<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
---------------------
Date of Report (Date of earliest event reported): APRIL 15, 1998
UNION TEXAS PETROLEUM HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-9019 76-0040040
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
</TABLE>
1330 POST OAK BOULEVARD, HOUSTON, TEXAS 77056
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713) 623-6544
================================================================================
<PAGE> 2
ITEM 5. OTHER EVENTS.
On this Current Report on Form 8-K, the Registrant is filing with the
Securities and Exchange Commission certain items that are to be incorporated by
reference into its Registration Statement on Form S-3 (Registration No.
333-31039).
Debt Offering. On April 15, 1998, the Registrant issued $150 million
principal amount of 7.000% MAndatory/Putable remarketable Securities (MAPS(SM))
due April 15, 2038 (the "MAPS") under a shelf registration of up to $500 million
aggregate amount of securities of the Registrant. The MAPS are senior unsecured
obligations of the Registrant and subject to mandatory tender on April 15, 2008.
As part of the MAPS structure, the Registrant received additional proceeds
representing the value of the right to remarket the MAPS as of the remarketing
date of April 15, 2008. Net proceeds from the sale of the MAPS in the amount of
approximately $154 million will be used to pay down indebtedness under certain
uncommitted and unsecured money market lines of credit of the Registrant
incurred primarily in connection with the Registrant's 1998 acquisition in
Venezuela and for general corporate purposes. The MAPS are redeemable at any
time after April 15, 2008 at the option of the Registrant, in whole or in part,
at a price equal to the sum of 100% of their principal amount plus accrued and
unpaid interest plus a make-whole premium.
Recent Developments. Union Texas Venezuela Limited, an indirect subsidiary
of the Registrant, announced a successful development well at the Desarrollo
Zulia Occidental (DZO) unit in western Venezuela. The well has boosted daily
production at the DZO unit by nearly 15%. A subsidiary of Union Texas Venezuela
Limited has a 100% interest in the operating service contract for the DZO unit
with PDVSA Petroleo y Gas, S.A., which interest was acquired in February 1998.
The Alturitas No. 52 development well flowed at a daily rate of 3,810 barrels of
oil at an average API gravity of 21 degrees on an electric submersible pump from
the Marcelina formation between 10,852 and 11,092 feet. Situated in the
Alturitas field, the well was placed on stream in early March and has increased
production at DZO from an average of 23,080 barrels of oil a day in February
1998 to a current peak of 26,540 barrels of oil a day. Overall, the Registrant
expects to drill up to seven development wells and one horizontal re-entry well
on the DZO unit during 1998.
This Current Report contains forward-looking statements within the meaning
of and in reliance upon the "safe harbor" provisions of the Private Securities
Litigation Reform Act, as set forth in Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that involve risks and uncertainties, including price volatility,
development, operational and implementation risks, and other factors described
from time to time in the Registrant's publicly available SEC reports, which
could cause actual results to differ materially.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.4 -- Remarketing Agreement between the Registrant and
NationsBanc Montgomery Securities LLC with respect to
the MAPS
12.1 -- Computation of Ratio of Earnings to Fixed Charges;
Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
</TABLE>
<PAGE> 4
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.
By: /s/ LARRY D. KALMBACH
----------------------------------
Larry D. Kalmbach
Vice President and Chief Financial
Officer
Date: April 15, 1998
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.4 -- Remarketing Agreement between the Registrant and
NationsBanc Montgomery Securities LLC with respect to
the MAPS
12.1 -- Computation of Ratio of Earnings to Fixed Charges;
Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
</TABLE>
<PAGE> 1
EXHIBIT 1.4
REMARKETING AGREEMENT
REMARKETING AGREEMENT, dated as of April 15, 1998 (this
"Agreement"), between Union Texas Petroleum Holdings, Inc., a Delaware
corporation (the "Company"), and NationsBanc Montgomery Securities LLC ("NMS"
and, in its capacity as the remarketing dealer hereunder, the "Remarketing
Dealer").
WHEREAS, the Company has issued $150,000,000 aggregate
principal amount of its 7.000% MAndatory Putable/remarketable Securities
(MAPSSM*) due April 15, 2038 (the "MAPS"), pursuant to an indenture, dated as
of March 15, 1995, as amended and supplemented (the "Indenture"), between the
Company and First National Bank of Chicago, as trustee (the"Trustee"); and
WHEREAS, the MAPS are being sold initially pursuant to an
underwriting agreement, dated April 9, 1998 (the "Underwriting Agreement"),
among the Company, NMS and the other underwriters party thereto (collectively,
the "Underwriters"); and
WHEREAS, the Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(No. 333-31039) under the Securities Act of 1933, as amended (together with the
rules and regulations of the Commission thereunder, the "Securities Act"), in
connection with the offering of securities, including the MAPS, which
registration statement was declared effective by order of the Commission on
July 24, 1997; and
WHEREAS, NMS is prepared to act as the Remarketing Dealer with
respect to the remarketing of the MAPS on April 15, 2008 (the "Remarketing
Date") pursuant to the terms of, but subject to the conditions set forth in,
this Agreement;
NOW, THEREFORE, for and in consideration of the covenants
herein made, and subject to the conditions herein set forth, the parties hereto
agree as follows:
SECTION 1. Definitions. Capitalized terms used and not
defined in this Agreement shall have the meanings assigned to them in the
Indenture (including the form of the MAPS).
SECTION 2. Representations and Warranties. (a) The Company
represents and warrants to the Remarketing Dealer as of the date hereof that:
(i) a registration statement in respect of the MAPS has
been filed with the Commission; such registration statement and any
post-effective amendment thereto, each in the form heretofore
delivered to the Remarketing Dealer, and, excluding exhibits thereto
but including all documents incorporated by reference in the
prospectus contained therein, have been declared effective by the
Commission in such form; no other document with respect to such
registration statement or document incorporated by reference therein
has heretofore been filed with the Commission; and no stop order
suspending the effectiveness of such registration statement has been
issued and no proceeding for that purpose has been initiated or
threatened by the Commission; the various parts of such registration
statement, including all exhibits
- -------------------------
* "MAPSSM" is a service mark of Salomon Brothers Inc
<PAGE> 2
2
thereto (other than the Statement of Eligibility and Qualification on
Form T-1 of the Trustee (as defined below)) and including the
documents incorporated by reference in the prospectus contained in the
registration statement at the time such part of the registration
statement became effective, each as amended at the time such part of
the registration statement became effective, being hereinafter called
the "Registration Statement"; the final prospectus, as supplemented by
any prospectus supplement (the "Prospectus Supplement"), used in
connection with the offering of the MAPS, in the final form filed with
the Commission pursuant to Rule 424(b) under the Securities Act, being
hereinafter called the "Prospectus"; any reference herein to the
Prospectus being deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act, as of the date of such Prospectus; any
reference to any amendment or supplement to the Prospectus being
deemed to refer to and include any documents filed after the date of
such Prospectus under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and incorporated by reference in such
Prospectus; and any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of
the Company filed pursuant to Section 13(a) or 15(d) of the Exchange
Act after the effective date of the Registration Statement that is
incorporated by reference in the Registration Statement; except that
if any revised prospectus shall be provided to the Remarketing Dealer
by the Company for use in connection with the remarketing of the MAPS
which differs from the Prospectus (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule
424(b) of the Securities Act), the term "Prospectus" shall refer to
such revised prospectus from and after the time it is first provided
to the Remarketing Dealer for such use; and
(ii) the representations and warranties contained in
subsections 1(ii)-(xiii) of the Underwriting Agreement are true and
correct with the same force and effect as though expressly made at and
as of the date hereof.
(b) The Company represents and warrants to the Remarketing
Dealer as of the Notification Date (as defined below), the Determination Date
(as defined below) and the Remarketing Date (each such date being hereinafter
referred to as a "Representation Date") that:
(i) none of the Company or any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus or the
Remarketing Materials (as defined herein) any loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus or the Remarketing Materials,
which loss or interference is material to the Company and its
subsidiaries taken as a whole; and, since the respective dates as of
which information is given in the Prospectus or the Remarketing
Materials, there has not been any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth,
incorporated by reference or contemplated in the Prospectus or the
Remarketing Materials;
<PAGE> 3
3
(ii) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus or
the Remarketing Materials, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and
all of the issued shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and
non-assessable;
(iii) each of the Company's subsidiaries that constitutes a
"significant subsidiary" within the meaning of Rule 1-02 of Regulation
S-X of the Commission (the "Material Subsidiaries") has been duly
incorporated and is validly existing as a corporation under the laws
of its jurisdiction of incorporation; and all of the issued shares of
capital stock of each Material Subsidiary have been duly and validly
authorized and issued and are fully paid and non-assessable, and all
of such shares of capital stock (except for directors' qualifying
shares and shares held by third parties solely to satisfy local law
requirements and except as set forth in the Prospectus or the
Remarketing Materials) are owned directly or indirectly by the
Company;
(iv) the MAPS have been duly authorized and executed by
the Company and authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in the Underwriting Agreement and
constitute, and will constitute when remarketed pursuant to this
Agreement, valid and legally binding obligations of the Company
entitled to the benefits provided by the Indenture; the Indenture has
been duly authorized by the Company and duly qualified under the Trust
Indenture Act of 1939, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Trust Indenture Act"),
and constitutes a valid and legally binding instrument of the Company;
and the MAPS and the Indenture conform to the descriptions thereof in
the Prospectus or the Remarketing Materials;
(v) since the respective dates as of which information is
given in the Prospectus and the Remarketing Materials, the
representations and warranties contained in subsection 1(x) (other
than with respect to Unimar Company) of the Underwriting Agreement are
true and correct with the same force and effect as though expressly
made at and as of each Representation Date.
(c) The Company represents and warrants to the Remarketing
Dealer as of the date hereof and each Representation Date that:
(i) it has made all the filings with the Commission that
it is required to make under the Exchange Act (collectively, the
"Exchange Act Documents");
(ii) the applicable Remarketing Materials will not, as of
the Remarketing Date, include an untrue statement of a material fact
or omit to state a material fact required to be
<PAGE> 4
4
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company; and
(iv) the issuance and sale of the MAPS and the compliance
by the Company with all of the provisions of the MAPS, the Indenture
and this Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, or any statute or any
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Company, any of its subsidiaries or any
of their properties (excluding conflicts, breaches, violations and
defaults that, individually or in the aggregate, will not have any
material adverse effect on the general affairs, management, financial
position, stockholders' equity, results of operations or prospects of
the Company and its subsidiaries taken as a whole), nor will any such
action result in any violation of the provisions of the Restated
Certificate of Incorporation or By-laws of the Company; and no
consent, approval, authorization, order, registration or qualification
of or with any such court or governmental agency or body is required
for the consummation by the Company of the transactions contemplated
by this Agreement or the Indenture, except the registration under the
Securities Act of the MAPS, the qualification under the Trust
Indenture Act of the Indenture, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the MAPS by the Underwriters or the
Remarketing Dealer.
SECTION 3. Covenants of the Company. The Company covenants
with the Remarketing Dealer as follows:
(a) The Company will provide prompt notice by telephone,
confirmed in writing (which may include facsimile or other electronic
transmission), to the Remarketing Dealer of (i) any notification or
announcement by a "nationally recognized statistical rating agency" (as defined
by the Commission for purposes of Rule 436(g)(2) under the Securities Act) with
regard to the ratings of any securities of the Company, including, without
limitation, notification or announcement of a downgrade in or withdrawal of the
rating of any security of the Company, (ii) the occurrence at any time of any
event set forth in Sections 9(c)(ii), (v) and (viii) of this Agreement, or
(iii) the occurrence during the Remarketing Period (as defined below) of any
event set forth in Sections 9(c)(iii) and (vi) of this Agreement.
(b) The Company will furnish to the Remarketing Dealer:
(i) the Registration Statement and the Prospectus
(including in each case any amendment or supplement thereto and each
document incorporated therein by reference); and
(ii) each Exchange Act Document filed after the date
hereof.
<PAGE> 5
5
The Company agrees to provide the Remarketing Dealer with as
many copies of the foregoing written materials and other Company approved
information as the Remarketing Dealer may reasonably request for use in
connection with the remarketing of MAPS and consents to the use thereof for
such purpose.
(c) If, at any time during the period commencing 15 days
prior to the Notification Date until the Remarketing Date (the "Remarketing
Period"), any event or condition known to the Company relating to or affecting
the Company, any subsidiary thereof or the MAPS shall occur which could
reasonably be expected to cause any of the reports, documents, materials or
information referred to in paragraph 3(b)(ii) above or any document
incorporated therein by reference (collectively, the "Remarketing Materials")
to contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company shall
promptly notify the Remarketing Dealer in writing of the circumstances and
details of such event or condition.
(d) So long as the MAPS are outstanding, the Company will
file all documents required to be filed with the Commission pursuant to the
Exchange Act within the time periods required or permitted by the Exchange Act
and will advise the Remarketing Dealer, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of the Prospectus for the remarketing of the
MAPS, of the suspension of the qualification of the MAPS for offering or sale
in any jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information, and, in the event of the issuance of any stop order or of any
order preventing or suspending the use of the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal.
(e) The Company will comply with the Securities Act, the
Exchange Act and the Trust Indenture Act so as to permit the completion of the
remarketing of the MAPS as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the Securities Act
to be delivered in connection with the remarketing of the MAPS, any event shall
occur or condition shall exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Remarketing Dealer or for the Company, to
amend the Registration Statement or amend or supplement the Prospectus in order
that the Prospectus will not include any untrue statements of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, or if it shall be necessary, in the reasonable
opinion of such counsel, at any such time to amend the Registration Statement
or file a new registration statement or amend or supplement the Prospectus or
issue a new prospectus in order to comply with the requirements of the
Securities Act and the Commission's interpretations of the Securities Act, the
Company, at its expense, will promptly (i) prepare and file with the Commission
such amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectus comply with
such requirements, or prepare and file any such new registration statement and
prospectus as may be necessary for such purpose, (ii) furnish to the
Remarketing Dealer such number of copies of such amendment, supplement or other
document as the Remarketing Dealer may reasonably request and (iii) furnish to
the Remarketing Dealer an officers' certificate, an opinion, including a
statement as to the absence of material misstatements in or omissions from the
Registration Statement and
<PAGE> 6
6
Prospectus, as amended or supplemented, of the general counsel for the Company
and a "comfort letter" from the Company's independent accountants, in each case
in form and substance reasonably satisfactory to the Remarketing Dealer, of the
same tenor as the officers' certificate, opinion and comfort letter,
respectively, delivered pursuant to the Underwriting Agreement, but modified to
relate to the Registration Statement and Prospectus as amended or supplemented
to the date thereof or such new registration statement and prospectus.
(f) The Company agrees that neither it 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, other than pursuant to Sections 4(g), 4(h)
or 12 of this Agreement.
(g) Notwithstanding any provision to the contrary set
forth in the Indenture, the Company shall (i) use its best efforts to maintain
the MAPS in book-entry form with The Depository Trust Company ("DTC") or any
successor thereto and to appoint a successor depositary to the extent necessary
to maintain the MAPS in book-entry form and (ii) waive any discretionary right
it otherwise has under the Indenture to cause the MAPS to be issued in
certificated form.
(h) The Company agrees to furnish to the Holders of the
MAPS as soon as practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, stockholders' equity and
cash flows of the Company and its consolidated subsidiaries certified by
independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year, a consolidated summary
financial information of the Company and its subsidiaries for such quarter in
reasonable detail.
SECTION 4. Appointment and Obligations of the
Remarketing Dealer. (a) Unless this Agreement is otherwise terminated in
accordance with Section 11 hereof, in accordance with the terms, but subject to
the conditions, of this Agreement, the Company hereby appoints NMS, and NMS
hereby accepts such appointment, as the exclusive Remarketing Dealer with
respect to $150,000,000 aggregate principal amount of MAPS, subject further to
repurchase of the MAPS in accordance with clause (g) of this Section or
redemption of the MAPS in accordance with clause (h) of this Section or Section
12.
(b) It is expressly understood and agreed by the parties
hereto that the obligations of the Remarketing Dealer hereunder with respect to
the MAPS to be remarketed on the Remarketing Date are conditioned on (i) the
issuance and delivery of such MAPS pursuant to the terms and conditions of the
Underwriting Agreement and (ii) the Remarketing Dealer's election on the
Notification Date to purchase the MAPS for remarketing on the Remarketing Date.
It is further expressly understood and agreed by and between the parties hereto
that, if the Remarketing Dealer has elected to remarket the MAPS pursuant to
clause (c) below, the Remarketing Dealer shall not be obligated to set the
Interest Rate to Maturity (as defined below) on any MAPS, to remarket any MAPS
or to perform any of the other duties set forth herein at any time after the
Notification Date if (i) any of the conditions set forth in clause (a) or (b)
of Section 9 hereof shall not have been fully and completely met to the
reasonable satisfaction of the Remarketing Dealer or (ii) any of the events set
forth in clause (c) of Section 9 hereof shall have occurred.
<PAGE> 7
7
(c) On a Business Day not later than 10 Business Days
prior to the Remarketing Date, the Remarketing Dealer will notify the Company
and the Trustee as to whether it elects to purchase the MAPS on the Remarketing
Date (the "Notification Date"). If, and only if, the Remarketing Dealer so
elects, the MAPS shall be subject to mandatory tender to the Remarketing Dealer
for remarketing on the Remarketing Date, subject to the conditions described
herein.
(d) Subject to the Remarketing Dealer's election to
remarket the MAPS as provided in clause (c) above, 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 April 15, 2038
(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).
"Reference Corporate Dealers" means each of Salomon Brothers
Inc, Chase Securities Inc., NMS, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and J.P. Morgan Securities Inc. and their respective successors;
provided, however, 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.
<PAGE> 8
8
"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 the 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 such other page as
may replace Telerate Page 500), or (b) if such page (or any successor page) is
not displayed or does not contain such offer prices on the 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. "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. on the Determination Date.
"Reference Treasury Dealer" means each of Salomon Brothers
Inc, Chase Securities Inc., NMS, 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.
(e) Subject to the Remarketing Dealer's election to
remarket the MAPS as provided in clause (c) above, the Remarketing Dealer shall
notify the Company, the Trustee and DTC by telephone, confirmed in writing
(which may include facsimile or other electronic transmission), by 4:00 p.m.,
New York City time, on the Determination Date of the Interest Rate to Maturity
applicable to the MAPS effective from and including the Remarketing Date.
(f) In the event that the MAPS are remarketed as provided
herein, the Remarketing Dealer shall make, or cause the Trustee to make,
payment to the DTC Participant of each Beneficial Owner of MAPS that has
tendered (or been deemed to have tendered) 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, of 100% of the principal amount of such
Beneficial Owner's MAPS to be remarketed by the Remarketing Dealer. The
Company shall make, or cause the Trustee to make, to each Beneficial Owner of
MAPS payment of interest due on the Remarketing Date by book entry through DTC
by the close of business on the Remarketing Date.
<PAGE> 9
9
(g) Subject to Section 11(c) of this Agreement, 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) at any time after the Remarketing Dealer elects on
the Notification Date to remarket the MAPS any event as set forth in Section 9
or Section 11 of this Agreement shall have occurred or (iv) the Remarketing
Dealer for any reason does not elect, by notice to the Company, and the Trustee
not later than the Notification Date, to purchase the MAPS for remarketing on
the Remarketing Date or (v) the Remarketing Dealer for any reason does not
purchase all tendered MAPS 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 by the Company through the Trustee 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 tendered MAPS.
(h) If the Remarketing Dealer elects to remarket the MAPS
as provided in clause (c) above, then not later than the Business Day
immediately preceding the Determination Date, the Company shall notify the
Remarketing Dealer and the Trustee if the Company irrevocably elects to
exercise its right to redeem the MAPS, in whole but not in part, from the
Remarketing Dealer on the Remarketing Date at the Remarketing Redemption Price.
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.
(i) The Remarketing Dealer may, in accordance with the
terms of the Indenture, modify the tender and settlement procedures set forth
in the Indenture in order to facilitate the tender and settlement process.
(j) The tender and settlement procedures described above,
including provisions for payment by purchasers of MAPS in the remarketing or
for payment to Beneficial Owners of tendered MAPS, may be modified to the
extent required by DTC or, subject to Section 11(b)(ii) hereof, to the extent
required to facilitate the tender and remarketing of MAPS in certificated form
if the book-entry system is no longer available for the MAPS at the time of the
remarketing.
(k) Unless this Agreement is otherwise terminated in
accordance with Section 11 hereof, the Remarketing Dealer will advise the
Company, no later than January 15th of each year, of the Remarketing Dealer's
good faith estimate, without obtaining bids from the Reference Corporate
Dealers, of the Applicable Spread as of each prior December 31, commencing
December 31, 1998.
SECTION 5. Fees and Expenses. Subject to Section 11 of
this Agreement, for its services in performing its duties set forth herein, the
Remarketing Dealer will not receive any fees or reimbursement of expenses from
the Company.
<PAGE> 10
10
SECTION 6. Resignation of the Remarketing Dealer. The
Remarketing Dealer may resign and be discharged from its duties and obligations
hereunder at any time, such resignation to be effective either (i) immediately
upon termination of this Agreement in accordance with Section 11(b) hereof or
(ii) 10 Business Days after delivery of a written notice to the Company and the
Trustee of such other resignation. The Company shall have the sole right, but
not the obligation, to appoint a successor Remarketing Dealer.
SECTION 7. Dealing in the MAPS; Purchase of MAPS by the
Company. (a) NMS, when acting as the Remarketing Dealer or in its individual
or any other capacity, may, to the extent permitted by law, buy, sell, hold and
deal in any of the MAPS. NMS, as Holder or Beneficial Owner of the MAPS, may
exercise any vote or join as a Holder or Beneficial Owner, as the case may be,
in any action which any Holder or Beneficial Owner of MAPS may be entitled to
exercise or take pursuant to the Indenture with like effect as if it did not
act in any capacity hereunder. The Remarketing Dealer, in its capacity either
as principal or agent, may also engage in or have an interest in any financial
or other transaction with the Company as freely as if it did not act in any
capacity hereunder.
(b) The Company may purchase MAPS in the remarketing,
provided that the Interest Rate to Maturity established with respect to MAPS in
the remarketing is not different from the Interest Rate to Maturity that would
have been established if the Company had not purchased such MAPS.
SECTION 8. Information. (a) The Company agrees to
furnish to the Remarketing Dealer: (i) copies of each material report or other
document mailed to or filed by the Company with the Commission including the
Registration Statement and the Prospectus (including in each case any documents
incorporated therein by reference, subject to existing confidentiality requests
made of the Commission), (ii) notice of the occurrence of any of the events set
forth in clauses (c)(i), (ii), (v) and (viii) of Section 9 hereof, and (iii)
during the Remarketing Period, notice of the occurrence of any of the events
set forth in clauses (c)(iii) and (vi) and such other information as the
Remarketing Dealer may reasonably request from time to time, in such form as
the Remarketing Dealer may reasonably request, including, but not limited to,
the financial condition of the Company or any Material Subsidiary thereof. The
Company agrees to provide the Remarketing Dealer with as many copies of the
foregoing materials and information as the Remarketing Dealer may reasonably
request for use in connection with the remarketing and consents to the use
thereof for such purpose.
(b) If, at any time during the Remarketing Period, any
event or condition known to the Company relating to or affecting the Company,
any subsidiary thereof or the MAPS shall occur which might reasonably cause any
of the Remarketing Materials to include an untrue statement of a material fact
or omit to state a material fact, the Company shall promptly notify the
Remarketing Dealer in writing of the circumstances and details of such event or
condition.
SECTION 9. Conditions to Remarketing Dealer's
Obligations. The obligations of the Remarketing Dealer under this Agreement
have been undertaken in reliance on, and shall be subject to, (a) the due
performance in all material respects by the Company of its obligations and
agreements as set forth in this Agreement and the accuracy, as of their
respective dates, of the representations and warranties in this Agreement and
any certificate delivered pursuant hereto, (b) the due performance in all
material respects by the Company of its obligations and agreements set forth
<PAGE> 11
11
in, and the accuracy in all material respects as of the dates specified therein
of the representations and warranties contained in, the Underwriting Agreement
and (c) the further condition that none of the following events shall have
occurred after the Remarketing Dealer elects on the Notification Date to
remarket the MAPS:
(i) the rating of any debt securities of the Company
shall have been down-graded or withdrawn by a nationally recognized
statistical rating agency;
(ii) without the prior written consent of the Remarketing
Dealer (which consent shall not be unreasonably withheld), the
Indenture (including the MAPS) shall have been amended in any manner
or shall otherwise contain any provision not contained therein as of
the date hereof that, in either case, in the reasonable judgment of
the Remarketing Dealer, materially changes the nature of the MAPS or
the remarketing procedures (it being understood that, notwithstanding
the provisions of this clause (ii), the Company shall not be
prohibited from amending or supplementing the Indenture);
(iii) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange shall have
occurred or a general moratorium on commercial banking activities in
New York shall have been declared by either Federal or New York State
authorities;
(iv) there shall have occurred any outbreak of hostilities
or escalation thereof involving the United States, or the declaration
by the United States of a national emergency or war, in each case the
effect of which is such as to make it, in the judgment of the
Remarketing Dealer, impracticable or inadvisable to remarket the MAPS
or to enforce contracts for the sale of the MAPS;
(v) an Event of Default (as defined in the Indenture), 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;
(vi) a material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries taken as
a whole, shall have occurred since the Notification Date or since the
respective dates as of which information is given or contemplated in
the Exchange Act Documents;
(vii) if a prospectus is required under the Securities Act
to be delivered in connection with the remarketing of the MAPS, the
Company shall fail to furnish to the Remarketing Dealer on the
Remarketing Date the officers' certificate, opinion and comfort letter
referred to in Section 3(e) of this Agreement and such other documents
and opinions as counsel for the Remarketing Dealer may reasonably
require for the purpose of enabling such counsel to pass upon the sale
of MAPS in the remarketing as herein contemplated and related
proceedings, or in order to evidence the accuracy and completeness of
any of the representations and warranties, or the fulfillment of any
of the conditions, herein contained; or
<PAGE> 12
12
(viii) the MAPS are not maintained in book-entry form with
DTC or any successor thereto;
and the Remarketing Dealer shall have received on the Remarketing Date an
officers' certificate of the Company, dated as of the Remarketing Date, to the
effect that (i) the representations and warranties set forth in Sections 2(b)
and (c) hereof are true and correct with the same force and effect as though
expressly made at and as of the Remarketing Date, (ii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Remarketing Date and (iii) none of the events
specified in the preceding clause (c) has occurred.
(d) In furtherance of the foregoing, the effectiveness of
the Remarketing Dealer's election on the Notification Date to remarket the MAPS
shall be subject to the condition that the Remarketing Dealer shall have
received an officers' certificate of the Company, dated as of the Notification
Date, to the effect that (i) the Company has, prior to the Remarketing Dealer's
election on the Notification Date to remarket the MAPS, provided the
Remarketing Dealer with notice of all events as required under Section 3(a) of
this Agreement, (ii) the representations and warranties set forth in Sections
2(b) and (c) hereof are true and correct at and as of the Notification Date and
(iii) the Company has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to the Notification Date.
Such certificate shall be delivered by the Company to the Remarketing Dealer as
soon as practicable following notification by the Remarketing Dealer to the
Company on the Notification Date of its election to remarket the MAPS and in
any event prior to the Determination Date.
In the event of the failure of any of the foregoing
conditions, the Remarketing Dealer may terminate its obligations under this
Agreement or redetermine the Interest Rate to Maturity as provided in Section
11.
SECTION 10. Indemnification; Contribution. (a) The Company
will indemnify and hold harmless the Remarketing Dealer against any losses,
claims, damages or liabilities, joint or several, to which the Remarketing
Dealer may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, the Prospectus, the
Prospectus Supplement, the related preliminary Prospectus Supplement, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Remarketing Dealer for any legal or other expenses reasonably
incurred by the Remarketing Dealer in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Prospectus, the Prospectus Supplement,
the related preliminary Prospectus Supplement, or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by the Remarketing Dealer expressly for use therein;
and provided, further, that the Company shall not be liable to the Remarketing
Dealer under the indemnity agreement in this subsection (a) with respect to any
preliminary prospectus to the extent that any such loss, claim, damage or
liability of the Remarketing Dealer results from the fact that the Remarketing
Dealer sold MAPS to a person as to whom it shall
<PAGE> 13
13
be established that there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (excluding documents
incorporated by reference) or of the Prospectus as then amended or supplemented
(excluding documents incorporated by reference) in any case where such delivery
is required by the Securities Act if the Company has previously furnished
copies thereof to the Remarketing Dealer and the loss, claim, damage or
liability of the Remarketing Dealer results from an untrue statement or
omission of a material fact contained in the preliminary prospectus which was
corrected in the Prospectus (excluding documents incorporated by reference) or
in the Prospectus as then amended or supplemented (excluding documents
incorporated by reference).
(b) The Remarketing Dealer will indemnify and hold harmless
the Company against any losses, claims, damages or liabilities to which the
Company may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement, the Prospectus, the
Prospectus Supplement, the related preliminary Prospectus Supplement, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, the Prospectus Supplement, the related
preliminary Prospectus Supplement, or any such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by the Remarketing Dealer expressly for use therein; and will reimburse
the Company for any legal or other expenses reasonably incurred by the Company
in connection with investigating or defending any such action or claim as such
expenses are incurred.
(c) Promptly after receipt by a party entitled to
indemnification under subsection (a) or (b) above (the "indemnified party") of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against a party required to provide
indemnification to such indemnified party under such subsection (the
"indemnifying party"), notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any indemnified
party otherwise than under such subsection. In case any such action shall be
brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party (which shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof
other than reasonable costs of investigation. In no event shall an
indemnifying party be liable for the fees and expenses of more than one counsel
(in addition to any local counsel), apart from counsel to such indemnifying
party, for all indemnified parties in connection with any one action or
separate but similar or related actions arising out of the same general
allegations or circumstances. No indemnifying party shall be liable for any
settlement of any such action effected without its consent, provided that such
consent is not unreasonably withheld or delayed.
<PAGE> 14
14
(d) If the indemnification provided for in this Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company on the one hand and the
Remarketing Dealer on the other from the offering of the MAPS. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law or if the indemnified party failed to give the notice
required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company on the one hand and the Remarketing
Dealer on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Remarketing Dealer on
the other shall be deemed to be in the same proportion as the total net
proceeds from the offering of the MAPS purchased under the Underwriting
Agreement (before deducting expenses and as set forth in the table on the cover
page of the Prospectus Supplement) received by the Company on the one hand bear
to the aggregate positive difference, if any, between the price paid by the
Remarketing Dealer for the MAPS tendered on the Remarketing Date and the price
at which the MAPS are sold by the Remarketing Dealer in the remarketing. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company on the one hand or the Remarketing Dealer on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Remarketing
Dealer agree that it would not be just and equitable if contributions pursuant
to this subsection (d) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), (i) the Remarketing Dealer shall not be required to contribute
any amount in excess of the amount by which the total price at which the MAPS
remarketed by it and distributed to the public were offered to the public
exceeds the amount of any damages which the Remarketing Dealer has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The obligations of the Company under this Section 10
shall be in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls the Remarketing Dealer within the meaning of the Securities Act; and
the obligations of the Remarketing Dealer under this Section 10 shall be in
addition to any liability which the Remarketing Dealer may otherwise have and
shall extend, upon the same terms and conditions, to each officer and director
of the Company and to each person, if any, who controls the Company within the
meaning of the Securities Act.
<PAGE> 15
15
SECTION 11. Termination of Remarketing Agreement or
Redetermination of Interest Rate to Maturity. (a) This Agreement shall
terminate as to the Remarketing Dealer on the effective date of the resignation
of the Remarketing Dealer pursuant to Section 6 hereof or the repurchase of the
MAPS by the Company pursuant to Section 4(g) hereof or the redemption of the
MAPS by the Company pursuant to Sections 4(h) and 12 hereof.
(b) In addition, the Remarketing Dealer may terminate all of
its obligations under this Agreement immediately by notifying the Company and
the Trustee of its election to do so, at any time on or before the Remarketing
Date, in the event that: (i) any of the conditions referred to or set forth in
Section 9(a) or (b) hereof have not been met or satisfied in full, (ii) any of
the events set forth in Section 9(c) (other than Section 9(c)(viii) if, in the
Remarketing Dealer's sole discretion and subject to receipt of an opinion of
counsel for the Company reasonably satisfactory to the Remarketing Dealer, the
Indenture and the MAPS in the Remarketing Dealer's reasonable judgment can be
amended, and they are amended, so as to permit the remarketing of the MAPS in
certificated form and otherwise as contemplated herein, and if the Company
shall have agreed in writing to reimburse the Remarketing Dealer for all
reasonable expenses of certificating the MAPS) shall have occurred after the
Remarketing Dealer elects on the Notification Date to remarket the MAPS or
(iii) the Remarketing Dealer reasonably determines after consultation with the
Company, that there is material nonpublic information about the Company that is
not available to the Remarketing Dealer, whether or not specifically referenced
herein, that is necessary to fulfill its obligations under this Agreement.
(c) Notwithstanding any provision herein to the contrary, in
lieu of terminating this Agreement pursuant to Section 11(b) above, upon the
occurrence of any of the events set forth therein, the Remarketing Dealer, in
its sole discretion at any time between the Determination Date and 3:30 p.m.,
New York City time, on the Business Day immediately preceding the Remarketing
Date, may elect to purchase the MAPS for remarketing and determine a new
Interest Rate to Maturity in the manner provided in Section 4(d) of this
Agreement, except that for purposes of determining the new Interest Rate to
Maturity pursuant to this paragraph the Determination Date referred to therein
shall be the date of such election and redetermination. The Remarketing Dealer
shall notify the Company, the Trustee and DTC by telephone, confirmed in
writing (which may include facsimile or other electronic transmission), by 4:00
p.m., New York City time, on the date of such election, of the new Interest
Rate to Maturity applicable to the MAPS. Thereupon, such new Interest Rate to
Maturity shall supersede and replace any Interest Rate to Maturity previously
determined by the Remarketing Dealer and, absent manifest error, shall be
binding and conclusive upon the Beneficial Owners and Holders of the MAPS on or
after the Remarketing Date, the Company and the Trustee; provided, however,
that the Remarketing Dealer, by redetermining the Interest Rate to Maturity
upon the occurrence of any event set forth in Section 11(b) as set forth above,
shall not thereby be deemed to have waived its right to determine a new
Interest Rate to Maturity or terminate this Agreement upon the occurrence of
any other event set forth in Section 11(b).
(d) If this Agreement is terminated pursuant to this Section
11, such termination shall be without liability of any party to any other
party, except that, in the case of termination pursuant to Section 11(b) of
this Agreement, the Company shall reimburse the Remarketing Dealer for all of
its reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Remarketing Dealer, and except further as set
forth in Section 11(e) below. Sections 1, 10, 11, 11(d) and 11(e) shall
survive such termination and remain in full force and effect.
<PAGE> 16
16
(e) In the case of either (i) termination of this Agreement
after the Remarketing Dealer's election on the Notification Date to remarket
the MAPS pursuant to Sections 11(b)(i) or (ii) (other than due to the
occurrence of an event set forth in Section 9(c)(viii)) or (ii) termination of
this Agreement prior to the Remarketing Dealer's election on the Notification
Date to remarket the MAPS pursuant to Section 11(b)(i) (other than due to the
occurrence of an event set forth in Section 9(c)(viii)) or due to the
occurrence of any event set forth in Sections 9(c)(ii) or (v), upon the request
of the Remarketing Dealer, the Company shall immediately following the Call
Price Determination Date (as defined below) pay the Remarketing Dealer, in
same-day funds by wire transfer to an account designated by the Remarketing
Dealer, the fair market value of the Remarketing Dealer's right to purchase and
remarket the MAPS pursuant to this Agreement (the "Call Price"), calculated as
follows:
(x) in the case of termination of this Agreement after
the Remarketing Dealer's election on the Notification Date to remarket
the MAPS pursuant to Sections 11(b)(i) or (ii) (other than due to the
occurrence of an event set forth in Section 9(c)(viii)), the Call
Price shall be equal to the excess of (i) the Dollar Price over (ii)
100% of the aggregate principal amount of the MAPS; or
(y) in the case of termination of this Agreement prior to
the Remarketing Dealer's election on the Notification Date to remarket
the MAPS pursuant to Section 11(b)(i) (other than due to the
occurrence of an event set forth in Section 9(c)(viii)) or due to the
occurrence of any event set forth in Sections 9(c)(ii) or (v), the
Call Price shall be determined by mutual agreement of the Company and
the Remarketing Dealer on a commercially reasonable basis by reference
to, among other factors, the formulation set forth in the preceding
paragraph; provided, however, that if such determination of the Call
Price is not reached within 30 days after the Company's receipt of the
Remarketing Dealer's notice of termination, the Call Price shall be
determined by taking the average of the three quotations remaining
after disregarding the highest and lowest quotations of the value of
the Call Price given by five Reference Corporate Dealers, each of
which quotations shall be given as of the same time and date and
determined by reference to the formulation described in the
immediately preceding paragraph. If fewer than five such quotations
are obtained, the average of the quotations obtained shall be used.
The Remarketing Dealer and, in the case of clause (y) above,
the Company shall determine the applicable Call Price on the Business Day
immediately following the date of termination or as soon as practicable
thereafter (the "Call Price Determination Date"). The Remarketing Dealer shall
promptly notify the Company of the Call Price Determination Date and the Call
Price by telephone, confirmed in writing (which may include facsimile or other
electronic transmission). The Call Price, absent manifest error, shall be
binding and conclusive upon the parties hereto.
(f) This Agreement shall not be subject to termination by the
Company.
SECTION 12. Redemption by the Company; Make-Whole Premium.
(a) The MAPS will be redeemable, at the option of the Company, at any time
after the Remarketing Date in whole or from time to time in part, upon not
less than 30 and not more than 60 days' notice mailed to each Beneficial Owner
of MAPS to be redeemed as shown in the security register for the MAPS, on any
<PAGE> 17
17
date prior to the Stated Maturity Date at a price equal to 100% of the
principal amount thereof plus accrued and unpaid interest 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) plus a make-whole premium (the "Make-Whole Premium"), if any.
(b) The amount of the Make-Whole Premium with respect to any
MAPS (or portion thereof) to be redeemed will be equal to 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.
(c) 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 NMS 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").
(d) 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.
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
<PAGE> 18
18
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.
(e) 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. The MAPS will not be
entitled to the benefit of any sinking fund or other mandatory redemption
provisions.
SECTION 13. Remarketing Dealer Performance, Duty of Care.
The duties and obligations of the Remarketing Dealer shall be determined solely
by the express provisions of this Agreement and the Indenture. No implied
covenants or obligations of or against the Remarketing Dealer shall be read
into this Agreement or the Indenture. In the absence of bad faith on the part
of the Remarketing Dealer, the Remarketing Dealer may conclusively rely upon
any document furnished to it, which purports to conform to the requirements of
this Agreement and the Indenture, as to the truth of the statements expressed
in any of such documents. The Remarketing Dealer shall be protected in acting
upon any document or communication reasonably believed by it to have been
signed, presented or made by the proper party or parties. The Remarketing
Dealer shall incur no liability to the Company or to any Beneficial Owner or
Holder of MAPS in its individual capacity or as Remarketing Dealer for any
action or failure to act in connection with the remarketing or otherwise,
except as a result of gross negligence or willful misconduct on its part.
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE.
SECTION 15. Term of Agreement. Unless otherwise terminated
in accordance with the provisions hereof, this Agreement shall remain in full
force and effect from the date hereof until the MAPS have been repurchased,
redeemed or remarketed in accordance with Section 4 hereof. Regardless of any
termination of this Agreement pursuant to any of the provisions hereof, the
obligations of the Company pursuant to Sections 10 and 11 hereof shall remain
operative and in full force and effect until fully satisfied.
SECTION 16. Successors and Assigns. The rights and
obligations of the Company hereunder may not be assigned or delegated to any
other person without the prior written consent of the Remarketing Dealer,
except that the rights and obligations of the Company may be assigned and
delegated to any successor of the Company permitted by Section 902 of the
Indenture. The rights and obligations of the Remarketing Dealer hereunder may
not be assigned or delegated to any other
<PAGE> 19
19
person without the prior written consent of the Company. This Agreement shall
inure to the benefit of and be binding upon the Company and the Remarketing
Dealer and their respective successors and assigns, and will not confer any
benefit upon any other person, partnership, association or corporation other
than, persons, if any, controlling the Remarketing Dealer within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, or any
indemnified party to the extent provided in Section 10 hereof, or any person
entitled to contribution to the extent provided in Section 11 hereof. The
terms "successors" and "assigns" shall not include any purchaser of any MAPS
merely because of such purchase.
SECTION 17. Headings. Section headings have been inserted in
this Agreement as a matter of convenience of reference only, and it is agreed
that such section headings are not a part of this Agreement and will not be
used in the interpretation of any provisions of this Agreement.
SECTION 18. Severability. If any provision of this Agreement
shall be held or deemed to be or shall, in fact, be invalid, inoperative or
unenforceable as applied in any particular case in any or all jurisdictions
because it conflicts with any provision of any constitution, statute, rule or
public policy or for any other reason, such circumstances shall not have the
effect of rendering the provision in question invalid, inoperative or
unenforceable in any other case, circumstance or jurisdiction, or of rendering
any other provision or provisions of this Agreement invalid, inoperative or
unenforceable to any extent whatsoever.
SECTION 19. Counterparts. This Agreement may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute one and the same document.
SECTION 20. Amendments. This Agreement may be amended by any
instrument in writing signed by each of the parties hereto so long as this
Agreement as amended is not inconsistent with the Indenture in effect as of the
date of any such amendment.
SECTION 21. Notices. Unless otherwise specified, any
notices, requests, consents or other communications given or made hereunder or
pursuant hereto shall be made in writing (which may include facsimile or other
electronic transmission) and shall be deemed to have been validly given or made
when delivered or mailed, registered or certified mail, return receipt
requested and postage prepaid, addressed as follows:
(a) to the Company:
Union Texas Petroleum Holdings, Inc.
1330 Post Oak Boulevard
Houston, TX 77056
Attention: Secretary
Facsimile No.: 713-968-2725
<PAGE> 20
20
(b) to NMS:
NationsBanc Montgomery Securities LLC
NationsBank Corporate Center
100 North Tryon Street
Charlotte, NC 28255
Attention: Tom Mooney
Facsimile No.: 704-386-7194
or to such other address as the Company or the Remarketing Dealer shall specify
in writing.
<PAGE> 21
21
IN WITNESS WHEREOF, each of the Company and the Remarketing
Dealer has caused this Agreement to be executed in its name and on its behalf
by one of its duly authorized officers as of the date first above written.
UNION TEXAS PETROLEUM HOLDINGS, INC.
By: /s/ LARRY D. KALMBACH
---------------------------------
Name: Larry D. Kalmbach
Title: Vice President and Chief
Financial Officer
NATIONSBANC MONTGOMERY
SECURITIES LLC
By: /s/ PHILLIP R. BENNETT
---------------------------------
Name: Phillip R. Bennett
Title: Vice President
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1993 1994 1995 1996 1997
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Pretax income.......................... $26,983 $211,983 $253,327 $379,039 $269,302
Fixed charges:
Interest expense..................... 30,506 28,721 50,379 49,858 46,850
Preferred stock dividends of a
subsidiary........................ 1,681
Capitalized debt cost................ 1,536 1,452 1,486 1,332 1,226
Interest portion of rent expense..... 2,777 3,170 3,126 2,928 3,270
------- -------- -------- -------- --------
Total fixed charges.......... 36,500 33,343 54,991 54,118 51,346
Less: Capitalized interest, net........ 4,623 1,464 4,845 8,690 27,270
------- -------- -------- -------- --------
31,877 31,879 50,146 45,428 24,076
Earnings before fixed charges.......... $58,860 $243,862 $303,473 $424,467 $293,378
======= ======== ======== ======== ========
Ratio of earnings to fixed charges..... 1.61(1) 7.31 5.52 7.84 5.71(2)
</TABLE>
- ---------------
(1) During 1993, the Company recorded a non-cash charge to depreciation,
depletion and amortization of $103 million pretax ($48 million after-tax)
for the write-down of its investment in the U.K. North Sea's Piper field.
Excluding the effect of the piper write-down, the ratio of earnings to fixed
charges for 1993 would have been 4.45.
(2) The 1997 pro forma ratio of earnings to fixed charges would be 4.96 as
calculated below:
<TABLE>
<S> <C>
1997 fixed charges per above................................ $51,346
Pro forma adjustments
Bond interest requirements............................. 10,946
Estimated decrease in interest expense due to
refinancing........................................... (3,200)
-------
Total pro forma fixed charges............................. $59,092
=======
Pro forma ratio of earnings to fixed charges.............. 4.96
=======
</TABLE>
The pro forma adjustments give effect to the issuance of bonds at an
annual effective interest rate of 7.3956% and the application of a portion
of the proceeds to the reduction of debt under the uncommitted and
unsecured lines of credit, as if such transaction had taken place January
1, 1997.
<PAGE> 2
COMPUTATION OF
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1993 1994 1995 1996 1997
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Pretax income............................ $26,983 $211,983 $253,327 $379,039 $269,302
Fixed charges
Interest expense....................... 30,506 28,721 50,379 49,858 46,850
Preferred stock dividends of
subsidiary.......................... 1,681
Capitalized debt cost.................. 1,536 1,452 1,486 1,332 1,226
Interest portion of rent expense....... 2,777 3,170 3,126 2,928 3,270
------- -------- -------- -------- --------
Total fixed charges............ 36,500 33,343 54,991 54,118 51,346
Less: Capitalized interest, net........ 4,623 1,464 4,845 8,690 27,270
------- -------- -------- -------- --------
31,877 31,879 50,146 45,428 24,076
Earnings before fixed charges............ $58,860 $243,862 $303,473 $424,467 $293,378
======= ======== ======== ======== ========
Ratio of earnings to fixed charges....... 1.61(1) 7.31 5.52 7.84 5.71(2)
</TABLE>
- ---------------
(1) During 1993, the Company recorded a non-cash charge to depreciation,
depletion and amortization of $103 million pretax ($48 million after-tax)
for the write-down of its investment in the U.K. North Sea's Piper Field.
Excluding the effect of the piper write-down, the ratio of earnings to fixed
charges for 1993 would have been 4.45.
(2) The 1997 pro form a ratio of earnings to combined fixed charges and
preferred stock dividends would be 3.49 as calculated below:
<TABLE>
<S> <C> <C>
1997 fixed charges per above................................ $51,346
Pro forma adjustments
Preferred stock dividend requirements.................. 12,495
Ratio of 1997 pretax income to net income.............. 2.0
------
Preferred stock dividend factor........................ 24,990
Bond interest requirements............................. 10,946
Estimated decrease in interest expense due to
refinancing........................................... (3,200)
-------
Total pro forma combined fixed charges and preferred stock
dividends.............................................. $84,082
=======
Pro forma ratio of earnings to combined fixed charges and
preferred stock dividends.............................. 3.49
=======
</TABLE>
The pro forma adjustments give effect to preferred stock dividends as a
result of the issuance of $175 million of the preferred stock at an annual
dividend rate of 7.14% and the issuance of bonds at an annual effective
interest rate of 7.3956% and the application of a portion of the proceeds
to the reduction of debt under the revolving credit facility and the
uncommitted and unsecured lines of credit, as if such transactions had
taken place January 1, 1997.
