasonably expected so to
affect (to the extent the Company can now reasonably foresee) the business,
assets, operations, prospects or condition, financial or otherwise, of the
Company and its Subsidiaries or the ability of the Company to perform its
obligations under the Financing Documents.
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(d) Since December 31, 1996 there has been no material adverse change
in the business, financial position, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole.
(e) No Default exists.
SECTION 4.05. Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Company threatened against or
affecting, the Company or any of its Subsidiaries or any of their respective
properties or interests at law or in admiralty or equity, before any court or
arbitrator or any governmental body, agency or official, foreign or domestic,
in which there is a reasonable possibility of an adverse decision which could
materially adversely affect the business, financial position or results of
operations of the Company and its Subsidiaries, taken as a whole, or which in
any manner draws into question the validity of any Financing Document.
SECTION 4.06. Compliance with ERISA. Each member of the ERISA Group
has fulfilled its obligations under the minimum funding standards of ERISA and
the Internal Revenue Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the
Internal Revenue Code with respect to each Plan. No member of the ERISA Group
has (i) sought a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting
of a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
SECTION 4.07. Environmental Matters. In the ordinary course of its
business, the Company conducts an ongoing review of the effect of existing
Environmental Laws on the business, operations and properties of the Company
and the Subsidiaries, in the course of which it attempts to identify and
evaluate associated liabilities and costs (including, without limitation, any
capital or operating expenditures required for clean-up or closure of
properties presently or previously owned, any capital or operating expenditures
required to achieve or maintain compliance with environmental protection
standards imposed by law or as a condition of any license, permit or contract,
any related constraints on operating activities, including any periodic or
permanent shutdown of any facility or reduction in the level of or change in
the nature of operations conducted thereat and any actual or potential
liabilities to third parties, including employees, and any related costs and
expenses). On the basis of this review, the Company has reasonably concluded
that existing Environmental Laws are unlikely to have a material adverse effect
on the business, financial condition, results of operations or prospects of the
Company and its Subsidiaries, taken as a whole.
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SECTION 4.08. Subsidiaries. All Restricted Assets are owned as of
the date of this Agreement by the Company and the Persons listed in Part B of
Schedule II hereto or, in the case of Restricted Assets sold since December 31,
1993, by Persons other than Unrestricted Subsidiaries. Part A of Schedule II
hereto contains a true, complete and accurate list of all Unrestricted
Subsidiaries, and Part B of Schedule II hereto contains a true, complete and
accurate list of all Restricted Subsidiaries as of the date of this Agreement.
SECTION 4.09. Ownership of Restricted Subsidiaries. The Company or a
Restricted Subsidiary is the record and beneficial owner, free and clear of all
Liens (other than those permitted by Section 5.07), of (i) all of the issued
and outstanding capital stock (other than directors' qualifying shares and
shares beneficially owned by the Company or a Restricted Subsidiary and held by
nominees of the Company or a Restricted Subsidiary solely to satisfy
requirements of local law) and other ownership interests of each Restricted
Subsidiary (except Unimar and the Unimar Restricted Subsidiaries and any other
Restricted Subsidiary the capital stock of which is sold pursuant to a sale
permitted by Section 5.14) and (ii) except during any period during which
Unimar is an Unrestricted Subsidiary or ceases to be a Subsidiary, at least 50%
of the ownership interest in Unimar and the Unimar Restricted Subsidiaries.
Except as disclosed on Schedule VI, there are no outstanding options, warrants
or other rights to acquire any capital stock or other ownership interest of any
Restricted Subsidiary.
SECTION 4.10. Title to Properties. The Company and each of the
Subsidiaries have good title, free and clear of all Liens, claims, burdens and
title defects, to all of the material assets reflected in the Company's or such
Subsidiary's books and records as being owned by them except Liens permitted by
this Agreement and claims, burdens and title defects not materially adverse in
the aggregate.
SECTION 4.11. Taxes and Other Obligations. Consolidated United
States Federal income tax returns of the Company and the Subsidiaries have been
examined by the Internal Revenue Service, or the statutory period for such
examination has expired, for all years up to and including the year ended
December 31, 1992, and all assessed deficiencies resulting from such
examination have been discharged or reserved against as required by generally
accepted accounting principles. The Company and the Subsidiaries have filed
all United States Federal, state and local income tax returns and all other
material domestic tax returns which are required to be filed by them and have
paid, or provided for the payment before the same became delinquent of, all
taxes due pursuant to such returns or pursuant to any assessment received by
the Company or any Subsidiary, other than those taxes being diligently
contested in good faith by appropriate proceedings. The charges, accruals and
reserves on the books of the Company and the Subsidiaries in respect of taxes
are, in the opinion of the Company, adequate. The Company and the Subsidiaries
have set up such reserves as are required by generally accepted accounting
principles for the payment of additional taxes for years which have not been
audited by the respective tax authorities. The
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Company and the Subsidiaries have paid all other material obligations when due
other than those being contested in good faith by appropriate proceedings.
SECTION 4.12. Regulation U. Neither the Company nor any Subsidiary
is engaged in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation G) or margin stock
(within the meaning of Regulation U). Following the application of the
proceeds of each Loan, not more than 25% of the value of the assets of the
Company, or of the Company and its Subsidiaries, which are subject to any
arrangement with the Agent or any Bank (herein or otherwise) whereby the
Company's or any Subsidiary's right or ability to sell, pledge or otherwise
dispose of assets is in any way restricted will be any such margin stock.
SECTION 4.13. Certain Obligations. Neither the Company nor any
Subsidiary has any obligation to make payments on the Joint Venture Debt other
than those permitted by Section 5.17. The only Non-Recourse Debt existing on
the date of this Agreement is the Existing Pakistan Non-Recourse Debt.
SECTION 4.14. United Kingdom Assets. Substantially all of the
Restricted Assets located in the United Kingdom (including the United Kingdom
Sector of the North Sea) are directly owned by UTPL as of the date of this
Agreement.
ARTICLE V
COVENANTS
The Company agrees that, so long as any Bank has any Commitment
hereunder or any amount payable under any Note remains unpaid:
SECTION 5.01. Information. The Company will deliver to each of the
Banks:
(a) as soon as available and in any event within 100 days after the
end of each fiscal year of the Company, a consolidated balance sheet of the
Company and its Consolidated Subsidiaries as of the end of such fiscal year
and the related consolidated statements of operations, cash flows and
common stock and other shareholders' equity for such fiscal year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all reported on in a manner acceptable to the Securities and Exchange
Commission by Price Waterhouse LLP or other independent public accountants
of nationally recognized standing;
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(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries
as of the end of such quarter and the related consolidated statements of
operations and cash flows for such quarter and for the portion of the
Company's fiscal year ended at the end of such quarter, setting forth in
each case in comparative form the figures for the corresponding quarter and
the corresponding portion of the Company's previous fiscal year, all
certified (subject to normal year-end adjustments) as to preparation in
accordance with generally accepted accounting principles and consistency by
the chief financial officer, the chief accounting officer or the treasurer
of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the
chief financial officer, the chief accounting officer or the treasurer of
the Company (i) setting forth in reasonable detail the calculations
required to establish whether the Company was in compliance with the
requirements of Sections 5.05 and 5.15 on the date of such financial
statements and (ii) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details
thereof and the action which the Company and its Subsidiaries are taking or
propose to take with respect thereto;
(d) as soon as available and in any event within 60 days after the end
of each fiscal quarter of the Company, a certificate of the chief financial
officer, the chief accounting officer or the treasurer of the Company
certifying (i) the rating (or lack of a rating thereof) by each of S&P and
Moody's of the senior unsecured long-term debt of the Company on the date
of such certificate, (ii) the Unimar Percentage as of the end of such
quarter and the amounts as of the end of such quarter of Consolidated Debt,
Defeased Debt, Excluded Subordinated Debt, Debt of the Company and its
Consolidated Subsidiaries determined on a consolidated basis, Debt of the
Company and the Restricted Subsidiaries determined on a consolidated basis,
Debt of Unimar, Debt of Unrestricted Subsidiaries, Excess Letter of
Credit/Guarantee Amount, Non-Restricted Asset Non-Recourse Debt, Non-
Recourse Debt of the Company and the Restricted Subsidiaries, and
Restricted Subsidiaries Recourse Debt, and (iii) each Asset Sale that has
been consummated during such quarter, the Fair Market Value of the
Restricted Assets subject thereto, the amount of fees, commissions,
expenses and taxes related thereto, the Net Sales Proceeds therefrom and
the cumulative amount of the Excess Net Sales Proceeds from all Assets
Sales since December 31, 1993;
(e) within five days after the chief financial officer, the chief
accounting officer or treasurer of the Company obtains knowledge of any
Default, if such Default is then continuing, a certificate of the chief
financial officer, the chief
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accounting officer or the treasurer of the Company setting forth the
details thereof and the action which the Company and its Subsidiaries are
taking or propose to take with respect thereto;
(f) immediately upon the filing of, or any material development in,
any litigation or the occurrence of any other event or contingency, if such
development, litigation, event or contingency could reasonably be expected
to have a material adverse effect on the business, assets, operations,
prospects or condition, financial or otherwise, of the Company and its
Subsidiaries, taken as a whole, a certificate of the chief financial
officer, the chief accounting officer or the treasurer of the Company
setting forth the details of such development, litigation, event or
contingency and the action which the Company and its Subsidiaries are
taking or propose to take with respect thereto;
(g) as soon as available and in any event within 100 days after the
end of each fiscal year of each Restricted Subsidiary (other than the
Unimar Restricted Subsidiaries), a consolidated balance sheet of such
Restricted Subsidiary and its consolidated subsidiaries as of the end of
such fiscal year and the related consolidated statements of operations,
cash flows and common stock and other shareholders' equity for such fiscal
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all certified as to preparation in accordance with
generally accepted accounting principles and consistency by the chief
financial officer, the chief accounting officer or the treasurer of such
Restricted Subsidiary;
(h) as soon as available and in any event within 60 days after the end
of the first three quarters of each fiscal year of each Restricted
Subsidiary (other than the Unimar Restricted Subsidiaries, Union Texas
Petroleum Energy Corporation and Union Texas International Corporation), a
consolidated balance sheet of such Restricted Subsidiary and its
consolidated subsidiaries as of the end of such quarter and the related
consolidated statements of operations and cash flows for such quarter and
for the portion of such Restricted Subsidiary's fiscal year ended at the
end of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of such
Restricted Subsidiary's previous fiscal year, all certified (subject to
normal year-end adjustments) as to preparation in accordance with generally
accepted accounting principles and consistency by the chief financial
officer, the chief accounting officer or the treasurer of such Restricted
Subsidiary;
(i) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed;
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(j) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements
on Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or
their equivalents) which the Company shall have filed with the Securities
and Exchange Commission;
(k) at least 45 days prior to the closing of each Asset Sale that will
result in aggregate Net Sales Proceeds (for such sale or, if such sale is
one of a series of related sales, for all sales and contemplated sales in
such series) of $50,000,000 or more, notice of such sale describing the
assets to be sold and the estimated Net Sales Proceeds thereof;
(l) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section
4043 of ERISA) (other than a "reportable event" not subject to the
provisions for 30-day notice to the PBGC under the regulations issued under
Section 4043 of ERISA) with respect to any Plan which might constitute
grounds for a termination of such Plan under Title IV of ERISA, or knows
that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives
notice of complete or partial withdrawal liability under Title IV of ERISA
or notice that any Multiemployer Plan is in reorganization, is insolvent or
has been terminated, a copy of such notice; (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or
appoint a trustee to administer, any Plan, a copy of such notice; (iv)
applies for a waiver of the minimum funding standard under Section 412 of
the Internal Revenue Code, a copy of such application; (v) gives notice of
intent to terminate any Plan under Section 4041(c) of ERISA, a copy of such
notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of a
bond or other security, a certificate of the chief financial officer, the
chief accounting officer or the treasurer of the Company setting forth
details as to such occurrence and action, if any, which the Company or
applicable member of the ERISA Group is required or proposes to take;
(m) within 5 days after the chief financial officer, the treasurer or
the controller of the Company has knowledge of any filing under Rule 13d of
the Securities and Exchange Commission, promulgated under the Securities
Exchange Act of 1934, as amended, a copy thereof;
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(n) within 5 days after receipt by the Company of any written
agreement of the type referred to in Section 6.01(k)(iii)(c), (A) a
copy thereof except that (i) if such written agreement has not been
filed with the Securities and Exchange Commission and is not otherwise
public information, each Bank as a condition to receiving a copy of
such written agreement may be required to sign, prior to receipt
thereof, a confidentiality agreement pursuant to which it agrees that
it will treat such written agreement in a confidential manner until
such written agreement otherwise becomes public, except for disclosure
(a) to counsel for and other advisors, accountants and auditors of
such Bank, (b) as may be required by statute, decision, order, rule,
regulation or other law, (c) to regulatory authorities, (d) in
connection with any litigation involving such written agreement, such
confidentiality agreement or any of the Financing Documents, and (e)
in connection with any assignment, prospective assignment, sale,
prospective sale, participation or prospective participation or other
transfer or prospective transfer of any of such Bank's interests
hereunder; provided that any such assignee, prospective assignee,
purchaser, prospective purchaser, participant, prospective
participant, transferee, or prospective transferee shall have entered
into a confidentiality agreement for the benefit of the Company
substantially upon the terms of this Section 5.01(n), and (ii) if the
Company is contractually prohibited from delivering a copy of such
written agreement to the Banks, the Company shall not be required to
deliver such written agreement unless such prohibition has been
waived, but the Company shall use reasonable efforts to obtain such
waiver or if it is a party to such written agreement to prevent any
such prohibition from being included therein, and (B) if the Company
is a party to such written agreement, but is excused pursuant to
clause (A)(ii) of this Section 5.01(n) from delivering a copy thereof
to the Banks, the Company shall notify the Banks of the existence of
such written agreement (but not the content thereof or other parties
thereto), but as a condition to receiving such notice the Banks may be
required to sign, prior to receipt of such notice, a confidentiality
agreement conforming to clause (A)(i) of this Section 5.01(n);
(o) by May 1 of each year, an Engineering Report as of the last day of
the immediately preceding year;
(p) promptly upon the closing of the sale or other disposition of any
capital stock of UTPC or any option, warrant or other right to acquire any
such capital stock, notice thereof;
(q) promptly after any change in or termination of the rating of any
senior unsecured long-term debt of the Company by S&P or Moody's, notice
thereof.
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(r) from time to time such additional information regarding the
financial position or business of the Company or any Subsidiary as the
Agent, at the request of any Bank, may reasonably request.
SECTION 5.02. Affirmative Covenants. The Company will maintain its
existence and cause each Restricted Subsidiary to maintain its existence except
in the case of (i) a merger of a Restricted Subsidiary into the Company in a
merger permitted by Section 5.08 hereof, (ii) the merger of a Restricted
Subsidiary into another Restricted Subsidiary, if immediately after such merger
(and giving effect thereto), no Default shall have occurred and be continuing,
and (iii) any Asset Sale in the form of the merger of a Restricted Subsidiary
into another Person, if immediately after such merger (and giving effect
thereto), no Event of Default shall have occurred and be continuing. The
Company and each Subsidiary shall:
(a) Conduct of Business; Property. Cause all material property useful
and necessary in its business to be maintained in good working order and
condition and to be operated prudently in accordance with good industry
practice; and to the extent consistent with prudent business practices,
defend its right, title and interest in its material properties against all
adverse claims.
(b) Compliance with Laws. Comply with all applicable laws,
ordinances, rules, regulations and reporting, filing and other requirements
of governmental authorities (including, without limitation, Environmental
Laws and ERISA and the rules and regulations thereunder), except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to so comply would not have a material
adverse effect on the Company and its Subsidiaries, taken as a whole.
(c) Inspection of Property, Books and Records. Keep proper books of
record and account in accordance with sound accounting practices; and
permit representatives of any Bank, at such Bank's sole risk and expense,
to visit and inspect any of its properties (subject to obtaining any
required consent of third-party operators), to examine and make abstracts
and copies from any of its books and records and to discuss its affairs,
finances and accounts with its officers and employees, and use its best
efforts to make its independent public accountants available to discuss the
affairs, finances and accounts of the Company and any of its Subsidiaries,
all at such reasonable times and as often as may reasonably be desired.
SECTION 5.03. Primary Business. The exploration for, and production
and marketing of, Hydrocarbons will continue to be the primary business of the
Company and its Subsidiaries taken as whole.
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SECTION 5.04. Insurance. The Company will maintain, and will cause
each Subsidiary to maintain (either in the name of the Company or in such
Subsidiary's own name) with financially sound and reputable insurance
companies, insurance on their property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business; and
will furnish to the Banks, upon written request from the Agent, full
information as to the insurance carried.
SECTION 5.05. Debt.
(a) At no time will Restricted Subsidiaries Recourse Debt exceed
$75,000,000.
(b) Consolidated Debt will not, on the last day of any calendar quarter,
exceed 3.75 times Operating Cash Flow for the four calendar quarters ending on
such day.
(c) Neither the Company nor any Restricted Subsidiary will create, assume
or otherwise incur any Debt if at the time of creation, assumption or
incurrence of such Debt or after giving effect to the creation, assumption or
incurrence of such Debt, any Event of Default would exist; provided that the
Company or any Restricted Subsidiary may renew or extend (but not increase) its
own Debt.
SECTION 5.06. Restricted Payments. Neither the Company nor any
Subsidiary shall declare or make any Restricted Payment unless, immediately
prior thereto and immediately thereafter, no Event of Default shall have
occurred and be continuing. Neither the Company nor any Subsidiary shall make
any Restricted Transfer unless, immediately prior thereto and immediately
thereafter, no Event of Default shall have occurred and be continuing; provided
that the Company or any Subsidiary can make Restricted Transfers in the form of
Investments in an Affiliate, Unrestricted Subsidiary or subsidiary of an
Unrestricted Subsidiary if (i) such Affiliate, Unrestricted Subsidiary or
subsidiary, as the case may be, has no outstanding Debt at the time of such
Investment and does not thereafter create, assume or otherwise incur any Debt
while any Event of Default is continuing and (ii) the Company notifies the
Banks of any such Investment in excess of $5,000,000 at least ten days prior to
such Investment. Nothing in this Section shall prohibit the payment of any
dividend or distribution within 45 days after the declaration thereof if
payment of such dividend or distribution was not prohibited by this Agreement
at the time such declaration was made.
SECTION 5.07. Negative Pledge. Neither the Company nor any
Restricted Subsidiary will create, assume or suffer to exist (i) any Lien on
any capital stock or other ownership interest of any Restricted Subsidiary now
owned or hereafter acquired by it or any Lien on any option, warrant or other
right to acquire any capital stock or other ownership interest of any
Restricted Subsidiary now owned or hereafter acquired by it, other than those
described in Part A of Schedule III or (ii) any Lien on any other asset now
owned or hereafter
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acquired by it, except for the following Liens on assets not referred to in the
foregoing clause (i) of this Section:
(a) Liens existing on the date of this Agreement, securing Debt
outstanding and other obligations (including contractual obligations)
existing on the date of this Agreement and, except in the case of inchoate
operator's Liens, described in Part B of Schedule III hereto;
(b) any Lien (i) on any Non-Restricted Asset securing only Non-
Restricted Asset Non-Recourse Debt of the Company or any Restricted
Subsidiary or (ii) on any asset of Virginia Indonesia Company, Virginia
International Company or Union Texas East Kalimantan Limited securing Joint
Venture Debt;
(c) mechanics', materialmen's, carriers' and other statutory Liens,
but only if arising, and only so long as continuing, in the ordinary course
of business; or deposits or pledges to obtain the release of any such Lien;
or easements, encroachments or other title defects which do not materially
detract from the value of its assets or materially impair the use thereof
in the operation of its business;
(d) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any obligation in an amount exceeding
$15,000,000 and (iii) do not in the aggregate materially detract from the
value of its assets or materially impair the use thereof in the operation
of its business;
(e) Liens on any interest in a Partnership arising under any agreement
creating or governing such Partnership (including Unimar) and securing only
obligations of the members of such Partnership to make Investments in such
Partnership;
(f) Liens arising under any customary provision of any joint operating
agreement or similar agreement relating to the exploration, production,
development or transportation of oil and gas;
(g) Liens not otherwise permitted by the foregoing clauses of this
Section on assets (other than any of the Restricted Assets) securing Debt
in an aggregate principal amount at any time outstanding not to exceed
$20,000,000;
(h) any Lien securing the refinancing, extension, renewal or refunding
of any Debt secured by any Lien permitted by the foregoing subsection (a)
of this Section; provided that such Debt is not increased from the lesser
of the amount of such Debt set forth on Schedule III hereto or the amount
of such Debt outstanding immediately prior to such refinancing, extension,
renewal or refunding, and such
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Lien does not cover any property that is not described on Schedule III
hereto as securing such Debt; and
(i) Liens in favor of third parties on cash, treasury securities and
other property deposited in margin accounts relating to, or otherwise
delivered as collateral for any obligation of the Company or any Subsidiary
under, contracts of the Company or any Subsidiary evidencing any Derivative
Transaction or other hedge obligation; provided, that the aggregate Fair
Market Value of all such cash, treasury securities and other property
subject to such Liens shall not exceed from time to time $15,000,000.
SECTION 5.08. Consolidations and Mergers. The Company will not
consolidate or merge with or into any Person; provided that the Company may
merge with another Person if the Company is the surviving corporation and,
immediately after such merger (and giving effect thereto), no Default shall
have occurred and be continuing.
SECTION 5.09. Use of Proceeds. The proceeds of the Loans made under
this Agreement will be used by the Company for general corporate purposes;
provided that none of such proceeds will be used in any manner or for any
purpose that results in any violation of any applicable law or regulation
(including, without limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System).
SECTION 5.10. Addition of Guarantors. If any Subsidiary of the
Company Guarantees (i) Debt (other than Funded Debt) of the Company having an
aggregate outstanding balance less than $25,000,000, and any Guarantee of such
Debt has not been released or terminated within 60 days of the date of the
incurrence of such obligation or (ii) Debt (other than Debt described in clause
(i) above) of the Company, then the Company shall (a) cause all Loans and all
other amounts payable at any time under any of the Financing Documents,
including, without limitation, interest which accrues during a proceeding which
occurs under the U.S. Bankruptcy Code or which would otherwise accrue under the
terms of any of the Financing Documents, but for a proceeding under the U.S.
Bankruptcy Code, to be equally and ratably guaranteed by such Subsidiary, (b)
cause such Subsidiary to execute and deliver a subsidiary guaranty agreement in
form and substance satisfactory to the Banks, and (c) deliver an opinion of
counsel and officers' certificate to the effect that such subsidiary guaranty
agreement has been duly authorized and executed by such Subsidiary and
constitutes the legal, valid, binding and enforceable obligation of such
Subsidiary, all in form and substance satisfactory to the Banks. "Funded Debt"
of any Person means at any date, all Debt (including, without limitation, Debt
incurred under any revolving credit, letter of credit or working capital
facility) of such Person that matures by its terms, or that is renewable at the
option of such Person to a date more than one year after the date on which such
Debt is originally incurred.
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SECTION 5.11. Restrictions on Dividends, Intercompany Loans, or
Investments. The Company will not create or otherwise cause or permit to exist
or become effective, or permit any Subsidiary to create or otherwise cause or
permit to exist or become effective, any consensual encumbrance or restriction
(other than the Financing Documents) on the ability of any Restricted
Subsidiary to (i) pay dividends or make any other distributions on its capital
stock or other ownership interests or pay any Debt or other obligation owed to
the Company or any Restricted Subsidiary, or (ii) make any loans or advances to
or other Investments in the Company or any Restricted Subsidiary, except any
encumbrance or restriction in effect on the date of this Agreement and
described on Schedule IV hereto.
SECTION 5.12. Loans and Advances. The Company will not make or
permit to remain outstanding any cash loan or advance to any Person, or permit
any Restricted Subsidiary to make or permit to remain outstanding any cash loan
or advance to any Person, except (i) loans and advances to Subsidiaries or
joint ventures, partnerships or other business ventures in which the Company or
any Subsidiary has or is contemporaneously acquiring an interest or
participation; and (ii) other loans and advances not exceeding $10,000,000 at
any time outstanding.
SECTION 5.13. Cross-Default. The Company will not create, assume,
otherwise incur or suffer to exist, or permit any Restricted Subsidiary to
create, assume, otherwise incur or suffer to exist, any Debt if the maturity of
such Debt is or may be accelerated (assuming the giving of notice or lapse of
time or both), in whole or in part, as a result of any default under, or
acceleration of (i) any Non-Recourse Debt of the Company or any Restricted
Subsidiary or (ii) any Debt of any Unrestricted Subsidiary, unless the Required
Banks shall have given their prior written consent to such Debt of the Company
or Restricted Subsidiary to be so created, assumed or otherwise incurred, which
consent will not be unreasonably withheld; provided that this Section 5.13
shall not prohibit a provision in a Guarantee of the Company or a Restricted
Subsidiary Guaranteeing Debt of an Unrestricted Subsidiary that provides that
the payment obligation under such Guarantee may be accelerated upon default
under or acceleration of such Debt.
SECTION 5.14. Subsidiaries. The Company will at all times own,
either directly or through one or more Restricted Subsidiaries, free and clear
of all Liens (other than those permitted by Section 5.07), 100% of all issued
and outstanding capital stock (other than directors' qualifying shares and
shares beneficially owned by the Company or a Restricted Subsidiary and held by
nominees of the Company or a Restricted Subsidiary solely to satisfy
requirements of local law) and other ownership interests of each Restricted
Subsidiary and all options, warrants and other rights to acquire any such
capital stock or any such ownership interest, except for (i) Unimar and the
Unimar Restricted Subsidiaries, (ii) any Restricted Subsidiary sold or
otherwise disposed of pursuant to an Asset Sale, if after giving effect to such
Asset Sale, the Company does not own, directly or indirectly, any
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interest in such Restricted Subsidiary, and (iii) those options described on
Schedule VI. The Company will at all times own, either directly or through one
or more Restricted Subsidiaries, free and clear of all Liens (other than those
permitted by Section 5.07), 50% or more of the ownership interest in Unimar and
the Unimar Restricted Subsidiaries and all options, warrants and other rights
to acquire any such ownership interest (other than those described on Schedule
VI); provided that the Company and the Restricted Subsidiaries may sell all of
their ownership interest in Unimar and the Unimar Restricted Subsidiaries and
such options, warrants and other rights if, after giving effect to such sale,
the Company does not own, directly or indirectly, any interest in Unimar, the
Unimar Restricted Subsidiaries or any such option, warrant or other right. The
Company will not at any time permit any Restricted Subsidiary that is not a
Unimar Restricted Subsidiary to become a Unimar Restricted Subsidiary. The
Company will not permit any Restricted Asset to be sold, leased, transferred or
otherwise disposed of to any Person that was an Unrestricted Subsidiary
immediately prior thereto if any Default then exists or would result. The
Company will not permit any Restricted Subsidiary to issue any preferred stock
unless such preferred stock at all times is owned only by the Company. The
Company will not permit any Restricted Subsidiary to own, directly, both (a)
any UK Asset and (b) any Non-UK Asset.
SECTION 5.15. Adjusted Equity and Interest Coverage. The Company
will at all times maintain Adjusted Equity of $350,000,000 or more. The
Company will cause EBITDA for each period of four consecutive calendar quarters
to exceed 4.00 times Cash Interest Expense for such period.
SECTION 5.16. Excluded Subordinated Debt and Preferred Stock.
Neither the Company nor any Subsidiary will pay, prepay, purchase, redeem,
defease, acquire, exchange or convert any preferred stock (other than
Restricted Preferred Stock) or any Excluded Subordinated Debt, except (a)
exchanges for or conversions to common stock of the Company, (b) payments of
interest when due required by the terms of any such Excluded Subordinated Debt
as such terms are in effect on the date such Excluded Subordinated Debt is
incurred and (c) if no Event of Default exists, payments of ordinary periodic
dividends (excluding liquidating dividends) on such preferred stock in
accordance with the terms thereof as such terms are in effect on the date such
preferred stock is issued.
SECTION 5.17. Certain Obligations. Neither the Company nor any
Subsidiary will create, incur, assume or suffer to exist any obligation on its
part to make any payment on the Joint Venture Debt other than (a) the
obligations set forth in the agreements listed on Schedule V hereto with
respect to Joint Venture Debt in existence on the date of this Agreement and
(b) obligations substantially similar to those referred to in clause (a) with
respect to Joint Venture Debt created, incurred, assumed or arising after the
date of this Agreement.
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SECTION 5.18. Restrictions on Asset Sales. (a) The Company will not
and will not permit any of its Restricted Subsidiaries to enter into any Asset
Sale if after giving effect thereto any Event of Default would exist.
(b) The Company will not permit to occur any Asset Sale involving,
directly or indirectly, any UK Assets if the aggregate Net Sales Proceeds of
all Asset Sales involving, directly or indirectly, UK Assets since December 31,
1993 would exceed $250,000,000.
SECTION 5.19. Conversion to Unrestricted Subsidiary. The Company may
convert a Restricted Subsidiary into an Unrestricted Subsidiary by giving the
Agent notice of such conversion at least 5 Domestic Business Days prior to such
conversion; provided that (i) no Restricted Subsidiary shall be so converted so
long as it owns directly or indirectly any interest in any Restricted Asset and
(ii) no such conversion shall be made if at the time of such notice or after
giving effect to such conversion, any Default would exist.
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) the Company shall fail to pay when due any principal of any Loan,
or shall fail to pay within five days of the due date thereof any interest
on any Loan, any fees or any other amount payable hereunder;
(b) the Company or any Subsidiary shall fail to observe or perform any
covenant contained in Sections 5.05 to 5.18, inclusive;
(c) the Company or any Subsidiary shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those covered
by clause (a) or (b) above) for 30 days after written notice thereof has
been given to the Company by the Agent at the request of any Bank;
(d) any representation, warranty, certification or statement made by
the Company or any Subsidiary in this Agreement or made in any certificate,
financial statement or other document delivered pursuant to this Agreement
shall prove to have been incorrect in any material respect when made (or
deemed made);
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(e) the Company or any Restricted Subsidiary shall fail to make any
payment in respect of any Material Debt (other than the Notes) when due or
within any applicable grace period;
(f) any event or condition shall occur which results in the
acceleration of the maturity of any Material Debt of the Company or any
Restricted Subsidiary (other than the Notes) or enables (or, with the
giving of notice or lapse of time or both, would enable) the holder of such
Material Debt or any Person acting on such holder's behalf to accelerate
the maturity thereof;
(g) the Company or any Restricted Subsidiary shall commence a
voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or shall consent to
any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall take any
corporate action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced against
the Company or any Restricted Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against the Company or any Restricted Subsidiary under the federal
bankruptcy laws as now or hereafter in effect;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $5,000,000 which it shall have become
liable to pay under Title IV of ERISA; or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the
ERISA Group, any plan administrator or any combination of the foregoing; or
the PBGC shall institute proceedings under Title IV of ERISA to terminate,
to impose liability (other than for premiums under Section 4007 of ERISA)
in respect of, or to cause a trustee to be appointed to administer any
Material Plan; or a condition shall exist by reason of which the PBGC would
be entitled to obtain a decree adjudicating that any Material Plan must be
terminated; or there shall occur a complete or partial withdrawal from, or
a default, within the meaning of Section 4219(c)(5) of ERISA, with respect
to, one
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or more Multiemployer Plans which could cause one or more members of the
ERISA Group to incur a current payment obligation in excess of $5,000,000;
(j) a judgment or order for the payment of money in excess of
$15,000,000 (net of applicable insurance coverage which is acknowledged by
the insurer) shall be rendered against the Company or any Restricted
Subsidiary and such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days;
(k) any Person or two or more Persons acting in concert, together with
any affiliates thereof, (i) shall have acquired beneficial ownership,
directly or indirectly, (a) within any 12 month period, of (1) more than
25% of the Company's common stock or (2) securities representing more than
25% of the combined voting power of all securities of the Company entitled
to vote in the election of directors (other than securities having such
power only by reason of the happening of a contingency) ("Voting
Securities"), or (b) within any 24 month period, of (1) more than 40% of
the Company's common stock or (2) more than 40% of the Company's Voting
Securities, (ii) owns a higher percentage of the Company's common stock or
Voting Securities than the percentage owned by Kohlberg Kravis Roberts &
Co. and/or non-operating investment entities it controls, and (iii) either
(a) owns 50% or more of the Company's common stock or Voting Securities,
(b) directly or indirectly elects or causes the election of Persons
constituting in the aggregate a majority of the Board of Directors of the
Company or any Restricted Subsidiary, or (c) exercises, directly or
indirectly, by written agreement, control over the Company or any
Restricted Subsidiary; provided that no Default or Event of Default shall
occur under this subsection (k) until the Agent, following request by the
Required Banks, gives notice to the Company that such an Event of Default
is declared, and such notice may not be given after the date which is 45
days after the Banks actually receive notice from the Company to the effect
that the matters set forth in clauses (i), (ii) and (iii) have occurred
(for purposes of this provision, "beneficial ownership" shall mean
beneficial ownership within the meaning of Rule 13d-3 of the Securities and
Exchange Commission promulgated under the Securities Exchange Act of 1934,
as amended, and the number and percentage of securities beneficially owned
by any Person or Persons shall be calculated in accordance with such Rule);
or
(l) any "Event of Default", as defined in the Other Credit Agreement,
shall occur;
then, and in every such event, the Agent shall (i) if requested by Banks having
at least 51% in the aggregate amount of the Commitments, by notice to the
Company terminate the Commitments and, upon the giving of such notice by the
Agent, they shall thereupon terminate, and (ii) if requested by Banks holding
Notes evidencing at least 51% in aggregate principal amount of the Loans, by
notice to the Company declare the Notes (together with
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accrued interest thereon) to be, and, upon the giving of such notice by the
Agent, the Notes shall thereupon become, immediately due and payable without
notice of intent to accelerate, notice of acceleration, presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Company; provided that in the case of any of the Events of Default specified in
clause (g) or (h) above, without any notice to the Company or any other act by
the Agent or the Banks, the Commitments shall thereupon terminate and the Notes
(together with accrued interest thereon) shall become immediately due and
payable without notice of intent to accelerate, notice of acceleration,
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Company.
SECTION 6.02. Notice of Default. The Agent shall give notice to the
Company under Section 6.01(c) promptly upon being requested to do so by any
Bank and shall thereupon notify all the Banks thereof.
ARTICLE VII
THE AGENT
SECTION 7.01. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf
and to exercise such powers under the Financing Documents as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto.
SECTION 7.02. Agent and Affiliates. NationsBank shall have the same
rights and powers under the Financing Documents as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent,
and NationsBank and its affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the Company or any Subsidiary or
other affiliate of the Company as if it were not the Agent hereunder.
SECTION 7.03. Action by Agent. The obligations of the Agent under
the Financing Documents are only those expressly set forth herein. Without
limiting the generality of the foregoing, the Agent shall not be required to
take any action with respect to any Default, except as expressly provided in
Article VI.
SECTION 7.04. Consultation with Experts. The Agent may consult with
legal counsel (who may be counsel for the Company or any Subsidiary),
independent public accountants, independent petroleum engineers and other
experts selected by it and the Agent shall not be liable for any action taken
or omitted to be taken by it in good faith in accordance with the advice of
such counsel, accountants, engineers or experts.
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SECTION 7.05. Liability of Agent. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken
or not taken by it in connection herewith (i) with the consent or at the
request of the Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct. Neither the Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the Company
or any Subsidiary; (iii) the satisfaction of any condition specified in Article
III, except receipt of items required to be delivered to the Agent; (iv) the
validity, effectiveness or genuineness of the Financing Documents or any other
instrument or writing furnished in connection herewith; or (v) the accuracy of
any Engineering Report. The Agent shall not incur any liability by acting in
reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it to be
genuine or to be signed by the proper party or parties.
SECTION 7.06. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agent (to the extent not
reimbursed by the Company) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from the Agent's gross negligence or willful misconduct) that the Agent
may suffer or incur in connection with the Financing Documents or any action
taken or omitted by the Agent hereunder (IT BEING EXPRESSLY UNDERSTOOD AND
AGREED THAT, EXCEPT FOR SUCH NEGLIGENCE AS IS SO DETERMINED TO CONSTITUTE GROSS
NEGLIGENCE, SUCH INDEMNIFICATION DOES EXTEND TO THE CONSEQUENCES OF THE
ORDINARY NEGLIGENCE, WHETHER SOLE OR CONTRIBUTORY, OF THE AGENT).
SECTION 7.07. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under this Agreement.
SECTION 7.08. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company and may be removed
at any time with or without cause by the Required Banks. Upon any such
resignation or removal, the Company shall have the right, with the consent of
the Required Banks, to appoint a successor Agent. If no successor Agent shall
have been so appointed with the consent of the Required Banks, and shall have
accepted such appointment, within 30 days after the retiring Agent's
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giving of notice of resignation or the Required Banks' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor
Agent, which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of its
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under the Financing Documents. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article VII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent.
SECTION 7.09. Agent's Fees. The Company shall pay to the Agent for
its own account fees in the amounts and at the times previously agreed upon
between the Company and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period:
(a) the Agent is advised by the Reference Banks that deposits in
dollars (in the applicable amounts) are not being offered to the Reference
Banks in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Agent that the London Interbank Offered Rate as
determined by the Agent will not adequately and fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make Euro-Dollar Loans, or make any Conversion (other than changing Euro-Dollar
Loans into Base Rate Loans), shall be suspended, and (ii) unless the Company
notifies the Agent at least two Domestic Business Days before the date of any
Euro-Dollar Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.
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SECTION 8.02. Illegality. If, after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Euro-Dollar Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall make it unlawful
or impossible for any Bank (or its Euro-Dollar Lending Office) to make,
maintain or fund its Euro-Dollar Loans, or make any Conversion (other than
changing Euro-Dollar Loans into Base Rate Loans), and such Bank shall so notify
the Agent, the Agent shall forthwith give notice thereof to the other Banks and
the Company, whereupon until such Bank notifies the Company and the Agent that
the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans, or make any Conversion
(other than changing Euro-Dollar Loans into Base Rate Loans), as the case may
be, shall be suspended. Before giving any notice to the Agent pursuant to this
Section, such Bank shall designate a different Euro-Dollar Lending Office if
such designation will avoid the need for giving such notice and will not, in
the judgment of such Bank, be otherwise disadvantageous to such Bank. If such
Bank shall determine that it may not lawfully continue to maintain and fund any
of its outstanding Euro-Dollar Loans to maturity and shall so specify in such
notice, each such Euro-Dollar Loan shall be immediately and automatically
Converted into a Base Rate Loan (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks).
SECTION 8.03. Increased Cost and Reduced Return. (a) If after the
date hereof, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency:
(i) shall subject any Bank (or its Applicable Lending Office) to any
tax, duty or other charge with respect to its Euro-Dollar Loans, its Note
or its obligation to make Euro-Dollar Loans, or shall change the basis of
taxation of payments to any Bank (or its Applicable Lending Office) of the
principal of or interest on its Euro-Dollar Loans or any other amounts due
under this Agreement in respect of its Euro-Dollar Loans or its obligation
to make Euro-Dollar Loans (except for changes in the rate of tax on the
overall net income of such Bank or its Applicable Lending Office imposed by
the jurisdiction in which such Bank's principal executive office or
Applicable Lending Office is located); or
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(ii) shall impose, modify or deem applicable any reserve, special
deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System
against assets of, deposits with or for the account of, or credit extended
by, any Bank (or its Applicable Lending Office) or on the United States
market for certificates of deposit or the London interbank market any other
condition affecting its Euro-Dollar Loans, its Note or its obligation to
make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan or
making any Conversion (other than changing Euro-Dollar Loans into Base Rate
Loans), or to reduce the amount of any sum received or receivable by such Bank
(or its Applicable Lending Office) under this Agreement or under its Note with
respect thereto, by an amount deemed by such Bank to be material, then, within
15 days after demand by such Bank (with a copy to the Agent), the Company shall
pay to such Bank such additional amount or amounts as will compensate such Bank
for such increased cost or reduction; provided that the Company shall not be
obligated to compensate any Bank for any such reduction attributable to a
period (i) more than 90 days prior to the giving of notice by such Bank to the
Company of its intention to seek compensation under this subsection (a) or (ii)
more than six months prior to the making of demand by such Bank for payment
thereof in accordance herewith.
(b) If any Bank shall have determined that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or its Parent) as a
consequence of such Bank's obligations hereunder to a level below that which
such Bank (or its Parent) could have achieved but for such adoption, change,
request or directive (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 15 days after demand by such Bank (with a copy to the
Agent), the Company shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its Parent) for such reduction; provided that the
Company shall not be obligated to compensate any Bank for any such reduction
attributable to a period (i) more than 90 days prior to the giving of notice by
such Bank to the Company of its intention to seek compensation under this
subsection (b) or (ii) more than six months prior to the making of demand by
such Bank for payment thereof in accordance therewith.
(c) Each Bank will promptly notify the Company and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such
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Bank to compensation pursuant to this Section and will designate a different
Applicable Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional
amount or amounts to be paid to it hereunder shall be conclusive in the absence
of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods.
SECTION 8.04. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans to the
Company has been suspended pursuant to Section 8.02 or (ii) any Bank has
demanded compensation under Section 8.03(a) and the Company shall, by at least
five Euro-Dollar Business Days' prior notice to such Bank through the Agent,
have elected that the provisions of this Section shall apply to such Bank,
then, unless and until such Bank notifies the Company that the circumstances
giving rise to such suspension or demand for compensation no longer apply:
(a) all Loans to the Company which would otherwise be made by such
Bank as, or be Converted by such Bank as or into, Euro-Dollar Loans shall
instead be made as, or Converted into, Base Rate Loans (on which interest
and principal shall be payable contemporaneously with the related Euro-
Dollar Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans to the Company has been
repaid, all payments of principal which would otherwise be applied to repay
such Euro-Dollar Loans shall be applied to repay its Base Rate Loans
instead.
SECTION 8.05. Substitution of Bank. If (i) the obligation of any
Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02,
(ii) any Bank has demanded compensation under Section 8.03 or payment of Taxes
or Other Taxes under Section 2.17, or (iii) after satisfaction of all
applicable conditions precedent, any Bank fails to fund when due any Loan it is
obligated to fund under this Agreement, the Company shall have the right, with
the assistance of the Agent, to seek a mutually satisfactory substitute bank or
banks (which may be one or more of the Banks) to purchase the Notes and assume
the Commitment of such Bank (any such Bank is herein called an "Affected
Bank"). Each Affected Bank agrees to sell, without recourse, all of its
Commitment, its interest in this Agreement and its Note to any such bank for an
amount equal to the sum of the outstanding unpaid principal of and accrued
interest on the Loans of such Affected Bank and all commitment fees and other
fees and amounts due such Affected Bank hereunder, calculated, in each case, to
the date such Commitment, interest in this Agreement and Note are purchased.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Company or the Agent, at its address or telex
number set forth on the signature pages hereof, (y) in the case of any Bank, at
its address or telex number set forth in its Administrative Questionnaire or
(z) in the case of any party, such other address or telex number as such party
may hereafter specify for the purpose by notice to the Agent and the Company.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified in
this Section and the appropriate answer-back is received, (ii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, (iii) if given by facsimile
transmission, when such facsimile is transmitted and accompanied by a telephone
call to the party receiving such transmission or (iv) if given by any other
means, when delivered at the address specified in this Section; provided that
notices to the Agent shall not be effective until received.
SECTION 9.02. No Waivers. No failure or delay by the Agent or any
Bank in exercising any right, power or privilege under any Financing Document
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies provided in the
Financing Documents shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Company shall pay
(i) all reasonable documented out-of-pocket costs and expenses of the Agent and
the Arranger incurred in connection with the syndication of this Agreement or
the preparation of the Financing Documents, any waiver or consent thereunder or
any amendment thereof or any Default or alleged Default hereunder and (ii) if
an Event of Default occurs, all reasonable out-of-pocket costs and expenses
incurred by the Agent or incurred by any Bank, including fees and disbursements
of counsel, in connection with such Event of Default and collection and other
enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent, each Co-Agent, the
Arranger and each Bank and hold the Agent, each Co-Agent, the Arranger and each
Bank harmless from and against any and all liabilities, losses, damages, costs
and expenses of any kind (including, without limitation, the reasonable fees
and disbursements of counsel for the Agent, any Co-Agent, the Arranger or any
Bank in connection with any investigative, administrative or judicial
proceedings, whether or not the Agent, such Co-Agent, the
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Arranger or such Bank, as the case may be, shall be designated a party thereto)
which may be incurred by the Agent, any Co-Agent, the Arranger or any Bank,
relating to or arising out of this Agreement or any actual or proposed use of
proceeds of Loans hereunder, including specifically, without limitation, all
liabilities, losses, damages, costs and expenses arising out of a violation of
any Environmental Law; provided that neither the Agent nor any Co-Agent nor the
Arranger nor any Bank shall have the right to be indemnified hereunder for its
own gross negligence or willful misconduct as determined by a court of
competent jurisdiction (IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT, EXCEPT
FOR SUCH NEGLIGENCE AS IS SO DETERMINED TO CONSTITUTE GROSS NEGLIGENCE, SUCH
INDEMNIFICATION DOES EXTEND TO THE CONSEQUENCES OF THE ORDINARY NEGLIGENCE,
WHETHER SOLE OR CONTRIBUTORY, OF THE INDEMNITEE).
(c) Within a reasonable period of time after any Person entitled to
indemnification under Section 9.03(b) (an "Indemnified Person") receives actual
notice of the assertion of any claim or the commencement of any action, or any
threatened claim or action, covered by Section 9.03(b), such Indemnified Person
shall, if indemnification with respect thereof is to be sought from the Company
under Section 9.03(b), notify the Company in writing of such claim or action;
provided that the failure to so notify the Company shall not relieve the
Company from any liability which the Company may have to the Indemnified Person
under Section 9.03(b) unless the obligations of the Company under Section
9.03(b) have been significantly increased as a result of such failure. The
Company and such Indemnified Person shall cooperate in the defense of any such
claim or action and shall take those actions reasonably within their power to
take which are necessary to preserve any legal defenses to such matters. If
any such claim or action shall be brought or threatened against an Indemnified
Person, so long as no Event of Default exists, the Company shall be entitled to
participate in the defense thereof, and, with the consent of such Indemnified
Person, to assume the defense thereof with counsel reasonably satisfactory to
the Indemnified Person. Notwithstanding any provision hereof to the contrary,
no consent order or settlement shall be entered into in any such claim or
action unless both the Company and such Indemnified Person have given their
prior written consent thereto; provided that such consent of the Company shall
not be required if any Event of Default exists.
(d) All obligations of the Company to indemnify or otherwise to make
payments to the Agent, any Co-Agent, the Arranger or any Bank provided in this
Agreement shall survive any termination of the Commitments and the repayment of
the Loans.
SECTION 9.04. Sharing of Set-Offs, Etc. Each Bank agrees that if it
shall, by exercising any right of set-off or counterclaim or otherwise, receive
payment of a proportion of the aggregate amount of principal and interest due
with respect to any Note held by it which is greater than the proportion
received by any other Bank in respect of the aggregate amount of principal and
interest due with respect to any Note held by such other
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<PAGE> 66
Bank, the Bank receiving such proportionately greater payment shall purchase
such participations in the Notes held by the other Banks, and such other
adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Notes held by the Banks shall be
shared by the Banks pro rata; provided that nothing in this Section shall
impair the right of any Bank to exercise any right of set-off or counterclaim
it may have and to apply the amount subject to such exercise to the payment of
indebtedness of the Company other than its indebtedness under the Notes. The
Company agrees, to the fullest extent it may effectively do so under applicable
law, that any holder of a participation in a Note, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as fully as if
such holder of a participation were a direct creditor of the Company in the
amount of such participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived, if, but only if, such
amendment or waiver is in writing and is signed by the Company and the Required
Banks (and, if the rights or duties of the Agent are affected thereby, by the
Agent); provided that no such amendment or waiver shall, unless signed by all
the Banks, (i) increase or decrease the Commitment of any Bank or subject any
Bank to any additional obligation, (ii) reduce the principal of or rate of
interest on any Loan or any fees hereunder, (iii) postpone the date fixed for
any payment of principal of or interest on any Loan or any fees hereunder or
for any reduction or termination of any Commitment, or (iv) change the
percentage of the Commitments or of the aggregate unpaid principal amount of
the Notes, or the number of Banks, which shall be required for the Banks or any
of them to take any action under this Section or any other provision of this
Agreement.
SECTION 9.06. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Company may not assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of all Banks.
(b) Any Bank may at any time and from time to time grant to one or
more banks or other institutions (each a "Participant") participating interests
in its Commitment or any or all of its Loans. In the event of any such grant
by a Bank of a participating interest to a Participant, whether or not upon
notice to the Company and the Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Company and the Agent shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under this Agreement. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of the Company hereunder including, without limitation, the right to approve
any amendment, modification or waiver of any
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<PAGE> 67
provision of this Agreement; provided that such participation agreement may
provide that such Bank will not agree to any modification, amendment or waiver
of this Agreement described in clause (i), (ii) or (iii) of Section 9.05
without the consent of the Participant. The Company agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article VIII with respect to its participating
interest. An assignment or other transfer which is not permitted by subsection
(c) or (d) below shall be given effect for purposes of this Agreement only to
the extent of a participating interest granted in accordance with this
subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") a proportionate part of all of its rights and
obligations under this Agreement and the Notes in an amount which, when added
to the amount of the rights and obligations under the Other Credit Agreement
contemporaneously assigned by such transferor Bank to such Assignee pursuant to
the second proviso to the first sentence of Section 9.06(c) of the Other Credit
Agreement, equals $10,000,000 or more, and such Assignee shall assume such
rights and obligations under this Agreement and the Notes, pursuant to an
Assignment executed by such Assignee and such transferor Bank, with (and
subject to) the subscribed consent of the Company and the Agent (which such
consents shall not be unreasonably withheld); provided that if an Assignee is
an affiliate of such transferor Bank or is another Bank, no such consent of the
Company shall be required; provided further that each such assignment shall be
of a constant, and not a varying, percentage of all rights and obligations
under this Agreement and the Notes, and the same constant percentage of all
rights and obligations of such transferor Bank under the Other Credit Agreement
and the notes thereunder shall be contemporaneously assigned by such transferor
Bank to such Assignee pursuant to Section 9.06(c) of the Other Credit
Agreement. Upon execution and delivery of such instrument (and delivery to the
Agent of an Administrative Questionnaire with respect to such Assignee, if such
Assignee has not already done so) and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed between such
transferor Bank and such Assignee, such Assignee shall be a Bank party to this
Agreement and shall have all the rights and obligations of a Bank with a
Commitment as set forth in such instrument of assumption, and the transferor
Bank shall be released from its obligations hereunder to a corresponding
extent, and no further consent or action by any party shall be required. Upon
the consummation of any assignment pursuant to this subsection (c), the
transferor Bank, the Agent and the Company shall make appropriate arrangements
so that, if required, a new Note is issued to the Assignee. In connection with
any such assignment, the transferor Bank shall pay to the Agent for its account
an administrative fee for processing such assignment in the amount of $2,500
less any administrative processing fee paid to the Agent on the same date under
Section 9.06(c) of the Other Credit Agreement as a result of the
contemporaneous assignment to such Assignee by such transferor Bank under the
Other Credit Agreement pursuant to the second proviso to the first sentence of
this Section 9.06(c). If the Assignee is not incorporated under the laws of
the United States of America or a state thereof, it shall, prior to the first
date on which
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<PAGE> 68
interest or fees are payable hereunder for its account, deliver to the Company
and the Agent certification as to exemption from deduction or withholding of
any United States federal income taxes in accordance with Section 2.17.
Notwithstanding the first sentence of this subsection (c), a Bank may not make
an assignment pursuant to this subsection (c) if after giving effect thereto
such Bank would hold less than 1.5% (or until March 1, 1999, 3% in the case of
NationsBank, Bank of America National Trust and Savings Association and Union
Bank of Switzerland, Houston Agency) of the Commitments (for this purpose such
Bank shall be deemed to hold any participating interests granted by such Bank
pursuant to subsection (b) above and any rights assigned pursuant to subsection
(d) below).
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.03 than such
Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Company's prior written
consent or by reason of the provisions of Section 8.02 or 8.03 requiring such
Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.07. Collateral. Each of the Banks represents to each Agent
and each of the other Banks that it in good faith is not relying upon any
margin stock (as defined in Regulation G) or any margin stock (as defined in
Regulation U) as collateral in the extension or maintenance of the credit
provided for in this Agreement.
SECTION 9.08. Texas Law. This Agreement and each Note shall be
construed in accordance with and governed by the law of the State of Texas.
SECTION 9.09. CONSENT TO JURISDICTION. THE COMPANY HEREBY
IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF TEXAS AND OF ANY FEDERAL COURT LOCATED IN SUCH STATE OVER IT IN
CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY
FINANCING DOCUMENT AND, TO THE FULLEST EXTENT PERMITTED BY LAW, FURTHER AGREES
(AND SHALL NOT CONTEST) THAT THE PROPER VENUE FOR FILING AND MAINTAINING ANY
SUCH ACTION OR PROCEEDING SHALL BE IN THE STATE OF TEXAS. IN ANY SUCH ACTION
OR PROCEEDING, THE COMPANY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST CLASS MAIL, RETURN
RECEIPT REQUESTED, TO
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<PAGE> 69
THE COMPANY AT ITS ADDRESS FOR NOTICES HEREUNDER, OR ANY FORM OF SERVICE
PROVIDED FOR IN THE TEXAS CIVIL PRACTICE AND REMEDIES CODE THEN IN EFFECT SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON THE COMPANY.
SECTION 9.10. Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 9.11. WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT, THE CO-
AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.12. COMPLETE AGREEMENT. THIS WRITTEN CREDIT AGREEMENT AND
THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
SECTION 9.13. Liability of Co-Agents and Arranger. Neither the
Arranger nor either Co-Agent, in its capacity as Co-Agent hereunder, shall have
any duty or responsibility hereunder.
SECTION 9.14. Termination of 1996 Short-Term Commitments. Each of
the parties hereto agrees that all "Commitments" (as defined in the
$100,000,000 Credit Agreement dated as of March 29, 1996 among the Company,
NationsBank, as agent and the co-agent and lenders parties thereto) are hereby
terminated effective as of the close of business on March 10, 1997 (and the
fees under Section 2.08(a) of such Credit Agreement shall accrue through such
date), and the Company has no further right to borrow thereunder. The Company
represents and warrants that all principal, interest and fees owed thereunder
have been paid in full.
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<PAGE> 70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: /s/ M.N. MARKOWITZ
--------------------------------------------------
M.N. Markowitz
Vice President and Treasurer
1330 Post Oak Blvd.
Houston, Texas 77056
Telex number: 762255
Commitments
- -----------
$7,727,272.69 NATIONSBANK OF TEXAS, N.A.
By: /s/ MARION B. LEMAN
--------------------------------------------------
Marion B. Leman
Vice President
$5,909,090.91 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ RICHARD D. BLUTH
--------------------------------------------------
Richard D. Bluth
Authorized Officer
$5,909,090.91 UNION BANK OF SWITZERLAND, HOUSTON AGENCY
By: /s/ KELLY BOOTS
--------------------------------------------------
Kelly Boots
Authorized Officer
By: /s/ J. GEORGE KUBOVE
--------------------------------------------------
J. George Kubove
Authorized Officer
-64-
<PAGE> 71
Commitments
- -----------
$4,545,454.55 THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. ASHBY
--------------------------------------------------
Authorized Officer
$4,545,454.55 THE BANK OF TOKYO-MITSUBISHI, LTD.,
HOUSTON AGENCY
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$4,545,454.55 THE CHASE MANHATTAN BANK
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$4,545,454.55 CITIBANK, N.A.
By: /s/ AREZOO JAFARI
--------------------------------------------------
Authorized Officer
$4,545,454.55 CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ PASCAL POUPELLE
--------------------------------------------------
Authorized Officer
-65-
<PAGE> 72
Commitments
- -----------
$4,545,454.55 THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$4,545,454.55 LTCB TRUST COMPANY
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$4,545,454.55 MELLON BANK, N.A.
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$4,545,454.55 MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$4,545,454.55 NATIONAL WESTMINSTER BANK PLC NEW YORK BRANCH
By: /s/ PAUL K. CARTER
--------------------------------------------------
Authorized Officer
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<PAGE> 73
Commitments
- -----------
NATIONAL WESTMINSTER BANK PLC NASSAU BRANCH
By: /s/ PAUL K. CARTER
--------------------------------------------------
Authorized Officer
$4,545,454.55 SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$4,090,909.09 BANQUE FRANCAISE DU COMMERCE EXTERIEUR
By: /s/ MARK A. HARRINGTON
--------------------------------------------------
Authorized Officer
By: /s/ ERIC DITGES
--------------------------------------------------
Authorized Officer
$4,090,909.09 THE YASUDA TRUST AND BANKING COMPANY, LIMITED, NEW
YORK BRANCH
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
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<PAGE> 74
Commitments
- -----------
$3,181,818.18 BANK OF TAIWAN, NEW YORK AGENCY
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$3,181,818.18 BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By: /s/ MIKE SHRYOCK
--------------------------------------------------
Authorized Officer
$3,181,818.18 BANQUE PARIBAS, HOUSTON AGENCY
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
By: /s/ [ILLEGIBLE]
--------------------------------------------------
Authorized Officer
$3,181,818.18 CHRISTIANIA BANK
By: /s/ WILLIAM S. PHELPS
--------------------------------------------------
Authorized Officer
By: /s/ JUSTIN F. McCARTY, III
--------------------------------------------------
Authorized Officer
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<PAGE> 75
Commitments
- -----------
$3,181,818.18 DEN NORSKE BANK ASA
By: /s/ J. MORTEN KREVTZ
--------------------------------------------------
J. Morten Krevtz
Authorized Officer
By: /s/ WILLIAM V. MOYER
--------------------------------------------------
William V. Moyer
Authorized Officer
$3,181,818.18 DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES
By: /s/ MICHAEL E. TERRY
--------------------------------------------------
Michael E. Terry
Authorized Officer
By: /s/ LAWRENCE E. JONES
--------------------------------------------------
Lawrence E. Jones
Authorized Officer
$3,181,818.18 THE MITSUBISHI TRUST & BANKING CORPORATION
By: /s/ Mr. AAKI YAMAGISHI
--------------------------------------------------
Mr. Aaki Yamagishi
Authorized Officer
Total Commitments: $100,000,000.00
---------------
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<PAGE> 76
NATIONSBANK OF TEXAS, N.A., as Agent
By: /s/ MARION S. LEMAN
--------------------------------------------------
Marion B. Leman
Vice President
700 Louisiana Street
Houston, Texas 77002
Telex Number: 163244
Answerback: NCNBTEXDAL
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Co-Agent
By: /s/ RICHARD D. BLUTH
--------------------------------------------------
Richard D. Bluth
Authorized Officer
UNION BANK OF SWITZERLAND, HOUSTON AGENCY, as Co-Agent
By: /s/ KELLY BOOTS
--------------------------------------------------
Kelly Boots
Authorized Officer
By: /s/ J. GEORGE KUBOVE
--------------------------------------------------
J. George Kubove
Authorized Officer
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<PAGE> 77
$100,000,000 CREDIT AGREEMENT DATED MARCH 11, 1997
SCHEDULE OF EXHIBITS
The following describes the Schedules and Exhibits to the Credit Agreement,
which are omitted herein, but which will be furnished upon request:
Schedule I Sets forth the Facility Fee and Applicable Margin at various
Rating Levels.
Schedule II Part A lists the Existing Unrestricted Subsidiaries and
Existing Unimar Unrestricted Subsidiaries. Part B lists the
Existing Restricted Subsidiaries, Other Restricted Subsidiary
and Existing Unimar Restricted Subsidiaries.
Schedule III Part A describes Liens on ownership interests. Part B
describes other existing Liens.
Schedule IV Describes certain existing restrictions.
Schedule V Sets forth the Joint Venture Debt Agreements.
Schedule VI Describes outstanding options.
Exhibit A Form of Note
Exhibit B Form of Assignment and Assumption Agreement
Exhibit C Form of Opinion of Counsel to the Company
Exhibit D Form of Opinion of Special Counsel to the Company
Exhibit E Form of Opinion of Special Counsel to the Agent
<PAGE> 1
EXHIBIT 10.3
BONTANG VI LOAN AGREEMENT
____________________________________
US$1,127,000,000.00
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Trustee
under the Bontang VI Trustee and Paying Agent Agreement
as Borrower,
BANK OF TAIWAN
NEW YORK AGENCY
as Lead Arranger
BONTANG LNG TRAIN-H INVESTMENT CO., LTD.
as Co-Lead Arranger
THE CHASE MANHATTAN BANK
as Agent, Co-Agent and Co-Arranger
BANQUE INDOSUEZ
THE FUJI BANK, LIMITED
PROJECT FINANCE DIVISION FOR THE AMERICAS
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
NEW YORK BRANCH
as Co-Agents and Co-Arrangers
CHANG HWA COMMERCIAL BANK, LTD.
NEW YORK BRANCH
FIRST COMMERCIAL BANK
NEW YORK AGENCY
HUA NAN COMMERCIAL BANK, LTD.
LOS ANGELES BRANCH
THE TOKAI BANK, LTD.
NEW YORK BRANCH
as Co-Arrangers
and
the Lenders named herein
____________________________________
Dated as of March 4, 1997
<PAGE> 2
TABLE OF CONTENTS*/
<TABLE>
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<S> <C> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. THE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1 The Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.2 Purpose and Manner of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.3 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Determination of Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.5 Alternative Interest Rates; Voluntary Prepayment . . . . . . . . . . . . . . . . . . . . . . . . 24
2.6 Interest Rate on Overdue Amounts; Other Indemnities . . . . . . . . . . . . . . . . . . . . . . 25
2.7 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.8 The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.9 Repayment on Maturity Dates; Deferral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.10 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.1 Allocation of Amounts; Substitute Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.2 Funds of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.3 Set-Off, Counterclaim and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.4 Change of Law; Certain Mandatory and Voluntary Prepayments; Additional Amounts . . . . . . . . . 33
3.5 Prepayments in Connection with Completion of Train H; Debt Coverage Reserve Mandatory Prepayments 34
3.6 Notice of Certain Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.7 Other Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
3.8 Cancellation of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.9 No Reborrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.10 Payments to be Made at End of Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . 36
4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.1 Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.2 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.3 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.4 Registration and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.5 Agreement Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.6 Ranking of Advances; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
- -------------------
* The Table of Contents is not a substantive part of this Agreement.
(i)
<PAGE> 3
<TABLE>
<CAPTION>
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<S> <C> <C>
4.8 Compliance with Other Instruments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.9 No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.10 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.1 Conditions Precedent to the Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.2 Conditions Precedent to the Initial and Subsequent Advances . . . . . . . . . . . . . . . . . . 43
5.3 Conditions Precedent to the Advances to Fund the Reserve Account . . . . . . . . . . . . . . . . 44
5.4 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6.1 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
6.2 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.3 No Consent to Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
6.4 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
6.5 Notice of Outstanding Amounts and Repayment Schedule . . . . . . . . . . . . . . . . . . . . . . 49
6.6 Selection of Qualified Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8. AGENT, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.1 Appointment and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.2 Agent May Rely on Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.3 No Amendment to Duties of Agent Without Consent . . . . . . . . . . . . . . . . . . . . . . . . 52
8.4 Responsibilities of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.5 Funding Costs of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.6 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.7 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.8 Arrangers and Co-Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.9 Change of Administrative Office of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.10 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
9. SOURCE OF DEBT SERVICE; NO RECOURSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.1 Accumulation for Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.2 Accumulation in Regular Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
9.3 Deposit in Debt Coverage Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.4 Payments Made from Debt Service Account and Reserve Account . . . . . . . . . . . . . . . . . . 56
9.5 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.6 Not to Limit Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.2 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
(ii)
<PAGE> 4
<TABLE>
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<S> <C> <C>
10.3 Use of English Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.4 Assignment; Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . 59
10.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.6 Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
10.7 Sharing of Set-Off and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.9 Table of Contents and Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.10 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.11 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
10.12 Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
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<S> <C>
EXHIBIT A FORM OF NOTICE OF BORROWING
EXHIBIT B-1 FORM OF NOTICE OF DEFERRAL
EXHIBIT B-2 FORM OF NOTICE OF COMPLETION
EXHIBIT C-1 FORM OF NOTE
EXHIBIT C-2 FORM OF TRANSFER CERTIFICATE
EXHIBIT D-1 FORM OF LEGAL OPINION OF WILLIAMS & HARRIS LLP, SPECIAL COUNSEL FOR THE BORROWER
EXHIBIT D-2 FORM OF LEGAL OPINION OF THOMAS R. BENNETT, 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 NEW YORK 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 AGENT
AND THE LENDERS
EXHIBIT F-2 FORM OF LEGAL OPINION OF SPECIAL KOREAN AND TAIWANESE COUNSEL TO THE AGENT AND THE LENDERS
SCHEDULE 1 BASIC AGREEMENTS
SCHEDULE 2 DRAWDOWN SCHEDULE
SCHEDULE 3 ASSUMED INTEREST RATE AND OTHER ASSUMPTIONS
SCHEDULE 4 QUALIFIED BANKS
</TABLE>
(iv)
<PAGE> 6
LOAN AGREEMENT
AGREEMENT dated as of March 4, 1997 among
(i) BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, not in its individual capacity but solely as Trustee under the
Bontang VI Trustee and Paying Agent Agreement among it and PERUSAHAAN
PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA, TOTAL INDONESIE, VIRGINIA INDONESIA
COMPANY, LASMO SANGA SANGA LIMITED, UNION TEXAS EAST KALIMANTAN LIMITED,
OPICOIL HOUSTON, INC., VIRGINIA INTERNATIONAL COMPANY, UNIVERSE GAS & OIL
COMPANY, INC., INDONESIA PETROLEUM, LTD. and UNOCAL INDONESIA COMPANY dated as
of the date hereof, as Borrower;
(ii) BANK OF TAIWAN, NEW YORK AGENCY, as Lead Arranger;
(iii) BONTANG LNG TRAIN-H INVESTMENT CO., LTD., as Co-Lead
Arranger;
(iv) BANQUE INDOSUEZ, as Co-Agent and Co-Arranger, THE
CHASE MANHATTAN BANK, as Agent, Co-Agent and Co-Arranger, THE FUJI BANK,
LIMITED, PROJECT FINANCE DIVISION FOR THE AMERICAS, as Co-Agent and
Co-Arranger, and THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED, NEW YORK BRANCH,
as Co-Agent and Co-Arranger;
(v) CHANG HWA COMMERCIAL BANK, LTD., NEW YORK BRANCH,
FIRST COMMERCIAL BANK, NEW YORK AGENCY, HUA NAN COMMERCIAL BANK, LTD., LOS
ANGELES BRANCH, and THE TOKAI BANK, LTD., NEW YORK BRANCH, as Co-Arrangers; and
(vi) the banks and other institutions named under the
caption "Lenders" on the signature pages hereof.
W I T N E S S E T H :
WHEREAS, the Borrower has requested the Lenders to make
advances to the Borrower upon the terms and subject to the conditions of this
Agreement in an
<PAGE> 7
2
aggregate principal amount of up to $1,127,000,000.00 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 H, (ii) interest, fees, expenses, taxes and other
amounts payable by the Borrower pursuant to Sections 2.3, 2.6, 2.7, 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;
WHEREAS, the portion of the advances to the Borrower under
this Agreement provided by Bontang LNG Train-H Investment Co., Ltd. shall be in
an aggregate principal amount of up to $338,100,000.00, which amount shall be
indirectly financed by The Export-Import Bank of Japan;
WHEREAS, the 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 Bank of America National Trust and Savings Association,
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 I. 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 utilities and facilities (other than the Support
Facilities and the Other 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 each advance by a Lender to the Borrower
hereunder on a Borrowing Date or, where the context so requires, the amount of
such advance from time to time outstanding.
<PAGE> 8
3
"Agent" means The Chase Manhattan Bank, acting in its capacity
as facility agent for the Lenders hereunder, or any successor thereto appointed
pursuant to Section 8.10 hereof.
"Amortization Period" means the period beginning on the
earlier of (i) the 22nd day of the 9th month after the month in which the
Completion Date occurred and (ii) September 22, 2000 and ending on the Final
Maturity Date.
"Applicable Amortization Percentage" has the meaning set forth
in Section 2.9(a) hereof.
"Applicable Margin" means for all Advances (including any
Deferred Portion thereof) (i) on any date during the period ending on the
fourth anniversary of the initial Borrowing Date hereunder, 1.125%, and (ii) on
any date thereafter, 0.85%.
"Applicable Percentage" has the meaning set forth in the
definition of Source of Debt Service.
"Arrangers" means the Lead Arranger, the Co-Lead Arranger and
the Co-Arrangers, in each case as identified on the signature pages hereof.
"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 or the
Agent, the Borrower 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 and the Agent. In any such negotiations,
the Assumed Interest Rate will be agreed by reference to (i) the average of
rates quoted for a period corresponding to the number of years from the time of
calculation to the Final Maturity Date (rounded up to the nearest whole number
of years) available on a swap basis in exchange for three-month LIBOR that
appear on Telerate Page 19901 (or such other page as may replace that page on
the Telerate screen for the purpose of displaying fixed interest rates
available on a swap basis in exchange for three-month LIBOR) under the column
titled "ANN A/360" (the "Telerate swap rate") during the period of such
negotiations and (ii) (x) on any date during the period ending on the fourth
anniversary of the initial Borrowing Date hereunder, 0.9875% and (y) on any
date thereafter, 0.85%. If agreement cannot be reached on the interest rate to
serve as the Assumed Interest Rate within 20 Business Days following a request
for such negotiations, then the Assumed Interest Rate will be redetermined as
of the 21st Business Day following such request as the sum of (i) the average
Telerate swap rate during the immediately preceding 20 Business Days plus (ii)
(x) on any date during the period ending on the fourth anniversary of the
initial Borrowing Date hereunder, 0.9875% and (y) on any date thereafter,
0.85%. If the Borrower and the Agent cannot agree on the result of any
redetermination of the
<PAGE> 9
4
Assumed Interest Rate in accordance with the immediately preceding sentence,
then such redetermination shall be submitted to a Selected Qualified Bank for
determination.
"Availability Period" means the period beginning on the
Effective Date and ending on the earlier of (i) as determined by the Borrower
and set forth in the written statement from the Borrower to the Agent
contemplated by Section 6.1(g) hereof either (a) the 21st day of the 9th month
after the month in which the Completion Date occurred or (b) September 21, 2000
and (ii) January 21, 2001.
"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,
condensate 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 H), 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 VI 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 Bank of America National Trust and Savings
Association, solely as Trustee under the Trust Agreement and not in its
individual capacity. The term "Borrower" does not include Bank of America
National Trust and Savings Association, in any other capacity or any one or
more of the Producers.
"Borrowing" means a borrowing hereunder consisting of Advances
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 seventh Business Day
following the Effective Date (or such other Business Day as the Borrower and
the Agent may agree) 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 seventeenth, eighteenth, nineteenth, twentieth or twenty-first
day of any calendar month and specified in a Notice of Borrowing as a date on
which the Borrower will make a
<PAGE> 10
5
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
twenty- first 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, as buyer
under the KGC Sales Contract and (ii) Chinese Petroleum Corporation, as buyer
under the CPC Sales Contract.
"Co-Agents" means the parties identified as such on the
signature pages hereof.
"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 the Agent shall have
received a written notice from the Borrower as required by Section 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 Other Facilities (other than the Debottlenecking Project) has been
completed in accordance with the Development Plan and the Additional Plant and
the Other Facilities (other than the Debottlenecking Project) have been fully
and finally accepted by Pertamina under the EPC Contract; and
(ii) the Additional Plant has demonstrated
processing capabilities consistent with those contained in the Development Plan
and at least 180,000 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.
"CPC Sales Contract" means the LNG Sale and Purchase Contract
(Badak VI) between Pertamina and Chinese Petroleum Corporation, dated as of
<PAGE> 11
6
October 25, 1995, as modified or amended from time to time, 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
LNG Sale and Purchase Contract (Badak VI) 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" mean, for as long as the CPC Sales
Contract is an LNG Sales Contract:
(i) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Chinese Petroleum Corporation
under Badak VI, dated May 1, 1996, by and between Pertamina, on the one hand,
and the members of the VICO Group, on the other hand, as modified or amended
from time to time;
(ii) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Chinese Petroleum Corporation
under Badak VI, dated April 4, 1996, by and between Pertamina, on the one hand,
and the members of the Total Group, on the other hand, as modified or amended
from time to time;
(iii) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Chinese Petroleum Corporation
under Badak VI, dated April 16, 1996, by and between Pertamina, on the one
hand, and Unocal, on the other hand, as modified or amended from time to time;
and
(iv) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Chinese Petroleum Corporation
under Badak VI, dated April 16, 1996, by and between Pertamina, on the one
hand, and Unocal and Inpex, on the other hand, as modified or amended from time
to time.
"Current Amortized Amount" has the meaning set forth in
Section 2.9(a) hereof.
"Current Payment" has the meaning set forth in Section 2.9(a)
hereof.
"Debottlenecking Project" means the debottlenecking project
for Trains A through F of the Bontang Plant, as described in and consistent
with the Development Plan.
<PAGE> 12
7
"Debt Coverage Ratio" means:
(i) at any time prior to the first day of the
Amortization Period, an amount (expressed as a percentage) determined as the
product of (a) the quotient of (1) the sum of (x) the present value as of
September 19, 2000 (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 (2) the
aggregate amount of the Commitments, multiplied by (b) 100;
(ii) during the Availability Period at any time on
or after the first day of the Amortization Period, an amount (expressed as a
percentage) determined as the product of (a) the quotient of (1) 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 that
is not available to pay the cost to complete the Additional Plant and the Other
Facilities pursuant to a waiver of such right made as provided in Section
6.1(h), divided by (2) the sum of (x) the aggregate outstanding principal
amount of the Advances, plus (y) the aggregate undrawn amount of the
Commitments, if any, in each case at the time of calculation, multiplied by (b)
100; and
(iii) at all times after the last day of the
Availability Period, an amount (expressed as a percentage) determined as the
product of (a) the quotient of (1) 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
(2) the aggregate outstanding principal amount of the Advances, in each case 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 and the Agent, as
provided herein or in the definition of Assumed Interest Rate, determined as
provided in the definition of Assumed Interest Rate or specified by a Selected
Qualified Bank as provided herein or in the definition of Assumed Interest
Rate. The Borrower or the Agent may at any time (but not more than once each
calendar quarter) request a reconsideration of such assumptions, whereupon the
Borrower 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 and the Agent. The assumptions to be negotiated
in good faith are, in addition to the Assumed Interest Rate as provided
<PAGE> 13
8
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 Contract. If the
Borrower and the Agent cannot reach agreement on such assumptions (other than
the Assumed Interest Rate) within 10 Business Days (or such longer period as
they may agree) following a request by one to the other for such negotiations,
then such assumptions shall be those specified in writing by a Selected
Qualified Bank. If the Borrower and the Agent cannot agree on the result of
any redetermination of the Assumed Interest Rate in accordance with the
penultimate sentence of the definition thereof within two Business Days of the
redetermination of such Assumed Interest Rate in accordance therewith, then the
Assumed Interest Rate shall be that redetermined by a Selected Qualified Bank
in accordance with such penultimate sentence.
"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 Advances, the payment of which has been deferred pursuant
to Section 2.9(b) hereof.
"Development Plan" means the Badak LNG Train "H" Project
Development Plan prepared by Processing Plant Project (PKP) (Proyek Kilang
Pengolahan), dated October 1996, as amended or modified from time to time.
"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
<PAGE> 14
9
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 "H" Contract No. B80-JMC-001 Agreement between Pertamina and
IKPT, dated as of March 3, 1997, (ii) Articles 1, 2, 6, 8, 9 and 18 of the
Collaboration Agreement, dated as of March 3, 1997, among IKPT, P.T. Graha
Centermine, an Indonesian corporation, and Kellogg Overseas Corporation, a
Delaware corporation, and (iii) the letter from Kellogg Overseas Corporation to
Pertamina, dated as of March 3, 1997, pursuant to which the former guarantees
and assumes full responsibility for the work to be performed under the
agreement referred to in clause (i) above, each as amended or modified from
time to time.
"Events of Default" means any of the events specified in
Section 7 hereof.
"Excluded Taxes" means:
(i) with respect to that portion of the Advances
made and maintained by any Lender (other than the Finance Company) or Payments
to the Agent, (x) any Taxes based upon gross or net income payable by such
Lender or the Agent to the jurisdiction of incorporation of such Lender or the
Agent, as applicable, or the jurisdictions in which such Lender or the Agent,
as applicable, has its principal executive office or in which the Lending
Office of such Lender is located, or to any department, agency or other
political subdivision or taxing authority in any of such jurisdictions and (y)
any Taxes that may be imposed upon or with respect to a Payment by the United
States, or any department, agency or political subdivision or taxing authority
therein, including, without limitation, those arising by reason of the fact
that the Lender is a foreign corporation or other non-resident person within
the meaning of the Internal Revenue Code of 1986, as amended; solely for
purposes of the preceding clause, the term "Lending Office" shall mean, in
addition to the definition set forth below in this Section 1, a branch or
office of a Lender which has physical custody of a Note, this Agreement or the
Letter Agreement or which conducts the activities that are the responsibilities
of a 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
Lender previously had (but no longer has) such custody or conducted (but no
longer conducts) such activities, such other branch or office;
(ii) with respect to that portion of the Advances
made and maintained by the Finance Company, (x) any Taxes imposed by Japan or
any department, agency or other 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 Finance Company changes the
<PAGE> 15
10
source of the funds it uses to make or maintain Advances from that contemplated
as of the Effective Date 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 or any Deferred Portion with respect
to the Advances made by the Finance Company; and
(iii) with respect to that portion of the Advances
made and maintained by any Lender that is not organized under the laws of the
United States or any State thereof and has not delivered to the Borrower two
duly executed copies of either IRS Form 1001 or 4224 (or any successor form)
claiming exemption from withholding with respect to Payments hereunder (i) on
or prior to the Effective Date in the case of a Lender party hereto, (ii) on or
prior to the date of the relevant transfer in the case of a Transferee and
(iii) at any subsequent time required by law, in the case of any Lender, any
Taxes of the United States of America or any department, agency or other
political subdivision thereof or any taxing authority thereof or therein that
are imposed by means of withholding at the source with respect to a Payment
that the Borrower would not be required to withhold if it had received from
such Lender two executed copies of any of the aforementioned forms as provided
above.
"Final Maturity Date" means the 40th Maturity Date occurring
following the first day of the Amortization Period.
"Finance Company" means Bontang LNG Train-H Investment Co.,
Ltd.
"Funded Advances" has the meaning set forth in Section 2.9(a)
hereof.
"Gross Invoice Amount" means:
(i) with respect to the KGC Sales Contract, the
sum, without duplication, of (a) all amounts payable to the Borrower pursuant
thereto in respect of LNG purchased or required to be paid for if not taken
thereunder (including without limitation amounts purchased pursuant to Section
4.11 of the KGC Sales Contract), (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 and
(d) to the extent they may hereafter become applicable by virtue of an
amendment to the KGC Sales Contract, amounts payable to the Borrower relating
to transportation charges, including, without limitation, demurrage and
non-utilization charges; and
(ii) with respect to the CPC Sales Contract, the
sum, without duplication, of (a) all amounts payable to the Borrower pursuant
thereto in respect of LNG purchased or required to be paid for if not taken
thereunder, (b) amounts payable
<PAGE> 16
11
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 and (d) amounts payable to the Borrower
relating to transportation charges, including, without limitation, demurrage
and non-utilization charges;
provided that the Gross Invoice Amount (other than any such amounts payable
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 Agent on behalf of the Lenders also executes and
delivers 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 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
<PAGE> 17
12
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. Notwithstanding anything to the contrary herein, the term "Insured
Bontang Plant" shall not include (I) the Additional Plant or the Storage Tank
until the operational acceptance thereof pursuant to the EPC Contract, (II) the
Debottlenecking Project until after the completion thereof in accordance with
the Development Plan or (III) the Support Facilities.
"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) a period of three months determined
as follows:
(i) The initial Interest Period for each
Borrowing will begin on the date of such Borrowing and will end on the March
19, June 19, September 19 or December 19 next occurring between three and 100
days thereafter; provided, however, that if the initial Borrowing Date occurs
on or before March 19, 1997, then the Interest Period for such Borrowing will
begin on the date of such Borrowing and will end on June 19, 1997, 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 19,
September 19, December 19 or March 19 next occurring three months thereafter,
subject to clause (ii) of this definition.
<PAGE> 18
13
(ii) 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.
"KGC Sales Contract" means the LNG Sales and Purchase Contract
(Badak V), dated August 12, 1995, by and between Pertamina and Korea Gas
Corporation, as modified or amended from time to time, 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
LNG Sales and Purchase Contract (Badak V) 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 VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated May 1, 1996, by and between Pertamina, on the one hand, and the
members of the VICO Group, on the other hand, as modified or amended from time
to time;
(ii) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated April 4, 1996, by and between Pertamina, on the one hand, and
the members of the Total Group, on the other hand, as modified or amended from
time to time;
(iii) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated April 16, 1996, by and between Pertamina, on the one hand, and
Unocal, on the other hand, as modified or amended from time to time; and
(iv) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated April 16, 1996, by and between Pertamina, on the one hand, and
Unocal and Inpex, on the other hand, as modified or amended from time to time.
"Lead Arranger" means Bank of Taiwan, New York Agency, and its
successors and assigns hereunder.
"Legal Requirements" means all applicable (i) laws, rules,
regulations, ordinances, orders, decrees, permits, licenses, authorizations,
directions and require-
<PAGE> 19
14
ments 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 banks
and other institutions identified as such on the signature pages hereof, 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 Lenders, as the office or branch
from or at which such Lender's Advances 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 2.7(a)
hereof.
"LIBOR" has the meaning set forth in Section 2.4(a) hereof.
"LIBOR 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 either London or
the City of New York.
"LNG" has the meaning set forth in Article 1 of the Processing
Agreement.
"LNG Sales Contract" means each of, and "LNG Sales Contracts"
means both of, the CPC Sales Contract and the KGC Sales Contract.
"Majority Lenders" means, at any time, Lenders holding in
excess of 70% of the aggregate unpaid principal amount of the Advances, or if
no such Advances are at the time outstanding, Lenders having in excess of 70%
of the aggregate amount of the Commitments.
"Maturity Date" means the first March 19, June 19, September
19 or December 19 to occur at least two months following the first day of the
Amortization Period and, thereafter, each March 19, June 19, September 19 and
December 19 occurring three months following the last of the same to occur,
each of which shall be
<PAGE> 20
15
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.
"Note" means any one of the Notes provided for in Section 2.8
hereof.
"Notice of Borrowing" means a notice from the Borrower to the
Agent substantially in the form of Exhibit A hereto, to be delivered in
accordance with Section 2.2(d) hereof.
"Notice of Completion" means a notice from the Borrower to the
Agent substantially in the form of Exhibit B-2 hereto, to be delivered in
accordance with Section 6.1(e) hereof.
"Notice of Deferral" means a notice from the Borrower to the
Agent substantially in the form of Exhibit B-1 hereto, to be delivered in
accordance with Section 2.9(b) hereof.
"Notice Lenders" has the meaning set forth in Section 2.5
hereof.
"Other Facilities" means the Storage Tank, the Pipeline and
the Debottlenecking Project.
"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.
"Pipeline" means one additional pipeline from the areas that
supply gas to the Bontang Plant, as described in and consistent with the
Development Plan.
"Plant Use Agreement" means the Second Amended and Restated
Agreement for Use and Operation of Plant dated August 12, 1991, but effective
as of
<PAGE> 21
16
February 9, 1988, between Pertamina and P.T. Badak, as modified or amended from
time to time.
"Prior Amortized Amount" has the meaning set forth in Section
2.9(a) hereof.
"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
modified or amended from time to time.
"Producers" means Pertamina, Total Indonesie, Virginia
Indonesia Company, Lasmo Sanga Sanga Limited, Union Texas East Kalimantan
Limited, OPICOIL Houston, Inc., Virginia International Company, Universe Gas &
Oil Company, Inc., 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 VI Producers Agreement
of even date herewith among the Producers, the Arrangers, the Agent, the
Co-Agents and the Lenders, as modified or amended from time to time.
"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
19, June 19, September 19 and December 19, and thereafter each subsequent
period of approximately three calendar months ending on the next to occur of
March 19, June 19, September 19 or December 19, 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, if any, of each
of Bank of Taiwan, Banque Indosuez, The Chase Manhattan Bank, The Fuji Bank,
Limited, and The Long-Term Credit Bank of Japan, Limited.
<PAGE> 22
17
"Reference Date" has the meaning set forth in Section 2.4(a)
hereof.
"Regular Reserve Account" has the meaning set forth in Article
1 of the Trust Agreement.
"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.
"Reserve Account Borrowing Date" means the Borrowing Date
occurring in the month in which the Amortization Period begins.
"Reserves" has the meaning set forth in Section 2.5 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 Bank of America National Trust and Savings Association.
"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) (a) in respect of each amount payable to the
Borrower for quantities of LNG purchased on or after January 1, 2000
and on or before December 31, 2017, as determined in accordance with
the KGC Sales Contract (the "KGC SDS Period"), or for quantities of
LNG required to be paid for if not taken during the KGC SDS Period, in
each case under the KGC Sales Contract, or payable with respect to the
KGC SDS Period to the Borrower pursuant to the KGC Supply Agreements
or otherwise pursuant to the KGC Sales Contract (without duplication),
the portion, if any, of the amount so payable equal to the relevant
Applicable Percentage (as defined below) of (I) the amount payable
under each invoice rendered with respect to quantities of LNG
purchased during the KGC SDS Period, or in the case of LNG required to
be purchased during the KGC SDS Period, but not taken, under each
invoice rendered with respect to the quantity not taken, and (II) all
indemnities and additional amounts payable
<PAGE> 23
18
by the Buyer with respect to the KGC SDS Period under the KGC Sales
Contract (excluding from Source of Debt Service, to the extent they
may hereafter become applicable by virtue of an amendment to the KGC
Sales Contract, amounts payable to the Borrower with respect to the
transportation of such quantities of LNG, including, without
limitation, demurrage and non-utilization charges), in each case
without any reduction or set-off from any such amounts;
(b) in respect of each amount payable to
the Borrower for quantities of LNG purchased on or after January 1,
2000 and on or before December 31, 2017, as determined in accordance
with the CPC Sales Contract (the "CPC SDS Period"), or for quantities
of LNG required to be paid for if not taken during the CPC SDS Period,
in each case under the CPC Sales Contract, or payable with respect to
the CPC SDS Period to the Borrower pursuant to the CPC Supply
Agreements or otherwise pursuant to the CPC Sales Contract (without
duplication), the portion, if any, of the amount so payable equal to
the relevant Applicable Percentage of (I) the amount payable under
each invoice rendered with respect to quantities of LNG purchased
during the CPC SDS Period, or in the case of LNG required to be
purchased during the CPC SDS Period, but not taken, under each invoice
rendered with respect to the quantity not taken, and (II) all
indemnities and additional amounts payable by the Buyer with respect
to the CPC SDS Period under the CPC Sales Contract (excluding from
Source of Debt Service amounts payable to the Borrower with respect to
the transportation of such quantities of LNG, including, without
limitation, demurrage payments and non-utilization charges), in each
case without any reduction or set-off from any such amounts; and
(ii) in respect of any period, the aggregate
amount of Source of Debt Service payable during such period.
For purposes of this definition of Source of Debt Service, "Applicable
Percentage" means: (i) 70% with respect to each amount payable to the Borrower
for quantities of LNG purchased on or after January 1, 2000 and on or before
December 31, 2002, or for quantities of LNG required to be paid for if not
taken during such period, or payable with respect to such period pursuant to
the Supply Agreements or otherwise pursuant to the LNG Sales Contracts and (ii)
68% with respect to all other amounts.
For purposes of this definition of Source of Debt Service, quantities of LNG
shall be deemed to have been purchased when title thereto passes to the
relevant Buyer under the terms of the relevant LNG Sales Contract, except that
any quantities of LNG included in (i) the Fixed Quantity Periods (as defined in
the KGC Sales Contract) ending on December 31, 1999 or December 31, 2017
pursuant to Section 7.3(c) of the KGC Sales Contract or (ii) the Fixed Quantity
Periods (as defined in the CPC Sales
<PAGE> 24
19
Contract) ending on December 31, 1999 or December 31, 2017 pursuant to Section
7.3(c) of the CPC Sales Contract, that would otherwise be deemed to have been
purchased on or after January 1, 2000 or on or after January 1, 2018,
respectively, shall instead be deemed to have been purchased on December 31,
1999 or December 31, 2017, respectively.
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 Agent also executes and delivers 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 Maturity Date" has the meaning set forth in Section
2.9(a) hereof.
"Storage Tank" means an LNG storage tank to be located at the
Bontang Plant, as described in and consistent with the Development Plan.
"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 and the KGC Supply Agreements.
"Support Facilities" means the community and 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 department, agency or other political subdivision thereof
or any taxing authority therein and all interest, penalties or similar
liabilities with respect thereto.
"Total Group" has the meaning specified in Article I of the
Trust Agreement.
"Train H" means, collectively, (i) the Additional Plant, (ii)
the Support Facilities and (iii) the Other Facilities.
<PAGE> 25
20
"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.
"Transportation Agreement" means the time charter with respect
to the transportation of LNG to be sold pursuant to the CPC Sales Contract, as
amended or modified from time to time.
"Trust Agreement" means the Bontang VI Trustee and Paying
Agent Agreement among Bank of America National Trust and Savings Association,
as Trustee, and the Producers, dated as of the date hereof, as modified or
amended from time to time.
"Unocal" means Unocal Indonesia Company.
"VICO Group" has the meaning specified in Article I of the
Trust Agreement.
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 each
Lender severally, and not jointly or jointly and severally, agrees to make
Advances to the Borrower 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 canceled pursuant to Section 3.4(a) hereof or
Section 3.8 hereof or otherwise.
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 (rounded upward or downward, so that
when added to amounts to be borrowed in accordance with Section 2.2(b), the
total amount to be borrowed on such Borrowing Date will be an amount that
complies with Section 2.2(d)(ii)), 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 Other Facilities and, to the extent
<PAGE> 26
21
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 and prior to the first day of the
Amortization Period, an amount to be used to pay, and equal in amount
to the sum of the amount of interest, fees, expenses, taxes and other
amounts payable by the Borrower pursuant to Sections 2.3, 2.6, 2.7,
3.3, 3.4(b), 6.6 and 10.6 hereof which are due on such Borrowing Date,
which amounts shall be used only to pay the amounts referred to
therein, and
(ii) on the Reserve Account Borrowing
Date, an amount (the "Reserve Account Borrowed Amount") to be paid to
the Reserve Account, which amount shall not exceed the lesser of (A)
the Anticipated Loan Amounts (as defined in the Trust Agreement) as of
such Borrowing Date as reasonably estimated and reflected in the
relevant Notice of Borrowing, and determined without giving effect to
any amount then held in the Reserve Account, and (B) the amount of
Commitments undrawn immediately before such Borrowing Date, less the
sum of any Borrowed Amounts borrowed on such Borrowing Date pursuant
to Section 2.2(b)(i) and 100 percent of the costs estimated to be
required for (x) the completion and final acceptance of the Additional
Plant and the Other Facilities (other than the Debottlenecking
Project) pursuant to the Development Plan and the EPC Contract and (y)
the completion of the Debottlenecking Project pursuant to the
Development Plan, as set forth in the report referred to in Section
5.3(c) hereof.
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 Sections 2.3, 2.4, 2.5 and 2.6 hereof.
(c) The Borrower has delivered to the Agent 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 H as provided therein), anticipated to be
requested during the Availability Period. The Borrower shall update
<PAGE> 27
22
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 Agent. 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 Agent as soon as
practicable in order to facilitate the Lenders' funding arrangements with
respect to such Borrowing.
(d) (i) With respect to each Borrowing, the
Borrower shall give to the Agent 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. In addition, the Borrower shall give a copy of the Notice
of Borrowing to the Finance Company, on which the Finance Company may
rely as if addressed to it as a Lender hereunder; provided that for
such purpose the amount of the Advance to be made by it shall equal
the percentage of the amount of such Borrowing equal to the
outstanding Commitment of the Finance Company divided by the
outstanding Commitments of all Lenders; and provided, further, that
the copy of the notice to the Finance Company shall be deemed timely
if received by the Finance Company not later than noon, Tokyo time, on
the date seven Business Days preceding such Borrowing Date.
(ii) 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 by the Agent on a pro rata basis among the outstanding
Commitments of the Lenders.
(iii) A Notice of Borrowing, once it has
been received by the Agent or a copy of it has been received by the
Finance Company, shall not be revocable by the Borrower.
<PAGE> 28
23
(e) Upon receipt of a Notice of
Borrowing, the Agent shall forthwith notify each Lender (including the
Finance Company) of the Borrowing Date identified therein. Before
11:00 a.m., New York time, on such Borrowing Date each Lender will
make available in Dollars the amount of such Lender's Advance to be
made on such Borrowing Date in same day settlement funds by credit of
Federal or other immediately available funds satisfactory to the Agent
to the account of the Agent (account no. 323-5-09967) at The Chase
Manhattan Bank, Administrative Agent, Loan & Agency Services, located
at 1 Chase Manhattan Plaza, 8th Floor, New York, New York 10081,
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 Lenders (other
than the Finance Company) and by facsimile (to be confirmed by letter)
to the Finance Company. 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 shall make available to the Borrower to the account or
accounts in New York City as shall have been specified 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.
(f) 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 Lender one Business Day prior to a Borrowing
Date (which notice shall be effective only upon receipt) that such
Lender does not intend to make available to it such Lender's Advance
to be made on such date, the Agent may (but shall have no obligation
to) assume that such Lender has made such 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 Lender's
Advance is not in fact made available to the Agent by such Lender, the
Agent shall be entitled to recover such amount either on demand from
such 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.
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 2.4 or 2.5
hereof, as the case may be, with respect to each Interest Period. Such
interest payable with respect to each Interest Period shall be paid on the
Interest Payment Date at the end of such Interest Period.
<PAGE> 29
24
Interest on the Advances shall be calculated from and including the relevant
Borrowing Date up to but not including the date of actual receipt of repayment
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 Determination of Interest Rates.
(a) On the LIBOR Business Day (the "Reference
Date") that is two LIBOR Business Days prior to the commencement of each
Interest Period, the Agent shall fix the interest rate for the Advances and any
Deferred Portion 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 selected by the Agent) as of approximately 11:00
a.m., London time, on the Reference Date for a period equal to such Interest
Period, as determined by the Agent. 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 Agent). 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 Agent shall be conclusive in the absence of manifest error.
(b) If pursuant to Section 2.4(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 the Interest Period and in an
amount of $50,000,000.00. The determination of the Agent shall be conclusive
in the absence of manifest error and shall be made on the above basis as soon
as
<PAGE> 30
25
practicable thereafter, New York time. If for any reason no quotation is
furnished by one or more of the Reference Banks to the Agent, the Agent shall
determine such interest rate on the basis of the quotations furnished by the
remaining Reference Banks.
2.5 Alternative Interest Rates; Voluntary Prepayment.
If, on any date on which an interest rate is to be fixed pursuant to Section
2.4 hereof, (i) none of the Reference Banks is able to furnish a quotation to
the Agent for purposes of determining an interest rate pursuant to Section
2.4(b) hereof or (ii) for purposes of determining an interest rate pursuant to
Section 2.4(b) hereof the Agent is 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 2.5) that
the rate or rates for Dollar deposits displayed on the Telerate screen or the
"LIBO" page (as applicable pursuant to Section 2.4(a) hereof) or, in the event
that LIBOR for such Interest Period is being determined pursuant to Section
2.4(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 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 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
<PAGE> 31
26
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 2.6(b)
hereof) in accordance with the provisions of Section 3.6 hereof. For purposes
of this Section 2.5, "Notice Lenders" means at any time Lenders holding in
excess of 15% of the aggregate unpaid principal amount of the Advances, or if
no such Advances are at the time outstanding, Lenders having in excess of 15%
of the aggregate amount of the Commitments.
2.6 Interest Rate on Overdue Amounts; Other Indemnities.
(a) The Borrower shall pay interest on overdue
principal of any 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 the fourth anniversary of the initial Borrowing Date
hereunder, 2.10%, and (ii) thereafter, 1.825%, 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 Agent may elect, as determined by the Agent 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 Agent
may elect, as displayed on the "LIBO" page (or any successor page as determined
by the Agent) of the Reuters Monitor Money Rates Service as determined by the
Agent upon consulting such "LIBO" page (or successor page) or (C) if the LIBO
page (or successor 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 at least six days and not
exceeding six months, as the Agent 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
<PAGE> 32
27
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 2.5 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 the fourth
anniversary of the initial Borrowing Date hereunder, 2.10%, and (ii)
thereafter, 1.825%, 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 2.6(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
Agent on behalf of each Lender 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 to the Agent (or a copy thereof has been
given by the Agent to the Finance Company), 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 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 2.6(b) shall be conclusive as to the
determination of such amounts in the absence of manifest error.
2.7 Fees.
(a) 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 fee letter
agreement, of even date herewith, between the Borrower and the Lead Arranger
and the agency fee letter agreement, of
<PAGE> 33
28
even date herewith, between the Borrower and the Agent and of even date
herewith (the management fee letter agreement and the agency fee letter
agreement are collectively referred to herein as the "Letter Agreement").
(b) The Borrower agrees to pay to the Agent, for
the account of each Lender, a commitment fee at the rate of 0.175% per annum on
the daily undrawn amount of such 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 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. 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.
2.8 The Notes. Each Lender's Advances shall be evidenced
by a single promissory note of the Borrower (each a "Note"), substantially in
the form of Exhibit C-1 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 and 2.6 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.
2.9 Repayment on Maturity Dates; Deferral.
(a) Subject to Section 2.9(b) hereof, the
Borrower shall pay (i) on any Maturity Date (including any Special Maturity
Date), the Current Payment with respect to such Maturity Date, plus (ii) on any
Special Maturity Date, an amount of principal equal to the difference between
(x) the Current Amortized Amount and (y) the Prior Amortized Amount; provided
that on the Final Maturity Date the Borrower
<PAGE> 34
29
shall repay in full the amount of the aggregate Advances then outstanding. As
used herein, the following terms have the respective meanings assigned thereto
below:
"Applicable Amortization Percentage" means (i) with respect to
each of the 1st through 4th Maturity Dates, 1.5%, (ii) with respect to each of
the 5th through 12th Maturity Dates, 2.0%, (iii) with respect to each of the
13th through 24th Maturity Dates, 2.5% and (iv) with respect to each of the
25th to 40th Maturity Dates, 3.0%.
"Current Amortized Amount" means, with respect to any Special
Maturity Date, the sum of (i) the product of (x) the number of Maturity Dates
(if any) occurring prior to such Special Maturity Date with respect to which
1.5% is the Applicable Amortization Percentage, multiplied by (y) 1.5% of the
Funded Advances as of the Special Maturity Date, plus (ii) the product of (x)
the number of Maturity Dates (if any) occurring prior to such Special Maturity
Date with respect to which 2.0% is the Applicable Amortization Percentage,
multiplied by (y) 2.0% of the Funded Advances as of the Special Maturity Date.
"Current Payment" means, with respect to any Maturity Date, an
amount of principal equal to the Applicable Amortization Percentage with
respect to such Maturity Date of the Funded Advances as of such Maturity Date.
"Funded Advances" means, with respect to any Maturity Date
(including any Special Maturity Date), the aggregate principal amount of
Advances that have been made by the Lenders to the Borrower prior to such
Maturity Date, whether or not outstanding as of such Maturity Date.
"Prior Amortized Amount" means, with respect to any Special
Maturity Date, the sum of all amounts previously calculated to or repayable
pursuant to this Section 2.9(a) (whether or not actually repaid).
"Special Maturity Date" means each of the Maturity Dates
occurring on or prior to the end of the Availability Period and the Maturity
Date first occurring after the end of the Availability Period.
(b) If after application of amounts to the
payment of interest and other amounts payable with respect to the Advances 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, 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 Agent, which shall
promptly notify the Lenders thereof) to defer to the next succeeding Maturity
Date payment of the amount of principal for which such funds will be
<PAGE> 35
30
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 2.9(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 shall be in
full force and effect;
(iii) No material breach or default under
either LNG Sales Contract 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 either LNG
Sales Contract 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 or both.
2.10 Notices. The Agent shall promptly give the Borrower
and each of the Lenders (i) notice of each interest rate (or interest rates)
determined pursuant to Section 2.4, 2.5 or 2.6 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, the amount of commitment fees estimated in accordance with Section
2.7(b) hereof to be paid to the Lenders on each of such dates and the amount of
the agency fee and the management 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 the occurrence of the Effective Date,
notice to the effect that the Effective Date has occurred, and (iv) the notices
to the Borrower by the Agent that Section 3.2(b) of the Trust Agreement
requires this Agreement to provide for. The Agent 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.
<PAGE> 36
31
SECTION 3. PAYMENTS
3.1 Allocation of Amounts; Substitute Payment.
(a) Unless otherwise provided in this Agreement,
all payments by the Borrower to the Agent for the account of the Lenders or to
the Finance Company 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 Lenders, pro rata to their respective
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 Lenders (other than the Finance Company), and the receipt
by the Agent of such payments shall discharge the Borrower from any further
liability to make such payments to the Lenders (other than the Finance
Company).
(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 payable to it to be made as aforesaid, the
Borrower shall pay to each 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 Lender and to such account as may be specified by
the relevant Lender to the Borrower, the amount of the relevant Lender's
portion of the payment in question. Each such 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 (other than
as provided in Section 3.2(b) hereof with respect to the Finance Company) under
this Agreement, the Notes or 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 international banking
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. 323-5-09967) at The Chase Manhattan Bank, Administrative Agent,
Loan & Agency Services, 1 Chase Manhattan Plaza, 8th Floor, New York, New York
10081, 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, 2.6 or 2.7 hereof and if the Borrowing Date
applicable to
<PAGE> 37
32
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 Lender (other
than the Finance Company) (in each case for the account of such Lender's
Lending Office) in like funds with respect to each payment received by such
Agent for the account of such Lenders or the holders of the Notes.
(b) Each payment made by the Borrower with
respect to the Finance Company under this Agreement, the Note held by the
Finance Company or 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 Finance Company (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 Finance Company and the other Lenders receive such payments 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
such payment is due, an irrevocable payment order in favor of the Finance
Company 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
Finance Company's bank in Tokyo, Japan (Account No. 02USD07189980-01) at The
Long-Term Credit Bank of Japan, Limited, Tokyo Headquarters, 1-8, Uchisaiwaicho
2-chome, Chiyoda-ku, Tokyo 100 Japan, or to such other bank or account of the
Finance Company in Tokyo, Japan as the Finance Company may at any time or from
time to time designate by written notice to the Borrower. The receipt by the
Finance Company of such payment in accordance with such irrevocable payment
order shall fully discharge the Borrower's obligations with respect to the
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, 2.6 or 2.7 hereof, and if the Borrowing Date
applicable to such Borrowing is also the date such payment is to be made to the
Finance Company, 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.
(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
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33
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 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 Agent,
the Finance Company or the Lenders through the Agent, as the case may be, to
the extent necessary in order that the net amount received by the Agent, the
Finance Company or the Lenders through the Agent, as the case may be, 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 Agent or any
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 Agent
and each Lender harmless from any such Taxes or will reimburse to the Agent and
each 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 Agent
and each Lender pursuant to such indemnity or reimbursement, after deduction of
all Taxes required to be deducted, withheld or otherwise paid by the Agent and
the Lenders with respect to such amount, shall equal the amount of such Taxes
so imposed or otherwise subject to indemnity and reimbursement.
<PAGE> 39
34
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 a Lender to maintain its Commitment as
aforesaid, such Lender shall promptly forward to the Agent in writing, and the
Agent shall promptly forward to the Borrower, evidence certified by such 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 (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
<PAGE> 40
35
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
2.6(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 Lender (other than the Finance Company)
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 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
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 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 Lenders provided in Section 3.4(a) or (b) hereof.
3.5 Prepayments in Connection with Completion of Train H;
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
H 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
<PAGE> 41
36
Period then in effect in accordance with the provisions of Section
3.7(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 or any other amount
pursuant to Sections 3.3(a)(vii) and 3.3(b)(vi) 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 2.5 or 3.4(b) hereof, the Borrower shall
give the Agent notice (and shall give a copy to the Finance Company on which
the Finance Company may rely as if addressed to it as a Lender hereunder) of
such prepayment not later than noon, New York City time, on or prior to the
eighth Business Day preceding the date of such prepayment, 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 payable under this Agreement to the Lender or
Lenders holding such Note or Notes. Any notice of prepayment under this
Section 3.6 shall be irrevocable. Without limiting the right of the Borrower
to prepay the Notes in the manner provided in Section 2.5 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 Agent with as much prior written
notice (with a copy to the Finance Company on which the Finance Company may
rely as if addressed to it as a Lender hereunder) of its intention to prepay
any of the Notes pursuant to Section 2.5 or 3.4(b) as is reasonably possible in
the circumstances.
3.7 Other Voluntary Prepayments. The Borrower may, upon
irrevocable prior notice to the Agent (with a copy to the Finance Company on
which the Finance Company may rely as if addressed to it as a Lender hereunder)
given not later than noon, New York City time, on or prior to the eighth
Business Day preceding the date of such 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
<PAGE> 42
37
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 Section
2.6(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 Agent (and shall provide a copy to the Finance Company on which the Finance
Company may rely as if addressed to it as a Lender hereunder) with 30 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 Agent (with a copy to the Finance Company on which the Finance
Company may rely as if addressed to it as a Lender hereunder), 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 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, the Letter Agreement and the
Notes shall be paid on or prior to the Final Maturity Date.
<PAGE> 43
38
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower and, only to the extent expressly stated to be in
its individual capacity, Bank of America National Trust and Savings
Association, 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. Bank of America National Trust and Savings
Association, 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.
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 Bank of America
National Trust and Savings Association, 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 Bank of America National Trust and Savings
<PAGE> 44
39
Association, 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 Agent 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.
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 VI 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. Bank of
America National Trust and Savings Association, 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
<PAGE> 45
40
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.
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 Agent shall have received on the
Effective Date the following, all in form and, as to Sections 5.1(a)(i) to
(a)(xv) inclusive and 5.1(a)(xvii), in substance satisfactory to the Lenders:
(i) a Note payable to the order of each
Lender complying with the requirements of Section 2.8 hereof;
(ii) a report of Merlin Associates, Inc.
with respect to the Additional Plant, the Storage Tank and the
Pipeline, the form and scope of which shall be substantially similar
to the form and scope of the Technical Consultants report of Merlin
Associates, Inc. with respect to Pertamina Bontang LNG Plant Train G
Expansion Project;
(iii) a signed copy of an opinion of
Williams & Harris LLP, special counsel to the Borrower, substantially
in the form of Exhibit D-1 hereto, dated the Effective Date;
<PAGE> 46
41
(iv) a signed copy of an opinion of
Thomas R. Bennett, 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, substantially 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 Agent and
the 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 Agent and the Lenders,
substantially in the form of Exhibit F-2 hereto, dated the Effective
Date;
(x) a signed copy of an opinion of
Taiwan Commercial Law Offices, special Taiwanese counsel to the Agent
and the 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) certified copies of all required
material authorizations and consents of all relevant governmental
authorities of Indonesia (certified by Pertamina), if any, in
connection with the transactions
<PAGE> 47
42
contemplated by this Agreement, the Notes, the Letter Agreement and
the Producers Agreement;
(xiv) a copy of each of the EPC Contract
(excluding the materials referred to in Exhibit A of the agreement
referred to in clause (i) of the definition of the EPC Contract), the
Development Plan and each Basic Agreement, in each case with all
amendments to the Effective Date;
(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 and (iii) the EPC
Contract, in each case as amended, that were provided to 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 April 30, 1995
of the Tunu Field in the Mahakam Contract Area, Offshore East
Kalimantan, Republic of Indonesia," "Certificate of Gas Reserves as of
April 30, 1995 of the Tambora Field in the Mahakam Contract Area,
Offshore East Kalimantan, Republic of Indonesia," "Certificate of Gas
Reserves as of April 30, 1995 of the Sisi Field, Offshore East
Kalimantan, Republic of Indonesia," "Certificate of Gas Reserves as of
April 30, 1995 of the Peciko Field in the Mahakam Contract Area,
Offshore East Kalimantan, Republic of Indonesia," "Certificate of Gas
Reserves as of April 30, 1995 of the Nubi Field, Offshore East
Kalimantan, Republic of Indonesia," "Certificate of Gas Reserves as of
April 30, 1995 of the Handil Field in the Mahakam Contract Area, East
Kalimantan, Republic of Indonesia," "Certificate of Gas Reserves as of
April 30, 1995 of the Bekapai Field in the Mahakam Contract Area,
Offshore East Kalimantan, Republic of Indonesia," "Certificate of Gas
Reserves as of April 30, 1995 of Kerindingan, Melahin, Santan, and
Serang Fields in the Unocal Indonesia, Ltd. Contract Area, East
Kalimantan, Republic of Indonesia," "Certificate of Gas Reserves as of
April 30, 1995 of the Attaka Field in the Unocal Indonesia, Ltd.
Contract Area, Offshore East Kalimantan, Republic of Indonesia,"
"Certificate of Gas Reserves as of April 30, 1995 of the West Peciko
Field in the Unocal Indonesia Ltd. Contract Area, Offshore East
Kalimantan, Republic of Indonesia," "Certificate of Gas Reserves as of
April 30, 1995 of Lampake and Pamaguan Fields in the Sanga Sanga
Contract Area, East Kalimantan, Republic of Indonesia," "Certificate
of Gas Reserves as of April 30, 1995 of the Semberah Field in the
<PAGE> 48
43
Sanga Sanga Contract Area, East Kalimantan, Republic of Indonesia,"
"Certificate of Gas Reserves as of April 30, 1995 of the Nilam Field
in the Sanga Sanga Contract Area, East Kalimantan, Republic of
Indonesia," "Certificate of Gas Reserves as of April 30, 1995 of the
Mutiara Field in the Sanga Sanga Contract Area, East Kalimantan,
Republic of Indonesia" and "Certificate of Gas Reserves as of April
30, 1995 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 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); and
(xvii) a certificate of Pertamina to the
effect that (i) Property Insurance Policy No. PNF9600091 dated July
1996, together with any amendments, issued by P.T. Tugu Pratama
Indonesia in favor of Pertamina, among others, covering the Insured
Bontang Plant and (ii) evidence, satisfactory to the Agent in its sole
discretion, confirming that Contractors "All Risks" insurance has been
issued by P.T. Tugu Pratama Indonesia in favor of Pertamina, among
others, covering Train H have been delivered to the Agent prior to the
Effective Date 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.
(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
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
<PAGE> 49
44
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 Agent 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 3.6(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 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 Agent shall have received a Notice of
Borrowing in accordance with the provisions of Section 2.2(d) hereof (and, with
respect to such obligations of the Finance Company, the Finance Company shall
have received a copy thereof as provided therein);
(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 Agent 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%;
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45
(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 Pertamina of or the ability of Pertamina to
perform its obligations under either 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)(xiii) 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 clause (i) or
(ii) of the definition of Completion Date in Section 1 hereof;
(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 Agent 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;
(h) with respect to the making of the initial
Advances only, the Agent shall have received a copy, certified by the Borrower
to be the true and correct as of the date of the initial Borrowing Date, of the
Transportation Agreement, in form and substance reasonably satisfactory to the
Majority Lenders acting in good faith;
(i) with respect to the making of the initial
Advances only, the Agent shall have received a signed copy of a legal opinion
to the effect that the Transportation Agreement has been duly authorized,
executed and delivered and constitutes the legal, valid and binding obligation
of Pertamina, enforceable against Pertamina in accordance with its terms, and
such other matters as the Agent may reasonably request, such opinion to be in
form and substance, and provided by legal counsel, in each case reasonably
acceptable to the Agent; and
(j) with respect to the making of the initial
Advances only, the Agent shall have received notice from Pertamina that the
agreement referred to in clause (i) of the definition of the EPC Contract has
become effective in accordance with Section 33.12 thereof.
5.3 Conditions Precedent to the Advances to Fund
the Reserve Account. Except as the Majority Lenders may otherwise consent, the
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46
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) (i) the Agent shall have received either (x)
at or prior to the delivery of the Notice of Borrowing with respect to such
Advance, a copy of a notice from Pertamina certifying that it has accepted
delivery of the vessel contemplated by the Transportation Agreement or (y) not
less than 30 days prior to the delivery of the Notice of Borrowing with respect
to such Advance, a copy of a notice from Pertamina certifying that it has
arranged for appropriate transportation sufficient for delivery of the fixed
quantities of LNG required pursuant to the CPC Sales Contract (which
transportation may include provisional arrangements with respect to the period
prior to the date the vessel contemplated by the Transportation Agreement is
expected to be delivered and accepted under the Transportation Agreement) and
attaching copies of all agreements governing the terms of such transportation,
certified by Pertamina to be complete and correct, and providing such other
information with respect to such transportation as may be reasonable in the
circumstances; and (ii) if Pertamina certifies pursuant to clause (i)(y) that
it has arranged for such appropriate transportation, the Agent shall not have
given the Borrower notice, within 15 Business Days of the Agent's receipt of
such certification, that the Majority Lenders are not reasonably satisfied that
such transportation arrangements are sufficient for delivery of the fixed
quantities of LNG required pursuant to the CPC Sales Contract;
(b) notices of Mechanical Completion (as defined
in the EPC Contract) with respect to each of the Additional Plant, the Storage
Tank and the Pipeline shall have been issued as contemplated by Section 11.1.2
of the EPC Contract, and the Agent shall have received, at or prior to the
delivery of the Notice of Borrowing with respect to such Advance, copies of
such notices certified by Pertamina; and
(c) the Agent 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 aggregate cost required for the completion
and final acceptance of the Additional Plant, the Storage Tank and the Pipeline
pursuant to the Development Plan and the EPC Contract and required for the
completion of the Debottlenecking Project pursuant to the Development Plan,
prepared by the Producers as of a date after the date of the notice of
Mechanical Completion referred to in clause (b) 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 be to the effect that the engineering firm has reviewed the
status of the construction of the Additional Plant and the Other 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.
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5.4 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 5.2(b)(i)
hereof as to Sections 7(a) through 7(e) hereof only, Section 5.2(b)(ii) hereof
and Section 5.2(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 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 2000, 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, (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 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
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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 Agent 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 or both
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-2 hereto, together with the original copy of the Notice of Completion
to Trustee substantially in the form included as part of Exhibit B-2 hereto;
and
(f) as soon as the Borrower receives notice from
the Producers pursuant to Section 3.7(c) of the Trust Agreement that Train H
has been completed, a written notice together with the copy of the notice from
the Producers certifying that such event has occurred; and
(g) at least 30 days prior to the first to occur
of the two dates that the Borrower may determine for use in clause (i) of the
definition of "Availability Period," a statement in writing setting forth the
Borrower's determination of the date to be so used; provided that if the
Borrower fails to deliver such statement at least 30 days prior to the first to
occur of such two dates the Borrower shall be deemed to have delivered a
statement determining to use the later of such two dates in such clause (i);
and
(h) on or prior to the delivery of the Notice of
Borrowing with respect to any Advance requested pursuant to Section 2.2(b)(ii),
the Borrower shall deliver a written notice indicating what portion, if any, of
the Reserve Account Borrowed Amount is to be available to pay the cost to
complete the Additional Plant and the Other Facilities; provided that the
failure to deliver such notice at or prior to the delivery of such Notice of
Borrowing shall be deemed to constitute the delivery of a notice indicating
that the Borrower does not waive the right to use any of the Reserve Account
Borrowed Amount for such purpose.
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The Agent shall forthwith cause a copy of all information
provided under this Section 6.1 to be distributed to each 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 VI 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 VI Trustee under the Trust Agreement or any duty as Bontang VI
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, 3.4 (other than Section 3.4(e)), 3.5, 3.7 or 3.9,
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 have an adverse effect on the trust created under such Trust
Agreement, or 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 Agent, on behalf of the 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 amounts of the Source of Debt
Service only after (x) 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 and (y) any amounts
required to be deposited in the Debt Coverage Reserve Account and paid to the
Lenders therefrom under Section 9 hereof have been so deposited and paid, (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
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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 of Outstanding Amounts and Repayment Schedule.
Promptly after (i) the beginning of the Amortization Period, (ii) each
Borrowing Date occurring thereafter prior to the end of the Availability Period
and (iii) the end of the Availability Period, the Agent shall deliver to the
Borrower a notice setting forth the outstanding amounts of principal and
interest as of the most recent Borrowing Date and a repayment schedule. In
each case, the Borrower shall either promptly confirm that it agrees with such
amounts and such schedule by signing and returning to the Agent a copy of such
notice or promptly deliver to the Agent a notice indicating that it does not
agree and specifying the reasons therefor. The delivery or lack of delivery of
any 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 assumptions necessary for
calculating the Debt Coverage Ratio are, pursuant to the definition of Debt
Coverage Ratio, to be
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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 and the Agent from time to time),
other than any such bank with respect to which the Agent has, within 10
Business Days after the request for negotiations in question, given written
notice of its reasonable objection or (ii) (x) if the Borrower shall not have
selected a bank as provided in the foregoing clause (i), (y) if at any time all
of the banks on Schedule 4 have been so objected to in one or more such notices
or (z) if such Qualified Bank shall not have specified such assumptions, as the
case may be, within 10 Business Days after being selected, 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 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. On or prior to the first day of the Amortization 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 first day of the Amortization 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 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:
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(a) (i) failure to make any payment of the
principal of any of the Notes within two days following, or interest on any of
the Notes 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 2.9(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 5.2 of this
Agreement or in any certificate delivered to the Agent or the 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 Agent at the request
of any Lender; or
(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
Agent at the request of any Lender; or
(f) a Default as defined in the Producers
Agreement;
then 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
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53
Agreement, as and when received by the Borrower, be accumulated and paid to the
Agent, 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 Lenders, the Agent and the Arrangers agree among
themselves and, where the context of Section 8.9 or 8.10 so requires, with the
Borrower:
8.1 Appointment and Authority.
(a) Each Lender (other than the Finance Company),
and each subsequent holder of any Note by its acceptance thereof, irrevocably
authorizes the Agent to receive all payments of principal, interest and other
amounts due to such Lender or such holder under this Agreement and the Notes.
Each Lender (including the Finance Company), and each subsequent holder of any
Note by its acceptance thereof, irrevocably authorizes the Agent to take all
other actions on behalf of such Lender or such holder and to exercise the
powers hereunder as are specifically delegated to the Agent by the terms
hereof, together with all other such powers as shall be reasonably incidental
thereto.
(b) The relationship between each of the 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
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 fiduciary relationship or other 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 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, the
Advances or otherwise, except for its own gross negligence or willful
misconduct. Each of the Lenders, and each subsequent holder of any Note by its
acceptance thereof, agrees (which agreement shall survive payment of the 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 Lenders and,
in the case of a subsequent holder of any Notes, of the Lender from whom such
holder acquired (directly or indirectly) such 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 Letter Agreement) which may
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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 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, the Advances or
otherwise, except (i) normal administrative expenses incidental to the
performance of duties as such Agent hereunder and (ii) any losses, 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 Notes and its duties hereunder and thereunder, and shall not be
liable to any of the 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. The Agent may treat the
payee of any 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 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 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 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 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 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 Borrower fails to
pay in accordance with the terms hereof to the
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Agent when due the principal of or interest on any Note or any commitment fee
payable to any Lender hereunder, the Agent shall promptly give written notice
thereof to the Lenders. The Agent may decline to take any action except upon
the written direction of the Majority Lenders in accordance with the voting
procedures agreement entered into by the Lenders and the Agent on the date
hereof and the Agent may obtain a ratification by such Majority 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
Lenders for any action taken by it upon the direction of the Majority Lenders
or if ratified by the Majority 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 Lenders. The action of the Majority Lenders shall in each case
bind all of the 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 Lender amounts due from the Borrower hereunder which the
Borrower has failed to make available to the Agent, then the 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 Lenders shall have the same rights and powers
hereunder as any 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 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 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 credit analysis and
decision to enter into this Agreement. Each 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.
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8.8 Arrangers and Co-Agents. Nothing in this Agreement
shall impose on the Arrangers or the Co- Agents, in their capacity as such, any
duties or obligations whatsoever among themselves or in favor of the 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 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 Lenders and to the Borrower. The
Agent may be removed at any time with or without cause by the Majority Lenders.
Upon any such resignation or removal, such Majority Lenders shall have the
right to appoint such successor Agent. If no successor Agent shall have been
so appointed by such Majority 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; provided, however, that the retiring Agent
shall not be discharged of any liability for any breach of its duties and
obligations hereunder prior to such acceptance. 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.
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 the Reserve Account Borrowed Amount, if any) immediately
upon receipt thereof, (ii) into the Reserve Account the entire amount of the
Reserve Account Borrowed Amount, if any, immediately upon receipt thereof and
(iii) subject to Section 9.2(b), 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
<PAGE> 62
57
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. 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.
(b) Notwithstanding Sections 9.1 and 9.2(a)
hereof, if there is any Source of Debt Service during the period from and
including January 1, 2000 to and including the first day of the Amortization
Period, the Borrower shall pay the full amount thereof into the Regular Reserve
Account pursuant to Section 3.2 of the Trust Agreement, as and when actually
received by the Borrower, until the aggregate amount accumulated in the Regular
Reserve Account shall equal 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.
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 beginning
of the Amortization Period the Certificate delivered to 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
<PAGE> 63
58
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 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 Agent, the Arrangers, the 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
Bank of America National Trust and Savings Association (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 Bank of America National Trust and Savings Association (or any entity
so acting), or against
<PAGE> 64
59
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 by the enforcement of any
assessment, or otherwise, and (ii) neither Bank of America National Trust and
Savings Association (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 Agent, the Arrangers, the Co-Agents or the 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 Bank of America National Trust and Savings Association (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 5.2 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 Agent, the Arrangers, the Co-Agents or the
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 by telex (with postage
<PAGE> 65
60
prepaid mail confirmation) or (d) sent by telecopier to the parties as follows
(as elected by the party giving such notice):
To the Borrower: Bank of America National Trust and Savings
Association, as Trustee under the Bontang VI
Trustee and Paying Agent Agreement
One World Trade Center, 9th Floor
New York, New York 10048-1191
Attention: Theodore M. Barba
Telex: 62 944
Answerback: BOA UW
Telecopier: 212-390-3595
To the Agent: The Chase Manhattan Bank
Specialized Product Support Services
One Chase Manhattan Bank Plaza, 8th Floor
New York, New York 10081
Attention: Mr. Jas S. Brar, Vice President
Sunita Vora, Second Vice President
Telex: 420120
Answerback: CMB UI
Telecopier: (212) 552-5646
To the Lenders: As provided on the signature
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 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 Agent, the Lenders or
the holders of any Note, any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any
<PAGE> 66
61
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 Arrangers, the Lenders, the Agent,
the Co-Agents 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 Lender (other than the Finance Company) to another financial institution
(i) at least 75% of the voting shares of which are held directly or indirectly
by such Lender, or (ii) holding directly or indirectly at least 75% of the
voting shares of such Lender or (iii) at least 75% of the voting shares of
which are held directly or indirectly by a corporation which holds directly or
indirectly at least 75% of the voting shares of such 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.
<PAGE> 67
62
(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-2 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 by the Transferee or the Lender of the transfer fee of $3,500,
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 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 (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.
<PAGE> 68
63
(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 2.8 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 its rights under this Agreement and the Notes without any restriction and
without notice to the Borrower.
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 Majority 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 each 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; (c) reduce the
percentage of the amount of the Commitments or the Advances specified in the
definition of "Majority 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 Agent on behalf of the relevant
Lenders if the Agent has been so authorized in writing or by telex, cable or
facsimile transmission by the Majority Lenders or all of the 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 Lenders and any holder of a
Note. Any action that the Agent may take on behalf of the Majority Lenders
under this Agreement and that the Agent in fact so takes shall be binding on
all of the Lenders.
<PAGE> 69
64
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 Agent, on behalf
of the Lenders, for, all reasonable fees, disbursements, expenses (including
without limitation travel expenses) and other charges of the Lenders' special
New York, Taiwanese and Korean counsel and (ii) to pay, or reimburse the Agent,
on behalf of the Arrangers, for, all other reasonable out-of-pocket expenses of
the Arrangers, including, but not limited to, travel and photocopying expenses,
in each case in connection with the preparation, negotiation and signing of the
documents related to the transactions contemplated by, the preparation by the
Lenders of an information memorandum with respect to, and the satisfaction of
the conditions precedent for 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 October 14, 1996 or after
the initial Borrowing Date, unless such fees, disbursements, expenses or other
charges were incurred pursuant to reasonable and customary post-closing
activities immediately after the initial Borrowing Date. With respect to such
amounts for which invoices shall have been delivered to the Borrower (i) on or
prior to February 14, 1997, the Borrower shall pay such amounts on or before
the earliest to occur of (x) the initial Borrowing Date, and (y) the 30th day
following the Effective Date and (ii) at any time after February 14, 1997, the
Borrower shall pay such amounts on or before the next date that is the 21st day
of a month and occurs at least 30 days following the date of delivery to the
Borrower of such invoice.
(b) The Borrower agrees (i) to pay, or reimburse
the Agent 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 Agent 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 (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),
to pay, or reimburse the Agent for, all reasonable out-of-pocket expenses of
the Agent and each holder of any Note arising in connection with such Event of
Default or the enforcement of this Agreement, such 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 the Agent or such holder. The Borrower
shall pay any such amounts for which an invoice is delivered to it prior to the
Completion Date, on or before the earlier of (A) the 30th day following
<PAGE> 70
65
the next Borrowing Date and (B) the 60th day following the date of delivery to
the Borrower of the invoice therefor. The Borrower shall pay any such amounts
for which an invoice is delivered to it on or after the Completion Date as
provided in the Trust Agreement.
10.7 Sharing of Set-Off and Other Payments. In the event
that any Lender shall have received an amount in excess of its ratable share of
payments hereunder or under the Notes through the exercise of any lien, set-off
or similar right or any voluntary payment by the Borrower, such Lender shall
promptly (and in any event within 15 days) purchase for cash, without recourse
that portion of each other Lender's Advances as will result in each 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
Lender, its purchases from the other Lenders shall be rescinded and the price
repaid without interest; and provided further, that if, after acceleration of
the maturity of the relevant Notes pursuant to Section 7 hereof, any Lender
shall commence an action or proceeding in any court to enforce the relevant
Notes held by such Lender and as a result thereof, or in connection therewith,
shall receive an excess payment on such Notes, such Lender shall not be
required to share any portion of such excess payment with a 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 Notes in another
court. Nothing herein contained shall in any way affect (a) expenses pursuant
to Section 2.6(b) hereof, prepayments pursuant to Section 3.4 hereof and
interest payments calculated in accordance with the provisions of the fifth
sentence of Section 2.5 hereof and (b) the right of any Lender to obtain
payment of indebtedness of the Borrower other than 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 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,
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66
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 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
------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Trustee as aforesaid
By /s/ HANAFI GAN BIN ABDULLAH
--------------------------------
Name: Hanafi Gan Bin Abdullah
Title: A/K/A Gan Kah Chai
Senior Vice President
and Country Manager
By /s/ MARIAWATI HALIM
--------------------------------
Name: Mariawati Halim
Title: Vice President
</TABLE>
<PAGE> 72
67
<TABLE>
<S> <C>
Lead Arranger
-------------
BANK OF TAIWAN,
NEW YORK AGENCY
By /s/ K. C. WANG
--------------------------------
Name: K. C. Wang
Title: Senior Vice President &
General Manager
Co-Lead Arranger
----------------
BONTANG LNG TRAIN-H INVESTMENT
CO., LTD.
By /s/ YOSHIAKI KATAYAMA
--------------------------------
Name: Yoshiaki Katayama
Title: President
Agent
-----
THE CHASE MANHATTAN BANK
By /s/ DANIEL DELANGE
--------------------------------
Name: Daniel Delange
Title: Managing Director
Co-Agents and Co-Arrangers
--------------------------
BANQUE INDOSUEZ
By /s/ MARC L. TABOUIS
--------------------------------
Name: Marc L. Tabouis
Title: Managing Director
Project and International
Finance Department
</TABLE>
<PAGE> 73
68
<TABLE>
<S> <C>
THE CHASE MANHATTAN BANK
By /s/ DANIEL DE LANGE
--------------------------------
Name: Daniel De Lange
Title: Managing Director
THE FUJI BANK, LIMITED,
PROJECT FINANCE DIVISION FOR THE
AMERICAS
By /s/ HAJIME TANIMURA
--------------------------------
Name: Hajime Tanimura
Title: Attorney-in-Fact
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED,
NEW YORK BRANCH
By /s/ TSUNEHIRO WATABE
--------------------------------
Name: Tsunehiro Watabe
Title: General Manager
Co-Arrangers
------------
CHANG HWA COMMERCIAL BANK, LTD.,
NEW YORK BRANCH
By /s/ WALTER W. T. YEH
--------------------------------
Name: Walter W. T. Yeh
Title: General Manager
</TABLE>
<PAGE> 74
69
<TABLE>
<S> <C>
FIRST COMMERCIAL BANK,
NEW YORK AGENCY
By /s/ VINCENT T. C. CHEN
--------------------------------
Name: Vincent T. C. Chen
Title: Vice President &
General Manager
HUA NAN COMMERCIAL BANK, LTD,
LOS ANGELES BRANCH
By /s/ GEORGE F. K. LU
--------------------------------
Name: George F. K. Lu
Title: Vice President &
General Manager
THE TOKAI BANK, LTD.,
NEW YORK BRANCH
By /s/ SHINICHIRO MIZUNO
--------------------------------
Name: Shinichiro Mizuno
Title: General Manager
International Finance
Division
</TABLE>
<PAGE> 75
70
Lenders
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$183,500,000.00 BANK OF TAIWAN,
NEW YORK AGENCY
By /s/ K. C. WANG
--------------------------------
Name: K. C. Wang
Title: Senior Vice President
General Manager
Lending Office:
One World Trade Center
53rd Floor, Suite 5323
New York, NY 10048
Attention: Mr. Kao-Chin Wang
Senior Vice President &
General Manager
Telex: 49604214
Answerback: BOTNY
Telecopier No.: (212) 775-9026 or 7
</TABLE>
<PAGE> 76
71
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By /s/ TETSUO SHIBATA
--------------------------------
Name: Tetsuo Shibata
Title: Attorney-in-Fact
Lending Office:
1251 Avenue of the Americas, 12th Floor
New York, NY 10020
Attention: Mr. Mathis Conner
Assistant Vice President
Telex:
Answerback:
Telecopier No.: (212) 782-6442
</TABLE>
<PAGE> 77
72
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 BANQUE FRANCAISE DU COMMERCE
EXTERIEUR,
HONG KONG BRANCH
By /s/ PATRICE TENEUR
--------------------------------
Name: Patrice Teneur
Title: Attorney-in-Fact
Lending Office:
Room 1818 Shui On Centre
8 Harbour Road
Wanchai, Hong Kong
Attention: Mr. Jean Berthelot
First Vice President
Ms. Grace Wong
Vice President
Telex: 80186
Answerback: BFCEX
Telecopier No.: (852) 2583 9801
</TABLE>
<PAGE> 78
73
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$20,090,000.00 BANQUE INDOSUEZ
By /s/ MARC L. TABOUIS
--------------------------------
Name: Marc L. Tabouis
Title: Managing Director
Project and International
Finance Department
Lending Office:
9, rue Louis Murat
75371 Paris Cedex 08
Attention: Ms. Josette Geugan or
Ms. Dominique Chaudron
Telex: INSU X 650409 F
Answerback:
Telecopier No.: 33-01-44201964
</TABLE>
<PAGE> 79
74
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 BANQUE NATIONALE DE PARIS,
SINGAPORE BRANCH
By /s/ JEAN-ALAIN ORSINI
--------------------------------
Name: Jean-Alain Orsini
Title: Attorney-in-Fact
Lending Office:
20 Collyer Quay
Tung Centre
Singapore 049319
Attention: Mr. Bruno Weill
Telex: NABAPAR RS 24315, 23424
Answerback:
Telecopier No.: (65) 532 7905, 224 3459
</TABLE>
<PAGE> 80
75
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$338,100,000.00 BONTANG LNG TRAIN-H INVESTMENT
CO., LTD.
By /s/ YOSHIAKI KATAYAMA
--------------------------------
Name: Yoshiaki Katayama
Title: President
Lending Office:
Ebisu Neonato, 14th Floor
1-18, Ebisu 4-chome
Shibuya-ku
Tokyo, Japan
Attention: Treasurer
Telecopier No.: (03) 5423-2400
</TABLE>
<PAGE> 81
76
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$60,000,000.00 CHANG HWA COMMERCIAL BANK, LTD.,
NEW YORK BRANCH
By /s/ WALTER W. T. YEH
--------------------------------
Name: Walter W. T. Yeh
Title: General Manager
Lending Office:
One World Trade Center, 32nd Floor
Suite 3211
New York, NY 10048
Attention: Mr. Teddy Mou
Telex: 6790574
Answerback: CHCB NY
Telecopier No.: (212) 390-0120
</TABLE>
<PAGE> 82
77
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$20,090,000.00 THE CHASE MANHATTAN BANK,
NASSAU BRANCH
By /s/ MORGAN T. MCGRATH
--------------------------------
Name: Morgan T. McGrath
Title: Managing Director
Lending Office:
c/o Eurocurrency & Global Money Markets
Operations Division
4 Chase Metrotech Center, 15th Floor
Brooklyn, NY 11245
Attention: Ms. Ida L. Borroto
Vice President
Mr. Daniel de Lange
Managing Director
Ms. Carolan Romeo
Second Vice President
Mr. Jose Santiago
Assistant Vice President
Ruth Tortorici
Operations Officer
Telex:
Answerback:
Telecopier No.: (718)242-6550
011-852-2523
(718)242-6550
(718)242-6550
(718)242-6550
</TABLE>
<PAGE> 83
78
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 CHO HUNG BANK,
NEW YORK BRANCH
By /s/ MYONG HYUN KYONG
--------------------------------
Name: Myong Hyun Kyong
Title: Attorney-in-Fact
Lending Office:
320 Park Avenue
New York, NY 10022
Attention: Mr. Dae Won Suh
Manager
Telex: 662314/5
Answerback: CHBK
Telecopier No.: (212) 355-2231
</TABLE>
<PAGE> 84
79
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 CHRISTIANIA BANK
By /s/ BJORN OSTROM
--------------------------------
Name: Bjorn Ostrom
Title: Branch Manager
Executive Vice President
By /s/ FINN AMUND NORBYE
--------------------------------
Name: Finn Amund Norbye
Title: First Vice President
Lending Office:
331 North Bridge Road
#21-01 Odeon Towers
Singapore 188720
Attention: Mr. Finn Amund Norbye
First Vice President
Telex: RS 42888 XIABS
Answerback:
Telecopier No.: (65) 338 2729
</TABLE>
<PAGE> 85
80
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 COMPAGNIE FINANCIERE DE CIC
ET DE L'UNION EUROPEENE
By /s/ CORINNE LEGER-LICOINE
--------------------------------
Name: Corinne Leger-Licoine
Title:
By /s/ J. SCHRICKE
--------------------------------
Name: J. Schricke
Title: Vice President
Lending Office:
4, rue Gaillon 75107
Paris Cedex 02
FRANCE
Attention: Mr. Jacques Schricke or
Mrs. Corinne Leger-Licoine
Telex: 210 942
Answerback: BUE
Telecopier No.: 33 1 42 66 7838 or 7897
</TABLE>
<PAGE> 86
81
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 THE DAI-ICHI KANGYO BANK, LIMITED,
NEW YORK BRANCH
By /s/ TAKESHI KURITA
--------------------------------
Name: Takeshi Kurita
Title: Vice President
Lending Office:
One World Trade Center, Suite 4911
New York, NY 10048
Attention: Ms. Wan Leung
Mr. T. Kurita
Investment Banking Dept. II
Telex:
Answerback:
Telecopier No.: 212-524-0579
</TABLE>
<PAGE> 87
82
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$35,000,000.00 THE FARMERS BANK OF CHINA,
LOS ANGELES BRANCH
By /s/ FRANK T. S. LIN
--------------------------------
Name: Frank T. S. Lin
Title: Vice President
General Manager
Lending Office:
601 South Figueroa Street, 35th Floor
Los Angeles, CA 90017
Attention: Mr. Francis Hsieh or
Ms. Nancy Chung
Telex: 188331
Answerback: FBOC LA
Telecopier No.: (213) 489-5195
</TABLE>
<PAGE> 88
83
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$60,000,000.00 FIRST COMMERCIAL BANK,
NEW YORK AGENCY
By /s/ VINCENT T. C. CHEN
--------------------------------
Name: Vincent T. C. Chen
Title: Vice President
General Manager
Lending Office:
Two World Trade Center, Suite 3328
New York, NY 10048
Attention: Ms. Karen Huang
Credit Department
Telex: 408633 or 408634
Answerback: FCBNY
Telecopier No.: (212) 432-7250
</TABLE>
<PAGE> 89
84
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$20,090,000.00 THE FUJI BANK, LIMITED,
PROJECT FINANCE DIVISION
FOR THE AMERICAS
By /s/ HAJIME TANIMURA
--------------------------------
Name: Hajime Tanimura
Title: Attorney-in-Fact
Lending Office:
Two World Trade Center, 79th Floor
New York, NY 10048
Attention: Ms. Nicole Steiner
Telex: 232440
Answerback:
Telecopier No.: (212) 321-9407 or
(212) 488-2172
</TABLE>
<PAGE> 90
85
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$60,000,000.00 HUA NAN COMMERCIAL BANK, LTD.,
LOS ANGELES BRANCH
By /s/ GEORGE F. K. LU
--------------------------------
Name: George F. K. Lu
Title: Vice President &
General Manager
Lending Office:
707 Wilshire Boulevard, Suite 3100
Los Angeles, CA 90017
Attention: Mr. Kemp Chen
VP/Deputy General Manager
Telex:
Answerback:
Telecopier No.: (213) 362-6617
</TABLE>
<PAGE> 91
86
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/ KIYOSHI KATO
--------------------------------
Name: Kiyoshi Kato
Title: Attorney-in-Fact
Lending Office:
1251 Avenue of the Americas
New York, NY 10020-1104
Attention: Mr. Ryusuke Shigetomi
(Credit Contact)
Ms. Wanda Arizmendi
(Administrative Contact)
Telex: 420802
Answerback: KOGI UI
Telecopier No.: (212) 282-4250
(212) 282-4480
</TABLE>
<PAGE> 92
87
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$50,000,000.00 THE INTERNATIONAL COMMERCIAL
BANK OF CHINA,
NEW YORK AGENCY
By /s/ W. L. LIN
--------------------------------
Name: W. L. Lin
Title: Senior Vice President &
General Manager
Lending Office:
65 Liberty Street
New York, NY 10005
Attention: Mr. Wen-Long Lin
S.V.P. & General Manager
Telex: 420062 or 232640
Answerback: ICBC UI or ICBC UR
Telecopier No.: (212) 608-4943 or 86
</TABLE>
<PAGE> 93
88
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 KREDIETBANK N.V., NEW YORK BRANCH
By /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
By /s/ JEAN GLASGOW
--------------------------------
Name: Jean Glasgow
Title: Assistant Vice President
Lending Office:
125 West 55th Street, 10th Floor
New York, NY 10019
Attention: Ms. Jean Glasgow (New York)
Mr. David Swan (Hong Kong)
Kredietbank Project Finance
Telex: MCI 661572
Answerback: KREDIETNV
Telecopier No.: (212) 956-5580
852-2879-3418
</TABLE>
<PAGE> 94
89
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$20,090,000.00 THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED,
NEW YORK BRANCH
By /s/ TSUNEHIRO WATABE
--------------------------------
Name: Tsunehiro Watabe
Title: General Manager
Lending Office:
165 Broadway
New York, NY 10006
Attention: Mr. Naoyoshi Kasuga
Vice President
Telex: 679-0541
Answerback:
Telecopier No.: (212) 608-2371
</TABLE>
<PAGE> 95
90
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 THE MITSUBISHI TRUST AND BANKING
CORPORATION, NEW YORK BRANCH
By /s/ TAKASHI MASUYAMA
--------------------------------
Name: Takashi Masuyama
Title: Attorney-in-Fact
Lending Office:
520 Madison Avenue
New York, NY 10022
Attention: Mr. Toshiaki Kobayashi
Vice President
Japanese Corporate Finance
Telex: 425078
Answerback: MTAB UI
Telecopier No.: (212) 755-2349
</TABLE>
<PAGE> 96
91
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 THE MITSUI TRUST AND BANKING
COMPANY, LIMITED,
NEW YORK BRANCH
By /s/ SHIGERU TSUJIMOTO
--------------------------------
Name: Shigeru Tsujimoto
Title: Senior Vice President &
Manager
Lending Office:
1251 Avenue of the Americas, 39th Floor
New York, NY 10020
Attention: Mr. Shigeru Tsujimoto
Business Development
Telex:
Answerback:
Telecopier No.: (212) 790-5435
</TABLE>
<PAGE> 97
92
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 THE NIPPON CREDIT BANK, LTD.
By /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Lending Office:
245 Park Avenue, 30th Floor
New York, NY 10167
Attention: Mr. Peter Capitelli
Vice President & Manager
Telex: 232496
Answerback: NCBN UR
Telecopier No.: (212) 490-3895
</TABLE>
<PAGE> 98
93
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 THE NORINCHUKIN BANK,
NEW YORK BRANCH
By /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Lending Office:
245 Park Avenue, 29th Floor
New York, NY 10167
Attention: Mr. Tsuneo Tsukasaki
Telex: 6720068
Answerback: NOCHUBANK
Telecopier No.: (212) 697-5754
</TABLE>
<PAGE> 99
94
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 PT. BANK NEGARA INDONESIA
(PERSERO) TBK.
By /s/ I. GDE DEWA SUTHAPA
--------------------------------
Name: I. Gde Dewa Suthapa
Title: General Manager
Lending Office:
55 Broadway
New York, NY 10006
Attention: Mr. Mohamed El-Shazly
Telex: RCA 235638
Answerback:
Telecopier No.: (212) 344-5723
</TABLE>
<PAGE> 100
95
<TABLE>
<CAPTION>
Commitment
- -----------
<S> <C>
$7,350,000.00 THE SAKURA BANK, LIMITED,
NEW YORK BRANCH
By /s/ MAKIYO NARUSHIMA
--------------------------------
Name: Makiyo Narushima
Title: Attorney-in-Fact
Lending Office:
277 Park Avenue, 45th Floor
New York, NY 10172
Attention: Mr. Tamihiro Kawauchi
Senior Vice President
Mr. Toshihiko Tsujimaru
Vice President
Telex: 232962
Answerback: MITKBK NY
Telecopier No.: (212) 888-7651
with a copy to:
SAKURA FINANCE ASIA LIMITED
41/F Far East Finance Centre
16 Harcourt Road, Hong Kong
Attention: Mr. Michihiro Susa
Executive Director, Credit Group
Telex: 83413
Answerback: MTKAL HX
Telecopier No.: 852-2861-2316
</TABLE>
<PAGE> 101
96
<TABLE>
<CAPTION>
Commitment
----------
<S> <C>
$7,350,000.00 THE SANWA BANK LIMITED,
NEW YORK BRANCH
By /s/ JEAN HERVE CARIOU
--------------------------------
Name: Jean Herve Cariou
Title: Attorney-in-Fact
Lending Office:
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Attention: Mr. David Leech
Vice President
Telex: RCA 232423
Answerback:
Telecopier No.: (212) 754-2360
</TABLE>
<PAGE> 102
97
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$35,000,000.00 TAIPEIBANK, NEW YORK AGENCY
By /s/ ROMAN C. J. LAI
--------------------------------
Name: Roman C. J. Lai
Title: Senior Vice President &
General Manager
Lending Office:
One World Trade Center, Suite 2911
New York, NY 10048
Attention: Mr. Roman C.I. Lai
Senior Vice President &
General Manager
Telex: 408916
Answerback:
Telecopier No.: (212) 775-1866
</TABLE>
<PAGE> 103
98
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$40,000,000.00 TAIWAN BUSINESS BANK,
LOS ANGELES BRANCH
By /s/ HENRY M. T. YEE
--------------------------------
Name: Henry M. T. Yee
Title: Vice President &
General Manager
Lending Office:
633 West 5th Street, Suite 2280
Los Angeles, CA 90071
Attention: Mr. Henry Yee
VP & General Manager
Telex: 49653674
Answerback: TBBLA
Telecopier No.: (213) 892-1270
</TABLE>
<PAGE> 104
99
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$20,090,000.00 THE TOKAI BANK, LIMITED,
NEW YORK BRANCH
By /s/ SHINICHIRO MIZUNO
--------------------------------
Name: Shinichiro Mizuno
Title: General Manager,
International Finance
Division
Lending Office:
55 East 52nd Street
Park Avenue Plaza
New York, NY 10055
Attention: Ms. Roka Sanda
Assistant Manager
Telex: 21848 TOKAIBK RS
Answerback:
Telecopier No.: 65-4385152
</TABLE>
<PAGE> 105
100
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$7,350,000.00 THE TOYO TRUST AND BANKING
COMPANY, LIMITED,
NEW YORK BRANCH
By /s/ AKIRA HANAZONO
--------------------------------
Name: Akira Hanazono
Title: Attorney-in-Fact
Lending Office:
666 Fifth Avenue, 33rd Floor
New York, NY 10103
Attention: Mr. Nicholas A. Fiore
Assistant Treasurer
Telex: 222675
Answerback: TTBOUR
Telecopier No.: (212) 307-3498
</TABLE>
<PAGE> 106
101
<TABLE>
<CAPTION>
Commitment
- ----------
<S> <C>
$40,000,000.00 UNITED WORLD CHINESE COMMERCIAL BANK,
LOS ANGELES AGENCY
By /s/ SHIHCHEN JOSEPH JAO
--------------------------------
Name: Shihchen Joseph Jao
Title: Vice President &
General Manager
Lending Office:
555 West Fifth Street, Suite 3850
Los Angeles, CA 90013
Attention: Mr. Shihchen Joseph Jao
Telex: 62001496
Answerback: ESLUD
Telecopier No.: (213) 627-6817
</TABLE>
<PAGE> 107
BONTANG VI LOAN AGREEMENT DATED AS OF MARCH 4, 1997
SCHEDULE OF EXHIBITS
The following describes the exhibits to the Loan Agreement, which are omitted
herein, but which will be furnished upon request:
EXHIBIT A FORM OF NOTICE OF BORROWING
EXHIBIT B-1 FORM OF NOTICE OF DEFERRAL
EXHIBIT B-2 FORM OF NOTICE OF COMPLETION
EXHIBIT C-1 FORM OF NOTE
EXHIBIT C-2 FORM OF TRANSFER CERTIFICATE
EXHIBIT D-1 FORM OF LEGAL OPINION OF WILLIAMS & HARRIS LLP,
SPECIAL COUNSEL FOR THE BORROWER
EXHIBIT D-2 FORM OF LEGAL OPINION OF THOMAS R. BENNETT, 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 NEW YORK 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 AGENT AND
THE LENDERS
EXHIBIT F-2 FORM OF LEGAL OPINION OF SPECIAL KOREAN AND TAIWANESE
COUNSEL TO THE AGENT AND THE LENDERS
SCHEDULE1 BASIC AGREEMENTS
SCHEDULE2 DRAWDOWN SCHEDULE
SCHEDULE3 ASSUMED INTEREST RATE AND OTHER ASSUMPTIONS
SCHEDULE4 QUALIFIED BANKS
<PAGE> 1
EXHIBIT 10.4
BONTANG VI
PRODUCERS AGREEMENT
by
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
TOTAL INDONESIE
VIRGINIA INDONESIA COMPANY
UNION TEXAS EAST KALIMANTAN LIMITED
LASMO SANGA SANGA LIMITED
VIRGINIA INTERNATIONAL COMPANY
OPICOIL HOUSTON, INC.
UNIVERSE GAS & OIL COMPANY, INC.
INDONESIA PETROLEUM, LTD.
UNOCAL INDONESIA COMPANY
in favor of
BANK OF TAIWAN
NEW YORK AGENCY
as Lead Arranger
BONTANG LNG TRAIN-H INVESTMENT CO., LTD.
as Co-Lead Arranger
THE CHASE MANHATTAN BANK
as Agent, Co-Agent and Co-Arranger
BANQUE INDOSUEZ
THE FUJI BANK, LIMITED
PROJECT FINANCE DIVISION FOR THE AMERICAS
THE LONG-TERM CREDIT BANK OF JAPAN, LIMITED
NEW YORK BRANCH
as Co-Agents and Co-Arrangers
CHANG HWA COMMERCIAL BANK, LTD.
NEW YORK BRANCH
FIRST COMMERCIAL BANK
NEW YORK AGENCY
HUA NAN COMMERCIAL BANK, LTD.
LOS ANGELES BRANCH
THE TOKAI BANK, LTD.
NEW YORK BRANCH
as Co-Arrangers
and
the Lenders named herein
__________________________________
Dated as of March 4, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <<C> <C> <C>
PART 1 PRODUCERS' AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.1 Authorization of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Approval of Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3 Rights to Bontang Plant and Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.4 No Amendments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.6 Enforcement of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.7 Operation of Bontang Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.8 Replacement of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.9 Indebtedness; Permitted Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.10 Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.11 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.12 Reserve Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.14 Construction of Train H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.15 Notices Relating to Source of Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.16 Effect of Certain Events with Respect to LNG Sales Contracts . . . . . . . . . . . . . . . . . . 15
1.17 Payment Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.18 Monitoring Total Project Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.19 Debt Service Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.20 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.21 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
PART 2 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.1 Due Incorporation; Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.2 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.3 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.4 Registrations and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.5 Agreement Binding; No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.7 Compliance with Other Instruments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.8 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.10 No Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.11 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
Page
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<S> <C> <C> <C>
PART 3 DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1 Default Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 Remedy for Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.3 Diversion and Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.4 Liability Share Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PART 4 INSURED LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Effect of Total Loss of Additional Plant or Other Facilities Prior to Operational Acceptance . . 26
4.2 Effect of Total Loss of Insured Bontang Plant . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.3 Insurance Shortfall . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.4 Other Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
PART 5 SCOPE OF PRODUCERS' LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
PART 6 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.2 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.3 Assignment; Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.8 Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.10 Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Schedule 1 Liability Share Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
</TABLE>
(ii)
<PAGE> 4
BONTANG VI
PRODUCERS AGREEMENT
Dated as of
March 4, 1997
Bank of Taiwan, New York Agency, as Lead Arranger, Bontang LNG Train-H
Investment Co., Ltd., as Co-Lead Arranger, The Chase Manhattan Bank, as Agent,
Co-Agent, and Co-Arranger, Banque Indosuez, The Fuji Bank, Limited, Project
Finance Division for the Americas, and The Long-Term Credit Bank of Japan,
Limited, New York Branch, as Co-Agents and Co- Arrangers, Chang Hwa Commercial
Bank, Ltd., New York Branch, First Commercial Bank, New York Agency, Hua Nan
Commercial Bank, Ltd., Los Angeles Branch, and The Tokai Bank, Ltd., New York
Branch, as Co-Arrangers, and the Lenders named on the signature pages hereto.
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 Bank of America National Trust and Savings
Association with the power to act as
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<PAGE> 5
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 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 III Trust Agreement" has the meaning set forth in
Article 1 of the Trust Agreement.
"Bontang III Trustee" has the meaning set forth in Article
1 of the Trust Agreement.
"Bontang VI 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.
"Liability Share" has the meaning set forth in Section 3.4
hereof.
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<PAGE> 6
"Loan Agreement" means the Bontang VI Loan Agreement, dated
as of the date hereof, among the Trustee, as borrower thereunder, the
Arrangers, the Lenders, the Agent, and the Co-Agents parties thereto, as
modified or amended from time to time.
"Lost Facilities" has the meaning set forth in Section 4.1
hereof.
"Other Transportation Agreement" means each contract of the
type referred to in Section 5.3(a)(i)(y) of the Loan Agreement.
"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" has the meaning set forth in
Article 1 of the Trust Agreement.
"Regular Reserve Account" has the meaning set forth in
Article 1 of the Trust Agreement.
"Sub-Contractor" means Kellogg Overseas Corporation, as
subcontractor under the EPC Contract.
"Total Group" has the meaning set forth in Article 1 of the
Trust Agreement.
"Total" means Total Indonesie.
"Train G Additional Plant" means the Additional Plant, as
such term is defined in the Bontang V Loan Agreement dated as of July 1, 1995
among the Bontang V Trustee (as defined in the Trust Agreement), as borrower
thereunder, and the Lenders, Agents and Arrangers named therein, as amended or
modified from time to time.
"Trustee" means Bank of America National Trust and Savings
Association as Bontang VI Trustee under the Trust Agreement, and its successors
thereunder pursuant to Section 1.8 hereof.
"Unocal Group" has the meaning set forth in Article 1 of
the Trust Agreement.
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<PAGE> 7
"VICO Group" has the meaning set forth in Article 1 of the
Trust Agreement.
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 (including any such definitions incorporated by reference to the
Trust Agreement), unless the context shall otherwise specifically require.
* * * * *
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.
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<PAGE> 8
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.
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, 3.4 (other than Section 3.4(e)), 3.5,
3.7 or 3.9 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 have an adverse
effect on 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, each
Production Sharing Contract, the EPC Contract, the Transportation Agreement and
any Other Transportation Agreement to which it is a party, such Producer shall
not (i) terminate or revoke such Basic Agreement, Production Sharing Contract,
EPC Contract, Transportation Agreement or Other Transportation Agreement
(except that any such Other Transportation Agreement that provides for
provisional transportation arrangements may be terminated or revoked when such
provisional arrangements are
5
<PAGE> 9
no longer required) or (ii) amend, modify, revise, supplement or waive any of
the provisions of such Basic Agreement, Production Sharing Contract, EPC
Contract, Transportation Agreement or Other Transportation Agreement (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%, (B) conflict with or have an adverse effect on (I) the rights
of the Lenders under the Loan Agreement, Notes or the Letter Agreement or (II)
the obligations of the Borrower under the Loan Agreement, Notes, the Letter
Agreement or Trust Agreement, (C) conflict with or impair the obligations of
the Producers under this Agreement (other than an assignment permitted pursuant
to Section 6.3 hereof) or (D) result in an Event of Default; 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;
(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 EPC Contract, Pertamina
shall not consent to the assignment or delegation of any of the rights or
obligations of the EPC Contractor or the Sub-Contractor other than (i) a
delegation by the EPC Contractor to the Sub-Contractor in accordance with the
EPC Contract 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 Agent, whether or not requiring consent of the Lenders pursuant to this
Section 1.4, correct and complete copies of 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, the EPC Contract if it is a party thereto (excluding change orders and
similar modifications or supplements arising in the ordinary course of
construction implementation), any Production Sharing Contract to which it is a
party, or, in the case of the Pertamina, the Transportation Agreement and any
Other Transportation Agreement 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.
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<PAGE> 10
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 EPC Contract, the
Production Sharing Contracts, the Supply Agreements, the LNG Sales Contracts,
the Transportation Agreement, any Other Transportation Agreement and any other
transportation agreements and agreements to pay for shipping of cargoes under
either LNG Sales Contract, 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 modified or amended from time to time
as permitted by Section 1.4 hereof.
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 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 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 EPC
Contract against the EPC Contractor, the Sub-Contractor and any other
sub-contractors under the EPC Contract, (b) under the LNG Sales Contracts, (c)
under the Plant Use Agreement, (d) under the Processing Agreement and (e) the
Transportation Agreement and any other transportation agreements contemplated
by Section 1.5(b) hereof.
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<PAGE> 11
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.
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)(2) 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 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
8
<PAGE> 12
(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, 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 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) Bank of America National Trust and
Savings Association or any person that becomes a successor trustee pursuant to
this Section 1.8 hereof, as relevant, shall:
(1) dispose of all or substantially
all of its assets; or
(2) 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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<PAGE> 13
(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, Bank of America National Trust and Savings Association 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 VI 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 VI 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
the Transportation Agreement or any other transportation agreement related to
an LNG Sales Contract or sales of LNG pursuant to Section 1.16 hereof and
discharged in the ordinary course of business.
1.11 Insurance.
(a) Prior to operational acceptance of the
Additional Plant, the Storage Tank and the Pipeline pursuant to the EPC
Contract, Pertamina shall maintain or cause to be maintained "All Risk"
Builder's Risk Insurance as required pursuant to the EPC Contract. Prior to
completion of the Debottlenecking Project pursuant to the Development Plan,
Pertamina shall maintain or cause to be maintained
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<PAGE> 14
appropriate "All Risk" Builder's Risk Insurance with respect to the work to be
performed in connection with the Debottlenecking Project.
(b) Pertamina shall maintain, or cause to be
maintained with respect to the Insured Bontang Plant, 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
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, 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,
determined on the basis of an independent appraisal provided in the manner
described below in this Section 1.11(b) (if such Plant Insurance in such amount
is available on commercially reasonable terms); provided, however, that upon
completion of the Train G Additional Plant of the Bontang Plant and until such
time thereafter as a new independent appraisal of the Insured Bontang Plant is
completed, the amount determined in accordance with this clause (i) shall be
increased by the total cost of the construction, installation and completion of
such Train G Additional Plant, excluding the cost of the items excluded from
the determination of the full replacement value of the Insured Bontang Plant in
the next succeeding sentence 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 4.2 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 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 Agent, Pertamina shall promptly cause to be prepared and
delivered to the Agent an appraisal prepared by an independent appraiser, who
shall be acceptable to the Agent in its reasonable judgment; provided, however,
that 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 Agent may
from time to time have prepared for its benefit and at the sole cost of the
Lenders an appraisal of an independent appraiser, who shall be acceptable to
the
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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 Agent a correct and complete copy of the policy or
policies of insurance required by Sections 1.11(a) and (b) hereof or other
evidence of such insurance, satisfactory to the Agent in its sole discretion
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 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).
1.12 Reserve Reports.
(a) The Producers agree that, if requested by the
Agent, they will cause to be delivered to the Agent correct and complete copies
of the latest reserve report or reports and any updates, modifications or
supplements thereto covering the areas that 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.
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(b) Pertamina shall, before committing additional
natural gas from the Gas Supply Area for sale or other utilization, submit or
cause to be submitted to the Agent a copy of each certificate and all
supporting documentation furnished to the respective Buyer pursuant to Section
3.2(a) of the KGC Sales Contract or pursuant to Section 3.2(a) of the CPC 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 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 or otherwise relating to the design, engineering, procurement
and construction of or otherwise relating to the Additional Plant, the Other
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, 2.6, 2.7, 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.
(b) If, during the Availability Period after the
start of the Amortization 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 Other Facilities as
indicated in the most recent quarterly status report delivered to 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 VI 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 portion of the Reserve Account Borrowed Amount
that, pursuant to Section 6.1(h) of the Loan Agreement, is available to be used
to pay for such costs or (y) the amounts needed to pay for such required costs.
Any such instruction shall be provided by written notice to the Trustee and the
Agent. The Producers shall use such amounts so transferred to the Bontang VI
Payment Account solely for the purpose of paying for such required costs.
(c) If, following the first day of the
Amortization 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
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may instruct the Bontang VI Trustee to transfer to the Bontang VI 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 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 H.
(a) Pertamina shall insure that Train H is
constructed and completed with due diligence and efficiency and in conformity
with sound administrative, engineering and financial practices.
(b) Pertamina shall deliver to the Agent (i) a
quarterly status report in reasonable detail concerning construction of Train
H, 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 H pursuant to the Development Plan and the EPC Contract,
and (ii) such other information in respect of Train H as the Agent may
reasonably request.
(c) Pertamina shall submit or cause to be
submitted to the Agent a semi-annual report for each semi-annual period ending
on March 31 (other than March 31, 1997) and September 30, prepared by the
Engineering Firm or if the Engineering Firm becomes unacceptable to Pertamina
or to 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 Agent, concerning the status of the construction of Train H.
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 H 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 H; 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.
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(e) Pertamina shall, if requested by the Agent,
permit representatives of the Agent, and designees appointed by it with the
consent of Pertamina, which consent shall not be unreasonably withheld, to
visit the site of the construction of Train H 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 Agent of any event or occurrence that
will, or would be reasonably likely to, (i) prevent the shipment of LNG under
the KGC Sales Contract or the CPC Sales Contract from occurring during the
first calendar quarter of 2000 or (ii) prevent shipments of such LNG from
occurring on a regular basis thereafter.
1.15 Notices Relating to Source of Debt Service.
(a) Pertamina shall inform 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 the Agent
promptly after it learns (i) of any event or occurrence, in the nature of force
majeure, and any material dispute that 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 an 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 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) an LNG Sales Contract is terminated or
(ii) any sales under an 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 such concept is defined in such LNG Sales
Contract) as to any LNG tanker or any Buyer's facilities relevant to such LNG
Sales Contract shall occur and such suspension of sales or event of force
majeure shall continue for a period of nine (9) months, Pertamina shall make
all reasonable efforts to sell any LNG originally scheduled to be sold to any
affected Buyer or Buyers pursuant to 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
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Pertamina reasonably anticipates would (x) 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 or (y) otherwise be in
violation of such LNG Contract; 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) 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 Contract Sales Price (as defined in such contract) (or if such contract is
modified to provide, in whole or in part, for ex-ship delivery of LNG, the
portion of the sales price not related to transportation) and (y) with respect
to the CPC 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 Excess Sales
Trustee and any other
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relevant trustee in writing to make immediate payment to the Bontang VI Trustee
of any amounts received by any of such trustees and deposited under the Bontang
III 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 of such written instruction (which may be reflected in an
amendment to the relevant trust agreements or trustee and paying agent
agreements) to the Agent simultaneously with sending such instructions to the
Bontang III 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 H 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 Other Facilities that have not already been paid
for from the proceeds of previous Advances, plus (ii) all reasonably
anticipated costs of such specific portions of the Support Facilities that
Pertamina proposes to finance through Borrowings under the Loan Agreement, plus
(iii) all reasonably anticipated future Borrowed Amounts, 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 (iii) 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 Agent, with reasonable promptness after the end of each
semi-annual period ending on March 31 (other than March 31, 1997) or September
30 during the Availability Period, a summary statement of its then current
estimate of the excess capacity of the Bontang
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Plant to be contractually uncommitted on January 1, 2000, excluding the LNG
Sales Contracts and the capacity of the Additional Plant.
1.19 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.
1.20 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 Agent, immediately pay such
amounts or otherwise cause such amounts to be paid.
1.21 Financial Statements. Upon the request of the Agent,
from time to time, each Producer agrees to deliver to the Agent 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:
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2.1 Due Incorporation; Power and Authority. Such
Producer is 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, the
EPC Contract, the Transportation Agreement, any Other Transportation Agreement
and each Basic Agreement.
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, the EPC Contract, the Transportation Agreement, any Other
Transportation Agreement 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 such 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 the EPC
Contract, the Transportation Agreement or any Other Transportation Agreement,
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 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 and each Basic Agreement
constitute, and when duly executed and delivered, the EPC Contract, the
Transportation Agreement and each Other Transportation Agreement will
constitute, the legal, valid and binding obligations of such Producer
enforceable against it in accordance with each
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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 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 Transportation
Agreement and each Other Transportation Agreement 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 the EPC Contract, in any material respect. Such Producer is not, and
upon execution and delivery of the EPC Contract will not be, in violation of
any of the 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)), 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 either
of the LNG Sales Contracts (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 set forth in the Trust
Agreement), the Transportation Agreement, when executed and delivered will not
by its terms terminate or will not by its terms be scheduled to expire prior to
the time of shipment of the last cargo giving rise to Source of Debt Service
under the CPC Sales Contract, 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.
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, the EPC Contract, any Production
Sharing Contract, the Transportation Agreement 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 either of the LNG Sales Contracts, or the
right of the Borrower to receive any such amounts under the Loan Agreement,
(ii) the
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Bontang Plant or Pertamina's interests therein or (iii) such Producer's ability
to perform its obligations under this Agreement, the Trust Agreement, the EPC
Contract, any Production Sharing Contract, the Transportation Agreement or any
Basic Agreement.
2.7 Compliance with Other Instruments, etc. Such
Producer is not, and upon the due execution and delivery of each of the EPC
Contract, the Transportation Agreement and any Other Transportation Agreement
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, the EPC Contract, the Transportation Agreement, any Other
Transportation Agreement or any Basic Agreement.
2.8 Other Agreements. The Agent has been provided with
correct and complete copies of the Development Plan and the Basic Agreements,
in each case as amended and in effect on the date hereof. The copies of the
EPC Contract (excluding the materials referred to in Exhibit A of the agreement
referred to in clause (i) of the definition of the EPC Contract), the
Transportation Agreement and each Other Transportation Agreement provided to
the Agent upon execution and delivery thereof will be correct and complete
copies of such agreements, in each case as amended and in effect on the date
thereof. Each Producer represents and warrants that, to the best of its
knowledge, no party to any of such Production Sharing Contracts or the Basic
Agreements, other than any other Producer, is, and upon the due execution and
delivery of each of the EPC Contract, the Transportation Agreement and each
Other Transportation Agreement no party to each such agreement will be, in
breach of any material obligation thereunder.
2.9 Insurance. As of the Effective Date, insurance
coverage of the type required by Section 1.11 hereof will be in full force and
effect, no default or breach shall exist thereunder which would give rise to a
right to cancel the same, and no notice of default or breach or notice of
termination shall have been given to Pertamina with respect thereto. On or
prior to the Effective Date, correct and complete copies of such insurance
policies or other evidence of such insurance will be delivered to the Agent.
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2.10 No Encumbrance. There is no Encumbrance on the
Source of Debt Service prior to its deposit in the Bontang VI 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.
2.11 No Material Adverse Change. With respect to each
Producer, there has been no material adverse change since the date of the
financial statements delivered by such Producer to the Lead Arranger on or
prior to the Effective Date 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)), 1.19 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 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 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
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(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
(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 either of the
LNG Sales Contracts or the ability of Pertamina to perform such obligations; or
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(f) any statement furnished to the Agent under
any of Section 5.2(c) or 6.1 of the Loan Agreement with respect to the Debt
Coverage Ratio, the Gross Invoice Amount or 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 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 Agent for the account of the 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 Agent for the account of the 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 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 either 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 (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 Agent for the account of
the 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
Agent for the account of the 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.
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
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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 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 Agent, any Co-Agent, any Arranger, 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 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 Other
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 meaning of
such policy) of the Additional Plant or any of the Other Facilities or any
combination of the foregoing (the "Lost Facilities"), Pertamina agrees as
follows:
(a) Pertamina shall, as promptly as possible in
the circumstances following such event, notify the Agent of the occurrence of
such event and shall, within six months following such event, notify the Agent
in writing whether or not it intends to rebuild or reconstruct the Lost
Facilities.
(b) If Pertamina notifies the Agent that it does
not intend to rebuild or reconstruct the Lost Facilities, it shall promptly pay
to the Agent for the account of the Lenders such amounts as are instructed by
the Agent equal in the aggregate to the lesser of (x) the aggregate amounts
outstanding under the Loan
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Agreement, Notes and Letter Agreement and (y) the aggregate amount of such
insurance proceeds paid to Pertamina in respect of such event.
(c) If Pertamina notifies 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 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 the Agent for the account of the Lenders, such amounts as are instructed by
the Agent equal in the aggregate to the lesser of (x) the amounts outstanding
under the Loan Agreement, the Note and the Letter Agreement and (y) 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.
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,
Pertamina agrees as follows:
(a) Pertamina shall, as promptly as possible in
the circumstances following such event, notify the Agent of the occurrence of
such event and shall, within six months following such event, notify the Agent
in writing whether or not it intends to rebuild or reconstruct the Insured
Bontang Plant.
(b) If Pertamina so notifies the Agent that it
does not intend to rebuild or reconstruct the Insured Bontang Plant, it shall
promptly pay to the Agent for the account of the Lenders such amounts as are
instructed by the Agent in an aggregate amount equal to the lesser of (x) the
share referred to below of the total insurance proceeds that are paid to
Pertamina under such policy in respect of such event and (y) 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.
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(c) If Pertamina notifies the Agent that it
intends to rebuild or reconstruct the Insured Bontang Plant, then it shall
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 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 or shall not be
proceeding with such rebuilding or reconstruction diligently and in good faith,
then Pertamina shall be obligated promptly to pay to the Agent for the account
of the Lenders such amounts as are instructed by the Agent in an aggregate
amount equal to the lesser of (x) 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 (y) 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
the Agent for the account of the Lenders in such amounts as are instructed by
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
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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, 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, any of the Other 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 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.
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
any Arranger, the Agent, any Co-Agent or any of the 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
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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.
Each Arranger, the Agent, each Co-Agent, each 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.
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
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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 members
of the VICO Group, such notices and communications shall be sent to Virginia
Indonesia Company, which is hereby designated the representative of the VICO
Group for such purpose. In the case of notices and other communications for
members of the Total Group, such notices and other communications shall be sent
to Total, which is hereby designated the representative of the Total Group for
such purpose. In the case of notices and other communications for members of
the Unocal Group, such notices and other communications shall be sent to
Unocal, which is hereby designated the representative of the Unocal Group for
such purpose; provided that once Inpex ceases to be a member of the Unocal
Group all notices and other communications 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 Agent 10 days in advance of
any such change. Until receipt of any such notice, 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 Arrangers,
the Lenders, the Agent, the Co-Agents 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 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 VI Payment Account,
without the written consent of the Majority Lenders, such consent not to be
unreasonably withheld;
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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, the Transportation
Agreement, any Other Transportation 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 Agent and which shall
confirm the assignment of rights and the assumption of obligations by such
Person under the Trust Agreement, the LNG Sales Contracts, the Transportation
Agreement, any Other Transportation Agreement 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 VI
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 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 and the Majority 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 Majority Lenders if the
Agent has been so authorized in writing
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or by telex by the Majority Lenders. Any amendment or waiver or telecopied
version signed by the Agent in accordance with the preceding sentence shall be
binding upon the Lenders and any holder of a 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 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
any 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 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
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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 VI 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 or any of the Notes.
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.
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.
34
<PAGE> 38
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 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 disclosed by
or on behalf of the Agent, any Co-Agent, any Arranger, or any 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 the form approved by the Producers pursuant to
that certain consent dated December 16, 1996. Notwithstanding the foregoing
and any provisions of any other confidentiality undertaking between any of the
Producers and any of the Arrangers or the Lenders to the contrary (each such
undertaking being hereby amended to the extent necessary to conform to this
Section 6.11), the agreements and documents referred to in the preceding
sentence and any information, including, without limitation, contracts,
agreements and financial data the disclosure of which is restricted by any such
other undertaking (collectively, "Information") may be disclosed (i) 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 agreement in the form substantially similar to that approved by
the Producers pursuant to that certain consent, dated December 16, 1996 and
(ii) to the extent such Information is required to be disclosed by order or
direction of a court or tribunal of competent authority under applicable law or
by a governmental order, decree, regulation or rule and is required to be made
to any regulatory authority, bank examiner or auditor; provided that the
Arranger or the Lender gives as much prior notice as is practical in the
circumstances to allow the Producer the ability to seek a protective order or
similar remedy and, if the disclosure of the Information is required, furnishes
only such portion of the Information as it is legally compelled to disclose and
exercises reasonable efforts to obtain an order or other reliable assurance
that confidential treatment will be accorded to the disclosed Information. No
public announcement or statement or publication relating to any of the
foregoing shall be made or released by or on behalf of the Agent, any Co-Agent,
any Arranger or any Lender, without the prior written approval of the
Producers.
*****
35
<PAGE> 39
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>
Jalan Medan Merdeka Timur 1A PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
Jakarta 10110 (PERTAMINA)
Indonesia
Telex No.: 45018
Answerback: PTMJKT 1A By: /s/ F. ABADA'OE
Telecopier No.: 62-21-345-2958 ----------------------------------------------
Attention: Director of Finance Name: F. Abada'oe
Title: President, Director and
Chief Executive Officer
</TABLE>
36
<PAGE> 40
<TABLE>
<S> <C>
TOTAL INDONESIE
Plaza Kuningan Menara Utara
Lantai 9
Jl. H.R. Rasuna Said Kav. C11-14
Jakarta 12940 By: /s/ MICHEL SEGUIN
Indonesia -----------------------------------------------
Telex No.: 60980 Name: Michel Seguin
Answerback: TOTALJ IA Title: Vice-Chairman and
Telecopier No.: 62-21-252-0814 Chief Executive Officer
Attention: President and General Manager
One Houston Center VIRGINIA INDONESIA COMPANY
1221 McKinney - Suite 700
Houston, Texas 77010
U.S.A.
Telex No.: 713-166-100 By: /s/ CHARLES M. REIMER
Answerback: VICO HOU ----------------------------------------------
Telecopier No.: 713-754-6697 Name: Charles M. Reimer
Attention: Treasurer Title: Chairman and
Chief Executive Officer
c/o Union Texas International Corporation UNION TEXAS EAST KALIMANTAN LIMITED
P.O. Box 2120
Houston, Texas 77252-2120
U.S.A.
Telex No.: 775255 By: /s/ DEAN HENRY
Answerback: UNOTEX PET HOU ----------------------------------------------
Telecopier No.: 1-713-968-2771 Name: Dean Henry
Attention: President Title: Assistant Treasurer
</TABLE>
37
<PAGE> 41
<TABLE>
<S> <C>
100 Liverpool Street LASMO SANGA SANGA LIMITED
London EC2M 2BB
United Kingdom
Telex No.: 8812970
Answerback: LASMO G By: /s/ RICHARD L. SMERNOFF
Telecopier No.: 44-171-606-2893 -----------------------------------------------
Attention: Finance Director Name: Richard L. Smernoff
Title: Director and
Chief Financial Officer
100 Liverpool Street VIRGINIA INTERNATIONAL COMPANY
London EC2M 2BB
United Kingdom
Telex No.: 8812970
Answerback: LASMO G By: /s/ RICHARD L. SMERNOFF
Telecopier No.: 44-171-606-2893 -----------------------------------------------
Attention: Finance Director Name: Richard L. Smernoff
Title: Vice President
Virginia International Company
3040 Post Oak Blvd. - Suite 800 OPICOIL HOUSTON, INC.
Houston, Texas 77056
U.S.A.
Telex No.: N/A
Answerback: N/A By: /s/ ROY C.H. Chiu
Telecopier No.: 1-713-297-8108 -----------------------------------------------
Ext. 322 Name: Roy C.H. Chiu
Attention: Vice President of Finance Title: President
NYK Tennoz Building UNIVERSE GAS & OIL COMPANY, INC.
2-20, Higashi-Shinagawa 2-chome
Shinagawa-ku, Tokyo 140
Japan
Telex No.: J26268 By: /s/ TOSHIO NORIMATSU
Answerback: UGO TOK -----------------------------------------------
Telecopier No.: 81-3-5462-0679 Name: Toshio Norimatsu
Attention: General Manager of Title: General Manager of
Business Department Business Dept.
</TABLE>
38
<PAGE> 42
<TABLE>
<S> <C>
17th Floor, Ebisu Neonato, INDONESIA PETROLEUM, LTD.
No. 1-18, Ebisu 4-chome
Shibuya-ku, Tokyo 150, Japan
Telex No.: 2424210
Answerback: JAIPEX J By: /s/ YUSUKE SAWATARI
Telecopier No.: 81-3-5448-1244 ------------------------------------------------
Attention: General Manager of Gas Business Name: Yusuke Sawatari
Department Title: Managing Director and General
Manager of Accounting & Finance Dept.
Ratu Plaza Office Tower UNOCAL INDONESIA COMPANY
Jalan Jenderal Sudirman
Jakarta 10270
Indonesia
Telex No. 47335 By: /s/ TIMOTHY C. LAUER
Answerback: UNOCAL IA -----------------------------------------------
Telecopier No. 62-21-720-4499 Name: Timothy C. Lauer
Attention: President and Managing Director Title: President & Managing Director
</TABLE>
39
<PAGE> 43
As of the date first written above
accepted and agreed to:
Lead Arranger
-------------
BANK OF TAIWAN,
NEW YORK AGENCY
By /s/ K.C. WANG
---------------------------------
Name: K.C. WANG
Title: Senior Vice President &
General Manager
Co-Lead Arranger
----------------
BONTANG LNG TRAIN-H
INVESTMENT CO., LTD.
By /s/ YOSHIAKI KATAYAMA
---------------------------------
Name: Yoshiaki Katayama
Title: President
Agent
-----
THE CHASE MANHATTAN BANK
By /s/ DANIEL DE LANGE
---------------------------------
Name: Daniel De Lange
Title: Managing Director
40
<PAGE> 44
Co-Agents and Co-Arrangers
--------------------------
BANQUE INDOSUEZ
By /s/ MARC L. TABOUIS
---------------------------------
Name: Marc L. Tabouis
Title: Managing Director Project
and International Finance
Department
THE CHASE MANHATTAN BANK
By /s/ DANIEL DE LANGE
----------------------------------
Name: Daniel De Lange
Title: Managing Director
THE FUJI BANK, LIMITED,
PROJECT FINANCE DIVISION FOR THE
AMERICAS
By /s/ HAJIME TANIMURA
----------------------------------
Name: Hajime Tanimura
Title: Attorney in fact
THE LONG-TERM CREDIT BANK
OF JAPAN, LIMITED,
NEW YORK BRANCH
By /s/ TSUNEHIRO WATABE
---------------------------------
Name: Tsunehiro Watabe
Title: General Manager
41
<PAGE> 45
Co-Arrangers
------------
CHANG HWA COMMERCIAL BANK, LTD.,
NEW YORK BRANCH
By /s/ WALTER W. T. YEH
---------------------------------
Name: Walter W. T. Yeh
Title: General Manager
FIRST COMMERCIAL BANK,
NEW YORK AGENCY
By /s/ VINCENT T. C. CHEN
----------------------------------
Name: Vincent T.C. Chen
Title: Vice President &
General Manager
HUA NAN COMMERCIAL BANK, LTD.,
LOS ANGELES BRANCH
By /s/ GEORGE F. K. LU
----------------------------------
Name: George F. K. Lu
Title: Vice President &
General Manager
THE TOKAI BANK, LTD.,
NEW YORK BRANCH
By /s/ SHINICHIRO MIZUNO
--------------------------------
Name: Shinichiro Mizuno
Title: General Manager,
International Finance
Division
42
<PAGE> 46
Lenders
BANK OF TAIWAN,
NEW YORK AGENCY
By /s/ K. C. WANG
-------------------------------------
Name: K. C. Wang
Title: Senior Vice President &
General Manager
43
<PAGE> 47
THE BANK OF TOKYO-MITSUBISHI, LTD.,
NEW YORK BRANCH
By /s/ TETSUO SHIBATA
-------------------------------------
Name: Tetsuo Shibata
Title: Attorney In Fact
44
<PAGE> 48
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR,
HONG KONG BRANCH
By /s/ PATRICE TENEUR
------------------------------------
Name: Patrice Teneur
Title:
45
<PAGE> 49
BANQUE INDOSUEZ
By /s/ MARC L. TABOUIS
-------------------------------------
Name: Marc L. Tabouis
Title: Managing Director
Project and International
Finance Department
46
<PAGE> 50
BANQUE NATIONALE DE PARIS,
SINGAPORE BRANCH
By /s/ JEAN-ALAIN ORSINI
-----------------------------
Name: Jean-Alain Orsini
Title: Attorney In Fact
47
<PAGE> 51
BONTANG LNG TRAIN-H INVESTMENT
CO., LTD.
By /s/ YOSHIAKI KATAYAMA
-----------------------------
Name: Yoshiaki Katayama
Title: President
48
<PAGE> 52
CHANG HWA COMMERCIAL BANK, LTD.,
NEW YORK BRANCH
By /s/ WALTER W. T. YEH
------------------------------
Name: Walter W. T. Yeh
Title: General Manager
49
<PAGE> 53
THE CHASE MANHATTAN BANK
By /s/ MORGAN T. MCGRATH
-------------------------------------
Name: Morgan T. McGrath
Title: Managing Director
50
<PAGE> 54
CHO HUNG BANK,
NEW YORK BRANCH
By /s/ MYONG HYUN KYONG
------------------------------------
Name: Myong Hyun Kyong
Title: Attorney In Fact
51
<PAGE> 55
CHRISTIANIA BANK
By /s/ BJORN OSTROM
------------------------------------
Name: Bjorn Ostrom
Title: Branch Manager
Executive Vice President
By /s/ FINN AMUND NORBYE
------------------------------------
Name: Finn Amund Norbye
Title: First Vice President
52
<PAGE> 56
COMPAGNIE FINANCIERE DE CIC
ET DE L'UNION EUROPEENE
By /s/ CORINNE LEGER-LICOINE
------------------------------------
Name: Corinne Leger-LiCoine
Title:
By /s/ J. SCHRIKE
------------------------------------
Name: J. SCHRIKE
Title: Vice President
53
<PAGE> 57
THE DAI-ICHI KANGYO BANK, LIMITED,
NEW YORK BRANCH
By /s/ TAKESHI KURITA
----------------------------------
Name: Takeshi Kurita
Title: Vice President
54
<PAGE> 58
THE FARMERS BANK OF CHINA,
LOS ANGELES BRANCH
By /s/ FRANK T. S. LIN
---------------------------------
Name: Frank T. S. Lin
Title: Vice President &
General Manager
55
<PAGE> 59
FIRST COMMERCIAL BANK,
NEW YORK AGENCY
By /s/ VINCENT T. C. CHEN
-----------------------------------
Name: Vincent T. C. Chen
Title: Vice President &
General Manager
56
<PAGE> 60
THE FUJI BANK, LIMITED,
PROJECT FINANCE DIVISION
FOR THE AMERICAS
By /s/ HAJIME TANIMURA
---------------------------------
Name: Hajime Tanimura
Title: Attorney In Fact
57
<PAGE> 61
HUA NAN COMMERCIAL BANK, LTD.,
LOS ANGELES BRANCH
By /s/ GEORGE F. K. LU
------------------------------
Name: George F. K. Lu
Title: Vice President &
General Manager
58
<PAGE> 62
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By /s/ KIYOSHI KATO
------------------------------
Name: Kiyoshi Kato
Title: Attorney In Fact
59
<PAGE> 63
THE INTERNATIONAL COMMERCIAL
BANK OF CHINA,
NEW YORK AGENCY
By /s/ W. L. Lin
-------------------------------
Name: W. L. Lin
Title: Senior Vice President &
General Manager
60
<PAGE> 64
KREDIETBANK N.V., NEW YORK BRANCH
By /s/ TOD R. ANGUS
-------------------------------------
Name: Tod R. Angus
Title:
By /s/ JEAN GLASGOW
-------------------------------------
Name: Jean Glasgow
Title: Assistant Vice President
61
<PAGE> 65
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED,
NEW YORK BRANCH
By /s/ TSUNEHIRO WATABE
---------------------------------
Name: Tsunehiro Watabe
Title: General Manager
62
<PAGE> 66
THE MITSUBISHI TRUST AND BANKING
CORPORATION, NEW YORK BRANCH
By /s/ TAKASHI MASUYAMA
----------------------------------
Name: Takashi Masuyama
Title: Attorney In Fact
63
<PAGE> 67
THE MITSUI TRUST AND BANKING
COMPANY, LIMITED,
NEW YORK BRANCH
By /s/ SHIGERO TSUJIMOTO
-------------------------------------
Name: Shigero Tsujimoto
Title: Senior Vice President
& Manager
64
<PAGE> 68
THE NIPPON CREDIT BANK, LTD.
By /s/ NOBUO IMAMURA
-------------------------------------
Name: Nobuo Imamura
Title: Attorney In Fact
65
<PAGE> 69
THE NORINCHUKIN BANK,
NEW YORK BRANCH
By /s/ TERUOKI SAKURAUCHI
-------------------------------------
Name: Teruoki Sakurauchi
Title: Attorney In Fact
66
<PAGE> 70
PT. BANK NEGARA INDONESIA
(PERSERO) TBK.
By /s/ I. GDE DEWA SUTHAPA
-------------------------------------
Name: I. Gde Dewa Suthapa
Title: General Manager
67
<PAGE> 71
THE SAKURA BANK, LIMITED,
NEW YORK BRANCH
By /s/ MAKIYO NARUSHIMA
-------------------------------------
Name: Makiyo Narushima
Title: Attorney In Fact
68
<PAGE> 72
THE SANWA BANK LIMITED,
NEW YORK BRANCH
By /s/ JEAN HERVE CARIOU
-------------------------------------
Name: Jean Herve Cariou
Title: Attorney In Fact
69
<PAGE> 73
TAIPEIBANK, NEW YORK AGENCY
By /s/ ROMAN C. J. LAI
-------------------------------------
Name: Roman C. J. Lai
Title: Senior Vice President &
General Manager
70
<PAGE> 74
TAIWAN BUSINESS BANK,
LOS ANGELES BRANCH
By /s/ HENRY M. T. YEE
-------------------------------------
Name: Henry M. T. Yee
Title: Vice President &
General Manager
71
<PAGE> 75
THE TOKAI BANK, LIMITED,
NEW YORK BRANCH
By /s/ SHINICHIRO MIZUNO
-------------------------------------
Name: Sinichiro Mizuno
Title: International Finance Division
72
<PAGE> 76
THE TOYO TRUST AND BANKING COMPANY,
LIMITED, NEW YORK BRANCH
By /s/ AKIRA HANAZONO
-------------------------------------
Name: Akira Hanazono
Title: Attorney In Fact
73
<PAGE> 77
UNITED WORLD CHINESE COMMERCIAL BANK,
LOS ANGELES AGENCY
By /s/ SHIHCHEN JOSEPH JO
-------------------------------------
Name: Shihchen Joseph Jo
Title: Vice President &
General Manager
74
<PAGE> 78
Schedule 1
Liability Share Percentages
<TABLE>
<CAPTION>
Pre Tax
Percentage
Interest (%)
------------
<S> <C>
Pertamina 42.3077
Total Indonesie 21.3670
Virginia Indonesia Company 0.7157
Lasmo Sanga Sanga Limited 2.5048
Union Texas East Kalimantan 2.5048
Limited
OPICOIL Houston, Inc. 1.9085
Virginia International Company 1.4910
Universe Gas & Oil Company, Inc. 0.4174
Indonesia Petroleum, Ltd. 22.7409
Unocal Indonesia Company 4.0422
100.0000%
</TABLE>
75
<PAGE> 1
EXHIBIT 10.5
BONTANG VI
TRUSTEE AND PAYING AGENT AGREEMENT
among
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA
(PERTAMINA)
TOTAL INDONESIE
VIRGINIA INTERNATIONAL COMPANY
LASMO SANGA SANGA LIMITED
UNION TEXAS EAST KALIMANTAN LIMITED
OPICOIL HOUSTON, INC.
VIRGINIA INDONESIA COMPANY
UNIVERSE GAS & OIL COMPANY, INC.
INDONESIA PETROLEUM, LTD.
UNOCAL INDONESIA COMPANY
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Dated as of March 4, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 RECEIPT OF PAYMENTS WITH RESPECT TO LNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1 Designation of Bontang VI Trustee and Bontang VI General Account . . . . . . . . . . . . . . . . . . 15
2.2 Bontang VI Trust Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Allocation of Amounts Received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Proceeds of Cargo Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.5 Payment Under Transportation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE 3 POWER TO BORROW AND ENTER INTO INTEREST RATE SWAPS . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.1 Enumeration of Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Power to Borrow from the Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Power to Incur Subordinated Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Power to Incur Pari Passu Swap Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Application of Certain Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.2 Accumulation of Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(a) Capital Payment Dates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(b) Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(c) Establishment of Debt Service Account
and Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(d) Depositing of Borrowings for Lenders
Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) Depositing of Borrowings for Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(f) Depositing of Borrowings for Special Payments. . . . . . . . . . . . . . . . . . . . . . . 21
(g) Depositing of Borrowing for Regular Reserve Account. . . . . . . . . . . . . . . . . . . . 21
(h) Depositing of Borrowings for Selected Qualified Bank. . . . . . . . . . . . . . . . . . . . 21
(i) Depositing of Source of Debt Service Before
Amortization Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(j) Depositing of Source of Debt Service in Loan
Account and Special Payment Account During
Amortization Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(k) Depositing of Source of Debt Service in Reserve
Account, Mandatory Prepayment Account and
Payment Account During Amortization Period . . . . . . . . . . . . . . . . . . . . . . . . 23
(l) Contested Special Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.3 Payment of Debt Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Payments from Loan Account and Special
Payment Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) Payments from Reserve Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(c) Mandatory Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(d) Payments Upon Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.4 Choices; Delivery of Information and Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 30
(a) Choices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(b) Delivery of Information and Certificates to Lenders. . . . . . . . . . . . . . . . . . . . 30
(c) Copies to Producers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Method of Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Notices to Allocation Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(f) Information to Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.5 Closing of Debt Service Account and Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . 31
3.6 Borrowing Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Notice of Authorized Signatory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Contents of Borrowing Instruction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) Deficient Borrowing Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) Requirement to Borrow. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.7 Disbursement Trust; Payment Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Disbursement Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Payment Instructions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Certain Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.8 Duties of Bontang VI Trustee with Respect to Instructions . . . . . . . . . . . . . . . . . . . . . 35
3.9 Bontang VI Depositaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 4 ESTABLISHMENT OF BONTANG VI
PAYMENT ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.1 Bontang VI Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.2 Funds to be Deposited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.3 Other Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 5 DISBURSEMENTS WITH RESPECT TO
PROCESSING CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.1 Submission and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.2 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 6 TRANSPORTATION EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.1 Submission and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2 Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 7 DISBURSEMENTS WITH RESPECT TO OTHER CHARGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.1 Submission and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 8 DISBURSEMENTS WITH RESPECT TO
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SHARING PERCENTAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.1 Approved Level of Working Capital; Sharing Percentages . . . . . . . . . . . . . . . . . . . . . . . 39
8.2 Charging of Amounts Payable; Payment of Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.3 Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.4 Arrangements for Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.5 Special Disbursement Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.6 Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.7 Receipt of Special Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 9 PROCEDURES RESPECTING ACCOUNTS UNDER
THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.1 Accounting for Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.2 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.3 Producer Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 10 INVESTMENT OF FUNDS HELD IN ACCOUNTS
UNDER THIS AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.1 Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.2 Prudence and Yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.3 Interest Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 11 CONCERNING THE BONTANG VI TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.1 Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.2 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.3 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.4 Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.5 Application to Court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.6 Successor Vested with Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.7 Payments After Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.8 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.9 Trustee in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 12 DEBT SERVICE ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.1 Debt Service Allocation Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
12.2 Estimated Debt Service Percentages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.3 Aggregate Dollar Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.4 Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
12.5 Income From the Disbursement Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.1 Counterparts; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.2 DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.4 Incumbency Certificates; Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
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13.5 No Amendment Except in Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.6 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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<PAGE> 6
BONTANG VI
TRUSTEE AND PAYING AGENT AGREEMENT
THIS AGREEMENT, made as of the 4th day of March, 1997 among
PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA ("Pertamina"); and TOTAL
INDONESIE ("Total"), VIRGINIA INDONESIA COMPANY ("VICO"), LASMO SANGA SANGA
LIMITED, UNION TEXAS EAST KALIMANTAN LIMITED, OPICOIL HOUSTON, INC., VIRGINIA
INTERNATIONAL COMPANY, UNIVERSE GAS & OIL COMPANY, INC., INDONESIA PETROLEUM,
LTD. ("Inpex"); and UNOCAL INDONESIA COMPANY ("Unocal"); and BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bontang VI 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;
<PAGE> 7
2
WHEREAS, Pertamina and the Contractors wish to authorize the
Bontang VI Trustee to borrow funds from time to time to pay for certain costs
incurred and to be incurred in connection with Train H;
WHEREAS, Pertamina, the Contractors and BankAmerica
International (both as successor in interest to Continental Bank International
and in its own right) are parties to certain existing trustee and paying agent
agreements and Bank of America National Trust and Savings Association 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 VI 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.
"Advance" 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 VI 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 have the meaning set forth in Section 1 of the
Loan Agreement.
<PAGE> 8
3
"Amortization Period" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Anticipated Loan Amount Notice" shall have the meaning set
forth in Section 3.2(b)(iii).
"Anticipated Loan Amounts" shall have the meaning set forth in
Section 3.2(b)(iii).
"Approved Level of Working Capital" shall have the meaning set
forth in Section 8.1.
"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.
"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, as amended by
Amendment No. 1 thereto, dated as of July 1, 1995, as amended by Amendment No.
2 thereto, dated as of March 4, 1997, each among the Producers or their
predecessors in interest, and BankAmerica International (as successor in
interest to Continental Bank International), as further modified or amended
from time to time.
"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 BankAmerica International (as successor in interest to
Continental Bank International), as further modified or amended from time to
time.
"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, condensate and liquefied petroleum gas consisting of propane and butane,
utilities, storage tanks, loading lines and arms, harbor, docks, berths,
tugboats, residential community, workshops, offices,
<PAGE> 9
4
fixed plant and equipment and communication systems, together with
replacements, improvements, additions and expansions of all such facilities
(including Train H), 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 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 BankAmerica International (as successor in
interest to Continental Bank International), as further modified or amended
from time to time.
"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 BankAmerica International (as
successor in interest to Continental Bank International), as modified or
amended from time to time.
"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 BankAmerica International (as successor in
interest to Continental Bank International), as modified or amended from time
to time.
"Bontang IV Trustee" shall mean the trustee and paying agent
under the Bontang IV Trust Agreement.
"Bontang V Trust Agreement" shall mean the Bontang V Trustee
and Paying Agent Agreement, dated as of July 1, 1995, among the Producers and
BankAmerica International, as modified or amended from time to time.
"Bontang V Trustee" shall mean the trustee and paying agent
under the Bontang V Trust Agreement.
"Bontang VI Depositary" shall mean the United States
headquarters or a United States branch of the following financial institutions
appointed pursuant to Section 3.9 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:
<PAGE> 10
5
(a) any branch or affiliate of Bank of America
National Trust and Savings Association with the power to act as a Bontang VI
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 and
the Agent on behalf of the Lenders.
"Bontang VI General Account" shall have the meaning set forth
in Section 2.1.
"Bontang VI Payment Account" shall mean a trust account of the
Bontang VI Trustee established as a subaccount of the Bontang VI General
Account pursuant to Section 4.1.
"Bontang VI Trustee" shall mean Bank of America National Trust
and Savings Association, as trustee and paying agent under this Agreement, or a
successor thereto.
"Bontang VI Trust Funds" shall have the meaning set forth in
Section 2.2.
"Bontang VI 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.
"Borrowing Date" 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, as buyer
under the KGC Sales Contract and (ii) Chinese Petroleum Corporation, as buyer
under the CPC Sales Contract.
<PAGE> 11
6
"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 Virginia 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 LNG Sale and Purchase
Contract (Badak VI) between Pertamina and Chinese Petroleum Corporation, dated
as of October 25, 1995, as modified or amended from time to time.
"CPC Supply Agreements" shall mean:
(i) Package VI Supply Agreement for Natural Gas
in Support of 2000-2017 LNG Sales to Chinese Petroleum Corporation under Badak
VI, dated May 1, 1996, by and between Pertamina, on the one hand, and the
members of the VICO Group, on the other hand, as modified or amended from time
to time;
(ii) Package VI Supply Agreement for Natural Gas
in Support of 2000-2017 LNG Sales to Chinese Petroleum Corporation under Badak
VI, dated April 4, 1996, by and between Pertamina, on the one hand, and the
members of the Total Group, on the other hand, as modified or amended from time
to time;
(iii) Package VI Supply Agreement for Natural Gas
in Support of 2000-2017 LNG Sales to Chinese Petroleum Corporation under Badak
VI, dated April 16, 1996, by and between Pertamina, on the one hand, and
Unocal, on the other hand, as modified or amended from time to time; and
(iv) Package VI Supply Agreement for Natural Gas
in Support of 2000-2017 LNG Sales to Chinese Petroleum Corporation under Badak
VI, dated April 16, 1996, by and between Pertamina, on the one hand, and Unocal
and Inpex, on the other hand, as modified or amended from time to time.
"Debt Coverage Ratio" shall have the meaning set forth in
Section 1 of the Loan Agreement.
<PAGE> 12
7
"Debt Coverage Reserve Account" shall mean a trust account of
the Bontang VI Trustee established as a subaccount of the Reserve Account
pursuant to Section 3.2(c), and such term shall include all subaccounts
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 VI Trustee as "Debt Service" under the
Debt Service Allocation Agreement.
"Debt Service Account" shall mean a trust account of the
Bontang VI Trustee established as a subaccount of the Bontang VI General
Account pursuant to Section 3.2(c), which may be established and maintained at
the offices of the Bontang VI Trustee, or any Bontang VI Depositary as
permitted in accordance with the terms hereof and such term shall include all
subaccounts 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 modified or amended from time to time.
"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 2.9(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 3.7 under which the Loan Proceeds (other than amounts referred to in
Sections 3.2(d), (e), (f) and (g) and 3.6(b)(iii)(y)) shall be maintained until
use thereof is required, as modified or amended from time to time.
"Disbursement Trustee" shall mean Bank of America National
Trust and Savings Association, 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 VI Trustee in writing by the Agent on
behalf of the 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.
<PAGE> 13
8
"Excluded Amounts" shall have the meaning set forth in Section
2.1.
"Finance Company" shall mean Bontang LNG Train-H Investment
Co., Ltd.
"Financed Capital Project" shall have the meaning specified in
the Processing Agreement.
"Gross Invoice Amount" shall mean:
(i) with respect to the KGC Sales Contract, the
sum, without duplication, of (a) all amounts payable to the Borrower pursuant
thereto in respect of LNG purchased or required to be paid for if not taken
thereunder (including without limitation amounts purchased pursuant to Section
4.11 of the KGC Sales Contract), (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 and
(d) to the extent they may hereafter become applicable by virtue of an
amendment to the KGC Sales Contract, amounts payable to the Borrower relating
to transportation charges, including, without limitation, demurrage and
non-utilization charges; and
(ii) with respect to the CPC Sales Contract, the
sum, without duplication, of (a) all amounts payable to the Borrower pursuant
thereto in respect of LNG purchased or required to be paid for if not taken
thereunder, (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 and (d) amounts
payable to the Borrower relating to transportation charges, including, without
limitation, demurrage and non-utilization charges;
provided that the Gross Invoice Amount (other than any such amounts payable
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 Agent on behalf of the Lenders also executes and
delivers such agreement this definition of Gross Invoice Amount shall be deemed
amended for all purposes of this Agreement as set forth in such agreement.
<PAGE> 14
9
"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 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" 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
2.6(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.
<PAGE> 15
10
"KGC Sales Contract" shall mean the LNG Sales and Purchase
Contract (Badak V), dated August 12, 1995, by and between Pertamina and Korea
Gas Corporation, as modified or amended from time to time.
"KGC Supply Agreements" shall mean:
(i) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated May 1, 1996, by and between Pertamina, on the one hand, and the
members of the VICO Group, on the other hand, as modified or amended from time
to time;
(ii) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated April 4, 1996, by and between Pertamina, on the one hand, and
the members of the Total Group, on the other hand, as modified or amended from
time to time;
(iii) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated April 16, 1996, by and between Pertamina, on the one hand, and
Unocal, on the other hand, as modified or amended from time to time; and
(iv) Package VI Supply Agreement for
Natural Gas in Support of 2000-2017 LNG Sales to Korea Gas Corporation under
Badak V, dated April 16, 1996, by and between Pertamina, on the one hand, and
Unocal and Inpex, on the other hand, as modified or amended from time to time.
"Lender" shall have the meaning set forth in Section 1 of the
Loan Agreement.
"Lenders Fees and Expenses" shall mean any amounts payable to
the Agent or any of the Lenders (other than any Affected Lenders) under
Sections 2.7 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" means both of, the CPC Sales Contract and the KGC Sales Contract.
"Loan Account" shall mean a trust account of the Bontang VI
Trustee established as a subaccount of the Debt Service Account pursuant to
Section 3.2(c).
<PAGE> 16
11
"Loan Agreement" shall mean the Loan Agreement among the
Bontang VI Trustee, as borrower thereunder, the Lenders, the Agent, the
Co-Agents and the Arrangers parties thereto, to be entered into pursuant to
Section 3.1(a), as modified or amended from time to time.
"Loan Percentage" shall mean, for any Lenders at any time, the
percentage determined by dividing the principal amount of such 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.
"LPG" shall have the meaning set forth in Article 1 of the
Processing Agreement.
"Majority Lenders" shall have the meaning set forth in Section
1 of the Loan Agreement.
"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.
"Mandatory Prepayment Account" shall mean a trust account of
the Bontang VI Trustee established as a subaccount of the Debt Service Account
pursuant to Section 3.2(c).
"Maturity Date" shall have the meaning set forth in Section 1
of the Loan Agreement.
"Mutual Incentive Sharing Side Letter" shall have the meaning
set forth in Section 8.1.
"Non-Scheduled Payment Notice" shall have the meaning set
forth in Section 3.2(b)(ii).
"Note" shall have the meaning set forth in Section 1 of the
Loan Agreement.
"Notice of Acceleration" shall have the meaning set forth in
Section 3.3(d).
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"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 Facilities" shall have the meaning set forth in Section
1 of the Loan Agreement.
"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, the
Bontang V Trust Agreement and any other relevant agreements of this type
entered into from time to time by Pertamina and the trustees parties thereto,
among others, as modified or amended from time to time.
"Pari Passu Swap Indebtedness" shall have the meaning set
forth in 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 modified or amended from time to time.
"Producers" shall mean Pertamina (and its successors) and the
Contractors.
"Producers Agreement" shall have the meaning set forth in
Section 1 of the Loan Agreement.
"Production Sharing Contracts" 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)
through August 7, 1998, the Amended and Restated Production Sharing Contract
dated April 23, 1990, as modified or amended from time to time, between
Pertamina, on the one hand, and the members of the VICO Group on the other, and
(ii) effective August
<PAGE> 18
13
8, 1998, the Production Sharing Contract dated April 23, 1990, as modified or
amended from time to time, 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)
through March 30, 1997, the Amended and Restated Production Sharing Contract
dated January 11, 1991, as modified or amended from time to time, 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 modified or amended from time to time, between Pertamina,
on the one hand, and the members of the Total Group, on the other;
(iii) as to Pertamina and the Unocal Group, (i)
through October 24, 1998, the Amended and Restated Production Sharing Contract
dated January 11, 1991, as modified or amended from time to time, between
Pertamina, on the one hand, and Unocal on the other, and (ii) effective October
25, 1998, the Production Sharing Contract dated January 11, 1991, as modified
or amended from time to time, 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 modified or
amended from time to time, 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 the laws of the Republic of Indonesia.
"Quarterly Period" shall have the meaning set forth in Section
1 of the Loan Agreement.
"Regular Reserve Account" shall mean a trust account of the
Bontang VI Trustee established as a subaccount of the Reserve Account pursuant
to Section 3.2(c), and such term shall include all subaccounts thereof.
"Reserve Account" shall mean a trust account of the Bontang VI
Trustee established as a subaccount of the Bontang VI General Account pursuant
to Section 3.2(c), which may be established at the offices of the Bontang VI
Trustee, or any Bontang VI Depositary, as permitted in accordance with the
terms hereof, and such term shall include all subaccounts thereof.
"Reserve Account Borrowed Amount" shall have the meaning set
forth in Section 2.2(b) of the Loan Agreement.
"Scheduled Payment Notice" shall have the meaning set forth in
Section 3.2(b)(i).
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"Scheduled Principal" shall mean the amount of principal
regularly scheduled to be payable to the Lenders (other than any Affected
Lenders) under Section 2.9(a) of the Loan Agreement and under the Notes.
"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 have the meaning set forth in
Section 1 of the Loan Agreement.
"Special Disbursement Amount" shall mean an amount paid by the
Bontang VI Trustee pursuant to a Special Disbursement Instruction or an amount
received by the Bontang VI Trustee from the trustee and paying agent under any
of the Other Trust Agreements which such trustee and paying agent has notified
the Bontang VI Trustee is a Special Disbursement Amount, as the case may be.
"Special Disbursement Instruction" shall have the meaning set
forth in Section 8.5.
"Special Payment Account" shall mean a trust account of the
Bontang VI Trustee established as a subaccount 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 2.6(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 have the meaning set forth
in 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 and the KGC Supply Agreements.
<PAGE> 20
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"Total" is defined in the title paragraph hereof.
"Total Group" shall mean Total and Inpex, and their respective
successors in interest under the Production Sharing Contracts described in
clause (ii) of the definition thereof.
"Train H" shall have the meaning set forth in Section 1 of the
Loan Agreement.
"Transportation Agreement" shall mean the time charter with
respect to the transportation of LNG to be sold pursuant to the CPC Sales
Contract.
"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 VI
Trustee, the address of which is set out in Section 13.3 or any other office of
the Bontang VI Trustee in the United States the address of which is notified to
the Producers by the Bontang VI 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 (a) Unocal and its successors in
interest under the Production Sharing Contracts described in clause (iii) of
the definition thereof and (b) prior to March 31, 1997, Inpex; 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 respective successors
in interest under the Production Sharing Contracts described in clause (i) of
the definition thereof.
ARTICLE 2
RECEIPT OF PAYMENTS WITH RESPECT TO LNG
2.1 Designation of Bontang VI Trustee and Bontang VI 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
<PAGE> 21
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agrees to the designation of, the Bontang VI Trustee named herein, and directs
the Bontang VI 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 VI General Account." Pertamina hereby designates the Bontang VI
General Account, and each of the Contractors hereby agrees to such designation
of the Bontang VI General Account, as the account to which the following
amounts shall be paid:
(a) (i) all amounts payable under the KGC Sales
Contract for quantities of LNG purchased on or after January 1, 2000 or for
quantities of LNG required to be purchased on or after January 1, 2000 but
which are not taken by the Buyer thereunder and (ii) all other amounts that
become due and payable under the KGC Sales Contract with respect to the period
commencing on January 1, 2000, in each case as provided therein; and
(b) (i) all amounts payable under the CPC Sales
Contract for quantities of LNG purchased on or after January 1, 2000 or for
quantities of LNG required to be purchased on or after January 1, 2000 but
which are not taken by the Buyer thereunder and (ii) all other amounts that
become due and payable under the CPC Sales Contract with respect to the period
commencing on January 1, 2000, in each case as provided therein.
Without limiting the foregoing, and notwithstanding any other provision herein
to the contrary, the parties hereto acknowledge and agree that all amounts
payable by the relevant Buyer under the relevant LNG Sales Contract with
respect to quantities of LNG purchased on or before December 31, 1999, and any
other amounts that become due and payable thereunder with respect to the period
ending on December 31, 1999, in each case as provided therein, shall not
constitute Bontang VI Trust Funds, and if received by the Bontang VI Trustee
shall be paid over to the Bontang Excess Sales Trustee (all such amounts are
herein called "Excluded Amounts"). For purposes of this Section 2.1,
quantities of LNG shall be deemed to have been purchased when title thereto
passes to the relevant Buyer under the terms of the relevant LNG Sales
Contract, except that any quantities of LNG included in (i) the Fixed Quantity
Period (as defined in the KGC Sales Contract) ending on December 31, 1999
pursuant to Section 7.3(c) of the KGC Sales Contract or (ii) the Fixed Quantity
Period (as defined in the CPC Sales Contract) ending on December 31, 1999
pursuant to Section 7.3(c) of the CPC Sales Contract, that would otherwise be
deemed to have been purchased on or after January 1, 2000 shall instead be
deemed to have been purchased on December 31, 1999.
2.2 Bontang VI Trust Funds. All such amounts that shall have
been received in the Bontang VI General Account pursuant to Section 2.1 (other
than Excluded Amounts), and any other amounts the Bontang VI Trustee may
receive under the terms of this Agreement (together with any securities
acquired by the Bontang VI Trustee pursuant to Article 10 and all interest
thereon) are herein referred to as the
<PAGE> 22
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"Bontang VI Trust Funds." The respective Sharing Percentages of each Producer
of all Bontang VI Trust Funds shall be credited to the respective Bontang VI
Trust Funds Accounts of such 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 VI Trustee's receipt of any funds unambiguously representing amounts
payable to the Bontang VI 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 VI Trust Funds and shall be
deposited in the Bontang VI General Account.
2.3 Allocation of Amounts Received. All amounts received by
the Bontang VI 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 VI Trustee receives any amount from any
Buyer which amount is not designated for the Bontang VI 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 VI 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 VI Trustee shall notify the Producers of the amounts received, the date
of receipt and any other information relevant to such amount known to the
Bontang VI Trustee. The Bontang VI Trustee shall thereupon request
instructions as to the proper allocation of the amount received and shall
allocate such amounts between the Bontang VI 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 VI Trustee identifying and itemizing in reasonable detail the portions
of the amounts received in the Bontang VI General Account that do and do not
constitute Source of Debt Service. Until such notice has been delivered, all
amounts received in the Bontang VI 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 VI Trustee. All such amounts received by the Bontang
VI 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 VI Trust Funds
and shall be deposited in the Bontang VI General Account. In the event the
Bontang VI Trustee receives any amounts from insurers that are not designated
as to origin, the procedures specified in Section 2.3 shall apply.
<PAGE> 23
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2.5 Payment Under Transportation Agreement. Pertamina shall
provide instructions that all amounts coming due to Pertamina under the
Transportation Agreement or any other transportation arrangement relating to an
LNG Sales Contract (other than Excluded Amounts) shall be paid directly to the
Bontang VI Trustee. All such amounts received by the Bontang VI Trustee shall
become a part of the Bontang VI Trust Funds and shall be deposited in the
Bontang VI 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) Power to Borrow from the Lenders. In
addition to its other powers hereunder, the Bontang VI 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 VI Trustee to pay for a portion of the capital costs incurred, or to be
incurred, in connection with the construction or financing of Train H is
desirable, the Bontang VI 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 VI 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 VI Trustee to enter into such
agreements or modifications. The Bontang VI Trustee shall have the power, as
specified herein, 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 VI 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 VI
Trustee to the effect
<PAGE> 24
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that no recourse may be had nor any claim thereunder made against Bank of
America National Trust and Savings Association, in its individual capacity,
other than for breach of a representation or warranty made in its individual
capacity or for gross negligence or willful misconduct.
(b) Power to Incur Subordinated Indebtedness. In
addition to its other powers hereunder, the Bontang VI 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 VI 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 VI 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 VI 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 VI Trustee shall not enter into any such agreement or
amendment prior to (i) receiving written notice from 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) Power to Incur Pari Passu Swap Indebtedness.
In addition to its other powers hereunder, the Bontang VI Trustee shall have
the power to incur Indebtedness (other than Subordinated Indebtedness) in
respect of interest rate swap arrangements of the Bontang VI Trustee entered
into solely for the purpose of exchanging floating interest rate obligations of
the Bontang VI 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 VI 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 Indebtedness; provided, however, that the Bontang VI
Trustee shall not enter into any such agreement prior to (i) receiving written
notice from the Agent that the
<PAGE> 25
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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) Application of Certain Provisions. 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 VI Trustee pursuant to Section
3.1(b) or 3.1(c).
3.2 Accumulation of Debt Service.
(a) Capital Payment Dates. The Loan Agreement
shall provide that all payment dates for payment of principal and interest
thereunder shall be uniform dates within each calendar quarter (each such date
for payment of principal or interest, a "Capital Payment Date").
(b) Notices. (i) The Loan Agreement shall
provide for the Bontang VI 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 (a "Scheduled Payment
Notice") from the Agent of the amounts of Scheduled Principal, Deferred
Principal, regularly scheduled Interest and regularly scheduled Lenders Fees
and Expenses payable on the Capital Payment Date occurring at the end of such
Quarterly Period (specifying the portions thereof payable to the Finance
Company, on the one hand, and the other Lenders, on the other).
(ii) The Loan Agreement shall provide for
the Bontang VI Trustee to receive notice (a "Non-Scheduled Payment Notice")
from the Agent of other amounts payable under the Loan Agreement, the Notes and
the Letter Agreement as the same shall become due and payable, designating
whether such amounts constitute principal, Lenders Fees and Expenses, Interest,
Special Payments or Mandatory Prepayments (specifying the portions thereof
payable to the Finance Company, on the one hand, and the other Lenders, on the
other).
(iii) The Loan Agreement shall provide for
the Bontang VI Trustee to receive on or about December 31, 1999 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 (an
"Anticipated Loan Amount Notice") from the Agent of the sum (such sum, the
"Anticipated Loan Amounts") of Scheduled Principal and Deferred Principal to be
payable to the Lenders (other than
<PAGE> 26
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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 all
Interest to accrue during the two Quarterly Periods next succeeding such
Quarterly Period plus all Lenders Fees and Expenses reasonably anticipated to
be payable during such next two Quarterly Periods; provided, however, that
during the period beginning January 1, 2000 and ending on the day immediately
preceding the first day of the Amortization Period, such sum shall be equal to
(and the phrase Anticipated Loan Amounts shall refer to) the Scheduled
Principal and Deferred Principal reasonably anticipated to become due to the
Lenders (other than Affected Lenders) with respect to the first two Maturity
Dates plus all Interest and Lenders Fees and Expenses reasonably anticipated to
be due on such Maturity Dates.
(iv) The Bontang VI Trustee, without any
action or approval being required of the Producers, shall be entitled to rely
conclusively on each such notice in the absence of manifest error.
(c) Establishment of Debt Service Account and
Reserve Account. On or before the Effective Date, the Bontang VI Trustee shall
open in its own name, as Bontang VI Trustee, at the Trustee's Office, two
subaccounts of the Bontang VI General Account, one designated as the "Debt
Service Account" (which term shall include all subaccounts thereof), and the
other designated as the "Reserve Account" (which term shall include all
subaccounts thereof). On or before the Effective Date, the Bontang VI Trustee
shall also open in its own name at the Trustee's Office (i) three separate
subaccounts of the Debt Service Account (such subaccounts to be designated as
the "Loan Account," the "Special Payment Account" and the "Mandatory Prepayment
Account") and (ii) two separate subaccounts of the Reserve Account (such
subaccounts to be designated as the "Regular Reserve Account" and the "Debt
Coverage Reserve Account," respectively), all such subaccounts to be used for
the receipt, administration and payment of principal, interest and other
amounts due or to become due under the Loan Agreement.
(d) Depositing of Borrowings for Lenders Fees and
Expenses. If the Bontang VI Trustee borrows amounts under the Loan Agreement
for the purpose of paying any Lenders Fees and Expenses due thereunder as
specified in all Scheduled Payment Notices and Non-Scheduled Payment Notices
received by the Bontang VI Trustee, without duplication, such amounts shall be
immediately deposited into the Loan Account.
(e) Depositing of Borrowings for Interest. If
the Bontang VI Trustee borrows amounts under the Loan Agreement for the purpose
of paying any Interest due thereunder as specified in all Scheduled Payment
Notices and Non-Scheduled Payment Notices received by the Bontang VI Trustee,
without duplication, such amounts shall be immediately deposited into the Loan
Account.
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(f) Depositing of Borrowings for Special
Payments. If the Bontang VI Trustee borrows amounts under the Loan Agreement
for the purpose of paying any Special Payments due thereunder as specified in
all Non- Scheduled Payment Notices received by the Bontang VI Trustee, without
duplication, such amounts shall be immediately deposited into the Special
Payment Account.
(g) Depositing of Borrowing for Regular Reserve
Account. If the Bontang VI Trustee borrows an amount under the Loan Agreement
for the purpose of funding the Regular Reserve Account, such amount shall be
immediately deposited into the Regular Reserve Account.
(h) Depositing of Borrowings for Selected
Qualified Bank. If the Bontang VI Trustee borrows amounts under the Loan
Agreement 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 assumptions necessary for calculating the Debt
Coverage Ratio, such amounts shall be immediately deposited into the Bontang VI
Payment Account.
(i) Depositing of Source of Debt Service Before
Amortization Period. Subject to all payments (if any) required by Section
3.3(d) having first been made, during the period beginning on January 1, 2000
and ending on the day immediately preceding the first day of the Amortization
Period, the Bontang VI Trustee shall, upon receipt, promptly pay over to the
Reserve Account or the Mandatory Prepayment Account, as applicable, for deposit
in the appropriate subaccount (or, in the case of clause (iii) below, to the
Bontang VI Payment Account), or for payment, all amounts of the Source of Debt
Service received in the Bontang VI 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 equal to the
Anticipated Loan Amounts at such time as specified in all Anticipated Loan
Amount Notices received by the Bontang VI Trustee, without duplication;
(ii) Second, to the Mandatory Prepayment
Account, until the aggregate of all amounts of Mandatory Prepayments due and
payable, if any, 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
(iii) Third, to the Bontang VI Payment
Account as provided in Section 4.2.
(j) Depositing of Source of Debt Service in Loan
Account and Special Payment Account During Amortization Period. Subject to all
payments (if any) required by Section 3.3(d) having first been made, commencing
on the first day of
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the Amortization Period and for each Quarterly Period thereafter and continuing
until the date of payment of all amounts due under the Loan Agreement, the
Bontang VI Trustee shall, upon receipt, promptly pay over to the Debt Service
Account with respect to each such Quarterly Period for deposit in the
appropriate subaccount all amounts of the Source of Debt Service received in
the Bontang VI General Account in the following amounts and in the following
order of priority:
(i) First, to the Loan Account, the
amounts, if any, of Lenders Fees and Expenses due and payable by the Bontang VI
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 Scheduled Payment Notices and Non-Scheduled Payment
Notices received by the Bontang VI Trustee, without duplication, until the
aggregate amount accumulated in the Loan Account shall be sufficient to pay the
aggregate of all such amounts of Lenders Fees and Expenses;
(ii) Second, to the Loan Account, the
amounts of Interest due and payable by the Bontang VI 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
Scheduled Payment Notices and Non-Scheduled Payment Notices received by the
Bontang VI Trustee, without duplication, until the aggregate amount accumulated
in the Loan Account (in excess of the amounts referred to in clause (i) above)
shall be sufficient to pay the aggregate of all such amounts of Interest;
(iii) Third, to the Special Payment
Account, the amounts of Special Payments, if any, due and payable by the
Bontang VI 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 Non-Scheduled Payment Notices received by
the Bontang VI Trustee, without duplication, until the aggregate amount
accumulated in the Special Payment Account shall be sufficient to pay the
aggregate of all such amounts of Special Payments;
(iv) Fourth, to the Loan Account, the
amounts, if any, of Deferred Principal due and payable by the Bontang VI
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 Scheduled Payment Notices received by the Bontang VI
Trustee, without duplication, until the aggregate amount accumulated in the
Loan Account (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
(v) Fifth, to the Loan Account, the
amounts of Scheduled Principal due and payable by the Bontang VI Trustee on the
Capital Payment Date occurring at the end of such Quarterly Period (and on any
prior Capital Payment
<PAGE> 29
24
Date to the extent not previously paid and not constituting Deferred
Principal), as specified in all Scheduled Payment Notices and Non-Scheduled
Payment Notices received by the Bontang VI Trustee, without duplication, until
the aggregate amount accumulated in the Loan Account (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.
(k) Depositing of Source of Debt Service in
Reserve Account, Mandatory Prepayment Account and Payment Account During
Amortization Period. 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(j), after all amounts of Source of Debt Service required to be paid into
the Debt Service Account pursuant to Section 3.2(j) with respect to such
Quarterly Period have been so paid, the Bontang VI 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 subaccount (or, in the case of clause (iv) below, to the Bontang VI
Payment Account), or for payment, all additional amounts of the Source of Debt
Service received in the Bontang VI 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 equal to the
Anticipated Loan Amounts specified for such Quarterly Period in all Anticipated
Loan Amount Notices received by the Bontang VI Trustee, without duplication;
(ii) Second, if the certificate delivered
to 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;
(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, to the Bontang VI Payment
Account as provided in Section 4.2.
(l) Contested Special Payments. Subject to all
payments (if any) required by Sections 3.3(c) and (d) having first been made,
if the Producers have, prior to the Bontang VI Trustee having paid all or part
of any Special Payments, advised the Bontang VI 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 Account shall remain
on deposit therein until such time as
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Pertamina and the Contractors have approved the use thereof for payment of such
amounts or, if earlier, such time as the Bontang VI 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.
(a) Payments from Loan Account and Special
Payment Account. Subject to all payments (if any) required by Sections
3.3(b)(ii), 3.3(c) and 3.3(d) having first been made, on each Capital Payment
Date, the Bontang VI 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 Scheduled Payment
Notices and Non-Scheduled Payment Notices received by the Bontang VI Trustee,
without duplication, shall be paid to the Agent (for the account of the Lenders
other than the Finance Company) and the Finance Company, pro rata in accordance
with the amounts thereof specified by the Agent in all Scheduled Payment
Notices and Non-Scheduled Payment Notices as being payable to all Lenders other
than the Finance Company, on the one hand, and as being payable to the Finance
Company, on the other, to the extent of and out of amounts then held in the
Loan Account; 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 Scheduled Payment Notices and Non-Scheduled Payment Notices, without
duplication, shall be paid (I) with respect to such amounts for which the Agent
shall have delivered an invoice to the Bontang VI Trustee on or before February
14, 1997, on the earliest to occur of (x) the date of such initial Borrowing
and (y) the 30th day following the Effective Date and (II) with respect to such
amounts for which the Agent shall have delivered an invoice to the Bontang VI
Trustee at any time after February 14, 1997, on or before the next date that is
the 21st day of a month and occurs at least 30 days following the date of
delivery of such invoice;
(ii) Second, all amounts of Interest then
due and payable, as specified in all Scheduled Payment Notices and
Non-Scheduled Payment Notices received by the Bontang VI Trustee, without
duplication, shall be paid to the Agent (for the account of the Lenders other
than the Finance Company) and the Finance Company, pro rata in accordance with
the portions thereof specified by the Agent in all Scheduled Payment Notices
and Non-Scheduled Payment Notices as being payable to all Lenders other than
the Finance Company, on the one hand, and as being payable to the Finance
Company, on the other, to the extent of and out of amounts then held in the
Loan Account;
(iii) Third, subject to Section 3.2(l),
all amounts of Special Payments then due and payable, as specified in all
Non-Scheduled Payment Notices received by the Bontang VI Trustee, without
duplication, shall be paid to the
<PAGE> 31
26
Agent (for the account of the Lenders other than the Finance Company) and the
Finance Company, pro rata in accordance with the amounts thereof specified by
the Agent in all Non-Scheduled Payment Notices as being payable to all Lenders
other than the Finance Company, on the one hand, and as being payable to the
Finance Company, on the other, for the account of the Lenders to the extent of
and out of amounts then held in the Special Payment Account;
(iv) Fourth, all amounts of Deferred
Principal then due and payable, as specified in all Scheduled Payment Notices
received by the Bontang VI Trustee, without duplication, shall be paid to the
Agent (for the account of the Lenders other than the Finance Company) and the
Finance Company, pro rata in accordance with the amounts thereof specified by
the Agent in all Scheduled Payment Notices as being payable to all Lenders
other than the Finance Company, on the one hand, and as being payable to the
Finance Company, on the other, to the extent of and out of amounts then held in
the Loan Account;
(v) Fifth, all amounts of Scheduled
Principal then due and payable, as specified in all Scheduled Payment Notices
received by the Bontang VI Trustee, without duplication, shall be paid to the
Agent (for the account of the Lenders other than the Finance Company), and the
Finance Company, pro rata in accordance with the amounts thereof specified by
the Agent in all Scheduled Payment Notices as being payable to all Lenders
other than the Finance Company, on the one hand, and as being payable to the
Finance Company, on the other, to the extent of and out of amounts then held in
the Loan Account;
(vi) Sixth, all amounts necessary to
ensure that the aggregate amount accumulated in the Regular Reserve Account
shall be equal to the Anticipated Loan Amounts specified for the Quarterly
Period commencing on such Capital Payment Date in Anticipated Loan Amount
Notices received by the Bontang VI Trustee shall be paid from the Debt Service
Account to the Regular Reserve Account;
(vii) Seventh, if the certificate
delivered to 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 VI Payment
Account as provided in Section 4.2.
<PAGE> 32
27
(b) Payments from Reserve Account.
(i) Subject to all payments (if any)
required by Sections 3.3(c) and 3.3(d) having first been made, to the extent
that on any Capital Payment Date the amounts held in any subaccount 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 subaccount, 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, that if on any Capital Payment Date occurring prior to the
first day of the Amortization Period there are any undrawn amounts of the
Commitments and such amounts are available to be borrowed under the Loan
Agreement, then the Bontang VI 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 upon receipt
of notice to such effect from the Producers addressed to the Agent and the
Bontang VI Trustee; provided, further, that the Bontang VI Trustee may not
apply any portion of the Reserve Account Borrowed Amount to make a payment to
the Lenders of Interest due and payable on any Capital Payment Date at any time
on or prior to the first day of the Amortization Period.
(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 Agent (for the account of the Lenders other than
the Finance Company) and the Finance Company, pro rata based on the aggregate
Loan Percentages of the Lenders other than the Finance Company and the Loan
Percentage of the Finance Company, respectively, 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 after the start of the Amortization
Period the Bontang VI Trustee shall receive a notice from the Producers given
pursuant to Section 1.13(b) of the Producers Agreement, the Bontang VI Trustee
shall transfer to the Bontang VI Payment Account, from amounts then held in the
Regular Reserve Account, the amount specified in such notice.
(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 first day of the Amortization Period, the Bontang
VI Trustee shall receive a notice from Pertamina given pursuant to Section
1.13(c) of the Producers Agreement, then the
<PAGE> 33
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Bontang VI Trustee shall transfer to the Bontang VI 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), 3.3(b)(ii), 3.3(b)(vi), 3.3(c) and 3.3(d)
having first been made, if immediately following the deposit of the Reserve
Account Borrowed Amount into the Reserve Account, the amounts then held in the
Regular Reserve Account exceed the Anticipated Loan Amounts required to be held
in the Regular Reserve Account pursuant to Section 3.2, the amount by which
such amounts exceed such Anticipated Loan Amounts shall be paid over to the
Bontang VI 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 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 VI Payment Account as provided in Section 4.2.
(c) Mandatory Prepayments. (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 VI Trustee of any Non-Scheduled Payment
Notice that any Mandatory Prepayments have become due and payable to one or
more Affected Lenders (a "Notice of Mandatory Prepayment"), the Bontang VI
Trustee, without any action or approval being required of Pertamina or the
Contractors, shall:
(1) Immediately pay to the Agent
(for the account of any Affected Lenders other than the Finance
Company) and the Finance Company (if it is an Affected Lender), 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
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(2) Immediately upon deposit of any
amounts in the Mandatory Prepayment Account pursuant to Section
3.2(i)(ii) or 3.2(k)(iii) or otherwise, pay all such amounts to the
Agent (for the account of any Affected Lenders other than the Finance
Company) and the Finance Company (if it is an Affected Lender), to the
extent the amount of such Mandatory Prepayments shall not have been
previously paid.
(ii) All amounts paid to the Finance
Company and to the Agent for the account of the Affected Lenders or to the
Finance Company pursuant to Section 3.3(c)(i) shall be reflected in the records
of the Bontang VI 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) Payments Upon Acceleration. The Loan
Agreement may provide for the acceleration of Advances outstanding and payable
thereunder. Notwithstanding Sections 3.3(a), (b) and (c), upon receipt by the
Bontang VI Trustee of any notice of acceleration (a "Notice of Acceleration")
from the Agent, the Bontang VI Trustee, without any action or approval being
required of the Producers, shall:
(i) Immediately apply all amounts then
held in all subaccounts 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 of Lenders
Fees and Expenses due and payable at the time of payment, as specified
in the Notice of Acceleration or in any Non-Scheduled Payment Notices
received by the Bontang VI Trustee, without duplication, shall be paid
to the Agent (for the account of the Lenders other than the Finance
Company) and the Finance
<PAGE> 35
30
Company, pro rata in accordance with the amounts thereof specified by
the Agent in such Notices as being payable to all Lenders other than
the Finance Company, on the one hand, and as being payable to the
Finance Company, on the other;
(2) Second, all amounts of Interest
due and payable at the time of payment, as specified in the Notice of
Acceleration or in any Non-Scheduled Payment Notices received by the
Bontang VI Trustee, without duplication, shall be paid to the Agent
(for the account of the Lenders other than the Finance Company) and
the Finance Company, pro rata in accordance with the amounts thereof
specified by the Agent in such Notices as being payable to all Lenders
other than the Finance Company, on the one hand, and as being payable
to the Finance Company, on the other;
(3) Third, 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 Scheduled Payment
Notices or Non- Scheduled Payment Notices received by the Bontang VI
Trustee, without duplication, shall be paid to the Agent (for the
account of the Lenders other than the Finance Company) and the Finance
Company, pro rata in accordance with the amounts thereof specified by
the Agent in such Notices as being payable to all Lenders other than
the Finance Company, on the one hand, and as being payable to the
Finance Company, on the other; and
(4) Fourth, all amounts of Special
Payments due and payable at the time of payment, as specified in the
Notice of Acceleration or in any Non-Scheduled Payment Notices
received by the Bontang VI Trustee, without duplication, shall be paid
to the Agent (for the account of the Lenders other than the Finance
Company) and the Finance Company, pro rata in accordance with the
amounts thereof specified by the Agent in such Notices as being
payable to all Lenders other than the Finance Company, on the one
hand, and as being payable to the Finance Company, on the other;
(ii) Promptly upon receipt pay over to
the Debt Service Account all amounts of Source of Debt Service received in the
Bontang VI 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.
<PAGE> 36
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3.4 Choices; Delivery of Information and
Certificates.
(a) Choices. The Loan Agreement may provide for
the exercise of choices or taking or refraining from taking any action by the
Bontang VI Trustee as to certain matters, including, but not limited to,
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 VI Trustee pursuant to the
terms of such Loan Agreement which is not otherwise specifically provided for
in this Article 3, the Bontang VI 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.
(b) Delivery of Information and Certificates to
Lenders. 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 VI Trustee in the performance of its duties under this
Agreement, the Bontang VI 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 VI 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 VI Trustee by the Producers,
which, together with information produced by the Bontang VI Trustee in the
performance of its duties hereunder, will enable the Bontang VI Trustee to
provide to such Lenders the information and certificates required under the
Loan Agreement.
(c) Copies to Producers. In furtherance of the
foregoing provisions of Section 3.3 and this Section 3.4, the Bontang VI
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 VI Trustee.
(d) Method of Notices. All notices, approvals,
instructions, and other communications to be provided by the Producers to the
Bontang VI Trustee pursuant to Section 3.3 and this Section 3.4 shall be given
or made as provided in Section 13.3.
(e) Notices to Allocation Trustees. The Bontang
VI 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 VI Trustee;
(2) each payment of Debt Service
made by a Producer pursuant to the Producers Agreement and of which
the Bontang VI Trustee has been notified;
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(3) each transfer to the Bontang VI
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 3.5;
(5) each receipt of amounts from
the Disbursement Trustee to which the Producers are entitled pursuant
to Section 3.7(c); and
(6) the portion of each such
payment of Debt Service, whether made by the Bontang VI Trustee or a
Producer, borne by each Producer.
Solely for the purposes of this Section 3.4(e), 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 VI 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.
(f) Information to Accountants. The Bontang VI
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 VI 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.
3.5 Closing of Debt Service Account and Reserve Account.
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 VI 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 VI 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.
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3.6 Borrowing Instructions.
(a) Notice of Authorized Signatory. Prior to any
borrowing under the Loan Agreement, Pertamina shall give the Bontang VI Trustee
written notice of each entity and individual authorized to give borrowing
instructions to the Bontang VI 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 VI Trustee.
(b) Contents of Borrowing Instruction. 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 H shall be a disbursement trust fund of the type
referred to in Section 3.7, (y) in the case of reimbursement of costs
previously incurred for the design, engineering, procurement and construction
of or otherwise relating to Train H 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), (g) and (h).
(c) Deficient Borrowing Instructions. In the
event any borrowing instruction does not include all of the information
required by subsection (b) above, the Bontang VI 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) Requirement to Borrow. The Bontang VI
Trustee shall take such action as is required to effect the specified borrowing
under the Loan Agreement.
3.7 Disbursement Trust; Payment Instructions.
(a) Disbursement Trust. Subject to Sections
3.2(d), (e), (f) and (g) and 3.6(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 H
having the following features:
(i) The disbursement trust fund will be
maintained by Bank of America National Trust and Savings Association, as
Disbursement Trustee.
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(ii) The parties to the Disbursement
Trust Agreement shall be the Disbursement Trustee and the Bontang VI Trustee.
(iii) The Bontang VI 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 VI 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.
(b) Payment Instructions. (i) Pertamina shall,
at the time the Disbursement Trust Agreement is executed and delivered, give
the Bontang VI Trustee written notice of each entity and individual authorized
to give payment instructions to the Bontang VI 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 VI
Trustee.
(ii) Each payment instruction shall be
transmitted by telex or telecopier to the Bontang VI Trustee, with a copy by
hand delivery or by telex or telecopier to the Producers, and shall include the
following information:
(1) the full name and date of the
Disbursement Trust Agreement;
(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 VI 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 3.6(b) for costs previously incurred or as provided
in
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Sections 3.2(d), (e), (f) and (g), the Bontang VI Trustee shall forward each
payment instruction to the Disbursement Trustee.
(c) Certain Notices. (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
3.7(c)(ii)(1), on or after February 15 in each year, cause the Accountants to
notify the Bontang VI 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 VI Trustee shall
promptly send the same to the Disbursement Trustee, which notices shall include
a payment instruction for the Disbursement Trustee to pay such amount to the
Bontang VI Trustee.
(ii) The Producers shall notify the
Bontang VI 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
VI Trustee shall have received notice from the Agent 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 Agent for the account of the 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 VI 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:
(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;
(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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(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 VI 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
VI 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 VI 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.
3.8 Duties of Bontang VI 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 VI 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 VI Trustee's sole responsibility in such circumstances shall
be to take such action with respect to such instruction as is specified in
Section 3.6 or Section 3.7(b), as the case may be.
3.9 Bontang VI Depositaries. The Bontang VI Trustee shall,
upon the authorization and request of the Producers, and in accordance with the
Loan Agreement, appoint or remove any Bontang VI Depositary as set forth below.
(a) The Bontang VI Trustee may entrust any
Bontang VI 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 VI Trustee's responsibility with respect to the funds,
properties and rights held by a
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Bontang VI Depositary shall be only to maintain and administer the accounting
of the Debt Service Account or the Reserve Account or both. Each Bontang VI
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 VI Depositary hereunder that the bank, trust company or financial
institution so appointed shall conform to the definition of "Bontang VI
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
VI Trustee, and upon such agreement such rights and obligations shall be
enjoyed by and binding upon such Bontang VI Depositary. The terms of
appointment of any Bontang VI Depositary shall not be inconsistent with the
provisions of this Agreement.
(c) Without the written consent of the Producers
and, so long as the Loan Agreement shall be in effect, the Majority Lenders
pursuant to the Loan Agreement, no funds, properties or rights shall be
transferred from the custody and possession of the Bontang VI Trustee to the
custody and possession of a Bontang VI 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 VI
Depositary to the Bontang VI Trustee without such consent.
ARTICLE 4
ESTABLISHMENT OF BONTANG VI PAYMENT ACCOUNT
4.1 Bontang VI Payment Account. On or before the Effective
Date, a subaccount of the Bontang VI General Account designated as the "Bontang
VI Payment Account" shall be opened by the Bontang VI Trustee in its own name,
as Bontang VI Trustee, at the Trustee's Office. If requested by the Producers,
the Bontang VI Trustee shall open in its own name, as Bontang VI Trustee, at
the Trustee's Office, one or more subaccounts of the Bontang VI Payment Account
(each a "Payment Subaccount").
4.2 Funds to be Deposited. Commencing on the date of the
first receipts by the Bontang VI Trustee under Article 2 and continuing
throughout the term of this Agreement the Bontang VI Trustee shall deposit in
the Bontang VI Payment Account (i) promptly after receipt by the Bontang VI
Trustee of any amount hereunder (other than Loan Proceeds), all amounts in the
Bontang VI 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 VI Payment Account, (iii) any
Loan Proceeds to be deposited in the Bontang VI Payment
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Account pursuant to Section 3.2(h), and (iv) promptly after receipt, all
amounts of Source of Debt Service in the Bontang VI 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 VI Trustee pursuant to Section 4.1, amounts
deposited into the Bontang VI 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 2.5, 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 VI Payment Account and otherwise in accordance with the
provisions of such Sections 2.5, 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 VI 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 VI
Payment Account the Bontang VI 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 VI 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 VI Trustee of such
procedures, which shall include a requirement that P.T. Badak furnish the
Bontang VI Trustee with an acknowledgment that each payment by the Bontang VI
Trustee hereunder fully satisfies the liabilities of the Producers with respect
to the debit note to which the payment relates.
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ARTICLE 6
TRANSPORTATION EXPENSES
6.1 Submission and Payment. Pertamina shall submit to the
Bontang VI Trustee (with a copy to the Contractors) each invoice relating to
shipment of LNG that it may receive from a Transporter pursuant to the
Transportation Agreement or such other transportation arrangement 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 VI Payment Account, the Bontang VI
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 VI 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 VI 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 VI Payment
Account under Section 6.1 and shall advise the Bontang VI Trustee of such
procedures, which shall include a requirement that such Transporter furnish the
Bontang VI Trustee with an acknowledgment that each payment by the Bontang VI
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 VI
Payment Account. Any Producer may submit to the Bontang VI 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
VI Payment Account, the Bontang VI 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 VI Payment 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 VI
Trustee of such procedures, which shall include a requirement that the person
receiving payment
<PAGE> 45
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furnish the Bontang VI Trustee with an acknowledgment that each payment by the
Bontang VI 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 VI 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 VI Trustee pursuant to
Section 8.3. The Producers acknowledge that the Approved Level of Working
Capital may include amounts anticipated to be payable from time to time by
Pertamina pursuant to the letter agreement dated October 25, 1995 between
Pertamina and Chinese Petroleum Corporation regarding Mutual Incentive Sharing,
as amended or modified from time to time (the "Mutual Incentive Sharing Side
Letter").
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 VI
Trust Fund Account. The (i) respective Sharing Percentages of each Producer of
any funds deposited in the Bontang VI 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 3.5, and (iii) portion
due each Producer from any amounts received by the Bontang VI Trustee from the
Disbursement Trustee pursuant to Section 3.7(c), shall be credited to each such
Producer's Bontang VI Trust Fund Account. Whenever and to the extent that the
amount held in the Bontang VI Payment Account at the end of any business day of
the Bontang VI 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
VI 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 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.
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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 VI Trustee of such
appointment.
The Accountants shall be directed to furnish to the Bontang VI
Trustee (with a copy to the Producers) a certificate on or before the 15th day
of December in each calendar year (initially for 1997 on or before December 15,
1997) setting forth the respective Sharing Percentages of each Producer for the
following calendar year (and for 1997 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 VI 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, 1998 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 VI Trustee (with a copy to the Producers) on or before the 15th day
of February in each calendar year, commencing February 15, 1998, 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 VI 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 such certificate indicates that any of the Producers has
been underpaid, the Bontang VI 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 VI Trustee
shall make all future payments to the Producers out
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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 the Bontang VI Trustee pursuant to this Section 8.3.
8.4 Arrangements for Payment. Each Producer shall make such
reasonable arrangements with the Bontang VI 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 VI 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,
(c) Chinese Petroleum Corporation to satisfy obligations of Pertamina under the
Mutual Incentive Sharing Side Letter or (d) the trustee under any of the Other
Trust Agreements, in order to satisfy certain obligations of the Producers
having interests in the Bontang VI Payment Account. Accordingly,
notwithstanding the payment arrangements made with the Bontang VI 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 VI 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 VI Trustee, by the same means of transmission. As used herein, a
"Special Disbursement Instruction" means an instruction so entitled which (i)
is given by the Producers as provided in Section 13.3, (ii) instructs the
Bontang VI 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 VI 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 VI 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.
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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 or statements and shall advise the Bontang VI Trustee
of such procedures, which shall include a requirement that the person receiving
payment furnish the Bontang VI Trustee with an acknowledgment that each payment
by the Bontang VI 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 VI Trustee
may from time to time receive Special Disbursement Amounts from the trustee
under any of the Other Trust Agreements. Immediately upon the Bontang VI
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 VI Trust Funds. Any such amounts received by the Bontang VI
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 VI Trustee and held from time to time in the Bontang
VI Trust Funds shall be accounted for within the Bontang VI General Account
specifying the subaccount 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 of the Bontang VI Trustee. The Bontang VI 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 VI 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 VI Trustee shall furnish to each of
the Producers the following reports:
(a) As soon as practicable (but not later than 45
days) after the close of each calendar year, a statement prepared by the
Bontang VI 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 VI Trustee pursuant to Sec-
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tion 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 VI 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 VI 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 VI 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 VI
General Account or any subaccount 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 VI
Trustee directly to each Contractor at its address specified pursuant to
Section 13.3.
9.3 Producer Accounts. The Bontang VI Trustee shall maintain
separate accounts for each Producer which are sufficient to reflect each such
Producer's interest in the assets, liabilities, receipts and disbursements of
the Bontang VI Trust Funds and its right to distributions therefrom (the
"Bontang VI 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 VI 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 VI 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.
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ARTICLE 10
INVESTMENT OF FUNDS HELD IN ACCOUNTS UNDER THIS AGREEMENT
10.1 Permitted Investments. The Bontang VI Trustee shall
invest amounts held by it from time to time in the Bontang VI Payment Account,
the Debt Service Account and the Reserve Account solely in:
(i) Eurodollar bank time deposits or
Eurodollar certificates of deposit with banks 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 VI
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 subaccount 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
VI Trustee satisfying the foregoing criteria; or
(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 VI 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 VI 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
VI 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 VI Trustee shall request
the approval of the Producers in accordance with Section 13.3
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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 VI 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 VI Trustee may submit to the Producers and
to the Agent a list of bank issuers of securities satisfying the criteria of
such clauses and may request that the Producers 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 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 VI
Payment Account shall require any approval or other action on the part of the
Lenders or the Agent. The Bontang VI Trustee shall make no investments under
such clauses (i) and (iii) until it has received such a designation. The
Bontang VI 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 VI 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 VI Trustee shall have no
liability whatsoever for the results of any investment approved by the
Producers and the Agent.
10.3 Interest Allocation. Interest or any other income
arising out of investment of the Bontang VI Trust Funds shall be and become a
part of the Bontang VI 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 subaccount of the Debt Service Account or the Reserve Account shall
be allocated to the subaccount for which such investment was made.
ARTICLE 11
CONCERNING THE BONTANG VI 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 VI Trustee shall be subject to the
following:
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(a) The Bontang VI 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 VI 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, but not limited to, with respect to any provision herein
requiring the Bontang VI Trustee to use its best efforts, except for its own
gross negligence or willful misconduct, nor shall the Bontang VI 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.
(c) The Bontang VI 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 VI Trustee shall have no duties
other than those specifically set forth or provided for in this Agreement. The
Bontang VI 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 VI Trustee. If, however, any remittance or
communication received by the Bontang VI Trustee appears erroneous or irregular
on its face, the Bontang VI 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 VI 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 the Bontang VI Trustee hereunder or
under any other document entered into by the Bontang VI 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 VI Trustee in connection therewith. The Bontang VI Trustee may charge
such agreed compensation and expenses to the Bontang VI 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 VI Payment Account is insufficient therefor, each Producer shall pay
such compensation and expenses to the Bontang VI
<PAGE> 53
48
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 VI Trustee may, at any time,
by notice to the Producers and the Agent, tender the Bontang VI Trustee's
resignation as Trustee and Paying Agent under this Agreement. The Producers
may, at any time by notice jointly given by them, terminate the Bontang VI
Trustee's appointment hereunder. Such resignation or termination shall be
effective as from the appointment of a successor as hereinafter provided.
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 VI Trustee and shall execute and
deliver to each of the parties hereto an instrument in writing accepting the
successor's 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 VI 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 VI Trustee
hereunder, but the Bontang VI 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 VI Trust Funds, including all funds
held in the Bontang VI Payment Account, the Debt Service Account and the
Reserve Account and assigning to the Successor all its rights hereunder and
under any Disbursement Trust Agreement and all of the Bontang VI Trustee's
rights with respect to any Bontang VI 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 VI Trustee under this Agreement shall pay the Successor at its office
specified as aforesaid all amounts described herein as payable to the Bontang
VI Trustee.
<PAGE> 54
49
11.8 Indemnification. The Producers hereby agree to
indemnify the Bontang VI 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 VI 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 VI 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, but not limited to,
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 VI 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 the Bontang VI Trustee 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 V Trust Agreement, the Bontang Excess Sales Trust
Agreement and the Bontang LPG Trust Agreement, provided that the foregoing may
be expanded or otherwise modified by written notice from the Producers to the
Bontang VI Trustee.
"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
<PAGE> 55
50
BankAmerica International (as successor in interest to Continental Bank
International), as modified or amended from time to time.
"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.
"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 VI 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 (as defined in Financing Agreement No. 3)),
(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
subaccounts 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 the Bontang III Loan
Agreement, dated as of February 9, 1988, as modified or amended from time to
time, entered into by the Bontang III Trustee.
"Financing Agreement No. 4" shall mean the Bontang IV Loan
Agreement, dated as of August 26, 1991, as modified or amended from time to
time, entered into by the Bontang IV Trustee.
<PAGE> 56
51
"Financing Agreement No. 5" shall mean the Bontang V Loan
Agreement, dated as of July 1, 1995, as modified or amended from time to time,
entered into by the Bontang V Trustee.
"Financing Agreement No. 6" shall mean the Bontang VI Loan
Agreement, dated as of the date hereof, as modified or amended from time to
time, entered into by the Bontang VI Trustee.
"Financing Agreements" shall mean Financing Agreement No. 3,
Financing Agreement No. 4, Financing Agreement No. 5, Financing Agreement No. 6
and any other agreement designated as a "Financing Agreement" in a notice to
the Bontang VI Trustee from the Producers.
"Producers Agreement" shall mean any agreement so entitled
among the Producers, or any of them, and lenders under a Financing Agreement,
as modified or amended from time to time.
"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 or, upon payment in full of all amounts owing under Financing
Agreement No. 3, at the rate specified in the Debt Service Allocation
Agreement or otherwise at a rate per annum agreed by the Producers.
"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
<PAGE> 57
52
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 (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 VI
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 VI 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 VI Trustee shall promptly
advise each other Allocation Trustee of each such Provisional Debt Service
payment made by the Bontang VI Trustee.
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
<PAGE> 58
53
question ("underpaid Producers"), the Accountants are required to instruct the
Bontang VI 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 VI Trustee 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 VI 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
VI 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 VI
Trustee. This Agreement shall be effective as of the date hereof and shall
remain in effect until the Producers shall have notified the Bontang VI 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
<PAGE> 59
54
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.
13.3 Notices. All notices, approvals, instructions, and
other communications for purposes of this Agreement shall be in English and
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
VI 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 10110
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
<PAGE> 60
55
(c) To the Contractors comprising the Total Group
at the following mail, telex and telecopier addresses:
Total Indonesie
Plaza Kuningan Menara Utara
Lantai 9
Jl. H.R. Rasuna Said Kav. C11-14
Jakarta 12940
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:
Unocal Indonesia Company
Ratu Plaza Office Tower
Jalan Jenderal Sudirman
Jakarta 10270
Indonesia
Telex No. 47335
Answerback: UNOCAL IA
Telecopier No.: 62-21-720-4499
Attention: President and Managing Director
(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 VI Trustee or the trustee
under any Other Trust Agreement at the following mail, telex, and telecopier
addresses:
<PAGE> 61
56
Bank of America National Trust and Savings Association
One World Trade Center, 9th Floor
New York, New York 10048-1191
Telex No.: 62 944
Answerback: BOA UW
Telecopier No.: 212-390-3595
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 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 10 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.
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 receipt of
a legible copy thereof if
<PAGE> 62
57
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 notice to or from the Agent under the Loan Agreement shall
be given in accordance with this Section 13.3, addressed, if to 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 VI 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 VI Trustee from time to time with a
notification signed by two of the Accountants' partners, advising the Bontang
VI 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 VI 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 VI Trustee or any
Producer receives such a communication which does not comply with such
arrangements, such 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 VI Trustee, from time to time, with such certificates or other evidence
as the Bontang VI 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 VI Trustee, from time to time, with such Contractor's
address to which the reports required by Section 9.2 shall be sent.
(e) The Bontang VI Trustee shall furnish the
Producers with notice of the officers of the Bontang VI Trustee who are
authorized to act on its behalf in the performance by the Bontang VI Trustee of
its duties under this Agreement.
<PAGE> 63
58
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 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/ F. ABDA'OE
-------------------------------
Name: F. Abda'oe
Title: President Director and
Chief Executive Officer
(Signatures continue on following page)
<PAGE> 64
59
<TABLE>
<S> <C>
TOTAL INDONESIE VIRGINIA INDONESIA COMPANY
By /s/ MICHAEL SEQUIN By /s/ CHARLES M. REIMER
--------------------------------- -------------------------------
Name: Michael Sequin Name: Charles M. Reimer
Title: Vice-Chairman and Chief Title: Chairman and Chief Executive
Executive Officer Officer
VIRGINIA INTERNATIONAL UNIVERSE GAS & OIL
COMPANY COMPANY, INC.
By /s/ RICHARD L. SMERNOFF By /s/ TOSHIO NORIMATSU
--------------------------------- ---------------------------------
Name: Richard L. Smernoff Name: Toshio Norimatsu
Title: Vice President, Virginia Title: General Manager of Business
International Company Dept.
LASMO SANGA SANGA LIMITED INDONESIA PETROLEUM, LTD.
By /s/ RICHARD L. SMERNOFF By /s/ YUSUKE SAWATARI
--------------------------------- ---------------------------------
Name: Richard L. Smernoff Name: Yusuke Sawatari
Title: Director and Chief Financial Title: Managing Director and General
Officer Manager of Accounting &
Finance Dept.
UNION TEXAS EAST KALIMANTAN UNOCAL INDONESIA COMPANY
LIMITED
By /s/ DEAN HENRY By /s/ TIMOTHY C. LAUER
--------------------------------- ---------------------------------
Name: Dean Henry Name: Timothy C. Lauer
Title: Assistant Treasurer Title: President and Managing Director
OPICOIL HOUSTON, INC. BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
By /s/ ROY C. H. CHIU By /s/ HANAFI GAN BIN ABDULLAH
--------------------------------- ---------------------------------
Name: Roy C. H. Chiu Name: Hanafi Gan Bin Abdullah
Title: President Title: a/k/a Gan Kah Chai
Senior Vice President and
Country Manager
</TABLE>
<PAGE> 65
APPOINTMENT OF ACCOUNTANTS
UNDER
BONTANG VI TRUSTEE AND PAYING AGENT AGREEMENT
___________________________________
Reference is made to the Bontang VI Trustee and Paying Agent
Agreement dated as of March 4, 1997 (the "Bontang VI Trustee and Paying Agent
Agreement"), among the undersigned parties and Bank of America National Trust
and Savings Association. Terms defined in the Bontang VI Trustee and Paying
Agent Agreement shall have the same meanings herein as so defined.
Pursuant to Section 8.3 of the Bontang VI Trustee and Paying
Agent Agreement the independent public accounting firm of ___________________,
Member firm of ___________________, 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 VI 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 _______________, 1997
PERUSAHAAN PERTAMBANGAN MINYAK
DAN GAS BUMI NEGARA (PERTAMINA)
By_____________________________
Name:
Title:
(Signatures continue on following page)
<PAGE> 66
2
<TABLE>
<S> <C>
TOTAL INDONESIE VIRGINIA INDONESIA COMPANY
By By
------------------------------ ------------------------------
Name: Name:
Title: Title:
VIRGINIA INTERNATIONAL COMPANY UNIVERSE GAS & OIL COMPANY, INC.
By By
------------------------------ ------------------------------
Name: Name:
Title: Title:
LASMO SANGA SANGA LIMITED INDONESIA PETROLEUM, LTD.
By By
------------------------------ ------------------------------
Name: Name:
Title: Title:
UNION TEXAS EAST
KALIMANTAN LIMITED UNOCAL INDONESIA COMPANY
By By
------------------------------ ------------------------------
Name: Name:
Title: Title:
OPICOIL HOUSTON, INC.
By
------------------------------
Name:
Title:
</TABLE>
<PAGE> 1
NationsBank Tel 713 247-6160
Energy Finance Division Fax 713 247 6568
P. O. Box 2518
Houston, TX 77252-2518
NATIONSBANK
March 24, 1997
Union Texas Britannia Limited
5th Floor Bowater House
68/114 Knightsbridge
London SWIX 7LR, England
Dear Sirs:
We refer to the Agreement (as from time to time amended, varied, novated or
supplemented, the "Facility Agreement") dated 26th May 1995 and made between
Union Texas Britannia Limited as Borrower, The Chase Manhattan Bank (formerly
Chemical Bank) as Arranger, NationsBank, N.A. (formerly NationsBank, N.A.
(Carolinas)) and National Westminster Bank Plc as Co-Arrangers, NationsBank,
N.A. (formerly NationsBank, N.A. Carolinas)) as Facility Agent, NationsBank,
N.A. (formerly NationsBank, N.A. (Carolinas)) and The Chase Manhattan Bank
(formerly Chemical Bank) as Technical Agents, National Westminster Bank Plc as
Funding Agent, National Westminster Bank Plc as Account Bank and the financial
institutions named therein as Banks and Hedge Counterparties. Terms defined in
the Facility Agreement shall have the same meanings in this letter.
We write to you as Facility Agent (on behalf of the Beneficiaries and for
ourselves) having received the prior written consent of all of the Banks to
agree with you the amendments to the Facility Agreement set out herein.
With effect on and from the date of countersignature of this letter by you, the
Facility Agreement shall be amended as follows:
(a) in Clause 1.1 thereof the words in paragraph (i) of the
definition of "Applicable Margin" "0.875% (zero point eight
seven five per cent.)" shall be deleted and replaced by the
words "0.75% (zero point seven five per cent.)";
(b) in Clause 1.1 thereof the words in paragraph (ii) of the
definition of "Applicable Margin" "0.75% (zero point seven
five per cent.)" shall be deleted and replaced by the words
<PAGE> 2
"0.625% (zero point six two five per cent.)"; and
(c) in Clause 37.1 thereof the words "zero point three five per
cent. (0.35%)" shall be deleted and replaced by the words
"0.3% (zero point three per cent.)".
The Facility Agreement shall continue in full force and effect in accordance
with its terms save only as amended by this letter.
This letter shall be governed by and construed in accordance with English law.
The provisions of Clause 54 of the Facility Agreement shall be deemed to be
incorporated in this letter mutatis mutandis provided that references therein
to "this Agreement" shall be references to this letter and references to
"Clause 54.1" shall be a reference to the relevant paragraph of such Clause 54
as deemed to be incorporated in this letter.
Please countersign and date this letter as evidence of your agreement to and
acceptance of the terms set out herein.
Yours faithfully,
/s/ PAUL A. SQUIRES
- -------------------------------------
For and on behalf of NationsBank, N.A.
Paul A. Squires
Vice President
Accepted and agreed on March 24, 1997
/s/ JOHN KENNEDY
- --------------------------------------------------
For and on behalf of Union Texas Britannia Limited
<PAGE> 1
EXHIBIT 10.7
AMENDMENT NO. 2
TO
BONTANG III LOAN AGREEMENT
AMENDMENT No. 2 dated as of March 4, 1997 among
(i) BankAmerica International (as successor in interest to
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, as amended by Amendment No. 1 to
Bontang III Loan Agreement dated as of July 1, 1995 (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:
<PAGE> 1
Exhibit 15
INDEPENDENT ACCOUNTANT'S 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 April 22, 1997 (issued pursuant to the provisions of Statement on
Auditing Standards No. 71) in the prospectuses constituting part of 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
April 22, 1997
1
<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 MARCH 31, 1997 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 24,380
<SECURITIES> 0
<RECEIVABLES> 91,178
<ALLOWANCES> 0
<INVENTORY> 34,714
<CURRENT-ASSETS> 182,808
<PP&E> 3,143,998
<DEPRECIATION> 1,586,326
<TOTAL-ASSETS> 1,845,931
<CURRENT-LIABILITIES> 243,440
<BONDS> 517,485
0
0
<COMMON> 4,391
<OTHER-SE> 585,692
<TOTAL-LIABILITY-AND-EQUITY> 1,845,931
<SALES> 282,021
<TOTAL-REVENUES> 292,430
<CGS> 81,360
<TOTAL-COSTS> 145,373
<OTHER-EXPENSES> 10,420
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,984
<INCOME-PRETAX> 132,653
<INCOME-TAX> 68,883
<INCOME-CONTINUING> 63,770
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,770
<EPS-PRIMARY> .74
<EPS-DILUTED> 0
</TABLE>
