<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, 1998
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 17, 1998, there were 85,283,525 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,
1998 1997
----------- -----------
ASSETS (UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents ..................................... $ 39,216 $ 24,324
Accounts and notes receivable ................................. 87,148 82,172
Inventories ................................................... 50,236 38,318
Prepaid expenses and other current assets ..................... 34,755 30,539
----------- -----------
Total current assets ...................................... 211,355 175,353
Equity investments .................................................. 91,117 90,488
Property, plant and equipment, at cost, less accumulated
depreciation, depletion and amortization* ..................... 1,981,582 1,746,661
Other assets ........................................................ 8,706 9,054
----------- -----------
Total assets .............................................. $ 2,292,760 $ 2,021,556
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .............................................. $ 144,899 $ 132,735
Taxes payable ................................................. 69,502 94,366
Other current liabilities ..................................... 51,773 52,555
----------- -----------
Total current liabilities ................................. 266,174 279,656
Long-term debt ...................................................... 719,807 626,404
Deferred income taxes ............................................... 325,420 321,879
Other liabilities ................................................... 129,526 125,022
----------- -----------
Total liabilities ......................................... 1,440,927 1,352,961
----------- -----------
Stockholders' equity:
Preferred stock (Series A Cumulative Preferred Stock) ......... 171,480
Common stock .................................................. 4,391 4,391
Paid in capital ............................................... 17,788 18,645
Cumulative foreign exchange translation adjustment and other .. (28,909) (34,954)
Retained earnings ............................................. 736,930 733,201
Common stock held in treasury, at cost:
2,581,182 shares at March 31, 1998 and 2,728,267
shares at December 31, 1997 ............................... (49,847) (52,688)
----------- -----------
Total stockholders' equity ................................ 851,833 668,595
----------- -----------
Total liabilities and stockholders' equity ................ $ 2,292,760 $ 2,021,556
=========== ===========
</TABLE>
* The Company follows the successful efforts method of accounting for
oil and gas activities.
The accompanying notes are an integral part of this financial statement.
2
<PAGE> 3
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1997
-------- --------
<S> <C> <C>
Revenues:
Sales and operating revenues ............................. $190,184 $282,021
Interest income and other revenues ....................... 534 2,555
Net earnings of equity investees ......................... 3,063 7,854
-------- --------
193,781 292,430
Costs and other deductions:
Product costs and operating expenses ..................... 73,740 81,360
Exploration expenses ..................................... 23,251 10,420
Depreciation, depletion and amortization ................. 54,516 59,225
Selling, general and administrative expenses ............. 6,215 4,788
Interest expense ......................................... 580 3,984
-------- --------
Income before income taxes .................................... 35,479 132,653
Income taxes .................................................. 26,626 68,883
-------- --------
Net income .................................................... $ 8,853 $ 63,770
Less: preferred dividends ..................................... 868
-------- --------
Net income applicable to common stockholders .................. $ 7,985 $ 63,770
======== ========
EARNINGS PER SHARE OF COMMON STOCK:
Basic and diluted earnings per share of common stock ..... $ .09 $ .74
======== ========
DIVIDENDS PER SHARE OF COMMON STOCK ........................... $ .05 $ .05
======== ========
Weighted average number of shares outstanding (000s) .......... 85,151 85,863
======== ========
Weighted average number of shares outstanding including
potential common shares (000s) ............................ 85,507 86,205
======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE> 4
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ......................................................................... $ 8,853 $ 63,770
Adjustment to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization ........................................ 54,516 59,225
Deferred income taxes ........................................................... 242 (6,954)
Net income of equity investees .................................................. (3,063) (7,854)
Other ........................................................................... 754 1,247
--------- ---------
Net cash provided by operating activities before changes in other
assets and liabilities ..................................................... 61,302 109,434
(Increase) decrease in accounts and notes receivable ............................ (4,894) 4,571
(Increase) decrease in inventories ............................................. (11,778) 4,493
Increase in prepaid expenses and other assets ................................... (4,575) (9,243)
Decrease in accounts payable and other liabilities .............................. (5,794) (16,613)
Decrease in income taxes payable ................................................ (24,748) (9,911)
--------- ---------
Net cash provided by operating activities .................................... 9,513 82,731
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment ......................................... (255,584) (36,055)
Cash provided by equity investees ................................................. 2,434 8,066
--------- ---------
Net cash required by investing activities ....................................... (253,150) (27,989)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from the issuance of preferred stock .................................. 171,480
Net proceeds from issuance of long-term debt ....................................... 140,940 8,160
Net (payments) on money market lines of credit ..................................... (49,928) (44,673)
Dividends on preferred stock ....................................................... (868)
Dividends on common stock .......................................................... (4,256) (4,320)
Proceeds from issuance of treasury stock ........................................... 1,161 1,202
Purchase of treasury stock ......................................................... (34,305)
--------- ---------
Net cash provided (required) by financing activities ............................ 258,529 (73,936)
--------- ---------
Net increase (decrease) in cash and cash equivalents ............................... 14,892 (19,194)
Cash and cash equivalents at beginning of period ................................... 24,324 43,574
--------- ---------
Cash and cash equivalents at end of period ......................................... $ 39,216 $ 24,380
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) ............................................ $ $ 820
Income taxes .................................................................... 50,875 85,944
</TABLE>
The accompanying notes are an integral part of this financial statement.
4
<PAGE> 5
FORM 10-Q
UNION TEXAS PETROLEUM HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NOTE 1 - BASIS OF PRESENTATION - These consolidated financial statements should
be read in the context of the consolidated financial statements and notes
thereto filed with the Securities and Exchange Commission ("SEC") in the
Company's 1997 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, 1998, and the results of operations and
cash flows for the three months ended March 31, 1998 and 1997. The results of
operations for the three months ended March 31, 1998, should not necessarily be
taken as indicative of the results of operations that may be expected for the
entire year 1998.
NOTE 2 - PREFERRED STOCK - Pursuant to the Company's July 1997 shelf
registration statement filed with the SEC, on March 6, 1998, the Company issued
1,750,000 shares of 7.14% Series A Cumulative Preferred Stock with a par value
of $.01 per share and a liquidation preference equivalent to $100.00 per share.
The Company received approximately $171 million (after deducting underwriting
discounts and commissions and offering expenses) in net proceeds from the
offering. The Series A Cumulative Preferred Stock is not redeemable prior to
March 31, 2008, except under certain limited circumstances. The Company declared
a dividend to all holders of the preferred stock of record on March 15, 1998,
which was paid on March 31, 1998.
NOTE 3 - MANDATORY PUTABLE/REMARKETABLE SECURITIES (MAPS(SM)) (the "MAPS") -
Pursuant to the Company's July 1997 shelf registration statement filed with the
SEC, on April 15, 1998, the Company issued 7.000% MAPS due April 15, 2038. The
MAPS are subject to mandatory tender on April 15, 2008. The net proceeds to the
Company were approximately $154 million (after deducting underwriting discounts
and commissions and offering expenses) which includes a premium paid by the
remarketing dealer for the right to remarket the MAPS on the remarketing date of
April 15, 2008. The premium will be amortized over the life of the related debt.
Net proceeds from the sale of the MAPS were used to pay down indebtedness under
certain uncommitted and unsecured money market lines of credit and for general
corporate purposes.
NOTE 4 - EARNINGS PER SHARE - In the fourth quarter of 1997, the Company adopted
the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share," and restated previously reported earnings per share
("EPS") in conformity with SFAS 128. The new standard specifies the computation,
presentation and disclosure requirements for EPS. A reconciliation of the
numerators and denominators of the basic and diluted EPS computations is as
follows:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1998 1997
------- -------
<S> <C> <C>
Basic EPS Computation:
Numerator, Net Income applicable to common stockholders .... $ 7,985 $63,770
Denominator, Common Shares Outstanding (000s) .............. 85,151 85,863
------- -------
Basic EPS per share ........................................ $ .09 $ .74
======= =======
Diluted EPS Computation:
Numerator, Net Income applicable to common stockholders .... $ 7,985 $63,770
Denominator, Common Shares Outstanding (000s) .............. 85,151 85,863
Potential Common Shares:
Stock options (000s) .................................. 356 342
------- -------
Total (000s) .......................................... 85,507 86,205
------- -------
Diluted EPS per share ............................................ $ .09 $ .74
======= =======
</TABLE>
Weighted average stock options (000s) for the three months ended March 31, 1998
and 1997 that were not included in the computation of diluted shares since they
had an anti-dilutive effect were 677 and 404, respectively.
5
<PAGE> 6
NOTE 5 - ACCOUNTING PRONOUNCEMENTS RECENTLY ISSUED - In the first quarter of
1998 the Company adopted the provisions of SFAS No. 130, "Reporting
Comprehensive Income," which requires that all items required to be recognized
under accounting standards as components of comprehensive income be reported in
the financial statements. The Company's comprehensive income was as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
------- --------
<S> <C> <C>
Net income .................................................. $ 8,853 $ 63,770
Other comprehensive income (loss):
Foreign exchange translation adjustments (net of tax) .... 6,045 (23,029)
------- --------
Comprehensive income ........................................ $14,898 $ 40,741
======= ========
</TABLE>
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for reporting information about operating
segments in annual financial statements and requires selected information about
operating segments in interim financial reports issued to shareholders. SFAS No.
131 is effective for financial statements for periods beginning after December
15, 1997 but the statement need not be applied to interim financial statements
in the initial year of application.
NOTE 6 - VENEZUELA ACQUISITION - In February 1998, the Company acquired all of
the stock of Compania Occidental de Hidrocarburos, Inc. ("Hidrocarburos"), a
U.S. affiliate of Occidental Oil and Gas Corporation, for approximately $212
million, which included approximately $18 million in working capital, effective
as of December 31, 1997. Hidrocarburos operates the Desarrollo Zulia Occidental
("DZO") unit under its 100% interest in an operating service contract with a
subsidiary of the national oil company, Petroleos de Venezuela S.A.
NOTE 7 - CONTINGENCIES - The Company and its subsidiaries and related companies
are named defendants in a number of lawsuits and named parties in numerous
government proceedings arising in the ordinary course of business. While the
outcome of contingencies, lawsuits or other proceedings against the Company
cannot be predicted with certainty, management expects that any liability, to
the extent not provided for through insurance or otherwise, will not have a
material adverse effect on the financial statements of the Company.
6
<PAGE> 7
UNION TEXAS PETROLEUM HOLDINGS, INC.
With respect to the unaudited consolidated financial information of Union Texas
Petroleum Holdings, Inc. for the three-month periods ended March 31, 1998 and
1997, 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, 1998 appearing below, states that
they did not audit and they do not express an opinion on that unaudited
consolidated financial information. Price Waterhouse LLP has not carried out any
significant or additional audit tests beyond those which would have been
necessary if their report had not been included. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. Price Waterhouse LLP is not
subject to the liability provisions of section 11 of the Securities Act of 1933
for their report on the unaudited consolidated financial information because
that report is not a "report" prepared or certified by Price Waterhouse LLP
within the meaning of sections 7 and 11 of the Act.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of Union Texas Petroleum Holdings, Inc.
We have reviewed the accompanying consolidated balance sheet of Union Texas
Petroleum Holdings, Inc. and consolidated subsidiaries as of March 31, 1998 and
the related consolidated statements of operations and of cash flows for the
three month periods ended March 31, 1998 and 1997. 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, 1997, 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 16, 1998 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, 1997, 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, 1998
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the financial
statements, notes, and management's discussion contained in the registrant's
1997 annual report on Form 10-K, and condensed financial statements and notes
contained in this report.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1997
Net income applicable to common stockholders for the three months ended March
31, 1998, was $8 million, or $.09 basic and diluted earnings per share as
compared to net income applicable to common stockholders of $64 million, or $.74
basic and diluted earnings per share reported for the same period in 1997. The
current quarter was unfavorably affected by lower worldwide oil prices, lower
U.K. gas volumes, lower Indonesian LNG prices and volumes, and higher
exploration expenses.
Sales and operating revenues for the three months ended March 31, 1998, were
$190 million, as compared to $282 million for the first quarter of 1997.
International revenues totaled $154 million as compared to $234 million for the
first quarter of 1997. In the U.K., sales and operating revenues decreased by
$55 million due to lower oil prices and volumes and lower sales volumes
primarily from the Sean fields. In Indonesia, sales decreased $27 million due to
lower LNG volumes and prices. For the full year, LNG sales volumes are expected
to be approximately 20% below 1997 levels. In Venezuela, revenues of $6 million
are included for the Company's first quarter 1998 acquisition of an interest in
an operating service contract of the DZO unit (see Note 6 of Notes to Financial
Statements and Financial Condition). In Pakistan, sales were $4 million below
1997 primarily due to lower crude oil prices.
Average prices received and volumes sold by the Company's major operations
during the first quarter of 1998 and 1997, respectively, were as follows:
<TABLE>
<CAPTION>
PRICES VOLUMES
(000S PER DAY)
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Crude oil (barrels):
U.K ................................. $ 12.32 $ 19.17 40 47
Pakistan ............................ 12.76 19.15 6 7
Indonesia ........................... 18.63 21.79 6 6
Venezuela (Operating Service Fee) ... 4.37 24*
Indonesian LNG (Mcf) ..................... 2.96 4.02 177 194
Pakistan natural gas (Mcf) ............... 1.61 1.71 47 38
U.K. natural gas (Mcf) ................... 2.85 3.00 19 79
U.S. ethylene (pounds) ................... .19 .25 1,256 1,168
</TABLE>
* Reflects 56 days of production for an interest in an operating service
contract acquired in February 1998.
Petrochemical revenues totaled $36 million as compared to $48 million in the
first quarter of 1997, while operating profit was $3 million as compared to $1
million in the prior period. The revenue decrease was principally due to lower
ethylene sales prices partially offset by higher ethylene sales volumes, while
lower feedstock costs contributed to the operating profit increase.
Interest expense in the first quarter of 1998 was lower than the same period of
1997 due to higher capitalized interest related to the Company's acquisition of
interests in Venezuela and the final phases of development of the Britannia
field, which field is expected to commence production in August 1998. Higher
exploration expenses were due to increased dry hole costs primarily in new
venture areas. The increased dry hole costs, certain of which provided no tax
benefit, resulted in a higher effective tax rate in the first quarter of 1998
compared to the first quarter of 1997.
8
<PAGE> 9
FINANCIAL CONDITION
Cash flow from operations: Net cash provided by operating activities was $10
million in the first quarter of 1998, a decrease of $73 million from the same
period in the prior year. The decline was due mainly to lower worldwide oil
prices, lower Indonesian LNG volumes and prices and lower U.K. gas volumes. Net
cash required by investing activities was $253 million in 1998, an increase of
$225 million from 1997. The change was primarily related to the increase in
property, plant and equipment for the DZO acquisition. In 1998, net cash
provided by financing activities was $259 million compared to net cash required
in 1997 of $74 million. The change resulted from proceeds from the Company's
preferred stock issue and the Hidrocarburos facility which was related to the
Company's DZO acquisition.
Capital resources: Capital expenditures for the first quarter of 1998 were $81
million (excludes acquisitions) excluding capitalized interest of $14 million.
Capital expenditures for the first quarter of 1997 were $25 million excluding
capitalized interest of $8 million. The current quarter increase was primarily
due to increased exploration drilling in new venture areas and higher
development spending in Alaska and Venezuela.
In February 1998, the Company acquired all of the stock of Compania Occidental
de Hidrocarburos, Inc. ("Hidrocarburos"), a U.S. affiliate of Occidental Oil &
Gas Corporation ("Occidental"), for approximately $212 million, which includes
approximately $18 million in working capital, effective as of December 31, 1997.
The Company initially funded the acquisition under bank facilities, including a
new $130 million facility through Hidrocarburos guaranteed by the Company.
Occidental may receive contingent payments of up to a maximum of $15 million
annually for six years based primarily on the level of oil prices. Hidrocarburos
operates as contractor of the DZO unit in Western Venezuela under a 20-year
operating service contract with a subsidiary of the national oil company, PDVSA.
The contractor invests capital and provides technology for reactivation of the
fields for which the contractor receives various fees per barrel delivered to
the custody transfer point. The fees received are operating, capital
reimbursement and interest on unrecovered capital costs which are in total
limited by a maximum total fee. The maximum total fee is indexed with a basket
of crude oil products. The Company cannot predict the extent that the future
maximum total fee will limit the operating, interest and capital fees received
and recorded. Additionally, an incremental incentive fee of several dollars per
barrel, which is also indexed to a basket of crude oil products but is not
limited by the maximum total fee, is payable when cumulative production from the
DZO unit (from inception of the 1993 contract) reaches 52 million barrels.
Cumulative production is expected to reach 52 million barrels during the second
half of 1999. The contractor does not pay royalties related to the DZO unit. In
1998, the Company recorded for the DZO unit 114 million barrels of proved
reserves of which 56 million barrels are classified as proved undeveloped. The
Company anticipates spending $400 to $450 million over the next nine years for
future DZO development expenditures. The Company plans to increase current
production from 23,000 gross barrels a day up to 55,000 gross barrels within
five years.
Financing activities: Pursuant to the Company's July 1997 shelf registration
statement filed with the SEC, on March 6, 1998, the Company issued 1,750,000
shares of 7.14% Series A Cumulative Preferred Stock with a par value of $.01 per
share and a liquidation preference equivalent to $100.00 per share. The Company
received approximately $171 million (after deducting underwriting discounts and
commissions and offering expenses) in net proceeds from the offering. The Series
A Cumulative Preferred Stock is not redeemable prior to March 31, 2008, except
under certain limited circumstances. The Series A Cumulative Preferred Stock is
not convertible into or exchangeable for any other property or securities of the
Company. The Company declared a dividend of $868 thousand, to holders of the
preferred stock of record on March 15, 1998, which was paid on March 31, 1998.
Pursuant to the Company's July 1997 shelf registration statement filed with the
SEC, on April 15, 1998, the Company issued 7.000% MAPS due April 15, 2038. The
MAPS are subject to mandatory tender on April 15, 2008. The net proceeds to the
Company were approximately $154 million (after deducting underwriting discounts
and commissions and offering expenses) which includes a premium paid by the
remarketing dealer for the right to remarket the MAPS on the remarketing date of
April 15, 2008. The premium will be amortized over the life of the related debt.
Net proceeds from the sale of the MAPS were used to pay down indebtedness under
certain uncommitted and unsecured money market lines of credit and for general
corporate purposes
9
<PAGE> 10
The Company had two unsecured credit facilities (the "Credit Facilities") at
March 31, 1998. One of the Credit Facilities is a $100 million revolver that
provides for conversion of amounts outstanding on March 9, 1999 to a one-year
term loan maturing March 8, 2000. This facility replaced a $100 million
unsecured credit agreement that matured on March 9, 1998. 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,
1998, no amounts were outstanding under the Credit Facilities. The Credit
Facilities contain restrictive covenants and require maintenance of
stockholders' equity, as adjusted, at $350 million. At March 31, 1998, the
Company's adjusted stockholders' equity was approximately $881 million.
The Company has 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, 1998, $33 million was outstanding under these money
market lines. As of March 31, 1998, the Company had approximately $387 million
of available financing under the Credit Facilities. After the issuance of the
preferred stock and MAPS, the Company had approximately $521 million of
available financing under the Credit Facilities as of April 15, 1998.
The Company's indirect subsidiary, Union Texas Britannia Limited ("UTBL"), has a
150 million pounds sterling secured financing from a syndicate of banks. At
March 31, 1998, 92 million pounds sterling ($154 million) was outstanding under
UTBL's financing which bore interest at a weighted average rate of 8.3% per
annum. The Company has a $130 million facility through Hidrocarburos that is
guaranteed by the Company. At March 31, 1998, $130 million was outstanding under
the Hidrocarburos facility, which bore interest at a weighted average rate of
6.2% per annum and was restructured in connection with the issuance of the MAPS.
Financial condition: In March, 1998, oil prices fell to their lowest levels
since 1988. For example, the spot price for West Texas Intermediate averaged
approximately $15.93 per barrel for the first quarter of 1998, down from
approximately $22.74 per barrel for the first quarter of 1997. In light of the
current low oil price environment, the Company is reviewing its capital
expenditure budget for 1998 and expects its 1998 capital spending to be about
15% below its original budget of approximately $413 million.
In the first quarter of 1998 the Company declared and paid a dividend of
approximately $868 thousand on its preferred stock for the 25 days it was
outstanding and approximately $4.3 million on its common stock. On April 20,
1998 the Company announced a dividend on its common stock of $.05 per share to
stockholders of record as of April 30, 1998, payable on May 15, 1998.
See the Company's 1997 annual report on Form 10-K - Management's Discussion and
Analysis of Financial Condition and Results of Operations - Financial Condition
for a discussion of the Company's plan to address the year 2000 issue.
The foregoing contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act that involve risks and uncertainties,
including price volatility, exploration, development, operational,
implementation and opportunity risks and other factors described from time to
time in the Company's publicly available SEC reports, which could cause actual
results to differ materially.
10
<PAGE> 11
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 1997 annual report on
Form 10-K.)
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
3.1 Certificate of Designation, 7.14% Series A
Cumulative Preferred Stock
4.2 Specimen Form of 7.14% Series A Cumulative
Preferred Stock
4.3 Specimen Form of 7.000% MAndatory
Putable/remarketable Securities (MAPS(SM)) due
April 15, 2038
10.1 Credit Agreement dated as of March 10, 1998
among Union Texas Petroleum Holdings, Inc., the
Banks and Co-Agents listed therein and
NationsBank of Texas, N.A., as Agent
10.2 Remarketing Agreement between Union Texas
Petroleum Holdings, Inc. and NationsBanc
Montgomery Securities LLC with respect to the
MAPS(SM) (Filed as Exhibit 1.4 to the Company's
Form 8-K dated April 15, 1998 (Commission File
No. 1-9019) and incorporated herein by
reference)
15 Letter Re Unaudited Interim Financial
Information
27.1 Financial Data Schedule for the three-month
period ended March 31, 1998
(b) Reports on Form 8-K
The Company filed the following reports on Form 8-K since the
quarterly period ended December 31, 1997:
The Company filed Current Reports on Form 8-K dated: (i) February 13,
1998 to report the Venezuelan acquisition of a 100% interest in the
operating service contract for the DZO unit, the drilling results of
an exploration well in China and to attach press releases reporting
that five employees were killed in Pakistan, the appointment of
Ambassador Robert Barry to the Company's Board of Directors, the
Company's 1997 year-end and fourth quarter results and the Company's
1998 capital spending budget; (ii) March 2, 1998 to file certain
items that are to be incorporated by reference in the Company's
Registration Statement on Form S-3 (Registration No. 333-31039) (the
"Shelf Registration"); (iii) April 2, 1998 to file certain items to
be incorporated by reference in the Shelf Registration and to report
on the issuance of preferred stock, the replacement of a revolving
credit facility, certain subsidiaries'
11
<PAGE> 12
management appointments, and recent developments regarding lower oil
prices; (iv) April 15, 1998 to file certain items that are to be
incorporated by reference in the Company's Shelf Registration and
report on the issuance of debt and a successful development well in
the DZO unit and (v) April 23, 1998 to attach a press release
announcing the Company's first quarter earnings and report on
activities in Azerbaijan and drilling results of an exploration well.
12
<PAGE> 13
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 24, 1998 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)
13
<PAGE> 14
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
3.1 Certificate of Designation, 7.14% Series A Cumulative
Preferred Stock
4.2 Specimen Form of 7.14% Series A Cumulative Preferred Stock
4.3 Specimen Form of 7.000% MAndatory Putable/remarketable
Securities (MAPS(SM)) due April 15, 2038
10.1 Credit Agreement dated as of March 10, 1998 among Union
Texas Petroleum Holdings, Inc., the Banks and Co-Agents
listed therein and NationsBank of Texas, N.A., as Agent
10.2 Remarketing Agreement between Union Texas Petroleum
Holdings, Inc. and NationsBanc Montgomery Securities LLC
with respect to the MAPS(SM) (Filed as Exhibit 1.4 to the
Company's Form 8-K dated April 15, 1998 (Commission File No.
1-9019) and incorporated herein by reference)
15 Letter Re Unaudited Interim Financial Information
27.1 Financial Data Schedule for the three-month period ended
March 31, 1998
<PAGE> 1
CERTIFICATE OF DESIGNATION
7.14% SERIES A CUMULATIVE PREFERRED STOCK
OF
UNION TEXAS PETROLEUM HOLDINGS, INC.
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
Union Texas Petroleum Holdings, Inc., a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "Company"), does
by its Vice President and Chief Financial Officer hereby certify as follows:
FIRST: That pursuant to the first paragraph of Article Fourth of the
Restated Certificate of Incorporation of the Company as presently in effect (the
"Charter"), the shares of stock which the Company may issue are as follows:
"The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is Two Hundred Fifteen Million
(215,000,000), of which Fifteen Million (15,000,000) shares shall be
Preferred Stock of the par value one cent ($.01) per share and Two Hundred
Million (200,000,000) shares shall be Common Stock of the par value of five
cents ($.05) per share."
SECOND: That the Board of Directors (the "Board") of the Company has the
authority to issue preferred stock in one or more series and to fix and
determine the relative rights and preferences of the shares of any series of
preferred stock so established and the number of shares constituting any series
of preferred stock without any further actions by shareholders of the Company.
THIRD: That pursuant to the authority so vested in the Board by the
Charter, the Board duly adopted the following resolutions (the "Resolutions"):
RESOLVED, that pursuant to the authority conferred upon the Board by
the Company's Restated Certificate of Incorporation, as amended (the
"Charter"), the Board does hereby authorize the issuance of one or more
series of Preferred Stock, consisting of shares of the presently authorized
but unissued shares of Preferred Stock, in such amount as shall not exceed
the authorized number of shares of Preferred Stock pursuant to the terms of
the Charter (the "Authorized Preferred Stock");
RESOLVED, that the Pricing Committee is hereby authorized and
empowered, for and on behalf of the Company, to determine, establish and
approve . . . the designations, powers, preferences and rights of the
shares of one or more series of Authorized Preferred Stock, and the
qualifications, limitations or restrictions thereon, such terms to be
consistent in all respects with the provisions of the Charter and these
resolutions, including, without limitation, to determine the amount,
designation and denomination of such Authorized Preferred Stock to be
issued . . . and the dividend rights, participation rights, dividend rates,
conversion rights, voting rights, rights and terms of redemption (including
sinking fund provisions), liquidation preferences and other terms of such
Authorized Preferred Stock."
FOURTH: That pursuant to the authority so vested in the Pricing Committee
by the Resolutions, the Pricing Committee duly adopted the following resolution:
<PAGE> 2
"RESOLVED, that a series of the class of Authorized Preferred Stock,
$.01 par value per share, of the Company be hereby created, and that the
designation and amount thereof and the preferences and relative,
participating, optional and other special rights of the shares of such
series, and the qualifications, limitations or restriction thereof are as
follows:
SECTION 1
DESIGNATION
The shares of such series shall be designated as the "7.14% Series A
Cumulative Preferred Stock" (the "Series A Preferred Stock") and the number of
shares constituting such series shall be 1,750,000, which number may be
increased or decreased by the Board of Directors or the Pricing Committee
without a vote of stockholders; provided, however, that such number may not be
decreased below the number of then currently outstanding shares of Series A
Preferred Stock.
SECTION 2
RANK
The Series A Preferred Stock will, with respect to dividend rights and
rights upon liquidation, dissolution or winding up of the affairs of the
Company, rank (i) senior to all classes or series of common stock of the
Company, and to all equity securities ranking junior to the Series A Preferred
Stock with respect to dividend rights or rights upon liquidation, dissolution or
winding up of the affairs of the Company, (ii) on a parity with all equity
securities issued by the Company the terms of which specifically provide that
such equity securities rank on a parity with the Series A Preferred Stock with
respect to dividend rights or rights upon liquidation, dissolution or winding up
of the affairs of the Company, and (iii) junior to all equity securities issued
by the Company the terms of which specifically provide that such equity
securities rank senior to the Series A Preferred Stock with respect to dividend
rights or rights upon liquidation, dissolution or winding up of the affairs of
the Company. The term "equity securities" does not include any convertible debt
securities, which could rank senior to the Series A Preferred Stock prior to
conversion of such debt securities.
SECTION 3
DIVIDENDS
Holders of shares of the Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds of the
Company legally available for the payment of dividends, cumulative cash
dividends at the rate of 7.14% of the liquidation preference per share of Series
A Preferred Stock (equivalent to $7.14 per annum per share of Series A Preferred
Stock). Such dividends shall accrue and be cumulative from the date of original
issue and shall be payable quarterly in arrears on the last day of each March,
June, September and December, or, if such date is not a business day, the
succeeding business day (each, a "Dividend Payment Date"). The first dividend on
the Series A Preferred Stock, if declared, will be paid on March 31, 1998. Any
dividend payable on the Series A Preferred Stock for any partial dividend period
will be computed on the basis of a 360-day year consisting of twelve 30-day
-2-
<PAGE> 3
months. Dividends will be payable to holders of record as they appear in the
records of the Company at the close of business on the applicable record date,
which shall be the 15th day of the calendar month in which the applicable
Dividend Payment Date falls or on such other date designated by the Board of
Directors of the Company for the payment of dividends that is not more than 30
nor less than 10 days prior to such Dividend Payment Date (each, a "Dividend
Record Date").
No dividends on shares of Series A Preferred Stock shall be declared by the
Board of Directors or paid or set apart for payment by the Company at such time
as the terms and provisions of any agreement of the Company, including any
agreement relating to its indebtedness, prohibits such declaration, payment or
setting apart for payment or provides that such declaration, payment or setting
apart for payment would constitute a breach thereof or a default thereunder, or
if such declaration or payment shall be prohibited by law.
Notwithstanding the foregoing, dividends on shares of Series A Preferred
Stock will accrue whether or not the Company has earnings, whether or not there
are funds legally available for the payment of such dividends and whether or not
such dividends are declared. Accrued but unpaid dividends on shares of Series A
Preferred Stock will not bear interest and holders of shares of Series A
Preferred Stock will not be entitled to any dividends in excess of full
cumulative dividends described above.
Any dividend payment made on the Series A Preferred Stock shall first be
credited against the earliest accumulated but unpaid dividend due with respect
to such shares that remains payable.
No full dividends shall be declared or paid or set apart for payment on any
capital stock of the Company ranking, as to dividends, on a parity with or
junior to the Series A Preferred Stock (other than a dividend in shares of any
class of stock ranking junior to the Series A Preferred Stock as to dividends
and upon liquidation, dissolution or winding up of the affairs of the Company
("Junior Stock") for any period unless full cumulative dividends have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment on the Series A Preferred Stock
for all past dividend periods and the then current dividend period. When
dividends are not paid in full (or a sum sufficient for such full payment is not
so set apart) upon the Series A Preferred Stock and the shares of any other
series of preferred stock ranking on a parity as to dividends with the Series A
Preferred Stock, all dividends declared upon the Series A Preferred Stock and
any other series of preferred stock ranking on a parity as to dividends with the
Series A Preferred Stock shall be declared pro rata so that the amount of
dividends declared per share of Series A Preferred Stock and such other series
of preferred stock shall in all cases bear to each other the same ratio that
accrued dividends per share on the Series A Preferred Stock and such other
series of preferred stock (which shall not include any accrual in respect of
unpaid dividends for prior dividend periods if such preferred stock does not
have a cumulative dividend) bear to each other.
Except as provided in the immediately preceding paragraph, unless full
cumulative dividends on the Series A Preferred Stock have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for payment for all past dividend periods and the
then current dividend period, no dividends (other than a dividend in shares of
any Junior Stock) shall be declared or paid or set aside for payment nor shall
any other distribution be declared or made upon common stock, any other capital
stock of the Company ranking on a parity with the Series A Preferred Stock as to
dividends or upon liquidation, dissolution or winding up of the affairs of the
Company ("Parity Stock") or Junior Stock nor shall any shares of common stock,
Parity Stock or Junior Stock be redeemed, purchased or otherwise acquired for
any consideration (or any monies be paid to or made available for a sinking fund
for the redemption of any such shares of any such stock) by the Company (except
by conversion into or exchange for other Junior Stock).
-3-
<PAGE> 4
If, prior to 18 months after the date of the original issuance of the
Series A Preferred Stock, one or more amendments to the Internal Revenue Code of
1986, as amended (the "Code"), are enacted that change the percentage of the
dividends received deduction for certain corporations (currently 70%) as
specified in Section 243(a)(1) of the Code or any successor provision (the
"Dividends Received Percentage"), the amount of each dividend payable (if
declared) per share of Series A Preferred Stock for dividend payments made on or
after the date of enactment of such change shall be adjusted by multiplying the
amount of the dividend payable described above (before adjustment) by the
following fraction (the "DRD Formula"), and rounding the result to the nearest
cent (with one-half cent and above rounded up):
1-.35 (1-.70)
-------------
1-.35 (1-DRP)
For the purposes of the DRD Formula, "DRP" means the Dividends Received
Percentage (expressed as a decimal) applicable to the dividend in question;
provided, however, that if the Dividends Received Percentage applicable to the
dividend in question shall be less than 50%, then the DRP shall equal .50. No
amendment to the Code, other than a change in the percentage of the dividends
received deduction set forth in Section 243(a)(1) of the Code or any successor
provision thereto, will give rise to an adjustment. Notwithstanding the
foregoing provisions, if, with respect to any such amendment, the Company
receives either an unqualified opinion of nationally recognized independent tax
counsel selected by the Company or a private letter ruling or similar form of
authorization from the Internal Revenue Service ("IRS") to the effect that such
amendment does not apply to a dividend payable on the Series A Preferred Stock,
then such amendment will not result in the adjustment provided for pursuant to
the DRD Formula with respect to such dividend. The opinion referenced in the
previous sentence shall be based upon a specific exemption in the legislation
amending the DRP or upon the IRS addressing such legislation. The Company's
calculation of the dividends payable, as so adjusted and as certified accurate
as to calculation and reasonable as to method by the independent certified
public accountants then regularly engaged by the Company, shall be final and not
subject to review absent manifest error.
Notwithstanding the foregoing, if any such amendment to the Code is enacted
after the dividend payable on a Dividend Payment Date has been declared, the
amount of the dividend payable on such Dividend Payment Date will not be
increased; instead, additional dividends (the "Post-Declaration Date Dividends")
equal to the excess, if any, of (x) the product of the dividend paid by the
Company on such Dividend Payment Date and the DRD Formula (where the DRP used in
the DRD Formula would be equal to the greater of the Dividend Received
Percentage applicable to the dividend in question and .50) over (y) the dividend
paid by the Company on such Dividend Payment Date, shall be payable (if
declared) to holders of Series A Preferred Stock on the record date applicable
to the next succeeding Dividend Payment Date or, if the Series A Preferred Stock
is called for redemption prior to such record date, to holders of Series A
Preferred Stock on the applicable redemption date, as the case may be, in
addition to any other amounts payable on such date.
Notwithstanding the foregoing, no adjustments in the dividends payable by
the Company shall be made, and no Post-Declaration Date Dividends shall be
payable by the Company, in respect of the enactment of any amendments to the
Code 18 months or more after the date of original issuance of the Series A
Preferred Stock that changes the Dividend Received Percentage.
In the event that the amount of dividends payable per share of the Series A
Preferred Stock is adjusted pursuant to the DRD Formula and/or any
Post-Declaration Date Dividends are to be paid, the Company will give notice of
such adjustment, and, if applicable, of any Post-Declaration Date Dividends to
the holders of Series A Preferred Stock.
-4-
<PAGE> 5
In the event that the Dividends Received Percentage is reduced to 50% or
less, the Company may, at its option, redeem the Series A Preferred Stock in
whole but not in part as described below.
SECTION 4
REDEMPTION
The Series A Preferred Stock is not redeemable prior to March 31, 2008,
except under certain limited circumstances as described below. On and after
March 31, 2008, the Company, at its option upon not less than 30 nor more than
60 days' written notice, may redeem shares of the Series A Preferred Stock, in
whole or in part, at any time or from time to time, for cash at a redemption
price of $100.00 per share, plus an amount equal to all accrued and unpaid
dividends (whether or not declared) thereon, if any, to the date fixed for
redemption, without interest, to the extent the Company has funds legally
available therefor. The redemption price shall be paid out of any assets of the
Company including, without limitation, proceeds of other capital stock of the
Company, which may include shares of other series of preferred stock. For
purposes of the preceding sentence, "capital stock" means any common stock,
preferred stock, depositary shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing. Holders of Series A Preferred Stock to be redeemed shall
surrender such Series A Preferred Stock at the place designated in such notice
and shall be entitled to the redemption price and any accrued and unpaid
dividends payable upon such redemption following such surrender. If notice of
redemption of any shares of Series A Preferred Stock has been given and if the
funds necessary for such redemption have been set aside by the Company in trust
for the benefit of the holders of any shares of Series A Preferred Stock so
called for redemption, then from and after the redemption date dividends will
cease to accrue on such shares of Series A Preferred Stock, such shares of
Series A Preferred Stock shall no longer be deemed outstanding and all rights of
the holders of such shares will terminate, except the right to receive the
redemption price and accrued and unpaid dividends, if any, to the date fixed for
redemption.
Notwithstanding the preceding paragraph, if, at any time while the Series A
Preferred Stock is outstanding, an enactment of an amendment to the Code results
in a reduction of the Dividends Received Percentage to 50% or less (whether or
not any dividend adjusted pursuant to the DRD Formula or any Post-Declaration
Date Dividend is then payable as described above), the Company, at its option,
may redeem all, but not less than all, of the outstanding shares of the Series A
Preferred Stock provided that, within 60 days of the date on which an amendment
to the Code is enacted which changes the Dividends Received Percentage to 50% or
less, the Company sends notice to holders of the Series A Preferred Stock of
such redemption. Any redemption of the Series A Preferred Stock pursuant to this
paragraph will take place on the date specified in the notice, which date shall
not be less than 30 nor more than 60 days from the date such notice is sent to
holders of the Series A Preferred Stock. Any redemption of the Series A
Preferred Stock in accordance with this paragraph shall be on notice as
aforesaid at the applicable redemption price set forth in the following table,
in each case plus an amount equal to accrued and unpaid dividends (whether or
not declared) thereon to the date fixed for redemption, including any changes in
dividends payable due to changes in the Dividends Received Percentage, if any.
Holders of the Series A Preferred Stock will have no right to require redemption
of the Series A Preferred Stock.
-5-
<PAGE> 6
<TABLE>
<CAPTION>
Redemption Period Redemption Price Per Share
----------------- --------------------------
<S> <C>
March 6, 1998 to March 30, 1999 $105.00
March 31, 1999 to March 30, 2000 $104.50
March 31, 2000 to March 30, 2001 $104.00
March 31, 2001 to March 30, 2002 $103.50
March 31, 2002 to March 30, 2003 $103.00
March 31, 2003 to March 30, 2004 $102.50
March 31, 2004 to March 30, 2005 $102.00
March 31, 2005 to March 30, 2006 $101.50
March 31, 2006 to March 30, 2007 $101.00
March 31, 2007 to March 30, 2008 $100.50
On or after March 31, 2008 $100.00
</TABLE>
If less than all of the outstanding Series A Preferred Stock is to be
redeemed, other than as described in the immediately preceding paragraph, the
Series A Preferred Stock to be redeemed shall be selected pro rata (as nearly as
may be practicable without creating fractional shares) or by any other equitable
method determined by the Company.
Notwithstanding the foregoing, unless full cumulative dividends on all
shares of Series A Preferred Stock shall have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period, (i) no shares of Series A Preferred Stock shall be redeemed unless all
outstanding shares of Series A Preferred Stock are simultaneously redeemed and
(ii) the Company shall not purchase or otherwise acquire directly or indirectly
any shares of Series A Preferred Stock (except by exchange for Junior Stock);
provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Series A Preferred Stock pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
Series A Preferred Stock. So long as no dividends are in arrears, the Company
shall be entitled at any time and from time to time to repurchase shares of
Series A Preferred Stock in open-market transactions duly authorized by the
Board of Directors and effected in compliance with applicable laws.
Notice of any redemption will be given by publication in a newspaper of
general circulation in the Borough of Manhattan, the City of New York, such
publication to be made not less than 30 nor more than 60 days prior to the
redemption date. A similar notice of redemption furnished by the Company will be
mailed, postage prepaid, not less than 30 nor more than 60 days prior to the
redemption date, addressed to the respective holders of record of the Series A
Preferred Stock to be redeemed at their respective addresses as they appear on
the stock transfer records of the transfer agent. In order to facilitate the
redemption of shares of Series A Preferred Stock, the Board of Directors may fix
a record date for the determination of the shares to be redeemed, and such
record date will be not more than 60 days nor less than 30 days prior to the
redemption date.
No failure to give such notice or any defect therein or in the mailing
thereof shall affect the validity of the proceedings for the redemption of any
shares of Series A Preferred Stock except as to the holder to whom notice was
defective or not given. Each notice shall state the following: (i) the
redemption date; (ii) the redemption price; (iii) the number of shares of Series
A Preferred Stock to be redeemed; (iv) the place or places where the Series A
Preferred Stock is to be surrendered for payment of the redemption price; and
(v) that dividends on the shares to be redeemed will cease to accrue on such
redemption date. If less than all of the Series A Preferred Stock held by any
holder is to be redeemed, the notice mailed to such holder shall also specify
the number of shares of Series A Preferred Stock held by such holder to be
redeemed.
If notice of redemption of any Series A Preferred Stock has been given and
if the funds necessary for such redemption have been set aside by the Company in
trust for the benefit of the holders of Series A
-6-
<PAGE> 7
Preferred Stock so called for redemption, then from and after the redemption
date dividends will cease to accrue on such Series A Preferred Stock, such
shares of Series A Preferred Stock shall no longer be deemed outstanding and all
rights of the holders of such shares will terminate, except the right to receive
the redemption price and accrued and unpaid dividends, if any, to the date fixed
for redemption.
SECTION 5
REACQUIRED SHARES
Any shares of Series A Preferred Stock redeemed, purchased or otherwise
acquired by the Company in any manner whatsoever shall be retired promptly after
the acquisition thereof. All such shares shall upon their retirement and the
filing of a proper certificate with the Delaware Secretary of State become
authorized but unissued shares of preferred stock, $.01 par value, of the
Company and may be reissued as part of another series of preferred stock, $.01
par value, of the Company subject to the conditions or restrictions on issuance
set forth herein, in the Charter, in any other Certificate of Designation
creating a series of preferred stock or any similar stock or as otherwise
required by law.
SECTION 6
LIQUIDATION
Upon any liquidation, dissolution or winding up of the affairs of the
Company, the holders of shares of Series A Preferred Stock are entitled to be
paid out of the assets of the Company legally available for distribution to its
shareholders a liquidation preference of $100.00 per share, plus an amount equal
to any accrued and unpaid dividends to the date of payment, before any
distribution of assets is made to holders of Common Stock or any other class or
series of capital stock of the Company that ranks junior to the Series A
Preferred Stock as to liquidation rights. If, upon any liquidation, dissolution
or winding up of the affairs of the Company, the assets of the Company, or
proceeds therefrom, distributable among the holders of the shares of the Series
A Preferred Stock and any shares of capital stock of the Company on a parity
with the Series A Preferred Stock upon liquidation, dissolution or winding up of
the affairs of the Company shall be insufficient to pay in full the respective
liquidation preferences, plus any accrued and unpaid dividends thereon, of such
shares of Series A Preferred Stock and such parity stock, then such assets, or
the proceeds therefrom, shall be distributable among such holders of Series A
Preferred Stock and capital stock of the Company on a parity with the Series A
Preferred Stock upon liquidation, dissolution or winding up of the affairs of
the Company pro rata so that the distributed amounts paid in respect of such
Series A Preferred Stock and such parity stock shall in all cases bear to each
other the same ratio that the respective liquidation preferences on the Series A
Preferred Stock and such parity stock bear to each other. After payment of the
full amount of the liquidating distributions to which they are entitled, the
holders of Series A Preferred Stock will have no right or claim to any of the
remaining assets of the Company. The consolidation or merger of the Company with
or into any other entity or the sale, lease, transfer or conveyance of all or
substantially all of the property or business of the Company shall not be deemed
to constitute a liquidation, dissolution or winding up of the affairs of the
Company.
-7-
<PAGE> 8
SECTION 7
VOTING RIGHTS
Holders of the Series A Preferred Stock will not have any voting rights,
except as set forth below or as otherwise from time to time required by law.
Whenever dividends on any shares of Series A Preferred Stock shall be in
arrears for six or more consecutive quarterly periods, the holders of such
shares of Series A Preferred Stock (voting separately as a class with all other
series of preferred stock upon which like voting rights have been conferred and
are exercisable) will be entitled to vote for the election of a total of two
additional directors of the Company at a special meeting called by the holders
of record of at least 25% of the Series A Preferred Stock or the holders of any
other series of preferred stock so in arrears (unless such request is received
less than 90 days before the date fixed for the next annual or special meeting
of shareholders) or at the next annual meeting of shareholders, and at each
subsequent annual meeting until all dividends accumulated on such shares of
Series A Preferred Stock for the past dividend periods and the dividend for the
then current dividend period shall have been fully paid or declared and a sum
sufficient for the payment thereof set aside for payment. In such case, the
entire Board of Directors of the Company will be increased by two directors.
Directors elected by the holders of Series A Preferred Stock may be removed
without cause by, and shall not be removed without cause except by, the vote of
holders of Series A Preferred Stock and all other series of preferred stock with
currently exercisable like voting rights, voting together as a single class
without regard to series, at a special meeting called by the holders of record
of at least 25% of the Series A Preferred Stock or the holders of any other
series of preferred stock with currently exercisable like voting rights or at an
annual meeting of shareholders. So long as the rights of the holders of the
Series A Preferred Stock to vote for directors continue, any vacancy in such
additional director positions may be filled either by the vote of such holders
at a meeting held pursuant to the provisions above or by an instrument signed in
writing by the remaining additional director and filed with the Company. The
term of office of all directors elected by the holders of Series A Preferred
Stock shall terminate immediately upon the termination of the right of such
holders to vote for directors.
So long as any shares of Series A Preferred Stock remain outstanding, the
Company shall not, without the consent or the affirmative vote of the holders of
at least a majority of the shares of Series A Preferred Stock outstanding at the
time given in person or by proxy, either in writing or at a meeting (such Series
A Preferred Stock voting separately as a class) (i) authorize, create or issue
or increase the authorized or issued amount of any series of stock ranking
senior to such Series A Preferred Stock with respect to payment of dividends, or
the distribution of assets on liquidation, dissolution or winding up of the
affairs of the Company, or reclassify any authorized stock of the Company into
any such shares, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such shares or (ii)
repeal, amend or otherwise change the provisions of the Company's Charter or the
Certificate of Designation applicable to the Series A Preferred Stock, whether
by merger, consolidation or otherwise, (an "Event") so as to materially and
adversely affect the powers, preferences, voting power or other rights or
privileges of the Series A Preferred Stock; provided, however, upon the
occurrence of an Event set forth in (ii) above, so long as the Series A
Preferred Stock remains outstanding with the terms thereof materially unchanged,
taking into account that upon the occurrence of an Event, the Company may not be
the surviving entity, the occurrence of any such Event shall not be deemed to
materially and adversely affect such rights, preferences, privileges or voting
power of holders of Series A Preferred Stock and, provided further, that any
increase in the amount of the Authorized Preferred Stock or the creation or
issuance of other series of preferred stock, or any increase in the amount of
authorized shares of such series or of any other series of preferred stock, in
each case ranking on a parity with or junior to the Series A Preferred Stock,
shall not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect
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<PAGE> 9
to which such vote would otherwise be required shall be effected, all
outstanding shares of Series A Preferred Stock shall have been redeemed or
called for redemption upon proper notice and sufficient funds shall have been
deposited in trust to effect such redemption.
Except as expressly stated in this Certificate of Designation or as
required by law, the Series A Preferred Stock shall not have any relative,
participating, optional or other special voting rights, and the consent of the
holders thereof shall not be required for the taking of any corporate action,
including but not limited to, any merger or consolidation involving the Company
or a sale of all or substantially all of the assets of the Company, irrespective
of the effect that such merger, consolidation or sale may have upon the rights,
preferences or voting power of the holders of the Series A Preferred Stock.
SECTION 8
MATURITY
The Series A Preferred Stock has no stated maturity and will not be subject
to any sinking fund or mandatory redemption.
SECTION 9
MISCELLANEOUS
The headings of the various Sections and subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof."
FIFTH: That said resolution of the Pricing Committee, and the authorization
of issuance of the Series A Preferred Stock and the determination thereby of the
provisions with respect to dividends and voting rights of Series A Preferred
Stock and the rights of holders of Series A Preferred Stock upon liquidation of
the Company, were duly made by the Pricing Committee pursuant to authority and
in accordance with the Resolutions and Section 141(c) of the General Corporation
Law of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
of 7.14% Series A Cumulative Preferred Stock to be duly executed by its Vice
President and Chief Financial Officer this 5th day of March, 1998.
UNION TEXAS PETROLEUM
HOLDINGS, INC.
By:
----------------------------------------
Larry D. Kalmbach
Vice President and Chief Financial Officer
-9-
<PAGE> 1
7.14% SERIES A CUMULATIVE PREFERRED STOCK CERTIFICATE
This Preferred Security is a Global Certificate and is registered in
the name of The Depository Trust Company, a New York corporation (55 Water
Street, New York, New York) (the "Depositary"), or a nominee of the Depositary.
This Preferred Security is exchangeable for Preferred Securities registered in
the name of a person other than the Depositary or its nominee only in limited
circumstances and no transfer of this Preferred Security (other than a transfer
of this Preferred Security as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
Certificate Number Number of Shares of Preferred Stock
------- ----------------
CUSIP NO. 908640 20 4
----------------------
CERTIFICATE EVIDENCING SHARES OF PREFERRED STOCK
OF
UNION TEXAS PETROLEUM HOLDINGS, INC.
7.14% SERIES A CUMULATIVE PREFERRED STOCK
(Par Value $.01 Per Share; Liquidation Preference Equivalent To $100.00 Per
Share)
UNION TEXAS PETROLEUM HOLDINGS, INC., a corporation formed under the
laws of the State of Delaware (the "Company"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of shares of preferred stock of the
Company representing undivided beneficial interests in the assets of the Company
designated the 7.14% Series A Cumulative Preferred Stock (par value $.01 per
share and liquidation preference equivalent to $100.00 per share) (the
"Shares"). The Shares are transferable on the books and records of the Company,
in person or by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restrictions, preferences and other terms and provisions of the
Shares represented hereby are issued and shall in all respects be subject to the
provisions of the Certificate of Designation filed with the Secretary of State
of Delaware on March 5, 1998 (the "Designation"). Capitalized terms used herein
but not defined shall have the meaning given them in the Designation. The
Company will provide a copy of the Designation and the powers, designations,
preferences and relative, participating, optional, or other special rights of
each other class of stock or series thereof of the Company and the
qualifications, limitations or restrictions of such preferences and/or rights to
a Holder without charge upon written request to the Company at its principal
place of business.
IN WITNESS WHEREOF, the Company has executed this certificate this 6th
day of March 1998.
UNION TEXAS PETROLEUM
HOLDINGS, INC.
By:
-----------------------------------
Name: Larry D. Kalmbach
Title: Vice President and Chief
Financial Officer
COUNTERSIGNED AND REGISTERED
FIRST CHICAGO TRUST COMPANY OF NEW YORK
TRANSFER AGENT AND REGISTRAR
By:
-------------------------------------
Authorized Officer
<PAGE> 2
FORM OF REVERSE OF SECURITY
Holders of Shares shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds of the Company legally available
therefor, cumulative cash dividends at the rate of 7.14 % of the liquidation
preference per Share (equivalent to $7.14 per annum per Share). Such dividends
shall accrue and be cumulative from the date of original issue and shall be
payable quarterly in arrears on the last day of each March, June, September and
December, or if such date is not a business day, the succeeding business day
(each, a "Dividend Payment Date"). The first dividend on the Shares, if
declared, will be paid on March 31, 1998. Any dividend payable on the Shares for
any partial dividend period will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Dividends will be payable to holders of
record as they appear in the records of the Company at the close of business on
the applicable record date, which shall be the 15th day of the calender month in
which the applicable Dividend Payment Date falls or on such other date
designated by the Board of Directors of the Company for the payment of dividends
that is not more than 30 nor less than 10 days prior to such Dividend Payment
Date.
The Shares will, with respect to dividend rights and rights upon
liquidation, dissolution or winding up of the affairs of the Company, rank (i)
senior to all classes or series of common stock of the Company, and to all
equity securities ranking junior to the Shares with respect to dividend rights
or rights upon liquidation, dissolution or winding up of the affairs of the
Company, (ii) on a parity with all equity securities issued by the Company the
terms of which specifically provide that such equity securities rank on a parity
with the Shares with respect to dividend rights or rights upon liquidation,
dissolution or winding up of the affairs of the Company, and (iii) junior to all
equity securities issued by the Company the terms of which specifically provide
that such equity securities rank senior to the Shares with respect to dividend
rights or rights upon liquidation, dissolution or winding up of the affairs of
the Company.
The Shares have no stated maturity and will not be subject to any
sinking fund or mandatory redemption. The Shares shall be redeemable as provided
in the Designation.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Certificate to:
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Insert address and zip code of assignee)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
and irrevocably appoints
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
agent to transfer this
- --------------------------------------------------------
Certificate on the books of the Company. The agent may substitute another to
act for him or her.
Date:
--------------------------------------------
Signature:
---------------------------------------
(Sign exactly as your name appears on the other side of this Certificate)
Signature Guarantee*:
----------------------
*Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union
meeting the requirements of the Registrar, which requirements include
membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities and Exchange Act of 1934, as amended.
<PAGE> 1
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY ("DTC") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC,
AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. UNLESS AND UNTIL IT
IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS
SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR
BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNION TEXAS PETROLEUM HOLDINGS, INC.
7.000% MANDATORY PUTABLE/REMARKETABLE SECURITIES (MAPS(SM)) DUE 2038
CUSIP NO.: 908640AH8
No. 1 $150,000,000
ORIGINAL ISSUE DATE: April 15, 1998
INTEREST RATE TO REMARKETING DATE: 7.000%
REMARKETING DATE: April 15, 2008
INTEREST RATE TO MATURITY: To be determined as provided herein and set forth
in the records of the Trustee
STATED MATURITY DATE: April 15, 2038
AUTHORIZED DENOMINATION: $1,000 and integral multiples thereof
INTEREST PAYMENT DATES: April 15 and October 15
- ------
"MAndatory Putable/remarketable Securities" and "MAPS(SM)" are service marks
owned by Salomon Brothers Inc
1
<PAGE> 2
UNION TEXAS PETROLEUM HOLDINGS, INC., a Delaware corporation
(hereinafter called the "Company," which term includes any successor corporation
under the Indenture hereinafter referred to), for value received, hereby
promises to pay to Cede & Co., a nominee of The Depository Trust Company
("DTC"), or its registered assigns, upon presentation, the principal amount of
One Hundred Fifty Million Dollars ($150,000,000) on the Stated Maturity Date
specified above (or any earlier redemption or repurchase date) (each such Stated
Maturity Date, earlier redemption or repurchase date being hereinafter referred
to as the "Maturity Date" with respect to the principal repayable on such date)
and to pay interest thereon at the Interest Rate per annum specified above to
April 15, 2008 (the "Remarketing Date"), and thereafter, subject to the terms
and conditions set forth herein, at the Interest Rate (the "Interest Rate to
Maturity") determined by the Remarketing Dealer (as defined below) in accordance
with the procedures set forth below until the principal hereof is paid or duly
made available for payment. The Company will pay interest in arrears on each
Interest Payment Date, if any, specified above (each, an "Interest Payment
Date"), commencing October 15, 1998 and on the Maturity Date. Interest on the
Securities represented hereby (the "MAPS") will be computed on the basis of a
360-day year of twelve 30-day months.
If, pursuant to the Remarketing Agreement, dated as of the date hereof
(the "Remarketing Agreement"), between NationsBanc Montgomery Securities LLC, as
Remarketing Dealer (the "Remarketing Dealer"), and the Company, the Remarketing
Dealer elects to remarket the MAPS, then, except as otherwise set forth herein,
(i) the MAPS shall be subject to mandatory tender to the Remarketing Dealer at
100% of the principal amount thereof for remarketing on the Remarketing Date, on
the terms and subject to the conditions set forth herein, and (ii) on and after
the Remarketing Date, the MAPS shall bear interest at the Interest Rate to
Maturity determined by the Remarketing Dealer in accordance with the procedures
set forth in Section 3 herein.
Interest on the MAPS will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly provided
for (or from, and including, the Original Issue Date if no interest has been
paid or duly provided for) to, but excluding, the applicable Interest Payment
Date or the Maturity Date, as the case may be. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, subject
to certain exceptions described herein, be paid to the persons in whose name the
MAPS are registered at the close of business on the fifteenth calendar day
(whether or not a Business Day, as defined below) immediately preceding such
Interest Payment Date (the "Regular Record Date"); provided, however, that
interest payable on the Maturity Date will be payable to the person to whom the
principal hereof and premium, if any, hereon shall be payable. Any such interest
not so punctually paid or duly provided for ("Defaulted Interest") will
forthwith cease to be payable to the Holder on any Regular Record Date, and
shall be paid to the person in whose name the MAPS are registered at the close
of business on a special record date (the "Special Record Date") for the payment
of such Defaulted Interest to be fixed by the Trustee hereinafter referred to,
of which notice shall be mailed, first-class postage prepaid, to the Holder of
the MAPS by the Trustee not less than 10 days prior to such Special Record Date
or may be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the MAPS may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
for in the Indenture.
Payment of principal, premium, if any, and interest in respect of the
MAPS due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of the MAPS at the corporate trust office of the
Trustee maintained for that purpose in the Borough of Manhattan, The City of New
York, currently located c/o First Chicago Trust Company of New York, 14 Wall
Street, Eighth Floor - Window 2, New York, New York, 10005, or at such other
paying agency in The City of New York, State of New York, as the Company may
determine. Payment of interest due on any Interest Payment Date other than the
Maturity Date will be made in immediately available funds provided that the MAPS
are represented by a global security registered in the name of DTC or its
nominee.
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the required payment of principal, premium, if any,
and/or interest shall be made on the next succeeding Business Day with the same
force and effect as if it were made on the date such payment was due and no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date or the Maturity Date, as the case may be.
As used herein, "Business Day" means any day other than a Saturday, a
Sunday or a day on which banking institutions in The City of New York are
authorized or obligated by law, executive order or governmental decree to be
closed.
2
<PAGE> 3
The Company is obligated to make payment of principal, premium, if any
and interest in respect of the MAPS in U.S. Dollars.
Reference is hereby made to the further provisions of the MAPS set
forth on the reverse hereof.
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature, the MAPS shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Union Texas Petroleum Holdings, Inc., has caused
the MAPS to be duly executed this 15th day of April 1998.
Attest: UNION TEXAS PETROLEUM HOLDINGS, INC.
By: By:
-------------------------- ------------------------------------------
A. J. Watkins, Secretary L. D. Kalmbach, Vice President and
Chief Financial Officer
SEAL
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This 7.000% MAndatory Putable/remarketable Securities (MAPS(SM)) due 2038 is one
of the Securities of the series designated therein referred to in the
within-mentioned Indenture.
Dated: April 15, 1998 THE FIRST NATIONAL BANK OF CHICAGO, as Trustee
By:
-------------------------------------------
Authorized Signatory
3
<PAGE> 4
(Form of Reverse of Security)
UNION TEXAS PETROLEUM HOLDINGS, INC.
7.000% MANDATORY PUTABLE/REMARKETABLE SECURITIES (MAPS(SM)) DUE 2038
1. Indenture; Ranking. (a) The MAPS are one of a duly authorized issue
of debt securities of the Company issued under an Indenture dated as of March
15, 1995 as amended, modified or supplemented from time to time (the
"Indenture"), among the Company, certain subsidiaries of the Company named
therein and The First National Bank of Chicago, as Trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture with
respect to the MAPS), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, and the
Holders of the MAPS, and of the terms upon which the MAPS are authenticated and
delivered. This Security is designated as "7.000% MAndatory Putable/remarketable
Securities (MAPS(SM)) due 2038." All terms used but not defined in this
certificate shall have the meanings assigned to such terms in the Indenture.
Except where the context otherwise requires, all references in this certificate
to "herein" or "hereof" or similar terms shall include the Indenture.
(b) The MAPS are senior unsecured obligations of the Company limited to
$150,000,000 aggregate principal amount.
(c) The MAPS are issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof.
(d) The MAPS are not subject to any sinking fund.
2. Mandatory Tender. Provided that on a Business Day not later than 10
Business Days prior to the Remarketing Date the Remarketing Dealer notifies the
Company and the Trustee of its election to purchase the MAPS for remarketing
(the "Notification Date"), each MAPS shall be subject to mandatory tender to the
Remarketing Dealer, and the Remarketing Dealer shall be obligated to purchase
the MAPS at a purchase price equal to 100% of the outstanding principal amount
of the MAPS, subject in each case to the conditions described herein and as set
forth in the Remarketing Agreement.
3. Determination of Interest Rate to Maturity. Subject to the
Remarketing Dealer's election to remarket the MAPS as provided in Section 2
hereof and in the Remarketing Agreement, the Interest Rate to Maturity shall be
determined by the Remarketing Dealer by 3:30 p.m., New York City time, on the
third Business Day immediately preceding the Remarketing Date (the
"Determination Date") to the nearest one hundred-thousandth (0.00001) of one
percent per annum, and will be equal to the sum of 5.8775% (the "Base Rate") and
the Applicable Spread (as defined below), which will be based on the Dollar
Price (as defined below) of the MAPS.
The "Applicable Spread" will be the lowest firm commitment bid
expressed as a spread (in the form of a percentage or in basis points) above the
Base Rate, obtained by the Remarketing Dealer on the Determination Date from the
bids quoted by five Reference Corporate Dealers (as defined below) for the full
aggregate principal amount of the MAPS at the Dollar Price, but assuming (i) an
issue date that is the Remarketing Date, with settlement on such date without
accrued interest, (ii) a maturity date that is the Stated Maturity Date and
(iii) a stated annual interest rate, payable semi-annually, equal to the Base
Rate plus the spread bid by the applicable Reference Corporate Dealer. If fewer
than five Reference Corporate Dealers bid as described above, then the
Applicable Spread shall be the lowest of such firm commitment bids obtained as
described above. The Interest Rate to Maturity announced by the Remarketing
Dealer, absent manifest error, shall be binding and conclusive upon the
Beneficial Owners and Holders of the MAPS, the Company and the Trustee.
"Dollar Price" means, with respect to the MAPS, the present value, as
of the Remarketing Date, of the Remaining Scheduled Payments (as defined below)
discounted to the Remarketing Date on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Rate (as defined
below).
4
<PAGE> 5
"Reference Corporate Dealers" means each of Salomon Brothers Inc, Chase
Securities Inc., NationsBanc Montgomery Securities LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and J. P. Morgan Securities Inc. and their
respective successors; provided, however, that if any of the foregoing or their
affiliates shall cease to be a leading dealer of publicly traded debt securities
of the Company in The City of New York (a "Primary Corporate Dealer"), the
Remarketing Dealer shall substitute therefor another Primary Corporate Dealer.
"Remaining Scheduled Payments" means, with respect to the MAPS, the
remaining scheduled payments of the principal thereof and interest thereon,
calculated at the Base Rate only, that would be due after the Remarketing Date
to but excluding the Stated Maturity Date; provided, however, that if the
Remarketing Date is not an Interest Payment Date with respect to the MAPS, the
amount of the next succeeding scheduled interest payment thereon, calculated at
the Base Rate only, will be reduced by the amount of interest accrued thereon,
calculated at the Base Rate only, to the Remarketing Date.
"Treasury Rate" means, with respect to the Remarketing Date, the rate
per annum equal to the semi-annual equivalent yield to maturity or interpolated
(on a day count basis) yield to maturity of the Comparable Treasury Issues (as
defined below) assuming a price for the Comparable Treasury Issues (expressed as
a percentage of its principal amount), equal to the Comparable Treasury Price
(as defined below) for such Remarketing Date.
"Comparable Treasury Issues" means the United States Treasury security
or securities selected by the Remarketing Dealer as having an actual or
interpolated maturity or maturities comparable to the remaining term of the MAPS
being remarketed.
"Comparable Treasury Price" means, with respect to the Remarketing
Date, (a) the offer prices for the Comparable Treasury Issues (expressed in each
case as a percentage of its principal amount) on the Determination Date, as set
forth on "Telerate Page 500," or (b) if such page (or any successor page) is not
displayed or does not contain such offer prices on such Determination Date, (i)
the average of the Reference Treasury Dealer Quotations for the Remarketing
Date, after excluding the highest and lowest of such Reference Treasury Dealer
Quotations, or (ii) if the Remarketing Dealer obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such Reference Treasury
Dealer Quotations, and "Telerate Page 500" means the display designated as
"Telerate Page 500" on Dow Jones Markets Limited (or such other page as may
replace Telerate Page 500 on such service) or such other service displaying the
offer prices specified in (a) above as may replace Dow Jones Markets Limited.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and the Remarketing Date, the offer prices for the
Comparable Treasury Issues (expressed in each case as a percentage of its
principal amount) quoted in writing to the Remarketing Dealer by such Reference
Treasury Dealer by 3:30 p.m., New York City time, on the Determination Date.
"Reference Treasury Dealer" means each of Salomon Brothers Inc, Chase
Securities Inc., NationsBanc Montgomery Securities LLC, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and J. P. Morgan Securities Inc. and their
respective successors; provided, however, that if any of the foregoing or their
affiliates shall cease to be a primary U.S. Government securities dealer in The
City of New York (a "Primary Treasury Dealer"), the Remarketing Dealer shall
substitute therefor another Primary Treasury Dealer.
4. Repurchase. In the event that (i) the Remarketing Dealer for any
reason does not notify the Company of the Interest Rate to Maturity by 4:00
p.m., New York City time, on the Determination Date, or (ii) prior to the
Remarketing Date, the Remarketing Dealer has resigned and no successor has been
appointed on or before the Determination Date, or (iii) since the Notification
Date, a material adverse change in the condition of the Company and its
subsidiaries, taken as a whole, shall have occurred or an Event of Default, or
any event which, with the giving of notice or passage of time, or both, would
constitute an Event of Default, with respect to the MAPS shall have occurred and
be continuing, or any other event constituting a termination event under the
Remarketing Agreement shall have occurred, or (iv) the Remarketing Dealer elects
not to remarket the MAPS, or (v) the Remarketing Dealer for any reason does not
purchase all MAPS tendered to it on the Remarketing Date, the Company shall
repurchase the MAPS as a whole on the Remarketing Date at a price equal to 100%
of the principal amount of the MAPS plus all accrued and unpaid interest, if
any, on the MAPS to but excluding the Remarketing Date. In any such case,
payment will be made
5
<PAGE> 6
by the Company to the DTC participant of each Beneficial Owner of MAPS by
book-entry through DTC by the close of business on the Remarketing Date against
delivery through DTC of such Beneficial Owner's MAPS.
5. Optional Redemption. (a) The MAPS will be subject to redemption at
the option of the Company from the Remarketing Dealer on the Remarketing Date,
in whole but not in part, at the Remarketing Redemption Price. To exercise its
irrevocable option to redeem the MAPS, the Company must notify the Remarketing
Dealer and the Trustee not later than the Business Day immediately preceding the
Determination Date. The "Remarketing Redemption Price" shall be the greater of
(i) 100% of the principal amount of the MAPS and (ii) the Dollar Price, plus in
either case accrued and unpaid interest on the principal amount being redeemed
to but excluding the Remarketing Date. If the Company elects to redeem the MAPS,
it shall pay the Remarketing Redemption Price therefor in same-day funds by wire
transfer to an account designated by the Remarketing Dealer on the Remarketing
Date.
(b) The MAPS shall be subject to redemption after the Remarketing Date,
on any date prior to the Maturity Date, at the option of the Company, at any
time in whole or from time to time in part and upon notice as set forth below,
at the Optional Redemption Price. The "Optional Redemption Price" shall be equal
to the sum of (i) 100% of the principal amount of the MAPS being redeemed, plus
accrued and unpaid interest thereon to the applicable date fixed for redemption
(the "Redemption Date") (subject to the right of persons in whose name the MAPS
are registered on the relevant record date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date), and (ii) the
Make-Whole Premium, if any.
"Make-Whole Premium" shall mean, in connection with any optional
redemption of any MAPS (or portion thereof), the excess, if any, of:
(i) the sum of the present values, calculated as of the
Redemption Date, of:
(A) each interest payment that, but for such
redemption, would have been payable on the MAPS (or portion
thereof) after the Redemption Date (excluding any accrued
interest for the period prior to the Redemption Date); and
(B) the principal amount that, but for such
redemption, would have been payable at the final maturity of
the MAPS (or portion thereof) being redeemed;
over
(ii) the principal amount of the MAPS (or portion thereof)
being redeemed.
The present values of interest and principal payments referred to in clause (i)
above will be determined in accordance with generally accepted principles of
financial analysis. Such present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each such
payment would have been payable, but for the redemption, to the Redemption Date
at a discount rate equal to the Treasury Yield (as defined below for purposes of
determining the Make-Whole Premium) plus 25 basis points.
The Make-Whole Premium will be calculated by an independent investment
banking institution of national standing appointed by the Company; provided,
that if the Company fails to make such appointment at least 10 Business Days
prior to the Redemption Date, or if the institution so appointed is unwilling or
unable to make such calculation, such calculation will be made by NationsBanc
Montgomery Securities LLC or, if such firm is unwilling or unable to make such
calculation, by an independent investment banking institution of national
standing appointed by the Trustee (in any such case, an "Independent Investment
Banker").
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means a rate of interest per annum equal to the weekly average yield to maturity
of United States Treasury Notes that have a constant maturity that corresponds
to the remaining term to maturity of the MAPS, calculated to the nearest 1/12 of
a year (the "Remaining Term"). The Treasury Yield will be determined as of the
third Business Day immediately preceding the applicable Redemption Date.
6
<PAGE> 7
The weekly average yields of United States Treasury Notes will be
determined by reference to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15(519) Selected Interest
Rates" or any successor release (the "H.15 Statistical Release"). If the H.15
Statistical Release sets forth a weekly average yield for United States Treasury
Notes having a constant maturity that is the same as the Remaining Term, then
the Treasury Yield will be equal to such weekly average yield. In all other
cases, the Treasury Yield will be calculated by interpolation, on a
straight-line basis, between the weekly average yields on the United States
Treasury Notes that have a constant maturity closest to and greater than the
Remaining Term and the United States Treasury Notes that have a constant
maturity closest to and less than the Remaining Term (in each case as set forth
in the H.15 Statistical Release). Any weekly average yields so calculated by
interpolation will be rounded to the nearest 1/100 of 1%, with any figure of
1/200 of 1% or above being rounded upward. If weekly average yields for United
States Treasury Notes are not available in the H.15 Statistical Release or
otherwise, then the Treasury Yield will be calculated by interpolation of
comparable rates selected by the Independent Investment Banker.
Notice of any optional redemption of any MAPS shall be given to Holders
at their addresses, as shown in the security register for the MAPS, not less
than 30 nor more than 60 days prior to the Redemption Date. The notice of
redemption shall specify, among other items, the Optional Redemption Price and
the principal amount of the MAPS held by such Holder to be redeemed. If less
than all of the MAPS are to be redeemed, the Trustee will select the MAPS to be
redeemed pro rata or by lot. The Trustee may select for redemption MAPS and
portions of MAPS in amounts of $1,000 or whole multiples of $1,000, provided
that if all of the MAPS of a Holder are to be redeemed, the entire outstanding
amount of MAPS held by such Holder, even if not a whole multiple of $1,000, will
be redeemed.
(c) On and after the applicable Redemption Date interest will cease to
accrue on the MAPS or on the portions thereof called for redemption, as the case
may be.
6. Defaults and Remedies. If an Event of Default, as defined in the
Indenture, shall occur and be continuing, the principal of the MAPS may be
declared due and payable in the manner and with the effect provided in the
Indenture. The Indenture contains provisions setting forth certain conditions to
the institution of proceedings by Holders of the MAPS with respect to the
Indenture or for any remedy under the Indenture.
7. Defeasance. The Indenture contains provisions for defeasance of (i)
the entire indebtedness of the Securities or (ii) certain restrictive covenants
and Events of Default with respect to the Securities, in each case upon
compliance with certain conditions set forth therein, which provisions apply to
the MAPS except in the case of clause (i) which will apply to the MAPS after the
Remarketing Date. Subject to the forgoing and certain other exceptions, neither
the Company nor any of its subsidiaries or affiliates shall defease, purchase or
otherwise acquire, or enter into any agreement to defease, purchase or otherwise
acquire, any of the MAPS prior to the Remarketing Date.
8. Amendment, Modification and Waiver. The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the
modification of the rights and obligations of the Company and the rights of the
Holders of a series of Securities at any time by the Company and the Trustee
with the consent of the Holders of not less than a majority of the aggregate
principal amount of all series of Securities (acting as one class) at the time
outstanding and affected thereby. The Indenture also contains provisions
permitting the Holders of not less than a majority of the aggregate principal
amount of the outstanding Securities affected thereby, on behalf of the Holders
of all such Securities, to waive compliance by the Company with certain
restrictive provisions of the Indenture. Furthermore, provisions in the
Indenture permit the Holders of not less than a majority of the aggregate
principal amount of any series (or, in certain cases, all outstanding
Securities), in certain instances, to waive, on behalf of all of the Holders of
Securities of such series (or all outstanding Securities), certain past defaults
under the Indenture and their consequences. Any such consent or waiver by the
Holder of this MAPS shall be conclusive and binding upon such Holder and upon
all future Holders of this MAPS and other MAPS issued upon the registration or
transfer hereof or in exchange heretofore or in lieu hereof, whether or not
notation of such consent or waiver is made upon the MAPS.
9. Obligation to Pay Principal, Premium, If Any, and Interest. No
reference herein to the Indenture and no provision of this certificate or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay principal, premium, if any, and interest in respect of
the MAPS at the times, places and rate or formula herein prescribed.
7
<PAGE> 8
10. Transfer and Exchange. As provided in the Indenture and subject to
certain limitations therein and herein set forth, the transfer of the MAPS is
registrable in the Security Register of the Company upon surrender of the MAPS
for registration of transfer at the office or agency of the Company in any place
where the principal hereof and any premium or interest hereon are payable, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or by his attorney duly authorized in writing, and thereupon one
or more new MAPS, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees. As
provided in the Indenture and subject to certain limitations therein and herein
set forth, the MAPS are exchangeable for a like aggregate principal amount of
MAPS of different authorized denominations but otherwise having the same terms
and conditions, as requested by the Holder hereof surrendering the same. No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection therewith as provided in the
Indenture.
Prior to due presentment of the MAPS for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Holder in whose name the MAPS are registered as the owner thereof for all
purposes, whether or not the MAPS be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
11. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
12. No Recourse against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the MAPS or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. Each
Holder by accepting the MAPS waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the MAPS.
13. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants
by the entireties), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform Gifts to Minors
Act).
14. Governing Law. The Indenture and the MAPS shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to applicable principles of conflicts of laws to the extent the
application of the laws of another jurisdiction would be required thereby.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Request may be made to:
Union Texas Petroleum Holdings, Inc.
1330 Post Oak Boulevard
Houston, Texas 77056
Attention: General Counsel
8
<PAGE> 9
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER IDENTIFYING
NUMBER OF ASSIGNEE
______________________________________________________________________________
(Please Print or Typewrite Name and Address, including Zip Code, of Assignee)
the within MAPS of Union Texas Petroleum Holdings, Inc., and the undersigned
hereby does irrevocably constitute and appoint
_________________________________________ as agent to transfer said MAPS on the
books of the within-named Company with full power of substitution in the
premises.
Dated: ______________________
Signature: ________________________________
NOTICE: The signature to this assignment must correspond with the name as it
appears on the first page of the within MAPS in every particular, without
alteration or enlargement or any change whatever.
Signature Guaranteed: ________________________________
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor institution"
that is a member or participant in a "signature guarantee program" (e.g., the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program or the New York Stock Exchange, Inc., Medallion Signature Program).
9
<PAGE> 1
_______________________________________________________
$100,000,000
CREDIT AGREEMENT
dated as of
March 10, 1998
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
ARTICLE I
<S> <C> <C>
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.03. Types of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.04. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.05. Unimar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 1.06. Ratings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE II
THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.01. Commitments to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.02. Notice of Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.03. Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.04. Notice to Banks; Funding of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.06. Maturity of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.07. Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.08. Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.09. Optional Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.10. Mandatory Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.11. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.12. General Provisions as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.13. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.14. Computation of Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.15. Chapter 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.16. Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE III
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.01. Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.02. All Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE IV
<S> <C> <C>
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.01. Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.02. Corporate and Governmental Authorization; Contravention . . . . . . . . . . . . . . . . . . . 32
SECTION 4.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.04. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.05. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.06. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.07. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.08. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 4.09. Ownership of Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.10. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.11. Taxes and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.12. Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.13. Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 4.14. United Kingdom Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.01. Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.02. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.03. Primary Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.05. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.06. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.07. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.08. Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.09. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.10. Addition of Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.11. Restrictions on Dividends, Intercompany Loans, or Investments . . . . . . . . . . . . . . . . 44
SECTION 5.12. Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.13. Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.14. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.15. Adjusted Equity and Interest Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.16. Excluded Subordinated Debt and Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.17. Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.18. Restrictions on Asset Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 5.19. Conversion to Unrestricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VI
DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 6.02. Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII
THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.01. Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.02. Agent and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.03. Action by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.04. Consultation with Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.05. Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.06. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.07. Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.08. Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 7.09. Agent's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE VIII
CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.01. Basis for Determining Interest Rate Inadequate or Unfair . . . . . . . . . . . . . . . . . . 51
SECTION 8.02. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 8.03. Increased Cost and Reduced Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.04. Base Rate Loans Substituted for Affected Euro-Dollar Loans . . . . . . . . . . . . . . . . . 53
SECTION 8.05. Substitution of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9.02. No Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.03. Expenses; Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.04. Sharing of Set-Offs, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.05. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.06. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 9.07. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.08. Texas Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.09. CONSENT TO JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 9.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.11. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.12. COMPLETE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.13. Liability of Co-Agents and Arranger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 9.14. Termination of 1997 Short-Term Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
<PAGE> 5
CREDIT AGREEMENT
Credit Agreement dated as of March 10, 1998 among Union Texas
Petroleum Holdings, Inc., the Banks party hereto, NationsBank of Texas, N.A.,
as Agent, and Bank of America National Trust and Savings Association and Union
Bank of Switzerland, Houston Agency, as Co-Agents.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following terms, as used
herein, have the following meanings:
"Acceptable Engineer" means DeGolyer & MacNaughton or such
other independent engineering firm that is mutually acceptable to the Agent and
the Company.
"Adjusted Equity" means the consolidated stockholders equity
of the Company and its Consolidated Subsidiaries, as determined on a
consolidated basis in accordance with generally accepted accounting principles,
adjusted to exclude (i) any cumulative foreign exchange translation
adjustments, (ii) any non-cash write-up or writedown of any assets of the
Company and its Consolidated Subsidiaries made after March 31, 1995 in
accordance with generally accepted accounting principles, and (iii) the
non-cash effect of the adoption of any change after March 31, 1995 required by
generally accepted accounting principles.
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form requested by the Agent
submitted to the Agent (with a copy to the Company) duly completed by such
Bank.
"Affiliate" means (i) any Person holding 5% or more of any
class of capital stock of the Company, and (ii) any Person (other than the
Company, a Subsidiary or a Partnership) directly or indirectly controlling,
controlled by or under common control with any Person described in clause (i).
As used in this definition of "Affiliate", the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
"Agent" means NationsBank in its capacity as agent for the
Banks hereunder and any successor in such capacity.
"Agreement" means this Credit Agreement dated as of March 10,
1998 among the Company, the Banks, the Agent and the Co-Agents, as amended from
time to time in accordance with the terms hereof.
1
<PAGE> 6
"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.
"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
2
<PAGE> 7
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 1997 Form 10-K" means the Company's annual report
on Form 10-K for 1997, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Consolidated Debt" means, at any date, an amount equal to (a)
the sum (without duplication) of (i) the aggregate amount of Debt (other than
Defeased Debt, Excluded Subordinated Debt not exceeding $100,000,000 and Debt
that would not constitute Debt of the Company or any of its Consolidated
Subsidiaries if clause (viii) were not included in the definition herein of
Debt) of the Company and its Consolidated Subsidiaries, determined on a
consolidated basis as of such date, plus (ii) the Unimar Percentage at such
date of the aggregate Debt (other than Defeased Debt and Debt that would not
constitute Debt of Unimar or any of the Unimar Restricted Subsidiaries if
clause (viii) were not included in the definition herein of Debt) of Unimar and
the Unimar Restricted Subsidiaries, determined on a consolidated basis as of
such date, plus (iii) the Excess Letter of Credit/Guarantee Amount at such
date, minus (b) the sum (without duplication and only to the extent that any of
the following are included in the foregoing clause (a)) at such date of (1)
Debt of Unrestricted Subsidiaries to the extent such Debt does not constitute
Debt of the Company or any Restricted Subsidiary plus (2) Non-Restricted Asset
Non-Recourse Debt plus (3) Existing Pakistan Non-Recourse Debt.
"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.
3
<PAGE> 8
"Corporate Base Rate" means a fluctuating interest rate per
annum as shall be in effect from time to time equal to the rate of interest
publicly announced by NationsBank as its base rate, whether or not the Company
has notice thereof. Such rate is set by NationsBank as a general reference
rate of interest, taking into account such factors as NationsBank may deem
appropriate, it being understood that many of NationsBank's commercial or other
loans are priced in relation to such rate, that it is not necessarily the
lowest or best rate actually charged to any customer and that NationsBank may
make various commercial or other loans at rates of interest having no
relationship to such rate.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except accrued expenses, trade accounts payable and taxes
payable arising in the ordinary course of business, (iv) the present value,
determined in accordance with generally accepted accounting principles, of the
obligations of such Person to make payments under capital leases, (v) all
obligations of such Person which shall have been outstanding for more than five
days owed to a bank or other Person in respect of amounts theretofore paid
under a letter of credit or similar instrument, (vi) all Debt of others secured
by a Lien on any asset owned by such Person whether or not such Debt is assumed
by such Person (except that Joint Venture Debt shall for purposes of this
Agreement be deemed to be Debt of Pertamina and not of the Company or a
Subsidiary), (vii) all Restricted Preferred Stock issued by such Person or as
to which such Person is otherwise liable, (viii) all Debt of others Guaranteed
by such Person, to the extent of such Guarantee, and (ix) all obligations of
such Person which have been outstanding for more than five days to pay any
margin call (or similar requirement) on any Derivative Transaction (excluding,
in the case of the Company and its Subsidiaries, such obligations not exceeding
$5,000,000 in the aggregate); provided that, neither Debt nor Guarantee
includes (a) obligations under leases other than capital leases and under bona
fide Derivative Transactions (except as provided in clause (ix) above) and
obligations with respect to take-or-pay payments theretofore received which
remain subject to cash settlement or make-up; (b) Debt of the 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
4
<PAGE> 9
would not have an adverse effect on the Company or any Subsidiary pursuant to
the terms of any such Restricted Preferred Stock or any documents related
thereto.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"Defeased Debt" means any Debt of the Company or any
Subsidiary (i) which has been defeased in accordance with the terms of the
applicable Debt instruments, (ii) which is deemed to be extinguished under
generally accepted accounting principles applicable to the Company or such
Subsidiary, and (iii) with respect to which the Agent has received a
certificate of an officer of the Company or such Subsidiary to the effect that
the requirements of clauses (i) and (ii) of this definition have been met as to
such Debt and such evidence, if any, in support of such certificate as the
Agent may reasonably request.
"Derivative Transactions" means foreign exchange transactions
and commodity, currency and interest rate swaps, floors, caps, collars, forward
sales, options, other similar transactions and combinations of the foregoing.
"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.
5
<PAGE> 10
"Effective Date" means the date of this Agreement, which is
March 10, 1998.
"Engineering Report" means a report of an Acceptable Engineer
providing an estimate of the proved reserves of Hydrocarbons attributable to
the properties of the Company and the Restricted Subsidiaries.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
other governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Resource
Conservation and Recovery Act, the Oil Pollution Act, and their state analogs,
in each case as they have been or may be amended.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means the 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.
6
<PAGE> 11
"Excess Letter of Credit/Guarantee Amount" means, at any date,
the excess of (a) the sum of (i) the aggregate undrawn amount, at such date, of
all letters of credit as to which the Company or any Restricted Subsidiary
(other than Unimar and the Unimar Restricted Subsidiaries) is the account party
or in respect of which the Company or any Restricted Subsidiary (other than
Unimar and the Unimar Restricted Subsidiaries) has Guaranteed payment plus the
unpaid drawn portions, at such date, of all such letters of credit to the
extent such drawn portions do not constitute Debt of the Company or a
Restricted Subsidiary (other than Unimar and the Unimar Restricted
Subsidiaries), plus (ii) the Unimar Percentage of the aggregate undrawn amount,
at such date, of all letters of credit as to which Unimar or any of the Unimar
Restricted Subsidiaries is the account party or in respect of which Unimar or
any of the Unimar Restricted Subsidiaries has Guaranteed payment plus the
unpaid drawn portions, at such date, of such letters of credit to the extent
such drawn portions do not constitute Debt of Unimar or any of the 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
7
<PAGE> 12
(b) if, after giving effect to such Asset Sale, the
aggregate Net Sales Proceeds from all Asset Sales since December 31,
1993 would be greater than $100,000,000, the lesser of (1) the amount
by which such aggregate Net Sales Proceeds exceeds $100,000,000 or (2)
the Net Sales Proceeds from such Asset Sale.
"Excluded Subordinated Debt" means Debt that (i) is
subordinate and junior, on terms reasonably satisfactory to the Agent, to the
Loans in all respects and (ii) has no requirement, absent a default under such
Debt, that any principal thereof be paid, purchased, redeemed, defeased,
acquired, exchanged or converted (other than exchange for or conversion to
common stock of the Company) prior to 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
8
<PAGE> 13
of any such Debt; provided that (i) the obligations of any Person in respect of
Debt of any Partnership in which such Person is a general partner shall not
constitute a Guarantee of such Debt so long as substantially all assets of such
Person are comprised of its Investment in such Partnership, (ii) the obligation
of a Person to transfer or restore cash to the account of a Partnership,
Subsidiary or Affiliate pursuant to periodic settlements or adjustments under
cash management practices of such Persons shall not constitute a Guarantee,
(iii) the contractual obligation of a Person to assure that a Subsidiary,
Partnership or Affiliate conducts its operations as a prudent operator shall
not constitute a Guarantee of indebtedness of the Subsidiary, Partnership or
Affiliate, (iv) the obligation of a Person to cause net amounts of cash owned
by a Subsidiary, Partnership or Affiliate to be applied to payment of
indebtedness of such Subsidiary, Partnership or Affiliate shall not constitute
a Guarantee of such indebtedness and (v) the reaffirmation to or for the
benefit of a lender of contractual obligations (as, for example, those set
forth in the Production Sharing Contracts) previously entered into in good
faith and not in contemplation of the incurrence of Debt shall not constitute a
Guarantee so long as the other arrangements entered into in connection with
such reaffirmation do not increase the likelihood that additional funds will be
required to meet such obligations (as would be the case, for example, if
revenues otherwise available to meet such obligations were dedicated to such
lender).
"HPG Plant" means the five-twelfths interest in the Geismar,
Louisiana olefins plant owned by UTPC and its subsidiaries, the supply and
distribution assets related to such plant and all other operating assets of
UTPC and its subsidiaries as of December 31, 1993.
"Hydrocarbons" means crude oil, including all kinds of
hydrocarbons and bitumens in solid or liquid form, and natural gas, including
all gaseous hydrocarbons produced from wells, and liquefied natural gas and
liquefied petroleum gases.
"Indonesian Participating Units" means the Indonesian
Participating Units issued by Unimar pursuant to the Indenture dated as of
September 24, 1984 between Unimar and Irving Trust Company, Trustee, as amended
and in effect on 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
9
<PAGE> 14
time) on the third Euro-Dollar Business Day prior to the first day of such
Interest Period, select; provided that:
(a) any Interest Period which would otherwise end on a
day which is not a Euro-Dollar Business Day shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Euro-Dollar
Business Day of a calendar month;
(c) the Company may not select an Interest Period for any
Loan if the last day of such Interest Period would be after the
Maturity Date; 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,
10
<PAGE> 15
whether by operation of law or by contract, does not constitute a Lien unless
there is a related obligation to maintain a deposit of cash or other assets in
respect of which such right of set-off may be exercised.
"Loan" means a loan made by a Bank to the Company pursuant to
Section 2.01 and refers to a Base Rate Loan or a Euro-Dollar Loan (each of
which shall be a "Type" of Loan), and "Loans" means Base Rate Loans or
Euro-Dollar Loans or any combination of the foregoing.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.07(b).
"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.
"Maturity Date" has the meaning referred to in Section 2.06.
"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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<PAGE> 16
"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.
"Non-Restricted Assets" means all assets of the Company and
its Subsidiaries other than Restricted Assets.
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<PAGE> 17
"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, 1997 as set forth
in the Company's 1997 Form 10-K; provided that in determining
such "net cash (required) provided by operating activities
before changes in other assets and liabilities" there shall be
excluded therefrom (to the extent otherwise included therein)
(a) the portion of such net cash provided by assets securing
any Non-Recourse Debt other than the Existing Pakistan
Non-Recourse Debt, (b) the net cash provided or required by
operating activities before changes in other assets and
liabilities of any Person acquired by the Company or a
Subsidiary in a pooling-of-interest transaction for any period
prior to the date of such transaction, and (c) the net cash
provided by operating activities before changes in other
assets and liabilities of any Person which is subject to any
contractual restriction which prevents the payment of
dividends or the making of distributions on the capital stock
or other ownership interests of such Person to the extent of
such contractual restrictions,
plus (ii) to the extent included in the determination of the
"net cash (required) provided by operating activities before
changes in other assets and liabilities" for such period in
accordance with the foregoing clause (i), exploration expenses
incurred by the Company or any Consolidated Subsidiary during
such period other than (a) exploration expenses incurred in
connection with assets securing any Non-Recourse Debt other
than the Existing Pakistan Non-Recourse Debt, (b) the
exploration expenses of any Person acquired by the Company or
a Subsidiary in a pooling-of-interest transaction for any
period prior to the date of such transaction, and (c) the
exploration expenses of any Person which is subject to any
contractual restriction which prevents the payment of
dividends or the making of distributions on the capital stock
or other ownership interests of such Person to the extent of
such contractual restrictions,
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<PAGE> 18
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, 1997 as set forth in the Company's 1997 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
by the First Amendment Agreement dated March 11, 1997, and as further 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.
"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
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<PAGE> 19
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, 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
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<PAGE> 20
(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 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.
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<PAGE> 21
"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.
"Termination Date" means March 9, 1999, 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
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<PAGE> 22
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.
"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
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<PAGE> 23
Restricted Subsidiary made in the ordinary course of the cash management
practices of the Company and its Subsidiaries) and (ii) such Unrestricted
Subsidiary owes, at the date of determination, any Debt for borrowed money to a
Person other than the Company or a Subsidiary (the "third party Debt") (other
than any such Debt that also constitutes Debt of the Company or a Restricted
Subsidiary), then an amount equal to the lesser of (1) such intercompany Debt
and (2) such third party Debt, shall not be eliminated in such determination of
Consolidated Debt.
SECTION 1.03. Types of Borrowings. The term "Borrowing"
denotes the aggregate of Loans made by Banks to the Company pursuant to Article
II on a single date, of a single Type and, if such Loans are Euro-Dollar Loans,
for a single Interest Period. Borrowings are classified for purposes of this
Agreement by reference to the pricing of Loans comprising such Borrowing (e.g.,
a "Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans).
SECTION 1.04. Miscellaneous. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and Article, Section, Schedule and Exhibit references are to
Articles and Sections of and Schedules and Exhibits to this Agreement, unless
otherwise specified. The term "including" as used herein means "including
without limitation". Definitions of terms defined herein shall be applicable
to both the singular and plural forms of the terms defined as appropriate.
References to "directly or indirectly" in respect of ownership of any interest
in any assets shall include, without limitation, direct ownership, indirect
ownership through capital stock or other ownership interest (whether through
one or more levels of subsidiaries, affiliates or other Persons) and any other
direct or indirect ownership arrangement.
SECTION 1.05. Unimar. To the extent this Agreement or any
other Financing Document obligates the Company or a Subsidiary to cause Unimar
and the Unimar Subsidiaries to take any action, such obligation shall be
satisfied if (a) the Company votes (or causes a Subsidiary to vote) the Unimar
Percentage in a manner consistent with the obligations of the Company and the
Subsidiaries under the Financing Documents and (b) any representative of the
Company sitting on any management board or board of directors of Unimar or any
of the Unimar Subsidiaries votes, as a member of such management board or board
of directors, in a manner consistent with the obligations of the Company and
the Subsidiaries under the Financing Documents.
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
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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.
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.
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(b) If requested to do so by the Company through
the Agent at least ten Euro-Dollar Business Days before the first day
of a proposed Interest Period for Euro-Dollar Loans, each Bank will
advise the Agent before 10:00 A.M. (Houston time) on the sixth
Euro-Dollar Business Day preceding the date of such proposed Interest
Period as to whether, if the Company selects a specified duration of
nine or twelve months for such Interest Period, such Bank expects that
deposits in dollars with a corresponding term will be available to it
in the relevant market on the first day of such Interest Period in the
amount required to fund its Loan to which such Interest Period would
apply. Unless a Bank responds by such time to the effect that it
expects such deposits will not be available to it, the Company shall
be entitled to select such proposed duration for such Interest Period.
SECTION 2.03. Conversions. (a) The Company may on any
Euro-Dollar Business Day, upon notice given to the Agent no later than 10:00
A.M. (Houston time) on the third Euro-Dollar Business Day prior to the date of
the proposed Conversion and subject to the provisions of Section 2.02 and
Article VIII and the other provisions hereof, Convert all Loans comprising one
or more Borrowings; provided that (i) Loans comprising a Borrowing may not be
Converted if after giving effect to such Conversion, such Borrowing would be a
Euro-Dollar Borrowing and the outstanding principal amount of such Borrowing
would be less than $10,000,000 and (ii) no Conversion (other than changing
Euro-Dollar Loans into Base Rate Loans) may be made if any Event of Default is
then existing. Each such notice of a Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Loans to be
Converted, (iii) if after giving effect to such Conversion, such Borrowing
would be a Euro-Dollar Borrowing, the commencement date and duration of the
proposed Interest Period for each Loan comprising such Borrowing, and (iv) the
nature of such Conversion (i.e., whether such Conversion is a change of Loans
of one Type into another Type, a continuation of Euro-Dollar Loans as such for
an additional Interest Period or an election to change an Interest Period).
Each such notice shall be irrevocable.
(b) If the aggregate unpaid principal amount of
Euro-Dollar Loans comprising any Borrowing shall be reduced by payment
or prepayment or otherwise, to 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
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<PAGE> 26
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.
(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
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<PAGE> 27
be in substantially the form of Exhibit A hereto with appropriate
modifications to reflect the fact that it evidences solely Loans of
the relevant Type. Any Bank that receives multiple Notes pursuant to
this Section 2.05(b) agrees that: (1) the aggregate principal amount
payable by the Company under such Notes shall never exceed the
aggregate principal amount of the Loans owed to such Bank (including,
if applicable, the separate lending offices, agencies or branches of
such Bank) and (2) the payees of the Notes issued at the request of
such Bank shall enjoy no greater rights (voting or otherwise) than
such Bank would enjoy in the absence of such request and such payees
(including, if applicable, the separate lending offices, agencies or
branches of such Bank) shall be considered a single Bank for purposes
of this Agreement. Each reference in this Agreement to the "Note" of
such Bank shall be deemed to refer to and include any or all of such
Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section
3.01(b), the Agent shall mail or send by private delivery service such
Note to such Bank. Each Bank shall record the date, amount and Type
of each Loan made by it to the Company and the date and amount of each
payment of principal made with respect thereto, and prior to any
transfer of its Note shall endorse on the schedule forming a part
thereof appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding; provided that the
failure of any Bank to make any such recordation or endorsement shall
not affect the obligations of 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 8, 2000
("Maturity Date").
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
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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 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.
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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 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
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aggregating $10,000,000 or any larger multiple of $1,000,000, by
paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment; provided that no partial
prepayment of a Euro-Dollar Borrowing shall be made if after giving
effect thereto the principal amount of such Borrowing would be less
than $10,000,000. Each such optional prepayment shall be applied to
prepay ratably the Loans of the several Banks included in such
Borrowing.
(b) Upon receipt of a notice of prepayment pursuant to
this Section, the Agent shall promptly notify each Bank of the
contents thereof and of such Bank's ratable share (if any) of such
prepayment and such notice shall not thereafter be revocable by the
Company.
SECTION 2.12. General Provisions as to Payments.
(a) The Company shall make each payment of principal of, and
interest on, the Loans and of fees hereunder, not later than 12:00
Noon (Houston time) on the date when due, in Federal or other funds
immediately available in Houston, to the Agent at its address referred
to in Section 9.01. The Agent will promptly distribute to each Bank
its ratable share of each such payment received by the Agent for the
account of the Banks. Whenever any payment of principal of, or
interest on, the Base Rate Loans or of fees shall be due on a day
which is not a Domestic Business Day, the date for payment thereof
shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, the Euro-Dollar
Loans shall be due on a day which is not a Euro-Dollar Business Day,
the date for payment thereof shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for
any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Agent shall have received notice from the
Company prior to the date on which any payment is due from the Company
to the Banks hereunder that the Company will not make such payment in
full, the Agent may assume that the Company has made such payment in
full to the Agent on such date and the Agent may, in reliance upon
such assumption, cause to be distributed to each Bank on such due date
an amount equal to the amount then due such Bank. If and to the
extent 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
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<PAGE> 31
applicable thereto, the Company shall reimburse each Bank within 15 days after
demand for any resulting loss or expense incurred by it (or by an existing or
prospective Participant in the related Loan), including (without limitation)
any loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin from the period after any such payment or
failure to borrow; provided that such Bank shall have delivered to the Company
a certificate as to the amount of such loss or expense, which certificate shall
be conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest
based on the Base Rate hereunder shall be computed on the basis of a year of
365 days (or 366 days in a leap year) and paid for the actual number of days
elapsed (including the first day but excluding the last day). All other
interest and fees shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding
the last day).
SECTION 2.15. Chapter 15. In no event shall the provisions
of Chapter 346 of the Texas Finance Code, as amended (formerly found in 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.
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(c) If the amount of interest payable for the account of
any Bank in respect of any interest computation period is reduced
pursuant to clause (b) of this Section and the amount of interest
payable for its account in respect of any subsequent interest
computation period, computed pursuant to Section 2.07, would be less
than the maximum amount permitted without penalty by applicable law to
be charged by such Bank, then the amount of interest payable for its
account in respect of such subsequent interest computation period
shall be automatically increased to such maximum permissible amount;
provided that at no time shall the aggregate amount by which interest
paid for the account of any Bank has been increased pursuant to this
clause (c) exceed the aggregate amount by which interest paid for its
account has theretofore been reduced pursuant to clause (b) of this
Section.
(d) In the event that maturity of the Loans is
accelerated for any reason, or in the event of any required or
permitted prepayment of the Loans, then such consideration that
constitutes interest payable for the account of any Bank shall never
include more than the maximum amount allowed without penalty by
applicable law to be charged by such Bank and excess interest, if any,
payable for the account of such Bank pursuant to its Note, this
Agreement or otherwise shall be cancelled automatically as of the date
of such acceleration or prepayment and, if theretofore paid, shall be
credited on the Loans of such Bank (or, to the extent in excess of
such Loans, refunded by such Bank to the Company).
(e) It is further agreed that, without limitation of the
foregoing, all calculations of the rate of interest contracted for,
charged or received for the account of any Bank under the Note held by
it, under this Agreement, under any other agreement executed in
connection herewith or otherwise in connection with the Loans or the
Commitment of such Bank for the purpose of determining whether such
rate exceeds the maximum nonusurious interest rate applicable to such
Bank, shall be made, to the extent permitted by usury laws applicable
to such Bank (now or hereafter enacted), by amortizing, prorating and
spreading in equal parts during the period of the 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 weekly ceiling as provided for in Chapter 303 of the
Texas Finance Code and in Article 5069-1D.002 of the Revised Civil
Statutes, in each case as amended (formerly known as the indicated
(weekly) rate ceiling in Article 5069-1.04 of the Revised Civil
Statutes of Texas).
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
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<PAGE> 33
federal income taxes and, without duplication, any taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction
under the laws of which the Agent, such Co-Agent or such Bank, as the
case may be, is organized or any political subdivision thereof and
(ii) in the case of each Bank, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (all
such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Company shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note to
any Bank, any Co-Agent or the Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable
under this Section 2.17) such Bank, such Co-Agent or the Agent (as the
case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Company shall make
such deductions and (iii) the Company shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Company agrees to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, assessments, charges or similar levies which arise from any
payment made hereunder or under the Notes or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement 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.
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(e) Each Bank represents that it is either (i) a
corporation, association or other entity organized under the laws of
the United States or any state thereof or (ii) entitled to complete
exemption from United States withholding tax imposed on or with
respect to any payments, including fees, to be made to it pursuant to
this Agreement or the Notes. Each Bank that is not organized under
the laws of the United States or any state thereof (a "Foreign Bank")
agrees to provide to the Company and the Agent, on or prior to the
date of this Agreement in the case of each Foreign Bank signatory
hereto, and on the date of the Assignment pursuant to which it became
a Bank in the case of each other Foreign Bank, two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224,
certifying in either case that such Foreign Bank is entitled to
receive payments from the Company under this Agreement and the Notes
without deduction or withholding of any United States federal income
taxes. Each Foreign Bank which so delivers a Form 1001 or 4224
further undertakes to deliver to each of the Company and the Agent two
additional copies of such form (or a successor form) on or before the
date that such form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form so
delivered by it, and such amendments thereto or extensions or renewals
thereof as may be reasonably requested by the Company or the Agent, in
each case certifying that such Foreign Bank is entitled to receive
payments from the Company under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes,
unless an event (including without limitation any change in treaty,
law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Foreign Bank from duly
completing and delivering any such form with respect to it and such
Foreign Bank advises the Company and the Agent that it is not capable
of receiving such payments without any deduction or withholding of
United States federal income tax. Each Bank agrees to indemnify and
hold the Company and the Agent harmless from any United States taxes,
penalties, interest and other expenses, costs and losses incurred or
payable by them as a result of either (a) such Bank's failure to
submit any form that it is required to provide pursuant to this
Section 2.17(e) or (b) the Agent's and the Company's reliance on any
such form which such Bank has provided to them, or on the
representation of such Bank made to them pursuant to this Section
2.17(e).
(f) If any Taxes are paid by the Company pursuant to this
Section 2.17 in respect of the Applicable Lending Office of any Bank,
such Bank will, if requested to do so by the Company, designate a
different Applicable Lending Office if such designation will avoid the
need to pay, or reduce the amount of, such Taxes and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank.
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ARTICLE III
CONDITIONS
SECTION 3.01. Initial Borrowing. The obligation of any Bank
to make a Loan on the occasion of the initial Borrowing is subject to the
satisfaction (or waiver in accordance with Section 9.05) of each of the
following conditions:
(a) receipt by the Agent of counterparts hereof signed by
each of the parties hereto (or, in the case of any party as to which
an executed counterpart shall not have been received, receipt by the
Agent in form satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a counterpart
hereof by such party);
(b) receipt by the Agent for the account of each Bank of
a duly executed Note of the Company dated on the date of this
Agreement complying with the provisions of Section 2.05;
(c) receipt by the Agent of 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.
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SECTION 3.02. All Borrowings. The obligation of any
Bank to make a Loan on the occasion of any Borrowing is subject to the
satisfaction of the following conditions (in addition to the conditions set
forth in Section 3.01):
(a) receipt by the Agent of a Notice of Borrowing as
required by Section 2.02;
(b) the fact that immediately prior to and immediately
after such Borrowing, no Default shall have occurred and be
continuing; and
(c) the fact that the representations and warranties of
the Company contained in this Agreement (except, in the case of any
Borrowing subsequent to the first Borrowing, the representations and
warranties set forth in Section 4.04(a) or (c)) shall be true and
correct in all material respects on and as of the date of such
Borrowing.
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
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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,
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, 1997 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 1997 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 1997 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, 1997 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.
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
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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, 1993, and all assessed deficiencies resulting from such
examination have been discharged or reserved against as required by generally
accepted accounting principles. The Company and the Subsidiaries have filed
all United States Federal, state and local income tax returns and all other
material domestic tax returns which are required to be filed by them and have
paid, or provided for the payment before the same became delinquent of, all
taxes due pursuant to such returns or pursuant to any assessment received by
the Company or any Subsidiary, other than those taxes being diligently
contested in good faith by appropriate proceedings. The charges, accruals and
reserves on the books of the Company and the Subsidiaries in respect of taxes
are, in the opinion of the Company, adequate. The Company and the Subsidiaries
have set up such reserves as are required by generally accepted accounting
principles for the payment of additional taxes for years which have not been
audited by the respective tax authorities. The Company and the Subsidiaries
have paid all other material obligations when due other than those being
contested in good faith by appropriate proceedings.
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SECTION 4.12. Regulation U. Neither the Company nor any
Subsidiary is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation G) or
margin stock (within the meaning of Regulation U). Following the application
of the proceeds of each Loan, not more than 25% of the value of the assets of
the Company, or of the Company and its Subsidiaries, which are subject to any
arrangement with the Agent or any Bank (herein or otherwise) whereby the
Company's or any Subsidiary's right or ability to sell, pledge or otherwise
dispose of assets is in any way restricted will be any such margin stock.
SECTION 4.13. Certain Obligations. Neither the Company nor
any Subsidiary has any obligation to make payments on the Joint Venture Debt
other than those permitted by Section 5.17. There is no Non-Recourse Debt
existing on the date of this Agreement.
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;
(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
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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 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
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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;
(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
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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;
(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
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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.
(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.
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(b) Compliance with Laws. Comply with all applicable
laws, ordinances, rules, regulations and reporting, filing and other
requirements of governmental authorities (including, without
limitation, Environmental Laws and ERISA and the rules and regulations
thereunder), except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings or where the
failure to so comply would not have a material adverse effect on the
Company and its Subsidiaries, taken as a whole.
(c) Inspection of Property, Books and Records. Keep
proper books of record and account in accordance with sound accounting
practices; and permit representatives of any Bank, at such Bank's sole
risk and expense, to visit and inspect any of its properties (subject
to obtaining any required consent of third- party operators), to
examine and make abstracts and copies from any of its books and
records and to discuss its affairs, finances and accounts with its
officers and employees, and use its best efforts to make its
independent public accountants available to discuss the affairs,
finances and accounts of the Company and any of its Subsidiaries, all
at such reasonable times and as often as may reasonably be desired.
SECTION 5.03. Primary Business. The exploration for, and
production and marketing of, Hydrocarbons will continue to be the primary
business of the Company and its Subsidiaries taken as whole.
SECTION 5.04. Insurance. The Company will maintain, and will
cause each Subsidiary to maintain (either in the name of the Company or in such
Subsidiary's own name) with financially sound and reputable insurance
companies, insurance on their property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies of established repute engaged in the same or similar business; and
will furnish to the Banks, upon written request from the Agent, full
information as to the insurance carried.
SECTION 5.05. Debt.
(a) 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
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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 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;
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(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
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
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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.
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.
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SECTION 5.14. Subsidiaries. The Company will at all times
own, either directly or through one or more Restricted Subsidiaries, free and
clear of all Liens (other than those permitted by Section 5.07), 100% of all
issued and outstanding capital stock (other than directors' qualifying shares
and shares beneficially owned by the Company or a Restricted Subsidiary and
held by nominees of the Company or a Restricted Subsidiary solely to satisfy
requirements of local law) and other ownership interests of each Restricted
Subsidiary and all options, warrants and other rights to acquire any such
capital stock or any such ownership interest, except for (i) Unimar and the
Unimar Restricted Subsidiaries, (ii) any Restricted Subsidiary sold or
otherwise disposed of pursuant to an Asset Sale, if after giving effect to such
Asset Sale, the Company does not own, directly or indirectly, any interest in
such Restricted Subsidiary, and (iii) those options described on Schedule VI.
The Company will at all times own, either directly or through one or more
Restricted Subsidiaries, free and clear of all Liens (other than those
permitted by Section 5.07), 50% or more of the ownership interest in Unimar and
the Unimar Restricted Subsidiaries and all options, warrants and other rights
to acquire any such ownership interest (other than those described on Schedule
VI); provided that the Company and the Restricted Subsidiaries may sell all of
their ownership interest in Unimar and the Unimar Restricted Subsidiaries and
such options, warrants and other rights if, after giving effect to such sale,
the Company does not own, directly or indirectly, any interest in Unimar, the
Unimar Restricted Subsidiaries or any such option, warrant or other right. The
Company will not at any time permit any Restricted Subsidiary that is not a
Unimar Restricted Subsidiary to become a Unimar Restricted Subsidiary. The
Company will not permit any Restricted Asset to be sold, leased, transferred or
otherwise disposed of to any Person that was an Unrestricted Subsidiary
immediately prior thereto if any Default then exists or would result. The
Company will not permit any Restricted Subsidiary to issue any preferred stock
unless such preferred stock at all times is owned only by the Company. The
Company will not permit any Restricted Subsidiary to own, directly, both (a)
any UK Asset and (b) any Non-UK Asset.
SECTION 5.15. Adjusted Equity and Interest Coverage. The
Company will at all times maintain Adjusted Equity of $350,000,000 or more.
The Company will cause EBITDA for each period of four consecutive calendar
quarters to exceed 4.00 times Cash Interest Expense for such period.
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.
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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.
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;
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(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);
(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
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adjudicating that any Material Plan must be terminated; or there shall
occur a complete or partial withdrawal from, or a default, within the
meaning of Section 4219(c)(5) of ERISA, with respect to, one or more
Multiemployer Plans which could cause one or more members of the ERISA
Group to incur a current payment obligation in excess of $5,000,000;
(j) a judgment or order for the payment of money in
excess of $15,000,000 (net of applicable insurance coverage which is
acknowledged by the insurer) shall be rendered against the Company or
any Restricted Subsidiary and such judgment or order shall continue
unsatisfied and unstayed for a period of 30 days;
(k) any Person or two or more Persons acting in concert,
together with any affiliates thereof, (i) shall have acquired
beneficial ownership, directly or indirectly, (a) within any 12 month
period, of (1) more than 25% of the Company's common stock or (2)
securities representing more than 25% of the combined voting power of
all securities of the Company entitled to vote in the election of
directors (other than securities having such power only by reason of
the happening of a contingency) ("Voting Securities"), or (b) within
any 24 month period, of (1) more than 40% of the Company's common
stock or (2) more than 40% of the Company's Voting Securities, (ii)
owns a higher percentage of the Company's common stock or Voting
Securities than the percentage owned by Kohlberg Kravis Roberts & Co.
and/or non-operating investment entities it controls, and (iii) either
(a) owns 50% or more of the Company's common stock or Voting
Securities, (b) directly or indirectly elects or causes the election
of Persons constituting in the aggregate a majority of the Board of
Directors of the Company or any Restricted Subsidiary, or (c)
exercises, directly or indirectly, by written agreement, control over
the Company or any Restricted Subsidiary; provided that no Default or
Event of Default shall occur under this subsection (k) until the
Agent, following request by the Required Banks, gives notice to the
Company that such an Event of Default is declared, and such notice may
not be given after the date which is 45 days after the Banks actually
receive notice from the Company to the effect that the matters set
forth in clauses (i), (ii) and (iii) have occurred (for purposes of
this provision, "beneficial ownership" shall mean beneficial ownership
within the meaning of Rule 13d-3 of the Securities and Exchange
Commission promulgated under the Securities Exchange Act of 1934, as
amended, and the number and percentage of securities beneficially
owned by any Person or Persons shall be calculated in accordance with
such Rule); or
(l) any "Event of Default", as defined in the Other
Credit Agreement, shall occur;
then, and in every such event, the Agent shall (i) if requested by Banks having
at least 51% in the aggregate amount of the Commitments, by notice to the
Company terminate the Commitments and, upon the giving of such notice by the
Agent, they shall thereupon terminate, and (ii) if requested by Banks holding
Notes evidencing at least 51% in aggregate principal amount of the Loans, by
notice to the Company declare the Notes (together with accrued interest
thereon) to be, and, upon the
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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.
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
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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 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
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under the Financing Documents. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article VII shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
SECTION 7.09. Agent's Fees. The Company shall pay to the
Agent for its own account fees in the amounts and at the times previously
agreed upon between the Company and the Agent.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period:
(a) the Agent is advised by the Reference Banks that
deposits in dollars (in the applicable amounts) are not being offered
to the Reference Banks in the relevant market for such Interest
Period, or
(b) Banks having 50% or more of the aggregate amount of
the Commitments advise the Agent that the London Interbank Offered
Rate as determined by the Agent will not adequately and fairly reflect
the cost to such Banks of funding their Euro-Dollar Loans for such
Interest Period,
the Agent shall forthwith give notice thereof to the Company and the Banks,
whereupon until the Agent notifies the Company that the circumstances giving
rise to such suspension no longer exist, (i) the obligations of the Banks to
make Euro-Dollar Loans, or make any Conversion (other than changing Euro-Dollar
Loans into Base Rate Loans), shall be suspended, and (ii) unless the Company
notifies the Agent at least two Domestic Business Days before the date of any
Euro-Dollar Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.
SECTION 8.02. Illegality. If, after the date of this
Agreement, the adoption of any applicable law, rule or regulation, or any
change therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any Bank (or its
Euro-Dollar Lending Office) with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall make it unlawful or impossible for any Bank (or its Euro-Dollar
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,
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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
(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
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after demand by such Bank (with a copy to the Agent), the Company shall pay to
such Bank such additional amount or amounts as will compensate such Bank for
such increased cost or reduction; provided that the Company shall not be
obligated to compensate any Bank for any such reduction attributable to a
period (i) more than 90 days prior to the giving of notice by such Bank to the
Company of its intention to seek compensation under this subsection (a) or (ii)
more than six months prior to the making of demand by such Bank for payment
thereof in accordance herewith.
(b) If any Bank shall have determined that the adoption
of any applicable law, rule or regulation regarding capital adequacy,
or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of
reducing the rate of return on capital of such Bank (or its Parent) as
a consequence of such Bank's obligations hereunder to a level below
that which such Bank (or its Parent) could have achieved but for such
adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Agent), the Company shall pay
to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction; provided that the Company
shall not be obligated to compensate any Bank for any such reduction
attributable to a period (i) more than 90 days prior to the giving of
notice by such Bank to the Company of its intention to seek
compensation under this subsection (b) or (ii) more than six months
prior to the making of demand by such Bank for payment thereof in
accordance therewith.
(c) Each Bank will promptly notify the Company and the
Agent of any event of which it has knowledge, occurring after the date
hereof, which will entitle such Bank to compensation pursuant to this
Section 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:
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(a) all Loans to the Company which would otherwise be
made by such Bank as, or be Converted by such Bank as or into,
Euro-Dollar Loans shall instead be made as, or Converted into, Base
Rate Loans (on which interest and principal shall be payable
contemporaneously with the related Euro-Dollar Loans of the other
Banks), and
(b) after each of its Euro-Dollar Loans to the Company
has been repaid, all payments of principal which would otherwise be
applied to repay such Euro-Dollar Loans shall be applied to repay its
Base Rate Loans instead.
SECTION 8.05. Substitution of Bank. If (i) the obligation of
any Bank to make Euro-Dollar Loans has been suspended pursuant to Section 8.02,
(ii) any Bank has demanded compensation under Section 8.03 or payment of Taxes
or Other Taxes under Section 2.17, or (iii) after satisfaction of all
applicable conditions precedent, any Bank fails to fund when due any Loan it is
obligated to fund under this Agreement, the Company shall have the right, with
the assistance of the Agent, to seek a mutually satisfactory substitute bank or
banks (which may be one or more of the Banks) to purchase the Notes and assume
the Commitment of such Bank (any such Bank is herein called an "Affected
Bank"). Each Affected Bank agrees to sell, without recourse, all of its
Commitment, its interest in this Agreement and its Note to any such bank for an
amount equal to the sum of the outstanding unpaid principal of and accrued
interest on the Loans of such Affected Bank and all commitment fees and other
fees and amounts due such Affected Bank hereunder, calculated, in each case, to
the date such Commitment, interest in this Agreement and Note are purchased.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Company or the Agent, at its address or telex
number set forth on the signature pages hereof, (y) in the case of any Bank, at
its address or telex number set forth in its Administrative Questionnaire or
(z) in the case of any party, such other address or telex number as such party
may hereafter specify for the purpose by notice to the Agent and the Company.
Each such notice, request or other communication shall be effective (i) if
given by telex, when such telex is transmitted to the telex number specified in
this Section and the appropriate answer-back is received, (ii) if given by
mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, (iii) if given by facsimile
transmission, when such facsimile is transmitted and accompanied by a telephone
call to the party receiving such transmission or (iv) if given by any other
means, when delivered at the address specified in this Section; provided that
notices to the Agent shall not be effective until received.
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SECTION 9.02. No Waivers. No failure or delay by the Agent
or any Bank in exercising any right, power or privilege under any Financing
Document shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in
the Financing Documents shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 9.03. Expenses; Indemnification. (a) The Company
shall pay (i) all reasonable documented out-of-pocket costs and expenses of
the Agent and the Arranger incurred in connection with the syndication of this
Agreement or the preparation of the Financing Documents, any waiver or consent
thereunder or any amendment thereof or any Default or alleged Default hereunder
and (ii) if an Event of Default occurs, all reasonable out-of-pocket costs and
expenses incurred by the Agent or incurred by any Bank, including fees and
disbursements of counsel, in connection with such Event of Default and
collection and other enforcement proceedings resulting therefrom.
(b) The Company agrees to indemnify the Agent, each
Co-Agent, the Arranger and each Bank and hold the Agent, each
Co-Agent, the Arranger and each Bank harmless from and against any and
all liabilities, losses, damages, costs and expenses of any kind
(including, without limitation, the reasonable fees and disbursements
of counsel for the Agent, any Co-Agent, the Arranger or any Bank in
connection with any investigative, administrative or judicial
proceedings, whether or not the Agent, such Co-Agent, the Arranger or
such Bank, as the case may be, shall be designated a party thereto)
which may be incurred by the Agent, any Co-Agent, the Arranger or any
Bank, relating to or arising out of this Agreement or any actual or
proposed use of proceeds of Loans hereunder, including specifically,
without limitation, all liabilities, losses, damages, costs and
expenses arising out of a violation of any Environmental Law; provided
that neither the Agent nor any Co-Agent nor the Arranger nor any Bank
shall have the right to be indemnified hereunder for its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction (IT BEING EXPRESSLY UNDERSTOOD AND AGREED THAT, EXCEPT
FOR SUCH NEGLIGENCE AS IS SO DETERMINED TO CONSTITUTE GROSS
NEGLIGENCE, SUCH INDEMNIFICATION DOES EXTEND TO THE CONSEQUENCES OF
THE ORDINARY NEGLIGENCE, WHETHER SOLE OR CONTRIBUTORY, OF THE
INDEMNITEE).
(c) Within a reasonable period of time after any Person
entitled to indemnification under Section 9.03(b) (an "Indemnified
Person") receives actual notice of the assertion of any claim or the
commencement of any action, or any threatened claim or action, covered
by Section 9.03(b), such Indemnified Person shall, if indemnification
with respect thereof is to be sought from the Company under Section
9.03(b), notify the Company in writing of such claim or action;
provided that the failure 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
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of any such claim or action and shall take those actions reasonably
within their power to take which are necessary to preserve any legal
defenses to such matters. If any such claim or action shall be
brought or threatened against an Indemnified Person, so long as no
Event of Default exists, the Company shall be entitled to participate
in the defense thereof, and, with the consent of such Indemnified
Person, to assume the defense thereof with counsel reasonably
satisfactory to the Indemnified Person. Notwithstanding any provision
hereof to the contrary, no consent order or settlement shall be
entered into in any such claim or action unless both the Company and
such Indemnified Person have given their prior written consent
thereto; provided that such consent of the Company shall not be
required if any Event of Default exists.
(d) All obligations of the Company to indemnify or
otherwise to make payments to the Agent, any Co-Agent, the Arranger or
any Bank provided in this Agreement shall survive any termination of
the Commitments and the repayment of the Loans.
SECTION 9.04. Sharing of Set-Offs, Etc. Each Bank agrees
that if it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount of principal
and interest due with respect to any Note held by it which is greater than the
proportion received by any other Bank in respect of the aggregate amount of
principal and interest due with respect to any Note held by such other Bank,
the Bank receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks shall be shared by the
Banks pro rata; provided that nothing in this Section shall impair the right of
any Bank to exercise any right of set-off or counterclaim it may have and to
apply the amount subject to such exercise to the payment of indebtedness of the
Company other than its indebtedness under the Notes. The Company agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and
other rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Company in the amount of such
participation.
SECTION 9.05. Amendments and Waivers. Any provision of this
Agreement or the Notes may be amended or waived, if, but only if, such
amendment or waiver is in writing and is signed by the Company and the Required
Banks (and, if the rights or duties of the Agent are affected thereby, by the
Agent); provided that no 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.
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SECTION 9.06. Successors and Assigns.
(a) The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not
assign or otherwise transfer any of its rights under this Agreement
without the prior written consent of all Banks.
(b) Any Bank may at any time and from time to time grant
to one or more banks or other institutions (each a "Participant")
participating interests in its Commitment or any or all of its Loans.
In the event of any such grant by a Bank of a participating interest
to a Participant, whether or not upon notice to the Company and the
Agent, such Bank shall remain responsible for the performance of its
obligations hereunder, and the Company and the Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement. Any agreement pursuant
to which any Bank may grant such a participating interest shall
provide that such Bank shall retain the sole right and responsibility
to enforce the obligations of the Company hereunder including, without
limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation
agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in
clause (i), (ii) or (iii) of Section 9.05 without the consent of the
Participant. The Company agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the
benefits of Article VIII with respect to its participating interest.
An assignment or other transfer which is not permitted by subsection
(c) or (d) below shall be given effect for purposes of this Agreement
only to the extent of a participating interest granted in accordance
with this subsection (b).
(c) Any Bank may at any time assign to one or more banks
or other institutions (each an "Assignee") a proportionate part of all
of its rights and obligations under this Agreement and the Notes in an
amount which equals $2,000,000 or more, and such Assignee shall assume
such rights and obligations under this Agreement and the Notes,
pursuant to an Assignment executed by such Assignee and such
transferor Bank, with (and subject to) the subscribed consent of the
Company and the Agent (which such consents shall not be unreasonably
withheld); provided that if an Assignee is an affiliate of such
transferor Bank or is another Bank, no such consent of the Company
shall be required; provided further that each such assignment shall be
of a constant, and not a varying, percentage of all rights and
obligations under this Agreement and the Notes. Upon execution and
delivery of such instrument (and delivery to the Agent of an
Administrative Questionnaire with respect to such Assignee, if such
Assignee has not already done so) and payment by such Assignee to such
transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Assignee, such Assignee shall be
a Bank party to this Agreement and shall have all the rights and
obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released
from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the
consummation of any assignment pursuant to this subsection (c), the
transferor Bank, the Agent and
57
<PAGE> 62
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. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall, prior to the
first date on which interest or fees are payable hereunder for its
account, deliver to the Company and the Agent certification as to
exemption from deduction or withholding of any United States federal
income taxes in accordance with Section 2.17. Notwithstanding the
first sentence of this subsection (c), a Bank may not make an
assignment pursuant to this subsection (c) if after giving effect
thereto such Bank would hold less than 1.5% (or until 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
58
<PAGE> 63
SUMMONS, COMPLAINT OR OTHER PROCESS OR NOTICE AND AGREES THAT SERVICE BY FIRST
CLASS MAIL, RETURN RECEIPT REQUESTED, TO THE COMPANY AT ITS ADDRESS FOR NOTICES
HEREUNDER, OR ANY FORM OF SERVICE PROVIDED FOR IN THE TEXAS CIVIL PRACTICE AND
REMEDIES CODE THEN IN EFFECT SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE UPON
THE COMPANY.
SECTION 9.10. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
SECTION 9.11. WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT,
THE CO-AGENTS AND THE BANKS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.12. COMPLETE AGREEMENT. THIS WRITTEN CREDIT
AGREEMENT AND THE OTHER FINANCING DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
SECTION 9.13. Liability of Co-Agents 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 1997 Short-Term Commitments.
Each of the parties hereto acknowledges that the Revolving Credit Period (as
defined in the $100,000,000 Credit Agreement dated as of March 11, 1997 among
the Company, NationsBank, as agent and the co-agent and lenders parties
thereto) ended at the close of business on March 9, 1998 pursuant to the terms
of such Credit Agreement, and the Company has no further right to borrow
thereunder. The Company represents and warrants that all principal, interest
and fees owed thereunder will be paid in full on the Effective Date.
59
<PAGE> 64
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
- -----------
$10,757,575.72 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/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$8,257,575.76 UNION BANK OF SWITZERLAND, HOUSTON AGENCY
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
60
<PAGE> 65
$4,545,454.55 THE BANK OF NOVA SCOTIA
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$4,545,454.55 THE BANK OF TOKYO-MITSUBISHI, LTD.,
HOUSTON AGENCY
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$8,257,575.76 THE CHASE MANHATTAN BANK
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$4,545,454.55 CITIBANK, N.A.
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$4,545,454.55 CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
61
<PAGE> 66
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
$5,909,090.91 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/ [ILLEGIBLE]
---------------------------------
Authorized Officer
62
<PAGE> 67
Commitments
- -----------
NATIONAL WESTMINSTER BANK PLC
NASSAU BRANCH
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$4,545,454.55 SOCIETE GENERALE, SOUTHWEST AGENCY
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$4,090,909.09 NATEXIS BANQUE - BFCE
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$3,181,818.18 BANK OF TAIWAN, NEW YORK AGENCY
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
63
<PAGE> 68
Commitments
- -----------
$3,181,818.18 BANQUE NATIONALE DE PARIS, HOUSTON AGENCY
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$3,181,818.18 BANQUE PARIBAS, HOUSTON AGENCY
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$3,181,818.18 DRESDNER BANK AG, NEW YORK AND GRAND
CAYMAN BRANCHES
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
$3,181,818.18 THE MITSUBISHI TRUST & BANKING
CORPORATION
By: /s/ [ILLEGIBLE]
---------------------------------
Authorized Officer
Total Commitments: $100,000,000.00
---------------
64
<PAGE> 69
Commitments
- -----------
NATIONSBANK OF TEXAS, N.A., as Agent
By: /s/ MARION B. 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/ [ILLEGIBLE]
--------------------------------
Authorized Officer
UNION BANK OF SWITZERLAND, HOUSTON
AGENCY, as Co-Agent
By: /s/ [ILLEGIBLE]
--------------------------------
Authorized Officer
By: /s/ [ILLEGIBLE]
--------------------------------
Authorized Officer
65
<PAGE> 70
$100,000,000 CREDIT AGREEMENT DATED March 10, 1998
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 Subdidiaries.
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 Opinion of General Counsel to the Company
Exhibit D Opinion of Special Counsel to the Company
Exhibit E Opinion of Special Counsel to the Agent
<PAGE> 1
EXHIBIT 15
LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We are aware that Union Texas Petroleum Holdings, Inc. has included our report
dated April 22, 1998 (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
Registration Statement on Form S-8 (No. 333-30807) filed on July 3, 1997
Registration Statement on Form S-8 (No. 333-30805) filed on July 3, 1997
Registration Statement on Form S-8 (No. 333-30811) filed on July 3, 1997
Registration Statement on Form S-3 (No. 333-31039) filed on July 10, 1997
We are also aware of our responsibilities under the Securities Act of 1933.
Yours very truly,
Price Waterhouse LLP
Houston, Texas
April 22, 1998
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 39,216
<SECURITIES> 0
<RECEIVABLES> 87,148
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<INVENTORY> 50,236
<CURRENT-ASSETS> 211,355
<PP&E> 3,797,886
<DEPRECIATION> 1,816,304
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<CURRENT-LIABILITIES> 266,174
<BONDS> 719,807
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171,480
<COMMON> 4,391
<OTHER-SE> 675,962
<TOTAL-LIABILITY-AND-EQUITY> 2,292,760
<SALES> 190,184
<TOTAL-REVENUES> 193,781
<CGS> 73,740
<TOTAL-COSTS> 134,471
<OTHER-EXPENSES> 23,251
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